-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
Mt6NVnK++DyaSzFODDZDH2XHc8MA4BLpSGMNxilFgVBM4c8hTCxbca6Ag7NQTHoO
jZokyoGl3DQOhBQM7ORMUg==
<SEC-DOCUMENT>0000928385-01-500145.txt : 20010330
<SEC-HEADER>0000928385-01-500145.hdr.sgml : 20010330
ACCESSION NUMBER: 0000928385-01-500145
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 11
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010329
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CAPITAL ONE FINANCIAL CORP
CENTRAL INDEX KEY: 0000927628
STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141]
IRS NUMBER: 541719854
STATE OF INCORPORATION: VA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-13300
FILM NUMBER: 1583826
BUSINESS ADDRESS:
STREET 1: 2980 FAIRVIEW PARK DRIVE
STREET 2: SUITE 1300
CITY: FALLS CHURCH
STATE: VA
ZIP: 22042
BUSINESS PHONE: 8049671000
MAIL ADDRESS:
STREET 1: 2980 FAIRVIEW PARK DRIVE SUITE 1300
CITY: FALLS CHURCH
STATE: VA
ZIP: 22042
FORMER COMPANY:
FORMER CONFORMED NAME: OAKSTONE FINANCIAL CORP
DATE OF NAME CHANGE: 19940728
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>d10k.txt
<DESCRIPTION>FORM 10K
<TEXT>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 2000.
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED).
For the transition period from to
Commission File No. 1-13300
CAPITAL ONE FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction
of Incorporation or Organization)
2980 Fairview Park Drive, Suite 1300
Falls Church, Virginia
(Address of Principal Executive Offices)
54-1719854
(I.R.S. Employer
Identification No.)
22042-4525
(Zip Code)
Registrant's telephone number, including area code: (703) 205-1000
Securities registered pursuant to section 12(b) of the act:
<PAGE>
Title of Each Class
-------------------
Common Stock, $.01 Par Value
Preferred Stock Purchase Rights*
Name of Each Exchange on
Which Registered
--------------------------
New York Stock Exchange
New York Stock Exchange
* Attached to each share of Common Stock is a Right to acquire 1/100th of a
share of the Registrant's Cumulative Participating Preferred Stock, par value
$.01 per share, which Rights are not presently exercisable.
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of the close of business on February 28, 2001.
Common Stock, $.01 Par Value: $11,511,485,965*
. In determining this figure, the registrant assumed that the executive
officers of the registrant and the registrant's directors are affiliates of
the registrant. Such assumption shall not be deemed to be conclusive for
any other purpose.
The number of shares outstanding of the registrant's common stock as of the
close of business on February 28, 2001.
Common Stock, $.01 Par Value: 207,214,626 shares
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to stockholders for the year ended December 31,
2000 are incorporated by reference into Parts I, II and IV.
2. Portions of the Proxy Statement for the annual meeting of stockholders to be
held on April 26, 2001 are incorporated by reference into Part III.
<PAGE>
CAPITAL ONE FINANCIAL CORPORATION
2000 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
<TABLE>
<S> <C>
Item 1. Business......................................................................................... 1
- ------------------
Business Description......................................................................... 2
--------------------
Operations................................................................................... 3
----------
Funding...................................................................................... 5
-------
Competition.................................................................................. 5
-----------
Employees.................................................................................... 6
---------
Supervision and Regulation................................................................... 6
--------------------------
Risk Factors................................................................................. 12
------------
Item 2. Properties........................................................................................ 17
- -------------------
Item 3. Legal Proceedings................................................................................. 17
- --------------------------
Item 4. Submission of Matters To a Vote of Security Holders............................................... 17
- ------------------------------------------------------------
Item 5. Market For Company's Common Stock And Related Stockholder Matters................................. 18
- -------------------------------------------------------------------------
Item 6. Selected Financial Data........................................................................... 18
- --------------------------------
Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operations............. 18
- ----------------------------------------------------------------------------------------------
Item 7A. Quantitative And Qualitative Disclosures About Market Risk....................................... 18
- --------------------------------------------------------------------
Item. 8 Financial Statements And Supplementary Data....................................................... 18
- ----------------------------------------------------
Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.............. 18
- ---------------------------------------------------------------------------------------------
Item 10. Directors And Executive Officers Of The Company.................................................. 19
- ---------------------------------------------------------
Item 11. Executive Compensation........................................................................... 19
- --------------------------------
Item 12. Security Ownership Of Certain Beneficial Owners And Management................................... 19
- ------------------------------------------------------------------------
Item 13. Certain Relationships And Related Transactions................................................... 19
- --------------------------------------------------------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................. 20
- -------------------------------------------------------------------------
</TABLE>
<PAGE>
PART I
Item 1. Business.
Overview
Capital One Financial Corporation (the "Corporation"), is a holding
company, incorporated in Delaware on July 21, 1994, whose subsidiaries provide a
variety of products and services to consumers using its proprietary information-
based strategy ("IBS"). The Corporation's principal subsidiary, Capital One
Bank (the "Bank"), a limited-purpose Virginia state chartered credit card
bank, offers credit card products. The Bank originally conducted its operations
as a division of Signet Bank, a wholly-owned subsidiary of Signet Banking
Corporation ("Signet")./1/ Capital One, F.S.B. (the "Savings Bank"), a
federally chartered savings bank, offers consumer lending and deposit products.
Capital One Services, Inc., another subsidiary of the Corporation, provides
various operating, administrative and other services to the Corporation and its
subsidiaries. Unless indicated otherwise, the terms "Company", "we", "us",
and "our" refer to the Corporation and its consolidated subsidiaries and for
periods prior to our separation from Signet Bank, Signet Bank's credit card
division.
We began operations in 1953 as part of Signet Bank, the same year as the
formation of what is now MasterCard International, and we are one of the oldest
continually operating bank card issuers in the United States. The Bank separated
from Signet on November 24, 1994 and became a subsidiary of the Corporation. As
of December 31, 2000, we had 33.8 million customers and $29.5 billion in managed
consumer loans outstanding. We are among the ten largest issuers of Visa and
MasterCard credit cards in the United States based on managed credit card loans
outstanding as of December 31, 2000. The success of our IBS, which we initiated
in 1988, in addition to credit card industry dynamics, has led to our growth in
managed credit card loans and accounts.
In June 1996, we established the Savings Bank to expand our product
offerings and our relationship with our cardholders. The Savings Bank currently
takes deposits and offers a variety of credit card and installment loan
products. Through the Savings Bank, we expect to offer multiple financial
products and services to existing cardholders and other households applying IBS
and existing information technology systems.
We offer credit card products outside of the United States through Capital
One Bank (Europe) plc, an indirect subsidiary of the Bank organized and located
in the United Kingdom (the "UK Bank"), through a branch of the Bank in Canada,
and through our involvement in a joint venture with a South African financial
institution. We currently have foreign operations primarily in the United
Kingdom and Canada, with additional operations in South Africa and France. We
may also, from time to time, consider establishing our business in additional
foreign jurisdictions as opportunities arise. We also offer various non-card
consumer lending products, including automobile financing and installment loan
products, through our subsidiaries both in the United States and elsewhere.
We use IBS to differentiate among customers based on credit risk, usage and
other characteristics and to match customer characteristics with appropriate
product offerings. IBS involves developing sophisticated models, information
systems, well-trained personnel and a flexible culture to create credit card or
other products and services that address the demands of changing consumer and
competitive markets. By actively testing a wide variety of product and service
features, marketing channels and other aspects of offerings, we design
customized solicitations that are targeted at various credit customer segments,
thereby enhancing customer response levels and maximizing returns on investment
within given underwriting parameters.
We build on information derived from our initial sources with continued
integrated testing and model development to improve the quality, performance and
profitability of our solicitation and account management initiatives. We apply
IBS to all areas of our business, including solicitations, account management,
credit line management, pricing strategies, usage stimulation, collections,
recoveries, and account and balance retention.
______________________
/1/ Signet Bank and Signet Banking Corporation were acquired by First Union
National Bank and First Union Corporation, respectively, as of November 30,
1997.
1
<PAGE>
Our common stock is listed on the New York Stock Exchange under the symbol
COF. Our principal executive office is located at 2980 Fairview Park Drive,
Suite 1300, Falls Church, Virginia 22042-4525 (telephone number (703) 205-1000).
Business Description
Our business consists of both lending and non-lending activities. Our
lending activities consist primarily of credit card products but also include
other consumer lending activities, such as unsecured installment lending and
automobile financing. Our non-lending business activities consist primarily of
our retail deposit-taking business and various non-lending new business
initiatives.
Lending Activities
We offer a wide variety of credit card products throughout the United
States, and internationally primarily in the United Kingdom and Canada. Applying
IBS, we customize our products to appeal to different consumer preferences and
needs by combining different product features, including annual percentage
rates, fees and credit limits, rewards programs and other special features. We
constantly test new products to develop packages that appeal to different and
changing consumer preferences. Our customized products include both products
targeted at a range of consumer credit risk profiles, such as low rate cards and
secured cards, as well as products aimed at special consumer interests, such as
affinity, co-brand and student cards. Our pricing strategies are risk-based;
lower risk customers may likely be offered products with more favorable pricing
and we expect these products to yield lower delinquencies and credit losses. On
products offered to many higher risk customers, however, we may experience
higher delinquencies and losses, and we price these products accordingly. In
general, however, IBS allows us to provide appropriate products to individual
consumers with a wide range of credit histories.
Additionally, we have been applying our IBS to other financial and non-
financial products and services. Our automobile finance subsidiary, Capital One
Auto Finance, Inc./2/, a Texas corporation which we acquired in 1998 ("Capital
One Auto Finance"), offers loans, secured by automobiles, through dealer
networks throughout the United States/2/. Capital One Auto Finance is our
platform to apply IBS to the automobile loan market, and as of December 31,
2000, loans outstanding at Capital One Auto Finance have tripled since its
acquisition in 1998.
We have also expanded our existing operations outside of the United States,
and are currently operating primarily in the United Kingdom and Canada, with
additional operations in South Africa and France. We have experienced continuing
growth in the number of accounts and loan balances in our international lending
business, with most of our growth coming from our business in the United
Kingdom. In 2000, to support the continued growth of our United Kingdom business
and any future business in Europe, we established the UK Bank, which has
authority to conduct full-service operations.
Our internet services provide significant support for our lending business
and include account decisioning, real-time account numbering and account
servicing. In the fourth quarter of 2000, we surpassed our previously stated
goal of originating one million accounts and servicing two million accounts
online by the end of 2000.
Non-Lending Activities
Our non-lending business consists primarily of our retail deposit-taking
business, which is also supported in part by our internet services. In 2000, we
launched CapitalOnePlace.com where we offer consumers a variety of products
________________
/2/ Capital One Auto Finance, Inc. was formerly known as Summit Acceptance
Corporation. We changed its name to Capital One Auto Finance, Inc. on
November 7, 2000.
2
<PAGE>
available for purchase online, some of which are offered in partnership with
other companies. We also engage in various other non-lending new business
initiatives, which we currently believe are not material to our operations or
financial condition.
Geographic Diversity
Loan portfolio concentration within a specific geographic region or
demographic portion of the population may be regarded as positive or negative
based upon the current and expected credit characteristics and performance of
the portfolio. Our consumer loan portfolio is geographically diverse. See Note O
to Consolidated Financial Statements on page 62 of the Company's Annual Report
to its stockholders for the year ended December 31, 2000 (the "Annual
Report"), which is incorporated herein by reference.
Operations
Marketing
IBS is the cornerstone of our marketing strategy, and since its
introduction in 1988 we have steadily increased our marketing efforts. We
generate accounts primarily through direct mail and telemarketing solicitations,
although we are increasing our efforts to solicit accounts through the internet,
newspaper, magazine, partnership arrangements, radio and television advertising
and location and event marketing. In 2000 we originated more than 1 million
accounts and serviced more than 2 million accounts online. Many of our
solicitations are targeted at potential customers that have been prescreened for
creditworthiness. We track and periodically review the results of our various
solicitation campaigns. In developing our targeting strategies, we respect the
privacy of our customers (and potential customers) by using customer information
only in accordance with our privacy policies and applicable laws.
We are also developing a brand marketing, or "brand awareness", strategy
with the intent of differentiating ourselves from other credit card issuers and
building a branded franchise to support our IBS and mass customization
strategies.
Risk Management
We employ a comprehensive risk management process that integrates all
aspects of an account's life cycle, from origination to closure. We have a
credit policy group that makes marketing and credit policy decisions. This
credit policy group consists of senior management representatives from the
credit operations, risk management, marketing and analysis, and legal units.
This group originates credit policy from the viewpoints of both profitability
and credit risk, taking into consideration a multitude of factors, including
prescreening criteria, proprietary model development and usage, as well as
reviews of test programs and test results.
An important element of our risk management process is our use of IBS to
identify and target potential consumers. We attempt to continuously monitor and
improve the effectiveness of our information systems and processes such that
senior management possesses the tools to manage portfolio risk and respond to
changing market conditions and challenges.
Credit Operations
Senior management actively manages our credit extension process which is
designed to bring consistency in credit practices and operating efficiencies.
Our scoring technology and verification procedures are highly automated with
limited judgmental review. Our credit evaluation process is based on proprietary
models using, among other things, credit scores developed by nationally
recognized scoring firms which may be tailored to individual programs.
3
<PAGE>
We validate, monitor and maintain these models as part of IBS. Our modeling
also provides us with a tool to objectively measure our application stage credit
policy decisions and account policies relating to credit lines, pricing and
collections.
Our prescreened account solicitation process uses information from credit
reporting agencies to identify consumers who are likely to be approved for a
credit card account. We vary the underwriting criteria used to prescreen
potential applicants from time to time in accordance with our established
policies and procedures relating to the operation of our consumer revolving
lending business. We may change such policies from time to time. In order to
establish the amount of the customer's credit line, we analyze, and in some
cases verify, the information on returned applications. We usually offer each
customer whose credit request meets all of the applicable underwriting criteria
a line of credit equal to or in excess of a minimum level we have established
for each product offering. We also may review manually applications that are
rejected by our credit scoring system because of inconsistencies in application
information, inquiries from rejected applicants or for other reasons. Our credit
analysts then have the ability to override decisions made by the system upon the
receipt of additional information from an applicant or otherwise.
For non-pre-screened solicitations, we generate names of prospective
customers from a variety of sources, including third party list vendors and our
internal sources, and then edit the list using internal and external sources to
ensure quality and accuracy. We approve or decline prospective customers who
respond to a solicitation based on information from both their application and a
credit report from one or more credit reporting agencies.
Account Management
We have found that active account management is necessary in order to
respond to the changing economic environment and cardholder risk, usage and
payment patterns. We calculate new credit scores for each account multiple times
each year and new behavioral scores for open accounts each month. We use this
information in account management strategies relating to credit lines, pricing,
usage stimulation, retention and collection. For creditworthy and profitable
accounts, such periodic review may result in more favorable pricing, higher
credit lines, product upgrades or other enhancements which, based on testing,
are likely to increase account usage or the overall profitability of an account.
Conversely, for delinquent or other accounts with significant credit risk,
periodic review may result in an account being reassigned to a higher risk
category and hence not being eligible for credit line increases or, in certain
circumstances, having pricing adjusted upward or the credit line reduced.
The IBS approach is also used to develop our retention strategies. We have
developed integrated systems which evaluate account profitability and risk, test
various strategies for cost and effectiveness in retaining cardholders and
assist service representatives in negotiating potential pricing alternatives.
Some of our products, including the introductory interest rate product and the
balance transfer product, have a repricing feature after an initial period. We
have developed methodologies for retaining these accounts and the balances in
these accounts after the expiration of the introductory period.
Collection Procedures
We have used IBS to customize our collections strategies and determine the
timing of collection activity based on models designed to predict delinquencies
and charge-offs. We generally consider an account delinquent if we have not
received a minimum payment by the accountholder's payment due date. We currently
refer delinquent accounts for contact by phone between seven and 60 days after
contractual delinquency, depending on the accountholder's risk profile. We
design our policies and procedures to encourage accountholders to pay delinquent
amounts; for example, once a delinquent account has re-established a payment
pattern with three consecutive minimum monthly payments, it can be re-aged as
current. Federal guidelines restrict how frequently an account can be re-aged,
renewed or extended. We reserve the right to suspend charging privileges at any
time after an account attains delinquent status. We may also, at our discretion,
enter into arrangements with delinquent accountholders to extend or otherwise
change payment schedules.
4
<PAGE>
We charge-off as uncollectible an account (net of collateral, if any) at
180 days past-due, except with respect to certain installment loans and auto
loans, which we charge-off as uncollectible at 120 days past-due. In connection
with a secured credit card account, except as set forth below, we apply funds
deposited as collateral to payment on the account shortly before the account is
charged off as uncollectible. In connection with auto loans, for which we retain
a security interest in the automobile which is the subject of the loan, we
charge-off up to 40% of the value of the loan on the charge-off date, with
additional amounts potentially charged off at a later date following our sale of
the collateral and recovery of the proceeds from such sale. With respect to
bankrupt customers, we charge-off the account within 30 days after we receive
the bankruptcy petition and, with respect to secured credit card accounts, we
apply funds deposited as collateral in satisfaction of the account only after
the bankruptcy automatic stay is lifted. We charge-off accounts of deceased
customers within 60 days of receiving proper notice if no estate exists against
which a proof of claim can be filed, no other party remits payments, and no
other responsible party is available. Transactions suspected of being fraudulent
are charged off to non-interest expense after a 60-day investigation period. We
may change our credit evaluation, servicing and charge-off policies and
collection practices over time in accordance with our business judgment,
applicable law and guidelines established by applicable regulatory authorities.
Technology/Systems
A key part of our strategic focus is the development of flexible, high-
volume computer and operational systems capable of handling our growth and
changes in marketing and account management strategies. Management believes that
the continued development and integration of these systems is important to our
efforts to reduce our operating costs and maintain a competitive advantage.
We have developed proprietary integrated information systems which allow
our employees to manage the large volumes of data collected through the IBS
process and to use such data in our account solicitations, application
processing, account management and retention strategies. We use this information
to predict consumer behavior and then match prospects to lending products with
various terms and fees. These systems also allow our customer service
representatives to access account specific information when responding to
customer inquiries.
Funding
Our primary methods of funding include loan securitizations, issuing
certificates of deposit, senior notes and other borrowings, and fed funds
purchased from financial institutions. For a discussion of our funding program,
see pages 25 and 34 of the Annual Report under the respective headings
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Managed Consumer Loan Portfolio" and "--Funding," which are
incorporated herein by reference.
Competition
As a marketer of credit card products, we face intense competition in all
aspects of our business from numerous bank and non-bank providers of financial
services. Many of these companies are substantially larger and have more
resources than we do. We compete with international, national, regional and
local issuers of Visa and MasterCard credit cards. In addition, American
Express, Discover Card, Diner's Club and, to a certain extent, smart cards and
debit cards, represent additional competition in the general purpose credit card
market. In general, customers are attracted to credit card issuers largely on
the basis of price, credit limit and other product features and customer loyalty
is often limited. We believe that IBS allows us to more effectively compete in
both our current and new markets. There can be no assurance, however, that our
ability to market services successfully or to obtain adequate yield on our loans
will not be impacted by the nature of the competition that now exists or may
later develop.
In addition, we face competition in seeking public funding from banks,
savings banks, money market funds and a wide variety of other entities that
5
<PAGE>
take deposits and/or sell debt securities, some of which are publicly traded.
Many of these companies are substantially larger, have more capital and other
resources and have better financial ratings than we do. Accordingly, there can
be no assurance that competition from these other borrowers will not increase
our cost of funds.
Employees
As of December 31, 2000, we employed 19,247 employees, to whom we refer as
"associates." A central part of our philosophy is to attract and maintain a
highly capable staff. We view current associate relations to be satisfactory.
None of our associates is covered under a collective bargaining agreement.
Supervision and Regulation
General
The Bank is a banking corporation chartered under Virginia law and a member
of the Federal Reserve System, the deposits of which are insured by the Bank
Insurance Fund of the Federal Deposit Insurance Corporation (the "FDIC"). In
addition to regulatory requirements imposed as a result of the Bank's
international operations (discussed below), the Bank is subject to comprehensive
regulation and periodic examination by the Bureau of Financial Institutions of
the Virginia State Corporation Commission (the "Bureau of Financial
Institutions"), the Federal Reserve Board (the "Federal Reserve"), the Federal
Reserve Bank of Richmond and the FDIC. The Bank is not a "bank" under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), because it (i) engages
only in credit card operations, (ii) does not accept demand deposits or deposits
that the depositor may withdraw by check or similar means for payment to third
parties or others, (iii) does not accept any savings or time deposits of less
than $100,000, other than as permitted as collateral for extensions of credit,
(iv) maintains only one office that accepts deposits and (v) does not engage in
the business of making commercial loans. Due to the Bank's status as a limited
purpose credit card bank, our non-credit card operations must be conducted in
our other operating subsidiaries.
The Savings Bank is a federal savings bank chartered by the Office of
Thrift Supervision (the "OTS") and is a member of the Federal Home Loan Bank
System. Its deposits are insured by the Savings Association Insurance Fund of
the FDIC. The Savings Bank is subject to comprehensive regulation and periodic
examination by the OTS and the FDIC.
The Corporation is not a bank holding company under the BHCA as a result of
its ownership of the Bank because the Bank is not a "bank" as defined under
the BHCA. If the Bank failed to meet the credit card bank exemption criteria
described above, its status as an insured depository institution would make the
Corporation subject to the provisions of the BHCA, including certain
restrictions as to the types of business activities in which a bank holding
company and its affiliates may engage. Becoming a bank holding company under the
BHCA would affect the Corporation's ability to engage in certain non-banking
businesses. In addition, for purposes of the BHCA, if the Bank failed to qualify
for the credit card bank exemption, any entity that acquired direct or indirect
control of the Bank and also engaged in activities not permitted for bank
holding companies could be required either to discontinue the impermissible
activities or to divest itself of control of the Bank.
As a result of the Corporation's ownership of the Savings Bank, the
Corporation is a unitary savings and loan holding company subject to regulation
by the OTS and the provisions of the Savings and Loan Holding Company Act. As a
unitary savings and loan holding company, the Corporation generally is not
restricted under existing laws as to the types of business activities in which
it may engage so long as the Savings Bank continues to meet the qualified thrift
lender test (the "QTL Test"). If the Corporation ceased to be a unitary
savings and loan holding company as a result of its acquisition of an additional
savings institution, as a result of the failure of the Savings Bank to meet the
QTL Test, or as a result of a change in control of the Savings Bank, the types
of activities that the Corporation and its non-savings association subsidiaries
would be able to engage in would generally be limited to those eligible for bank
holding companies.
6
<PAGE>
Under the Gramm-Leach-Bliley Financial Services Modernization Act of 1999
(the "Act"), bank holding companies may engage in an expanded range of
activities, including the securities and insurance businesses. To do so, a bank
holding company may voluntarily elect to become a "financial holding company."
While these changes are significant in their impact upon the traditional
banking, securities and insurance industries, the impact upon us is less
significant in light of the fact that we are regulated as a unitary thrift
holding company and not as a bank holding company or a financial holding
company. As a result, we may engage in both the full range of activities
authorized for bank or financial holding companies, as well as additional non-
banking activities typically impermissible for such entities. In addition, the
Act permits a limited-purpose credit card bank such as the Bank to establish one
or more foreign banking subsidiaries that are not subject to the business-line
limitations credit card banks face domestically. Therefore, such foreign banking
subsidiaries could engage in non-credit card lending and could accept retail
deposits overseas.
While the Act does not impact the permissible range of our activities, it
does impose some limitations on the future activities of unitary thrift holding
companies. Existing unitary thrift holding companies such as the Corporation are
"grandfathered" with full powers to continue and expand their current
activities. Grandfathered unitary thrift holding companies, however, may not be
acquired by nonfinancial companies and maintain their grandfathered powers. In
addition, if a grandfathered unitary thrift holding company is acquired by a
financial company without such grandfather rights, it may lose its ability to
engage in certain non-banking activities otherwise ineligible for bank holding
companies or financial holding companies.
The Corporation is also registered as a financial institution holding
company under Virginia law and as such is subject to periodic examination by
Virginia's Bureau of Financial Institutions.
Dividends and Transfers of Funds
Dividends to the Corporation from its direct and indirect subsidiaries
represent a major source of funds for the Corporation to pay dividends on its
stock, make payments on its debt securities and meet its other obligations.
There are various federal and Virginia law limitations on the extent to which
the Bank and the Savings Bank can finance or otherwise supply funds to the
Corporation through dividends, loans or otherwise. These limitations include
minimum regulatory capital requirements, Federal Reserve, OTS and Virginia law
requirements concerning the payment of dividends out of net profits or surplus,
Sections 23A and 23B of the Federal Reserve Act governing transactions between
an insured depository institution and its affiliates and general federal and
Virginia regulatory oversight to prevent unsafe or unsound practices. In
general, federal banking laws prohibit an insured depository institution, such
as the Bank and the Savings Bank, from making dividend distributions if such
distributions are not paid out of available earnings or would cause the
institution to fail to meet applicable capital adequacy standards. In addition,
the Savings Bank is required to give the OTS at least 30 days' advance notice of
any proposed dividend. Under OTS regulations, other limitations apply to the
Savings Bank's ability to pay dividends, the magnitude of which depends upon the
extent to which the Savings Bank meets its regulatory capital requirements. In
addition, under Virginia law, the Bureau of Financial Institutions may limit the
payment of dividends by the Bank if the Bureau of Financial Institutions
determines that such a limitation would be in the public interest and necessary
for the Bank's safety and soundness.
Capital Adequacy
The Bank and the Savings Bank are currently subject to capital adequacy
guidelines adopted by the Federal Reserve and the OTS, respectively. For a
further discussion of the capital adequacy guidelines, see page 36 of the Annual
Report under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Capital Adequacy" and Note J to
Consolidated Financial Statements on pages 58-59, which are incorporated herein
by reference.
In January 2001, the Basle Committee on Banking Supervision issued for
public comment a proposal to revise significantly the current international
7
<PAGE>
capital adequacy accord. The purpose of the revisions is to ensure that banking
organizations maintain prudent levels of capital, to make regulatory capital
standards more reflective of banking risks, and to provide incentives for
organizations to enhance their risk management capabilities. While many of these
changes address the activities of internationally active banks, some elements of
the proposal, including a revised basic or standardized risk-based capital
framework, could affect all U.S. banking organizations. The proposal embodies a
"three-pillars" approach for assessing a banking organization's capital
adequacy. These pillars are: a more risk-sensitive minimum regulatory capital
requirement; effective supervisory oversight; and strengthened market discipline
through enhanced public disclosure. If ultimately adopted, this proposal may
require some banks to increase their current capital levels.
FDICIA
Among other things, the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") requires federal bank regulatory authorities to take
"prompt corrective action" ("PCA") in respect of insured depository
institutions that do not meet minimum capital requirements. FDICIA establishes
five capital ratio levels: well-capitalized, adequately-capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. The capital categories are determined solely for the purposes
of applying FDICIA's PCA provisions, as discussed below, and such capital
categories may not constitute an accurate representation of the overall
financial condition or prospects of the Bank or the Savings Bank. As of December
31, 2000, each of the Bank and the Savings Bank met the requirements for a
"well-capitalized" institution. A "well-capitalized" classification should
not necessarily be viewed as describing the condition or future prospects of a
depository institution, including the Bank and the Savings Bank.
Under FDICIA's PCA system, an insured depository institution in the
"undercapitalized category" must submit a capital restoration plan guaranteed by
its parent company. The liability of the parent company under any such guarantee
is limited to the lesser of 5.00% of the insured depository institution's assets
at the time it became undercapitalized, or the amount needed to comply with the
plan. An insured depository institution in the undercapitalized category also is
subject to limitations in numerous areas including, but not limited to, asset
growth, acquisitions, branching, new business lines, acceptance of brokered
deposits and borrowings from the Federal Reserve. Progressively more burdensome
restrictions are applied to insured depository institutions in the
undercapitalized category that fail to submit or implement a capital plan and to
insured depository institutions that are in the significantly undercapitalized
or critically undercapitalized categories. In addition, an insured depository
institution's primary federal banking agency is authorized to downgrade the
institution's capital category to the next lower category upon a determination
that the institution is in an unsafe or unsound condition or is engaged in an
unsafe or unsound practice. An unsafe or unsound practice can include receipt by
the institution of a less than satisfactory rating on its most recent
examination with respect to its capital, asset quality, management, earnings or
liquidity.
"Critically undercapitalized" insured depository institutions (which are
defined to include institutions that still have a positive net worth) may not,
beginning 60 days after becoming critically undercapitalized, make any payment
of principal or interest on their subordinated debt (subject to certain limited
exceptions). Thus, in the event an institution became critically
undercapitalized, it would generally be prohibited from making payments on its
subordinated debt securities. In addition, critically undercapitalized
institutions are subject to appointment of a receiver or conservator.
FDICIA also requires the FDIC to implement a system of risk-based premiums
for deposit insurance pursuant to which the premiums paid by a depository
institution will be based on the probability that the FDIC will incur a loss in
respect of such institution. The FDIC has since adopted a system that imposes
insurance premiums based upon a matrix that takes into account an institution's
capital level and supervisory rating.
The Bank and the Savings Bank may accept brokered deposits as part of their
funding. Under FDICIA, only "well-capitalized" and "adequately-capitalized"
institutions may accept brokered deposits. Adequately-capitalized institutions,
however, must first obtain a waiver from the FDIC before accepting brokered
deposits, and such deposits may not pay rates that significantly exceed the
8
<PAGE>
rates paid on deposits of similar maturity from the institution's normal market
area or the national rate on deposits of comparable maturity, as determined by
the FDIC, for deposits from outside the institution's normal market area.
Liability for Commonly-Controlled Institutions
Under the "cross-guarantee" provision of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA"), insured depository institutions
such as the Bank and the Savings Bank may be liable to the FDIC in respect of
any loss or reasonably anticipated loss incurred by the FDIC resulting from the
default of, or FDIC assistance to, any commonly controlled insured depository
institution. The Bank and the Savings Bank are commonly controlled within the
meaning of the FIRREA cross-guarantee provision.
Investment Limitation and Qualified Thrift Lender Test
Federally-chartered savings banks such as the Savings Bank are subject to
certain investment limitations. For example, federal savings banks are not
permitted to make consumer loans (i.e., certain open-end or closed-end loans for
personal, family or household purposes, excluding credit card loans) in excess
of 35% of the savings bank's assets. Federal savings banks are also required to
meet the QTL Test, which generally requires a savings bank to maintain at least
65% "portfolio assets" (total assets less (i) specified liquid assets up to 20%
of total assets, (ii) intangibles, including goodwill and (iii) property used to
conduct business) in certain "qualified thrift investments" (residential
mortgages and related investments, including certain mortgage backed and
mortgage related investments, small business related securities, certain state
and federal housing investments, education loans and credit card loans) on a
monthly basis in nine out of every 12 months. Failure to qualify under the QTL
Test could subject the Savings Bank to substantial restrictions on its
activities, including the activity restrictions that apply generally to bank
holding companies and their affiliates and potential loss of grandfathered
rights under the Act. As of December 31, 2000, 78.22% of the Savings Bank's
portfolio assets were held in qualified thrift investments, and the Savings Bank
was in compliance with the QTL Test.
Subprime Lending Guidelines
On January 31, 2001, the federal banking agencies, including the Federal
Reserve and the OTS, issued "Expanded Guidance for Subprime Lending Programs"
(the "Guidelines"). The Guidelines, while not constituting a formal regulation,
provide guidance to the federal bank examiners regarding the adequacy of capital
and loan loss reserves held by insured depository institutions engaged in
subprime lending. The Guidelines adopt a broad definition of "subprime" loans
which likely covers more than one-third of all consumers in the United States.
Because our business strategy is to provide credit card products and other
consumer loans to a wide range of consumers, a portion of our loan assets may be
viewed by the examiners as "subprime". Thus, under the Guidelines, bank
examiners could require the Bank or the Savings Bank to hold additional capital
(up to one and one-half to three times the minimally required level of capital,
as set forth in the Guidelines), or additional loan loss reserves, against such
assets. As described above, at December 31, 2000 the Bank and the Savings Bank
each met the requirements for a "well-capitalized" institution, and management
believes that each institution is holding an appropriate amount of capital or
loan loss reserves against higher risk assets. Management also believes we have
general risk management practices in place that are appropriate in light of our
business strategy. Significantly increased capital or loan loss reserve
requirements, if imposed, however, could have a material impact on the
Corporation's consolidated financial statements.
Regulation of Lending Activities
The activities of the Bank and the Savings Bank as consumer lenders also
are subject to regulation under various federal laws, including the Truth-in-
Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act,
9
<PAGE>
the Community Reinvestment Act and the Soldiers' and Sailors' Civil Relief Act,
as well as under various state laws. Regulators are authorized to impose
penalties for violations of these statutes and, in certain cases, to order the
Bank and the Savings Bank to pay restitution to injured borrowers. Borrowers may
also bring actions for certain violations. Federal bankruptcy and state debtor
relief and collection laws also affect the ability of the Bank and the Savings
Bank to collect outstanding balances owed by borrowers who seek relief under
these statutes.
OTS Holding Company Proposal
On October 27, 2000, the OTS issued a notice of proposed rulemaking which
would require savings and loan holding companies to provide the agency with
prior notice of any significant transactions or activities proposed to be
conducted by the holding company or any of its non-thrift subsidiaries.
Significant transactions or activities include mergers, acquisitions or
significant debt issuances. Because the proposed rule contains a prior notice
requirement, the OTS theoretically could exercise the ability to approve or
disapprove of any proposed transaction, thus potentially delaying or preventing
the Corporation from entering into or consummating a significant transaction in
the future. In response to public comments the OTS received with respect to the
proposed rule, the OTS recently stated its intention to significantly revise the
proposal to address substantial concerns raised. As such, the proposed rule has
not been formally adopted. The nature of any potential impact of this proposed
rule, however, is uncertain and cannot be predicted.
Legislation
Legislation has been introduced requiring additional credit card
disclosures and that could place additional restrictions on the practices of
credit card issuers. Additional proposals have sought to change existing federal
bankruptcy laws and to expand the privacy protections afforded to customers of
financial institutions. It is unclear at this time whether and in what form any
such legislation will be adopted or, if adopted, what its impact on the Bank,
the Savings Bank or the Corporation would be. Congress may in the future
consider other legislation that would materially affect the banking or credit
card industries.
Privacy
The Act requires a financial institution to disclose its privacy policy to
customers and consumers, and requires that such customers and consumers be given
a choice (through an opt-out notice) to forbid the sharing of their nonpublic
personal information with nonaffiliated third persons. We have a written privacy
policy posted on our web site, which we will deliver to all of our customers by
June 1, 2001, in compliance with the Act. Pursuant to that policy, we protect
the security of information about our customers, educate our employees about the
importance of protecting customer privacy, and allow our customers to remove
their names from the solicitation lists we use and share with others. We require
business partners with whom we share such information to abide by the
redisclosure and reuse provisions of the Act. We have developed and are in the
process of implementing programs to fulfill on the expressed requests of
customers and consumers to opt out of information sharing subject to the Act. As
our regulators establish further guidelines for addressing customer privacy
issues, we may need to amend our privacy policy and adapt our internal
procedures.
In addition to adopting federal requirements regarding privacy, the Act
also permits individual states to enact stricter laws relating to the use of
customer information. Many states are expected to consider such proposals which
may impose additional requirements or restrictions on us.
Investment in the Corporation, the Bank and the Savings Bank
Certain acquisitions of capital stock may be subject to regulatory approval
or notice under federal or Virginia law. Investors are responsible for insuring
that they do not, directly or indirectly, acquire shares of capital stock of
10
<PAGE>
the Corporation in excess of the amount which can be acquired without regulatory
approval.
The Bank and the Savings Bank are each "insured depository institutions"
within the meaning of the Change in Bank Control Act. Consequently, federal law
and regulations prohibit any person or company from acquiring control of the
Company without, in most cases, prior written approval of the Federal Reserve or
the OTS, as applicable. Control is conclusively presumed if, among other things,
a person or company acquires more than 25% of any class of voting stock of the
Corporation. A rebuttable presumption of control arises if a person or company
acquires more than 10% of any class of voting stock and is subject to any of a
number of specified "control factors" as set forth in the applicable
regulations.
Although the Bank is not a "bank" within the meaning of Virginia's
reciprocal interstate banking legislation (Chapter 15 of Title 6.1 of the Code
of Virginia), it is a "bank" within the meaning of Chapter 13 of Title 6.1 of
the Code of Virginia governing the acquisition of interests in Virginia
financial institutions (the "Financial Institution Holding Company Act"). The
Financial Institution Holding Company Act prohibits any person or entity from
acquiring, or making any public offer to acquire, control of a Virginia
financial institution or its holding company without making application to, and
receiving prior approval from, the Bureau of Financial Institutions.
Interstate Taxation
Several states have passed legislation which attempts to tax the income
from interstate financial activities, including credit cards, derived from
accounts held by local state residents. Based on the volume of its business in
these states and the nature of the legislation passed to date, we currently
believe that this development will not materially affect our financial
condition. The states may also consider legislation to tax income derived from
transactions conducted through the Internet. We currently solicit accounts and
take account information via the Internet. It is unclear at this time, however,
whether and in what form any such legislation will be adopted or, if adopted,
what its impact on us would be.
International Regulation
We also face regulation in certain foreign jurisdictions where we
currently, and may in the future, operate. Those regulations may be similar to
or substantially different from the regulatory requirements we face in the
United States.
In the United Kingdom, we operate through the UK Bank, which was
established in 2000. The UK Bank is regulated by the Financial Services
Authority and the Office of Fair Trading (the "OFT"). The UK Bank is an
"authorized deposit taker" under the Banking Act-1987 and thus is able to take
consumer deposits in the UK. The UK Bank has also been granted full license by
the OFT to issue consumer credit under the Consumer Credit Act-1974. The FSA
requires the UK Bank to maintain certain capital ratios at all times. In
addition, the UK Bank is limited by the UK Companies Act-1985 in its
distribution of dividends to the Bank in that such dividends may only be paid
out of the UK Bank's "distributable profits."
In Canada, we operate principally through a recently established branch of
the Bank (the "Canadian Branch"). Under U.S. law, a foreign branch of the Bank
may engage only in activities permissible for the Bank in the United States.
Thus, the Canadian Branch is engaged solely in the issuance of credit cards. Our
installment loan business in Canada is conducted through a separately
incorporated finance company subsidiary of the Corporation.
The Canadian Branch is considered a federally regulated financial
institution ("FRFI") under the Canadian Bank Act. FRFIs are authorized and
supervised on an ongoing basis by the Canadian Office of the Superintendent of
Financial Institutions ("OSFI"). The supervisory framework has been developed to
allow OSFI to focus its efforts on evaluating an institution's material risks
and the quality of its risk management practices. These goals are achieved
through OSFI's evaluation of a FRFI's risk profile, financial condition, risk
management processes and compliance with applicable laws and regulations. Areas
of review and evaluation include capital adequacy, large exposure limits,
liquidity, loan loss provisioning, management and outsourcing.
11
<PAGE>
In France, we operate through a branch of the UK Bank which was established
under the European Union's passport authority. This branch issues credit cards
and installment loans.
Risk Factors
This Annual Report on Form 10-K contains forward-looking statements. We
also may make written or oral forward-looking statements in our periodic reports
to the Securities and Exchange Commission on Forms 10-Q and 8-K, in our annual
report to shareholders, in our proxy statements, in our offering circulars and
prospectuses, in press releases and other written materials and in oral
statements made by our officers, directors or employees to third parties.
Statements that are not historical facts, including statements about our beliefs
and expectations, are forward-looking statements. Forward-looking statements
include information relating to growth in earnings per share, return on equity,
growth in managed loans outstanding and customer accounts, net interest margins,
funding costs, operations costs and employment growth, marketing expense,
delinquencies and charge-offs. Forward-looking statements also include
statements using words such as "expect," "anticipate," "intend," "plan,"
"believe," "estimate" or similar expressions. These statements are based on
current plans, estimates and projections, and therefore you should not place
undue reliance on them.
Although we have tried to discuss key factors, please be aware that other
risks may prove to be important in the future. New risks may emerge at any time
and we cannot predict such risks or estimate the extent to which they may affect
our financial performance.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions, including the risks discussed
below. Our future performance and actual results may differ materially from
those expressed in these forward-looking statements. Many of the factors that
will determine these results and values are beyond our ability to control or
predict. This section highlights specific risks that could affect us and our
business.
We Face Intense Competition in all of our Markets
We face intense competition from many other providers of credit cards and
other financial products and services. In particular, we compete with
international, national, regional and local bank card issuers, with other
general purpose credit or charge card issuers, and to a certain extent, issuers
of smart cards and debit cards. In addition, the Act, which permits greater
affiliations between banks, securities firms and insurance companies, may
increase competition in the financial services industry, including in the credit
card business. Increased competition has resulted in, and may continue to cause,
a decrease in credit card response rates and reduced productivity of marketing
dollars invested in certain lines of business. Other credit card companies may
compete with us for customers by offering lower interest rates and fees. Because
customers generally choose credit card issuers based on price (mostly interest
rates and fees), credit limit and other product features, customer loyalty is
limited. We may lose entire accounts, or may lose account balances, to competing
card issuers.
In the past, we have faced intense competition primarily in the market for
our low introductory rate credit cards. Recently, however, the competition with
our other credit card products, such as our low fixed-rate cards, secured cards
and other customized cards, has also become more intense. The cost to acquire
new accounts varies along business lines and is expected to rise as we move
beyond the domestic card market. We expect that competition will continue to
grow more intense with respect to all of our products, including our products
offered internationally.
12
<PAGE>
Our Accounts and Loan Balances Will Fluctuate
Our accounts and loan balances and the rate at which they grow are affected
by a number of factors, including how we allocate our marketing investment among
different products and the rate at which customers transfer their accounts and
loan balances to competing card issuers. Accounts and loan balances are also
affected by general economic conditions, which may increase or decrease the
amount of spending by customers, their ability to repay their loans, and other
factors beyond our control.
Because we designed our IBS to take advantage of market opportunities, we
cannot forecast how much we will spend for marketing, how we will spend such
funds, or on which products. Likewise, our account and loan balance growth is
affected by many factors, including the ones mentioned above. Our results,
therefore, will vary as marketing investments, accounts and loan balances
fluctuate.
It is Difficult to Sustain and Manage Growth
Our growth strategy is threefold. First, we seek to continue to grow our
domestic credit card business. Second, we desire to grow our lending business
internationally, in the United Kingdom, Canada and beyond. Third, we hope to
identify and pursue new business opportunities, both financial and non-
financial. Our management believes that, through IBS, we can achieve these
objectives. However, there are a number of factors that can affect our ability
to do so, including:
. our ability to retain existing customers and to attract new customers;
. the growth of existing and new account balances;
. the delinquency and charge-off levels of accounts;
. the availability of funding on favorable terms;
. the amount of funds available for marketing to solicit new customers;
. general economic and other factors;
. the legal and regulatory environment;
. a favorable interest rate environment;
. our ability to build or acquire the necessary operational and
organizational infrastructure;
. our ability to manage expenses as we expand; and
. our ability to recruit experienced management and operations personnel.
Our expansion internationally is affected by additional factors, including
limited access to information, differences in cultural attitudes toward credit,
new regulatory and legislative environments and differences from the historical
experience of portfolio performance in the United States and other countries.
Difficulties or delays in the development, production, testing and
marketing of new products or services will affect the success of such products
or services and can cause losses associated with the costs to develop
unsuccessful products and services. Such difficulties could include:
. failure to implement new product or service programs on time;
. failure of customers to accept these products or services;
13
<PAGE>
. operational difficulties or delays;
. losses arising from the testing of new products or services; and
. legal and other difficulties.
In addition, any new products and services we offer may not achieve the
same financial results as we have achieved in the past from our credit card
business.
We May Experience Limited Availability of Financing and Variation in our Funding
Costs
One of our major sources of funding is the securitization of consumer
loans. Securitization transactions involve the sale of beneficial interests in
consumer loan balances. Our ability to use securitization funding depends on how
difficult and expensive such funding is. Until now, we have completed
securitization transactions on terms that we believe are acceptable. However,
securitization transactions can be affected by many factors. Economic, legal,
regulatory, accounting and tax changes can make securitization funding more
difficult, more expensive or unavailable on any terms both domestically and
internationally, where the securitization of consumer loans may be on terms more
or less favorable than in the United States. For example, securitizations that
meet the criteria for sale treatment under generally accepted accounting
principles may not always be an attractive source of funding for us, and we may
have to seek other more expensive funding sources in the future.
In general, the amount, type and cost of our financing, including financing
from other financial institutions, the capital markets and deposits, affects our
financial results. A number of factors could make such financing more difficult,
more expensive or unavailable including, but not limited to, changes within our
organization, changes in the activities of our business partners, changes
affecting our investments, interest rate fluctuations and regulatory changes. In
addition, we compete for funding with other banks, savings banks and similar
companies. Some of these institutions are publicly traded. Many of these
institutions are substantially larger, have more capital and other resources and
have better financial ratings than we do. Competition from these other borrowers
may increase our cost of funds. Events that disrupt capital markets and other
factors beyond our control could also make our funding sources more expensive or
unavailable.
We May Experience Increased Delinquencies and Credit Losses
Like other consumer lenders, we face the risk that accounts will become
uncollectible because accountholders may not repay their loans. Consumers who
miss payments on their loans often fail to repay them, and consumers who file
for protection under the bankruptcy laws generally do not repay their loans.
Therefore, the rate of missed payments, or "delinquencies," on our portfolio of
loans, and the rate at which consumers may be expected to file for bankruptcy,
can be used to predict the future rate at which we charge-off our consumer
loans. A high charge-off rate would hurt our financial performance, the
performance of our securitizations and our cost of funds.
Widespread increases in past-due payments and nonpayment are most likely to
occur if the country or a regional area encounters an economic downturn, such as
a recession, but they could also occur for other reasons. For example, fraud can
cause losses. In addition, the age and rate of growth, or "seasoning," of a
consumer loan portfolio also increases the rate of nonpayment and past-due
payments. If we make fewer loans than we have in the past, the proportion of new
loans in our portfolio will decrease and the delinquency rate and charge-off
rate may increase. Therefore, the seasoning of accounts may require higher loan
loss provisions and reserves. This would reduce our earnings unless offset by
other changes.
In addition, we market many of our products to underserved markets, which
may have less experience with credit risk and performance. These markets, in
some cases, also have higher delinquency and charge-off rates. Although we
believe that IBS can help us effectively price these products in relation to
14
<PAGE>
their risk, we may not set high enough fees and rates for these accounts to
offset the higher delinquency and loss rates we may experience.
We Face Risk From Economic Downturns and Social Factors
Delinquencies and credit losses in the credit card industry generally
increase during periods of an economic downturn or recession. Likewise, consumer
demand may decline during an economic downturn or recession. Accordingly, an
economic downturn or recession (either local or national) can hurt our financial
performance as accountholders default on their loans or carry lower balances. As
we increasingly market our cards internationally, an economic downturn or
recession outside the United States also could hurt our financial performance. A
variety of social factors also may cause changes in credit card use, payment
patterns and the rate of defaults by accountholders. Social factors include
changes in consumer confidence levels, the public's perception of the use of
credit cards and changing attitudes about incurring debt and the stigma of
personal bankruptcy. We believe that we can manage these risks through our
underwriting criteria and product design. Nevertheless, underwriting criteria
and design may not be enough to protect our growth and profitability during a
sustained period of economic downturn or recession or a material shift in social
attitudes.
We Face Risk of Interest Rate Fluctuations
Like other financial institutions, we borrow money from institutions and
depositors in order to lend money to customers. We earn interest on the consumer
loans we make, and pay interest on the deposits and borrowings we use to fund
those loans. The difference between these two interest rates affects the value
of our assets and liabilities. If the rate of interest we pay on our borrowings
increases more than the rate of interest we earn on our loans, our earnings
could fall. Our earnings could also be hurt if the rates on our consumer loans
fall more quickly than those on our borrowings.
We manage the risk of interest rate fluctuations through various financial
instruments and techniques, such as asset/liability matching, interest rate
swaps and similar financial instruments, hedging and other techniques. The goal
is to maintain an interest rate neutral or "matched" position, where interest
rates on loans and borrowings go up or down by the same amount and at the same
time. We cannot, however, always achieve this position at a reasonable cost.
Furthermore, if these techniques become unavailable or impractical, our earnings
could be hurt.
We also manage these risks partly by changing the interest rates we charge
on our customer accounts. The success of repricing accounts to match an increase
or decrease in our borrowing rates depends on the overall product mix of such
accounts, the actual amount of accounts repriced, the rate at which we are
originating new accounts and our ability to retain accounts (and the related
loan balances) after repricing. For example, if we increase the interest rate we
charge on our consumer loan accounts and the accountholders close their accounts
as a result, we won't be able to match our increased borrowing costs as quickly
if at all.
Regulation and Legislation Can Change
Federal and state laws and rules, as well as rules to which we are subject
in foreign jurisdictions in which we conduct business, significantly limit the
types of activities in which we engage. For example, federal and state consumer
protection laws and rules limit the manner in which we may offer and extend
credit. From time to time, the United States Congress and the states consider
changing these laws and may enact new laws or amend existing laws to regulate
further the consumer lending industry. Such new laws or rules could limit the
amount of interest or fees we can charge, restrict our ability to collect on
account balances, or materially affect us or the banking or credit card
industries in some other manner. Additional federal and state consumer
protection legislation also could seek to expand the privacy protections
afforded to customers of financial institutions and restrict our ability to
share customer information.
The laws governing bankruptcy and debtor relief, in the U.S. or in foreign
jurisdictions in which we conduct business, also could change, making it more
15
<PAGE>
expensive or more difficult for us to collect from our customers. Congress
currently is considering legislation that would change the existing federal
bankruptcy laws. One intended purpose of this legislation is to increase the
collectibility of unsecured debt, however it is not clear whether or in what
form Congress may adopt this legislation and we cannot predict how this
legislation may affect us.
In addition, banking regulators possess broad discretion to issue or revise
regulations, or to issue guidance, which may significantly impact the
Corporation, the Bank or the Savings Bank. As noted above, the OTS is currently
considering a proposal to impose prior notice requirements on savings and loan
holding companies. The banking agencies have also recently issued examiner
guidelines governing subprime lending activities which may require financial
institutions engaged in such lending to carry higher levels of capital and/or
loan loss reserves. The Corporation cannot predict whether a proposed rule will
ultimately be adopted, or if adopted, what form the final rule will take.
Furthermore, the Corporation cannot predict whether and how any guidelines
issued by the agencies will be applied to the Bank or the Savings Bank. As such,
the Corporation cannot predict how any rule or guideline may affect the
Corporation, the Bank or the Savings Bank.
In addition, the existing laws and rules, both in the U.S and in the
foreign jurisdictions in which we conduct operations, are complex. If we fail to
comply with them we might not be able to collect our loans in full, or we might
be required to pay damages or penalties to our customers. For these reasons, new
or changes in existing laws or rules could hurt our profits.
Our Expenses and Other Costs Will Fluctuate
Our expenses and other costs, such as human resources and marketing
expenses, directly affect our earnings results. Many factors can influence the
amount of our expenses, as well has how quickly they grow. As our business
develops, changes or expands, additional expenses can arise from asset
purchases, structural reorganization or a reevaluation of business strategies.
Other factors that can affect expenses include legal and administrative cases
and proceedings, which can be expensive to pursue or defend. In addition,
accounting policies that change can significantly affect how we calculate
expenses and earnings.
Statistical Information
The statistical information required by Item 1 can be found in our Annual
Report, and is incorporated herein by reference, as follows:
<TABLE>
<CAPTION>
Page In The Company's Annual
------------------------------
Report To Its Stockholders For
------------------------------
Guide 3 Disclosure The Year Ended December 31, 2000
------------------------------------------------------------ --------------------------------
<S> <C>
I. Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential........................... 26-31
II. Investment Portfolio............................................... 51
III. Loan Portfolio..................................................... 25-26; 31-34; 37; 48; 52; 62-63
IV. Summary of Loan Loss Experience.................................... 33-34
V. Deposits........................................................... 29; 34-36
VI. Return on Equity and Assets........................................ 23
VII. Other Borrowings................................................... 34-36
</TABLE>
16
<PAGE>
Item 2. Properties
We lease our principal executive office at 2980 Fairview Park Drive, Suite
1300, Falls Church, Virginia, consisting of approximately 43,400 square feet.
The lease commenced January 1, 1995 and we have exercised an option to extend
the lease until February 28, 2005.
We own administrative offices and credit card facilities in Richmond,
Virginia, consisting of approximately 470,000 square feet, from which we conduct
our credit, collections, customer service and other operations. We also lease
additional facilities consisting of an aggregate of approximately 3,946,000
square feet (excluding the principal executive office) from which credit,
collections, customer service and other operations are conducted, in Virginia,
Florida, Texas, Idaho, Washington, Massachusetts, the United Kingdom, France and
Canada. We also own a facility in Tampa, Florida, consisting of approximately
118,624 square feet and another facility in Nottingham, Great Britain,
consisting of approximately 267,000 square feet. We expect to lease or purchase
additional facilities in Virginia, Florida, Washington and the United Kingdom
consisting of an aggregate of approximately 617,500 square feet in 2001. We
purchased approximately 29.2 acres of land in McLean, Virginia on December 5,
2000 and plan to consolidate our Northern Virginia operations into a single
campus. We recently commenced construction of the first phase of the Northern
Virginia campus. We also recently purchased approximately 316 acres of land in
Goochland County, Virginia for the construction of an office campus to
consolidate certain of our operations in the Richmond area.
Item 3. Legal Proceedings
The information required by Item 3 is included in the Annual Report on
pages 64-65 under the heading "Notes to Consolidated Financial Statements--Note
K--Commitments and Contingencies."
Item 4. Submission of Matters To a Vote of Security Holders
During the fourth quarter of our fiscal year ending December 31, 2000, no
matters were submitted to a vote of our stockholders.
17
<PAGE>
PART II
Item 5. Market For Company's Common Stock And Related Stockholder Matters.
The information required by Item 5 is included under "Supervision and
Regulation--Dividends and Transfers of Funds" herein and in the Annual Report on
pages 34-37 under the headings "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Funding" and "--Capital
Adequacy," on page 41 under the heading "Selected Quarterly Financial Data" and
on pages 58-59 in Note J to Consolidated Financial Statements, and is
incorporated herein by reference and filed as part of Exhibit 13.
Item 6. Selected Financial Data.
The information required by Item 6 is included in the Annual Report on page
23 under the heading "Selected Financial and Operating Data," and is
incorporated herein by reference and filed as part of Exhibit 13.
Item 7. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations.
The information required by Item 7 is included in the Annual Report on
pages 24-40 under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and is incorporated herein by reference
and filed as part of Exhibit 13.
Item 7A. Quantitative And Qualitative Disclosures About Market Risk.
The information required by Item 7A is included in the Annual Report on
pages 37-38 under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Interest Rate Sensitivity," and is
incorporated herein by reference and filed as part of Exhibit 13.
Item 8. Financial Statements And Supplementary Data.
The information required by Item 8 is included in the Annual Report on page
43 under the heading "Report of Independent Auditors," on pages 44-64 under the
headings "Consolidated Balance Sheets," "Consolidated Statements of Income,"
"Consolidated Statements of Changes in Stockholders' Equity," "Consolidated
Statements of Cash Flows" and "Notes to Consolidated Financial Statements" and
on page 41 under the heading "Selected Quarterly Financial Data," and is
incorporated herein by reference and filed as part of Exhibit 13.
Item 9. Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure.
Not applicable.
18
<PAGE>
PART III
Item 10. Directors And Executive Officers Of The Company.
The information required by Item 10 is included in the Corporation's 2001
Proxy Statement (the "Proxy Statement") on pages 6-8 under the heading
"Information About Our Directors and Executive Officers and is incorporated
herein by reference. The Proxy Statement was filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days of the end of the
Corporation's 2000 fiscal year.
Item 11. Executive Compensation.
The information required by Item 11 is included in the Proxy Statement on
pages 9-10 under the heading "Information About Our Directors and Executive
Officers--Compensation of the Board," on pages 11-16 under the heading
"Compensation of Executive Officers" and on pages 18-21 under the heading
"Report of the Compensation Committee on Executive Compensation," and is
incorporated herein by reference.
Item 12. Security Ownership Of Certain Beneficial Owners And Management.
The information required by Item 12 is included in the Proxy Statement on
page 4 under the heading "Information About Capital One's Common Stock
Ownership," and is incorporated herein by reference.
Item 13. Certain Relationships And Related Transactions
The information required by Item 13 is included in the Proxy Statement on
page 10 under the heading "Information About Our Directors and Executive
Officers--Related Party Transactions," and on page 12 in Footnote (11) to the
Summary Compensation Table, and is incorporated herein by reference.
19
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules And Reports On Form 8-K
(a) (1) The following consolidated financial statements of Capital One
Financial Corporation, included in the Annual Report, are incorporated herein by
reference in Item 8:
Report of Independent Auditors, Ernst & Young LLP
Consolidated Balance Sheets--As of December 31, 2000 and 1999
Consolidated Statements of Income--Years ended December 31, 2000, 1999 and
1998
Consolidated Statements of Changes in Stockholders' Equity--Years ended
December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows--Years ended December 31, 2000, 1999
and 1998
Notes to Consolidated Financial Statements
Selected Quarterly Financial Data--As of and for the years ended December
31, 2000 and 1999
(2) All schedules are omitted since the required information is either not
applicable, not deemed material, or is shown in the respective financial
statements or in notes thereto.
(3) Exhibits:
A list of the exhibits to this Form 10-K is set forth on the Exhibit Index
immediately preceding such exhibits and is incorporated herein by reference.
(b) Reports on Form 8-K
The Company filed on October 12, 2000 a Current Report on Form 8-K dated
October 11, 2000, Commission File No. 1-13300, enclosing its press release dated
October 11, 2000.
The Company filed on October 24, 2000 a Current Report on Form 8-K dated
October 23, 2000, Commission File No. 1-13300, enclosing its press release dated
October 23, 2000.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Capital One Financial Corporation
/s/ David M. Willey
By:
David M. Willey
Executive Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the Company
and in the capacities indicated on the ____ day of March, 2001.
<TABLE>
<CAPTION>
Signature Title Date
--------- -------------------- --------------------
<S> <C> <C>
Director, Chairman and March 27, 2001
/s/ Richard D. Fairbank Chief Executive Officer
(Principal Executive
Richard D. Fairbank Officer)
/s/ Nigel W. Morris Director, President and Chief March 27, 2001
Operating Officer
Nigel W. Morris
/s/ David M. Willey Executive Vice President and Chief March 27, 2001
Financial Officer
David M. Willey (Principal Accounting and
Financial Officer)
/s/ W. Ronald Dietz Director March 27, 2001
W. Ronald Dietz
/s/ James A. Flick, Jr. Director March 27, 2001
James A. Flick, Jr.
/s/ Patrick W. Gross Director March 27, 2001
Patrick W. Gross
/s/ James V. Kimsey Director March 27, 2001
</TABLE>
21
<PAGE>
<TABLE>
<S> <C> <C>
James V. Kimsey
/s/ Stanley I. Westreich Director March 27, 2001
Stanley I. Westreich
</TABLE>
22
<PAGE>
EXHIBIT INDEX
CAPITAL ONE FINANCIAL CORPORATION
ANNUAL REPORT ON FORM 10-K
DATED DECEMBER 31, 2000
Commission File No. 1-13300
The following exhibits are incorporated by reference or filed herewith.
References to (i) the "1994 Form 10-K" are to the Corporation's Annual Report
on Form 10-K for the year ended December 31, 1994; (ii) the "1995 Form 10-K"
are to the Corporation's Annual Report on Form 10-K for the year ended December
31, 1995; (iii) the "1996 Form 10-K" are to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1996; (iv) the "1997 Form 10-K" are
to the Corporation's Annual Report on Form 10-K for the year ended December 31,
1997; (v) the "1998 Form 10-K" are to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1998; and (vi) the "1999 Form 10-K/A" are
to the Corporation's Annual Report on Form 10-K, as amended, for the year ended
December 31, 1999.
Exhibit
- -------
Number Description
- ------ ------------------------------------------------------
3.1.1 Restated Certificate of Incorporation of Capital One Financial
Corporation (incorporated by reference to Exhibit 3.1 of the 1994
Form 10-K).
3.1.2 Certificate of Amendment to Restated Certificate of Incorporation of
Capital One Financial Corporation (incorporated by reference to
Exhibit 3.1.2 of the Corporation's Report on Form 8-K, filed January
16, 2001).
3.2 Amended and Restated Bylaws of Capital One Financial Corporation (as
amended November 18, 1999) (incorporated by reference to Exhibit 3.2
of the 1999 10-K/A).
4.1 Specimen certificate representing the Common Stock (incorporated by
reference to Exhibit 4.1 of the 1997 Form 10-K).
4.2.1 Rights Agreement dated as of November 16, 1995 between Capital One
Financial Corporation and Mellon Bank, N.A. (incorporated by
reference to Exhibit 4.1 of the Corporation's Report on Form 8-K,
filed November 16, 1995).
4.2.2 Amendment to Rights Agreement dated as of April 29, 1999 between
Capital One Financial Corporation and First Chicago Trust Company of
New York, as successor to Mellon Bank, N.A. (incorporated by
reference to Exhibit 4.2.2 of the 1999 10-K/A).
4.3 Amended and Restated Issuing and Paying Agency Agreement dated as of
April 30, 1996 between Capital One Bank and Chemical Bank (including
exhibits A-1, A-2, A-3 and A-4 thereto) (incorporated by reference to
Exhibit 4.1 of the Corporation's quarterly report on Form 10-Q for
the period ending June 30, 1996).
4.4.1 Distribution Agreement dated June 6, 2000 among Capital One Bank,
J.P. Morgan Securities, Inc. and the agents named therein
(incorporated by reference to the Corporation's quarterly report on
Form 10-Q for the period ending June 30, 2000).
4.4.2 Copy of 6.875% Notes, due 2006, of Capital One Bank.
4.4.3 Copy of Floating Rate Notes, due 2003, of Capital One Bank.
4.4.4 Copy of 8 1/4% Fixed Rate Notes, due 2003, of Capital One Bank.
<PAGE>
Exhibit
- -------
Number Description
- ------ ------------------------------------------------------
4.5.1 Senior Indenture and Form T-1 dated as of November 1, 1996 among
Capital One Financial Corporation and Harris Trust and Savings Bank
(incorporated by reference to Exhibit 4.1 of the Corporation's Report
on Form 8-K, filed November 13, 1996).
4.5.2 Copy of 7.25% Notes, Due 2003, of Capital One Financial Corporation
(incorporated by reference to Exhibit 4.5.2 of the 1996 Form 10-K, of
Capital One Financial Corporation).
4.6.1 Declaration of Trust, dated as of January 28, 1997, between Capital
One Bank and The First National Bank of Chicago, as trustee (including
the Certificate of Trust executed by First Chicago Delaware Inc., as
Delaware trustee) (incorporated by reference to Exhibit 4.6.1 of the
1996 Form 10-K).
4.6.2 Copies of Certificates Evidencing Capital Securities (incorporated by
reference to Exhibit 4.6.2 of the 1996 Form 10-K).
4.6.3 Amended and Restated Declaration of Trust, dated as of January 31,
1997, by and among Capital One Bank, The First National Bank of
Chicago and First Chicago Delaware Inc. (incorporated by reference to
Exhibit 4.6.3 of the 1996 Form 10-K).
4.7 Indenture, dated as of January 31, 1997, between Capital One Bank and
The First National Bank of Chicago (incorporated by reference to
Exhibit 4.7 of the 1996 Form 10-K).
4.8 Copy of 7 1/8% Notes, due 2008, of Capital One Financial Corporation
(incorporated by reference to Exhibit 4.8 of the 1998 Form 10-K).
4.9 Issue and Paying Agency Agreement dated as of October 24, 1997 between
Capital One Bank, Morgan Guaranty Trust Company of New York, London
Office, and the Paying Agents named therein (incorporated by reference
to Exhibit 4.9 of the 1998 Form 10-K).
4.10 Copy of 7% Notes due 2006 (incorporated by reference to Exhibit 4.10
of the 1999 Form 10-K/A).
10.1.1 Amended and Restated Distribution Agreement dated April 30, 1996 among
Capital One Bank and the agents named therein (incorporated by
reference to Exhibit 10.1 of the Corporation's quarterly Report on
Form 10-Q for period ending June 30, 1996).
10.1.2 Amendment to Amended and Restated Distribution Agreement dated April
21, 1998 among Capital One Bank and the agents named therein
(incorporated by reference to Exhibit 10.1.1 of the 1998 Form 10-K).
10.1.3 Second Amendment to Amended and Restated Distribution Agreement dated
April 30, 1999 among Capital One Bank and the agents named therein
(incorporated by reference to Exhibit 10.1.3 of the 1999 10-K/A).
<PAGE>
Exhibit
- -------
Number Description
- ------ ------------------------------------------------------
10.2.1 Lease Agreement, dated as of December 5, 2000, among First Union
Development Corporation, as Lessor, and Capital One F.S.B. and Capital
One Bank, jointly and severally, as Lessees.
10.2.2 Participation Agreement, dated as of December 5, 2000, among Capital
One F.S.B. and Capital One Bank as construction agents and lessees,
Capital One Financial Corporation as guarantor, First Union
Development Corporation as Lessor, the various financing parties named
therein, and First Union National Bank as Agent.
10.2.3 Guaranty, dated as of December 5, 2000, from Capital One Financial
Corporation in favor of First Union Development Corporation and the
various other parties to the Participation Agreement, dated as of
December 5, 2000.
10.3* Form of Change of Control Employment Agreement dated as of January 25,
2000 between Capital One Financial Corporation and each of Richard D.
Fairbank, Nigel W. Morris and John G. Finneran Jr. (incorporated by
reference to Exhibit 10.3 of the 1999 10-K/A).
10.4* Capital One Financial Corporation 1999 Non-Employee Directors Stock
Incentive Plan (incorporated by reference to Exhibit 4 of the
Corporation's Registration Statement on Form S-8, Commission File No.
333-78635, filed May 17, 1999).
10.5.1 Revolving Credit Facility Agreement dated as of August 10, 2000 by and
between Capital One Inc., as borrower, Capital One Financial
Corporation, as guarantor, and Bank of Montreal, as lender (terminated
as of February 1, 2001) (incorporated by reference to Exhibit 10.1 of
the Corporation's quarterly report on Form 10-Q for the period ending
September 30, 2000).
10.5.2 Revolving Credit Facility Agreement dated as of August 10, 2000 by and
between Capital One Inc., as borrower, Capital One Financial
Corporation, as guarantor, and Bank One Canada, as lender (terminated
as of February 1, 2001) (incorporated by reference to Exhibit 10.2 of
the Corporation's quarterly report on Form 10-Q for the period ending
September 30, 2000).
10.5.3 Revolving Credit Facility Agreement dated as of August 10, 2000 by and
between Capital One Financial Corporation, as borrower, and
Citibank, N.A., as lender (terminated as of March 15, 2001)
(incorporated by reference to Exhibit 10.3 of the Corporation's
quarterly report on Form 10-Q for the period ending September 30,
2000).
10.5.4 Revolving Credit Facility Agreement dated as of August 10, 2000 by and
between Capital One Financial Corporation, as borrower, and First
Union National Bank, as lender (terminated as of March 15, 2001)
(incorporated by reference to Exhibit 10.4 of the Corporation's
quarterly report on Form 10-Q for the period ending September 30,
2000).
10.6* Capital One Financial Corporation 1999 Stock Incentive Plan
(incorporated by reference to the Corporation's Registration Statement
on Form S-8, Commission File No. 333-78609, filed May 17, 1999).
10.7* Capital One Financial Corporation 1994 Stock Incentive Plan, as
amended.
10.8 Multicurrency Revolving Credit Facility Agreement dated as of
August 11, 2000 by and between Capital One Bank, as borrower, Capital
One Financial Corporation, as guarantor, and Chase Manhattan PLC, as
lender (incorporated by reference to Exhibit 10.5 of the Corporation's
quarterly report on Form 10-Q for the period ending September 30,
2000).
10.9 Intentionally left blank.
10.10 Amended and Restated Change of Control Employment Agreement dated
as of January 25, 2000 between Capital One Financial Corporation and
certain of its senior executives (incorporated by reference to Exhibit
10.10.2 of the 1999 Form 10-K/A).
10.11* Capital One Financial Corporation Excess Savings Plan, as amended
(incorporated by reference to Exhibit 10.20 of the 1995 Form 10-K).
10.12* Capital One Financial Corporation Excess Benefit Cash Balance Plan, as
amended (incorporated by Reference to Exhibit 10.21 of the 1995 Form
10-K).
<PAGE>
Exhibit
- -------
Number Description
- ------ ------------------------------------------------------
10.13* Capital One Financial Corporation 1994 Deferred Compensation Plan, as
amended (incorporated by Reference to Exhibit 10.22 of the 1995 Form
10-K).
10.14* 1995 Non-Employee Directors Stock Incentive Plan (incorporated by
reference to the Corporation's Registration Statement on Form S-8,
Commission File No. 33-91790, filed May 1, 1995).
10.15 Services Agreement dated as of April 1, 1999 by and between D'Arcy
Masius Benton & Bowles USA, Inc. and Capital One Financial Corporation
(incorporated by reference to Exhibit 10.15 of the 1999 Form 10-K/A).
10.16 Consulting Agreement dated as of April 5, 1995, by and between Capital
One Financial Corporation and American Management Systems, Inc.
(incorporated by reference to Exhibit 10.33 of the 1995 Form 10-K).
10.17.1 Amended and Restated Lease Agreement dated as of October 14, 1998
between First Security Bank of Utah, N.A., as owner trustee for the
COB Real Estate Trust 1995-1, as lessor and Capital One Realty, Inc.,
as lessee (incorporated by reference to Exhibit 10.17.1 of the 1998
Form 10-K).
10.17.2 Guaranty dated as of October 14, 1998 from Capital One Bank in favor
of First Security Bank, N.A., as owner trustee for the COB Real Estate
Trust 1995-1, First Union National Bank, as indenture trustee, Lawyers
Title Realty Services, Inc., as deed of trust trustee, and the Note
Purchasers, Registered Owners and LC Issuer referred to therein
(incorporated by reference to Exhibit 10.17.2 of the 1998 Form 10-K).
10.17.3 Amendment to Lease Documents dated as of October 1, 1999 between First
Security Bank of Utah, N.A., and Val T. Orton, as owner trustees for
COB Real Estate Trust 1995-1, as lessor and Capital One Bank and
Capital One Realty, Inc., as lessees (incorporated by reference to
Exhibit 10.17.3 of the 1999 Form 10-K/A).
10.17.4 Amendment to Guaranty dated as of April 1, 1999 between Capital One
Bank and First Security Bank, N.A., as owner trustee for the COB Real
Estate Trust 1995-1, First Union National Bank, as indenture trustee,
Lawyers Title Realty Services, Inc., as deed of trust trustee, and the
Note Purchasers, Registered Owners and LC Issuer referred to therein
(incorporated by reference to Exhibit 10.17.4 of the 1999 Form 10-
K/A).
10.18.1 Second Amended and Restated Credit Agreement dated as of May 25, 1999
by and among Capital One Financial Corporation, Capital One Bank and
Capital One, F.S.B, as original borrowers, and The Chase Manhattan
Bank, as administrative agent and lender and the other lenders named
therein (incorporated by reference to Exhibit 10.18.1 of the 1999 Form
10-K/A).
<PAGE>
Exhibit
- -------
Number Description
- ------ ------------------------------------------------------
10.18.2 Amendment to Second Amended and Restated Credit Agreement dated as of
December 21, 1999 among Capital One Financial Corporation, Capital One
Bank and Capital One, F.S.B., as original borrowers, and The Chase
Manhattan Bank, as administrative agent (incorporated by reference to
Exhibit 10.18.2 of the 1999 Form 10-K/A).
10.19.1 Revolving Credit Facility Agreement dated as of August 29, 1997 by and
among Capital One Finance Company and Capital One Inc., as original
borrowers, Capital One Financial Corporation, as original guarantor,
and the agents and lenders named therein (incorporated by reference to
Exhibit 10.19 of the 1997 Form 10-K).
10.19.2 Amendment to Revolving Credit Facility agreement dated as of December
21, 1999 between Capital One Finance Company and Capital One Inc., as
original borrowers, Capital One Financial Corporation, as original
guarantor, and the agents and lenders named therein (incorporated by
reference to Exhibit 10.19.2 of the 1999 Form 10-K/A).
10.20 Form of Intellectual Property Protection Agreement dated as of April
29,1999 by and among Capital One Financial Corporation and certain of
its senior executives (incorporated by reference to Exhibit 10.20 of
the 1999 Form 10-K/A).
10.21 Credit Agreement (Capital One Realty, Inc.) dated as of September 3,
1999 between First Security Bank, N.A. as owner trustee for Capital
One Realty Trust 1998-1, as borrower, the lenders party thereto, and
Bank of America, N.A., as administrative agent (incorporated by
reference to Exhibit 10.21 of the 1999 Form 10-K/A).
10.22 Lease Agreement (Capital One Realty, Inc.) dated as of September 3,
1999 between First Security Bank, N.A. as owner trustee for Capital
One Realty Trust 1998-1, as lessor, and Capital One Realty, Inc. as
lessee (incorporated by reference to Exhibit 10.22 of the 1999 Form
10-K/A).
10.23 Participation Agreement (Capital One Realty, Inc.) dated as of
September 3, 1999 among Capital One Realty, Inc., as construction
agent and lessee, Capital One Bank, as guarantor, First Security Bank,
N.A. as owner trustee under the Capital One Realty Trust 1998-1, and
the holders and lenders named therein, and Bank of America, N.A., as
Agent (incorporated by reference to Exhibit 10.23 of the 1999 Form 10-
K/A).
10.24 Credit Agreement (Capital One Services, Inc.) dated as of September 3,
1999 between First Security Bank, N.A. as owner trustee for Capital
One Realty Trust 1998-1 as borrower, the lenders party thereto, and
Bank of America N.A. as administrative agent (incorporated by
reference to Exhibit 10.24 of the 1999 Form 10-K/A).
10.25 Lease Agreement (Capital One Services, Inc.) dated as of September 3,
1999 between First Security Bank, N. A. as owner trustee for Capital
One Realty Trust 1998-1, as lessor, and Capital One Services, Inc. as
lessee (incorporated by reference to Exhibit 10.25 of the 1999 Form
10-K/A).
<PAGE>
Exhibit
- -------
Number Description
- ------ ------------------------------------------------------
10.26 Participation Agreement (Capital One Services, Inc.) dated as of
September 3, 1999 among Capital One Services, Inc. as construction
agent as lessee, Capital One Financial Corporation, as guarantor,
First Security Bank, N.A., as owner trustee under the Capital One
Realty Trust 1998-1, the holders and lenders named therein, and Bank
of America, N.A., as agent (incorporated by reference to Exhibit 10.26
of the 1999 Form 10-K/A)...
13 The portions of Capital One Financial Corporation's 2000 Annual Report
to Stockholders that are incorporated by reference herein.
21 Subsidiaries of the Company.
23 Consent of Ernst & Young LLP.
* Indicates a management contract or compensation plan or arrangement required
to be filed as an exhibit to this Annual Report on Form 10-K.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4.2
<SEQUENCE>2
<FILENAME>dex442.txt
<DESCRIPTION>COPY OF 6.875% NOTES
<TEXT>
<PAGE>
Exhibit 4.4.2
REGISTERED GLOBAL SENIOR NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE "DEPOSITARY") TO
CAPITAL ONE BANK (THE "BANK") OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN
EXCHANGE FOR, OR IN LIEU OF, THIS NOTE IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS A GLOBAL SECURITY AND, UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN
WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, IT MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
SENIOR NOTE: THIS NOTE IS A DIRECT, UNCONDITIONAL, UNSECURED AND UNSUBORDINATED
GENERAL OBLIGATION OF CAPITAL ONE BANK (THE "BANK"). THE OBLIGATIONS EVIDENCED
BY THIS NOTE RANK PARI PASSU WITH ALL OTHER UNSECURED AND UNSUBORDINATED
OBLIGATIONS OF THE BANK, EXCEPT OBLIGATIONS, INCLUDING ITS DOMESTIC (U.S.)
DEPOSITS, THAT ARE SUBJECT TO ANY PRIORITIES OR PREFERENCES UNDER APPLICABLE
LAW. THIS NOTE DOES NOT EVIDENCE A DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION ("FDIC") OR ANY OTHER INSURER.
THIS NOTE IS ISSUABLE ONLY IN MINIMUM DENOMINATIONS OF US$100,000 AND INTEGRAL
MULTIPLES OF US$1,000 IN EXCESS THEREOF. EACH OWNER OF A BENEFICIAL INTEREST IN
THIS NOTE IS REQUIRED TO HOLD A BENEFICIAL INTEREST OF US$100,000 PRINCIPAL
AMOUNT OR ANY INTEGRAL MULTIPLE OF US$1,000 IN EXCESS THEREOF OF THIS NOTE AT
ALL TIMES.
No. R- REGISTERED
---------
CUSIP No.: 14040EER9
-----------
ISIN No.: US14040EER99
------------
Common Code: 12446128
<PAGE>
CAPITAL ONE BANK
GLOBAL BANK NOTE
(Registered Global Note)
ORIGINAL ISSUE DATE: February 6, 2001 PRINCIPAL AMOUNT: $1,250,000,000
SPECIFIED CURRENCY:
MATURITY DATE: February 1, 2006 |_| U.S. dollar
|_| FIXED RATE NOTE |_| Other:
|_| FLOATING RATE NOTE
CAPITAL ONE BANK, a bank organized under the laws of the Commonwealth of
Virginia (the "Bank"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal amount specified above as adjusted in
accordance with Schedule 1 hereto, on the Maturity Date specified above (except
to the extent redeemed or repaid prior to the Maturity Date) and to pay interest
thereon (i) in accordance with the provisions set forth on the reverse hereof
under the caption "Fixed Rate Interest Provisions," if this Note is designated
as a "Fixed Rate Note" above, or (ii) in accordance with the provisions set
forth on the reverse hereof under the caption "Floating Rate Interest
Provisions," if this Note is designated as a "Floating Rate Note" above, in each
case as such provisions may be modified or supplemented by the terms and
provisions set forth in the Pricing Supplement attached hereto (the "Pricing
Supplement"), and (to the extent that the payment of such interest shall be
legally enforceable) to pay interest at the Default Rate per annum specified in
the Pricing Supplement on any overdue principal and premium, if any, and on any
overdue installment or interest. If no Default Rate is specified in the Pricing
Supplement then the Default Rate shall be the Interest Rate specified in the
Pricing Supplement. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will be paid to the person in whose
name this Note (or any predecessor Note) is registered at the close of business
on the fifteenth calendar day (whether or not a Business Day (as defined on the
reverse hereof)) next preceding the applicable Interest Payment Date (unless
otherwise specified in the Pricing Supplement) (each, a "Regular Record Date");
provided, however, that interest payable at Maturity (as defined on the reverse
hereof) will be payable to the person to whom principal shall be payable. Any
such interest not so punctually paid or duly provided for shall forthwith cease
to be payable to the holder as of the close of business on such Regular Record
Date, and shall instead be payable to the person in whose name this Note (or any
predecessor Note) is registered at the close of business on a special record
date for the payment of such defaulted interest (the "Special Record Date") to
be fixed by the Registrar (as defined below), notice whereof shall be given by
the Registrar to the holder of this Note not less than 15 calendar days prior to
such Special Record Date.
This Note is one of a duly authorized issue of the Bank's notes due from 30 days
to 30 years or more from date of issue (the "Notes"). The Notes are issued in
accordance with the Global Agency Agreement, dated as of June 6, 2000 (the
"Global Agency Agreement"), among the Bank and The Chase Manhattan Bank as
paying agent (the "Domestic Paying Agent") and as registrar (the "Registrar"),
The Chase Manhattan Bank, London Branch, as paying agent (the "London Paying
Agent") and as issuing agent (the "London Issuing Agent") and Chase Manhattan
Bank
2
<PAGE>
Luxembourg S.A. as transfer agent (the "Transfer Agent"), as paying agent (the
"Luxembourg Paying Agent", together with the Domestic Paying Agent and the
London Paying Agent, the "Paying Agents", and individually, a "Paying Agent")
and Kredietbank S.A. Luxembourgeoise as listing agent (the "Listing Agent"). The
terms Domestic Paying Agent, Registrar, London Paying Agent, London Issuing
Agent, Luxembourg Paying Agent, Transfer Agent and Listing Agent shall include
any additional or successor agents appointed in such capacities by the Bank.
The Bank shall cause to be kept at the office of the Registrar designated below
a register (the register maintained in such office or any other office or agency
of the Registrar, herein referred to as the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Bank shall provide for
the registration of Notes issued in registered form and of transfers of such
Notes. The Bank has initially appointed The Chase Manhattan Bank, acting through
its principal office at 450 West 33rd Street, 15th Floor, New York, New York
10001, as "Registrar" for the purpose of registering Notes issued in registered
form and transfers of such Notes. The Bank reserves the right to rescind such
designation at any time, and to transfer such function to another bank or
financial institution.
The transfer of this Note is registrable in the Note Register, upon surrender of
the Note for registration of transfer at the office or agency of the Registrar
or any transfer agent maintained for that purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar (or such transfer agent) duly executed by, the holder hereof or its
attorney duly authorized in writing.
Payment of principal of, and premium, if any, and interest on, this Note due at
Maturity will be made in immediately available funds upon presentation and
surrender of this Note at the office of a Paying Agent maintained for that
purpose; provided, that this Note is presented to such Paying Agent in time for
such Paying Agent to make such payment in accordance with its normal procedures.
Payments of interest an this Note (other than at Maturity) will be made by wire
transfer to such account as has been appropriately designated to a Paying Agent
by the person entitled to such payments.
Reference is made to the further provisions of this Note set forth on the
reverse hereof and in the Pricing Supplement, which further provisions shall for
all purposes have the same effect as if set forth at this place. In the event of
any conflict between the provisions contained herein or on the reverse hereof
and the provisions contained in the Pricing Supplement attached hereto, the
latter shall control. References herein to "this Note," "hereof," "herein" and
comparable terms shall include the Pricing Supplement attached hereto.
Unless the certificate of authentication hereon has been executed by the
Registrar, by manual signature of an authorized signatory, this Note shall not
be valid or obligatory for any purpose.
3
<PAGE>
This Note shall be governed by, and construed in accordance with, the laws of
the State of New York, without regard to the conflicts of law principles
thereof.
IN WITNESS WHEREOF, the Bank has caused this Note to be duly executed.
CAPITAL ONE BANK
By:
------------------------------------
Name:
Title:
Dated:
REGISTRAR'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the
within-mentioned Global Agency Agreement.
THE CHASE MANHATTAN BANK,
as Registrar
By:
--------------------------
Name:
Title:
4
<PAGE>
PRICING SUPPLEMENT DATED FEBRUARY 1, 2001
(to be read in conjunction with the Offering Circular dated June 6, 2000)
Capital One Bank
(a Bank Organized Pursuant to the Laws of Virginia)
Global Bank Notes
Fixed Rate Notes due February 1, 2006
This Pricing Supplement should be read in conjunction with the Offering
Circular, dated June 6, 2000 (the "Offering Circular"), relating to the
U.S.$5,000,000,000 Global Bank Note Program of Capital One Bank. Unless
otherwise defined herein, terms used herein shall have the meanings ascribed to
them in the Offering Circular.
DESCRIPTION OF THE NOTES
1. Specified Currency and Principal Amount: US $1,250,000,000
2. Senior or Subordinated: Senior
3. Original Issue Date: February 6, 2001
4. Stated Maturity Date: February 1, 2006
5. Issue Price: 99.640%
6. (a) Authorized Denomination(s): $100,000 and integral multiples of
$1,000 in excess thereof
(b) Redenomination (Yes/No): No [If yes, give details]
7. Form of Note (Registered or Bearer): Registered
8. (a) Series Number: 3
(b) If forming part of an existing Series (Yes/No): No [If yes,
give details]
9. Interest Period:
|_| One Month
|_| Three Months
|X| Six Months
|_| Twelve Months
|_| Other (Specify Number of Months):
10. Interest Payment Date(s): February 1 and August 1, commencing
on August 1, 2001
5
<PAGE>
11. Record Dates (for Registered Notes with Maturities Greater
than One Year): the January 17 and the July 17 preceding each
Interest Payment Date
12. Exchange Rate Agent (Registered Notes and Dual Currency
Notes):
13. Default Rate (if other than Interest Rate): % per annum
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
FIXED RATE NOTES
14. Interest Rate: 6.875% per annum
15. Day Count Convention:
|_| 30/360 for the period from February 6, 2001 to February
1, 2006
|_| Actual/360 for the period from _________ to ________
|_| Actual/Actual for the period from ________ to ________
|_| Other (specify convention and applicable period):
FLOATING RATE NOTES
16. Interest Rate Determination:
|_| ISDA Rate
|_| Reference Rate Determination
17. Calculation Agent, if not The Chase Manhattan Bank:
18. Maximum Interest Rate: % per annum
19. Minimum Interest Rate: % per annum
20. Day Count Convention:
|_| 30/360 for the period from _________ to __________
|_| Actual/360 for the period from _________ to __________
|_| Actual/Actual for the period from _________ to __________
|_| Other (specify convention and applicable
period):
21. Business Day Convention:
|_| Floating Rate Convention
|_| Following Business Day Convention
|_| Modified Following Business Day Convention
|_| Preceding Business Day Convention
|_| Other (specify):
ISDA RATE
22. Margin: [+/-] % per annum
23. Floating Rate Option:
6
<PAGE>
24. Designated Maturity:
25. Reset Date:
REFERENCE RATE DETERMINATION
26. Initial Interest Rate:
27. Index Maturity:
28. Interest Rate Basis or Bases:
If CMT Rate: Specified CMT Telerate Page:
Specified CMT Maturity Index:
If EURIBOR:
If LIBOR: |_| LIBOR Telerate
|_| LIBOR Reuters
29. Index Currency:
30. Spread: [+/-] %
31. Spread Multiplier:
32. Initial Interest Reset Date:
33. Interest Determination Period:
34. Interest Reset Dates:
35. Interest Calculation:
|_| Regular Floating Rate Note
|_| Floating Rate/Fixed Rate Note
Fixed Rate Commencement Date:
Fixed Interest Rate: % per annum
|_| Inverse Floating Rate Note:
Fixed Interest Rate: % per annum
PROVISIONS REGARDING REDEMPTION/REPAYMENT
36. Initial Redemption Date:
37. Initial Redemption Percentage:
38. Annual Redemption Percentage Reduction:
39. Holder's Optional Repayment Date(s):
DISCOUNT NOTES (INCLUDING ZERO COUPON NOTES)
40. Discount Note (Yes/No):
If Yes: Total Amount of OID:
Yield to Maturity:
Initial Accrual Period: %
7
<PAGE>
Issue Price:
INDEXED NOTES
41. Index: [give details]
42. Formula:
43. Agent, if any, responsible for calculating the principal and/or
interest payable:
44. Provisions where calculation by reference to Index and/or
Formula is impossible or impracticable:
DUAL CURRENCY NOTES
45. Dual Currency Notes (Yes/No):
If Yes: Face Amount:
Face Amount Currency:
Optional Payment Currency:
Option Election Dates: [give details]
46. Designated Exchange Rate:
47. Option Value Calculation Agent:
48. Agent, if any, responsible for calculating the principal
and/or interest payable:
INSTALLMENT NOTES
49. Additional provisions relating to Installment Notes:
PARTLY PAID NOTES
50. Additional provisions relating to Partly Paid Notes:
GENERAL PROVISIONS
51. Additional or different Paying Agents:
52. Additional or different Registrars:
53. Additional or different London Issuing Agents:
54. Additional or different Transfer Agents:
55. "Business Day" definition (if other than as defined in the
Offering Circular):
56. Cost, if any, to be borne by Noteholders in connection with
exchanges for Definitive Bearer Notes:
57. Talons for future Coupons or Receipts to be attached to Definitive
Bearer Notes (Yes/No) and dates on which such Talons mature:
[If yes, give details]
58. Additional selling restrictions: [give details]
59. CUSIP: 14040EER9
ISIN: US14040EER99
Common Code: 12446128
8
<PAGE>
Other (specify):
60. Details of additional/alternative clearance system approved by
the Bank:
61. Notes to be listed (Yes/No): Yes
If Yes, securities exchange(s): Luxembourg
62. Syndicated Issue (Yes/No): Yes
If Yes, names of managers and details of relevant stabilizing
manager, if any: Barclays Capital Inc. and Credit Suisse
First Boston Corporation
63. Clearance System(s):
|_| DTC only
|_| Euroclear and Clearstream, Luxembourg only
|_| DTC, and Euroclear and Clearstream, Luxembourg through DTC
|_| DTC, Euroclear and Clearstream, Luxembourg
|_| Other:
64. Name(s) of relevant Distribution Agent(s): Barclays Capital
Inc., Credit Suisse First Boston Corporation, ABN AMRO
Incorporated, Banc of America Securities LLC, Deutsche Banc
Alex. Brown Inc. and Salomon Smith Barney Inc.
65. Other terms or special conditions:
66. Tax considerations:
67. Discount or Commission per Note: .350%
68. Selling Concession per Note: .200%
69. Reallowance per Note: .125%
9
<PAGE>
[Reverse of Note]
The Notes are issuable only in denominations of US$100,000 and integral
multiples of US$1,000 in excess thereof (or equivalent denominations in other
currencies, subject to any other statutory or regulatory minimums). This Note,
and any Note issued in exchange or substitution herefor or in place hereof, or
upon registration of transfer, exchange or partial redemption or repayment of
this Note, may be issued only in an Authorized Denomination specified in the
Pricing Supplement (or, if this Note is in definitive form, specified on the
face hereof).
Unless otherwise provided herein (or, if this Note is in global form, in the
Pricing Supplement), the principal of, and premium, if any, and interest on,
this Note are payable in the Specified Currency indicated on the face hereof
(or, if such Specified Currency is not at the time of such payment legal tender
for the payment of public and private debts, in such other coin or currency of
the country which issued such Specified Currency as at the time of such payment
is legal tender for the payment of debts). If this Note is a DTC Global Note and
the Specified Currency indicated on the face hereof is other than U.S. dollars,
any such amounts paid by the Bank will be converted by The Chase Manhattan Bank,
as Exchange Rate Agent, or such other agent as may be specified in the Pricing
Supplement (or, if this Note is in definitive form, specified on the face
hereof), which for these purposes shall act as currency exchange agent (the
"Exchange Rate Agent"), into U.S. dollars for payment to the holder of this
Note.
If this Note is a DTC Global Note and the Specified Currency indicated on the
face hereof is other than the U.S. dollar, any U.S. dollar amount to be received
by the holder of this Note will be based on the Exchange Rate Agent's bid
quotation as of 11:00 a.m., London time, on the second day on which banks are
open for business in London, New York City and Glen Allen, Virginia, preceding
the applicable payment date, for the purchase of U.S. dollars with the Specified
Currency for settlement on such payment date of the aggregate amount of the
Specified Currency payable to all holders of Notes denominated other than in the
U.S. dollar scheduled to receive U.S. dollar payments. If such bid quotation is
not available, the Exchange Rate Agent will obtain a bid quotation from a
leading foreign exchange bank in London or New York City selected by the
Exchange Rate Agent for such purchase. If no such bids are available, payment of
the aggregate amount due to the holder of this Note on the payment date will be
made in the Specified Currency, subject to the other provisions of this Note
relating to payment in such Specified Currency. All currency exchange costs will
be borne by the holder of this Note by deductions from such payments. All
determinations referred to above made by the Exchange Rate Agent shall be at its
sole discretion and shall, in the absence of manifest error, be conclusive for
all purposes and binding upon the holder of this Note.
If this Note is a DTC Global Note and the Specified Currency indicated on the
face hereof is other than the U.S. dollar, the holder of this Note may elect to
receive payment of principal (and premium, if any) and interest on this Note in
the Specified Currency indicated on the face hereof by submitting a written
notice to the Paying Agents prior to 5:00 pm, New York City time, on the fifth
Business Day following the applicable Record Date in the case of interest and
the tenth calendar day prior to the payment date for the payment of principal.
Such notice, which may be mailed or hand delivered or sent by cable, telex or
facsimile transmission, shall contain (i) the
10
<PAGE>
holder's election to receive all or a portion of such payment in the Specified
Currency on the relevant Interest Payment Date or Maturity, as the case may be,
and (ii) wire transfer instructions to an account denominated in the Specified
Currency with respect to any payment to be made in the Specified Currency. Any
such election made with respect to this Note by the holder will remain in effect
with respect to any further payments of principal of, and premium, if any, and
interest on this Note payable to the holder of this Note unless such election is
revoked on or prior to the fifth Business Day following the applicable Record
Date in the case of interest and the tenth calendar day prior to the payment
date for the payment of principal.
If (i) this Note is a DTC Global Note and the holder of this Note shall have
duly made an election to receive all or a portion of a payment of principal of,
and premium, if any, or interest on this Note in the Specified Currency
indicated on the face hereof, or (ii) if this Note is not a DTC Global Note, in
the case of (i) or (ii) in the event the Specified Currency indicated on the
face hereof has been replaced by another currency (a "Replacement Currency"),
any amount due pursuant to this Note may be repaid, at the option of the Bank,
in the Replacement Currency or in U.S. dollars, at a rate of exchange which
takes into account the conversion, at the rate prevailing on the most recent
date on which official conversion rates were quoted or set by the national
government or other authority responsible for issuing the Replacement Currency,
from the Specified Currency to the Replacement Currency and, if necessary, the
conversion of the Replacement Currency into U.S. dollars at the rate prevailing
on the date of such conversion.
If the Specified Currency indicated on the face hereof is other than the U.S.
dollar and (i) this Note is a DTC Global Note and the holder of this Note shall
have duly made an election to receive all or a portion of a payment of principal
of, and premium, if any, or interest on this Note in the Specified Currency
indicated on the face hereof, or (ii) if this Note is not a DTC Global Note, in
the case of (i) or (ii) if such Specified Currency is not available due to the
imposition of exchange controls or other circumstances beyond the control of the
Bank, the Bank will be entitled to satisfy its obligations to the holder of this
Note by making such payments of principal of (and premium, if any) or interest
on this Note in U.S. dollars until, in the sole discretion of the Bank, the
Specified Currency is again available. In such circumstances, the U.S. dollar
amount to be received by the holder of this Note will be made on the basis of
the most recently available bid quotation from a leading foreign exchange bank
in London or New York City selected by the Exchange Rate Agent, for the purchase
of U.S. dollars with the Specified Currency for settlement on such payment date
of the aggregate amount of the Specified Currency payable to all holders of
Notes denominated other than in the U.S. dollar scheduled to receive U.S. dollar
payments. Any payment made under such circumstances in U.S. dollars, where the
payment is required to be made in the Specified Currency, will not constitute an
"Event of Default" with respect to this Note.
The Chase Manhattan Bank shall initially act as domestic paying agent (the
"Domestic Paying Agent") and the Bank has initially appointed The Chase
Manhattan Bank, London Branch, acting through its specified office in London as
London paying agent (the "London Paying Agent") and Chase Manhattan Bank
Luxembourg S.A. as Luxembourg paying agent (the "Luxembourg Paying Agent" and
together with the Domestic Paying Agent and the London Paying Agent, the "Paying
Agents," and each individually, a "Paying Agent," and such terms shall include
any additional or successor paying agents appointed pursuant to the Global
Agency Agreement (as defined on the face hereof)) in respect of the Notes. If
this Note is in registered form, this Note
11
<PAGE>
may be presented or surrendered for payment, and notices, designations or
requests in respect of payments with respect to this Note may be served, at the
office or agency of any Paying Agent maintained for that purpose. The Bank may
at any time rescind any designation of a Paying Agent, appoint any additional or
successor Paying Agents or approve a change in the office through which a Paying
Agent acts.
Subject to any fiscal or other laws and regulations applicable thereto in the
place of payment, payments on registered Notes to be made in a Specified
Currency other than the U.S. dollar and payments on bearer Notes will be made by
a check in the Specified Currency drawn on or by wire transfer to an account in
the Specified Currency (which, in the case of a payment in Yen to a non-resident
of Japan, shall be a non-resident account) maintained by the payee with a bank
(which, in the case of a payment in Yen to a non-resident of Japan, shall be an
authorized foreign exchange bank) in the Principal Financial Center of the
country of the Specified Currency, provided, however, that a check may not be
delivered to an address in, and an amount may not be transferred to an account
located in, the United States of America or its possessions by any office or
agency of the Bank or any Paying Agent.
Fixed Rate Interest Provisions
If this Note is designated as a "Fixed Rate Note" on the face hereof, the Bank
will pay interest on each Interest Payment Date specified in the Pricing
Supplement (or, if this Note is in definitive form, specified on the face
hereof) and on the Maturity Date or any Redemption Date (as defined below) or
Holder's Optional Repayment Date (as defined below) (each such Maturity Date,
Redemption Date and Holder's Optional Repayment Date and the date on which the
principal or an installment of principal is due and payable by declaration of
acceleration as provided herein being hereinafter referred to as a "Maturity"
with respect to the principal repayable on such date), commencing on the first
Interest Payment Date next succeeding the Original Issue Date specified on the
face hereof (or if the Original Issue Date is between a Record Date and the
Interest Payment Date immediately following such Record Date, on the Second
Interest Payment Date following the Original Issue Date), at the Interest Rate
per annum specified in the Pricing Supplement (or, if this Note is in definitive
form, specified on the face hereof), until the principal hereof is paid or duly
made available for payment.
Payments of interest hereon will include interest accrued from and including the
most recent Interest Payment Date to which interest on this Note (or any
predecessor Note) has been paid or duly provided for (or, if no interest has
been paid or duly provided for, from and including the Original Issue Date) to
but excluding the relevant Interest Payment Date or Maturity, as the case may
be. Unless otherwise specified in the Pricing Supplement (or, if this note is in
definitive form, on the face hereof), if the Maturity Date specified on the face
hereof falls more than one year from the Original Issue Date, interest payments
for this Note shall be computed and paid on the basis of a 360-day year of
twelve 30-day months. Unless otherwise specified in the Pricing Supplement (or,
if this Note is in definitive form, on the face hereof) if the Maturity Date
specified on the face hereof falls one year or less from the Original Issue
Date, interest payments for this Note shall be computed and paid on the basis of
the actual number of days in the year divided by 360.
12
<PAGE>
Unless otherwise provided herein, if any Interest Payment Date or the Maturity
of this Note falls on a day which is not a Business Day, the related payment of
principal of, or premium, if any, or interest on, this Note shall be made on the
next succeeding Business Day with the same force and effect as if made on the
date such payments were due, and no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date or the
Maturity, as the case may be.
Floating Rate Interest Provisions
If this Note is designated as a "Floating Rate Note" on the face hereof, the
Bank will pay interest on each Interest Payment Date specified in the Pricing
Supplement (or, if this Note is in definitive form specified on the face hereof)
and at Maturity, commencing on the first Interest Payment Date next succeeding
the Original Issue Date specified on the face hereof (or, if the Original Issue
Date is between a Record Date and the Interest Payment Date immediately
following such Record Date, on the second Interest Payment Date following the
Original Issue Date), at a rate per annum determined in accordance with the
provisions hereof (and, if this Note is in global form, in accordance with the
Pricing Supplement), until the principal hereof is paid or duly made available
for payment.
Payments of interest hereon will include interest accrued from and including the
most recent Interest Payment Date to which interest on this Note (or any
predecessor Note) has been paid or duly provided for (or, if no interest has
been paid or duly provided for, from and including the Original Issue Date) to
but excluding the relevant Interest Payment Date or Maturity, as the case may be
(each such period, an "Interest Period").
Unless otherwise specified herein (or, if this Note is in global form, in the
Pricing Supplement), if any Interest Payment Date (or other date which is
subject to adjustment in accordance with a Business Day Convention specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement))
in respect of this Note (other than an Interest Payment Date at Maturity) would
otherwise fall on a day that is not a Business Day, then, if the Business Day
Convention specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement) is:
(1) the "Floating Rate Convention," such Interest Payment Date (or other
date) shall be postponed to the next succeeding day which is a
Business Day unless it would thereby fall into the next succeeding
calendar month, in which event (A) such Interest Payment Date (or
other date) shall be brought forward to the next preceding Business
Day and (B) each subsequent Interest Payment Date (or other date)
shall be the last Business Day in the month which falls the number
of months or other period specified as the Interest Payment Period
on the face hereof after the preceding applicable Interest Payment
Date (or other date) occurred; or
(2) the "Following Business Day Convention," such Interest Payment Date
(or other date) shall be postponed to the next succeeding day which
is a Business Day; or
(3) the "Modified Following Business Day Convention," such Interest
Payment Date (or other date) shall be postponed to the next
succeeding day that is a Business Day unless it would thereby fall
into the next succeeding calendar month, in
13
<PAGE>
which event such Interest Payment Date (or other date) shall be
brought forward to the next preceding Business Day; or
(4) the "Preceding Business Day Convention," such Interest Payment Date
(or other date) shall be brought forward to the next preceding
Business Day.
If the Maturity of this Note falls on a day that is not a Business Day, the
related payment of principal of (and premium, if any) and interest on, this Note
will be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no interest shall accrue on the
amount so payable for the period from and after such Maturity.
If "ISDA Rate" is specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement) in connection with the determination of the
rate of interest on this Note, the rate of interest on this Note for each
Interest Period will be the relevant ISDA Rate (as defined below) plus or minus
the Margin, if any, specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement). Unless otherwise specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), "ISDA Rate"
means, with respect to any Interest Period, the rate equal to the Floating Rate
that would be determined by the Calculation Agent or other person specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement)
pursuant to an interest rate swap transaction if the Calculation Agent or that
other person were acting as calculation agent for that swap transaction in
accordance with the terms of an agreement in the form of the Interest Rate and
Currency Exchange Agreement published by the International Swaps and Derivatives
Association, Inc. (the "ISDA Agreement") and evidenced by a Confirmation (as
defined in the ISDA Agreement) incorporating the ISDA Definitions (as defined
below) and under which:
(A) the Floating Rate Option is as specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement);
(B) the Designated Maturity is the period specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), and
(C) the relevant Reset Date is either (i) if the applicable Floating
Rate Option is based on the London inter-bank offered rate for a
currency or on the Euro-zone inter-bank offered rate ("EURIBOR") for
a currency, the first day of that Interest Period or (ii) in any
other case, as specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement).
As used in this paragraph, "Floating Rate," "Calculation Agent," "Floating Rate
Option," "Designated Maturity," and "Reset Date" have the meanings ascribed to
those terms in the ISDA Definitions.
If "Reference Rate Determination" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement) in connection with the
determination of the rate of interest on this Note, this Note will bear interest
at a rate per annum equal to the Initial Interest Rate specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) until the
Initial Interest Reset Date specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) and thereafter at a rate per annum
determined as follows:
14
<PAGE>
1. If this Note is designated as a "Regular Floating Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) or if no
designation is made for Interest Calculation on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), then, except as described
below (or, if this Note is in global form, in the Pricing Supplement), this Note
shall bear interest at the rate determined by reference to the applicable
Interest Rate Basis or Bases specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement) (i) plus or minus the applicable
Spread, if any, and/or (ii) multiplied by the applicable Spread Multiplier, if
any, specified and applied in the manner described on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). Commencing on the
Initial Interest Reset Date, the rate at which interest on this Note is payable
shall be reset as of each Interest Reset Date specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement); provided, however,
that the interest rate in effect for the period from the Original Issue Date to
the Initial Interest Reset Date will be the Initial Interest Rate.
2. If this Note is designated as a "Floating Rate/Fixed Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), then,
except as described below (or, if this Note is in global form, in the Pricing
Supplement), this Note shall bear interest at the rate determined by reference
to the applicable Interest Rate Basis or Bases specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement) (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
Multiplier, if any, specified and applied in the manner described on the face
hereof (or, if this Note is in global form, in the Pricing Supplement).
Commencing on the Initial Interest Reset Date, the rate at which interest on
this Note is payable shall be reset as of each Interest Reset Date specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement);
provided, however, that (i) the interest rate in effect for the period from the
Original Issue Date to the Initial Interest Reset Date shall be the Initial
Interest Rate and (ii) the interest rate in effect commencing on, and including,
the Fixed Rate Commencement Date specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement) to the Maturity Date shall be the
Fixed Interest Rate, if such a rate is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), or if no such Fixed Interest
Rate is so specified, the interest rate in effect hereon on the Business Day
immediately preceding the Fixed Rate Commencement Date.
3. If this Note is designated as an "Inverse Floating Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), then,
except as described below (or, if this Note is in global form, in the Pricing
Supplement), this Note shall bear interest equal to the Fixed Interest Rate
indicated on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) minus the rate determined by reference to the applicable Interest
Rate Basis or Bases specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement) (i) plus or minus the applicable Spread, if
any, and/or (ii) multiplied by the applicable Spread Multiplier, if any,
specified and applied in the manner described on the face hereof (or, if this
Note is in global form, in the Pricing Supplement); provided, however, that,
unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the interest rate hereon will not be less than
zero percent. Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note is payable shall be reset as of each Interest Rate Reset
Date specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement); provided, however, that the interest rate in effect for the
period from the Original Issue Date to the Initial Interest Reset Date shall be
the Initial Interest Rate.
15
<PAGE>
Except as provided above, if "Reference Rate Determination" is specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement) in
connection with the determination of the rate of interest on this Note, the
interest rate in effect on each day shall be (a) if such day is an Interest
Reset Date, the interest rate determined as of the Interest Reset Determination
Date (as defined below) immediately preceding such Interest Reset Date or (b) if
such day is not an Interest Reset Date, the interest rate determined as of the
Interest Determination Date immediately preceding the next preceding Interest
Reset Date. Each Interest Rate Basis shall be the rate determined in accordance
with the applicable provision below. If any Interest Reset Date (which term
includes the term Initial Interest Reset Date unless the context otherwise
requires) would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be adjusted in accordance with the Business Day Convention
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement).
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the "Interest Determination Date" with respect
to the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate,
the J.J. Kenny Rate, and the Prime Rate will be the second Business Day
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to the Eleventh District Cost of Funds Rate will be the last working day
of the month immediately preceding each Interest Reset Date on which the Federal
Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the
Index (as defined below); the "Interest Determination Date" with respect to
EURIBOR will be the second day on which the TARGET system is open immediately
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to LIBOR shall be the second London Banking Day (as defined below)
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to the Treasury Rate will be the day in the week in which the related
Interest Reset Date falls on which day Treasury Bills (as defined below) are
normally auctioned (Treasury Bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held on
the preceding Friday); provided, however, that if an auction is held on the
Friday of the week preceding the related Interest Reset Date, the related
Interest Determination Date shall be such preceding Friday; and provided,
further, that if an auction shall fall on any Interest Reset Date, then the
Interest Reset Date shall instead be the first Business Day following such
auction. If the interest rate of this Note is determined with reference to two
or more Interest Rate Bases as specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), the Interest Determination Date
pertaining to this Note will be the latest Business Day which is at least two
Business Days prior to such Interest Reset Date on which each Interest Rate
Basis is determinable. Each Interest Rate Basis shall be determined on such
date, and the applicable interest rate shall take effect on the Interest Reset
Date.
Determination of CD Rate. If an Interest Rate Basis for this Note is the CD
Rate, as specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), the CD Rate shall be determined as of the applicable
Interest Determination Date (a "CD Rate Interest Determination Date") as the
rate on such date for negotiable United States dollar certificates of deposit
having the Index Maturity specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) as published in H.15(519) (as defined
below) under the heading "CDs (Secondary Market)". In the event that such rate
is not so published prior to 3:00 p.m., New York City time, on the Calculation
Date pertaining to such CD Rate Interest Determination Date,
16
<PAGE>
the CD Rate will be the rate on such CD Rate Interest Determination Date for
certificates of deposit having the Index Maturity specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement) as published in
H.15 Daily Update (as defined below), or another recognized electronic source
used for the purpose of displaying that rate, under the heading "CDs (secondary
market)". If such rate is published neither in H.15(519) nor in H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on such Calculation Date, the CD Rate for such CD Rate Interest Determination
Date will be calculated by the Calculation Agent and will be the arithmetic mean
of the secondary market offered rates as of 10:00 a.m., New York City time, on
such CD Rate Interest Determination Date, of three leading nonbank dealers of
negotiable United States dollar certificates of deposit in The City of New York
selected by the Calculation Agent for negotiable United States dollar
certificates of deposit of major United States money market banks for negotiable
certificates of deposit with a remaining maturity closest to the Index Maturity
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) in an amount that is representative for a single transaction in that
market at that time; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate determined on such CD Rate Interest Determination Date
will be the CD Rate in effect on such date.
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through the
world-wide-web site of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
Determination of CMT Rate. If an Interest Rate Basis for this Note is the CMT
Rate, as specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), the CMT Rate shall be determined by the Calculation
Agent as of the applicable Interest Determination Date (a "CMT Rate Interest
Determination Date") in accordance with the following provisions:
(i) If "CMT Telerate Page 7051" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), the CMT Rate on the CMT Rate
Interest Determination Date shall be a percentage equal to the yield for United
States Treasury securities at "constant maturity" having the Index Maturity
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) as set forth in H.15(519) under the caption "Treasury Constant
Maturities," as such yield is displayed on Telerate, Inc. (or any successor
service) on page 7051 (or any other page as may replace such page on such
service) ("Telerate Page 7051") for such CMT Rate Interest Determination Date.
If such rate does not appear on Telerate Page 7051, the CMT Rate on such CMT
Rate Interest Determination Date shall be a percentage equal to the yield for
United States Treasury securities at "constant maturity" having the Index
Maturity and for such CMT Rate Interest Determination Date as set forth in
H.15(519) under the caption "Treasury Constant Maturities". If such rate does
not appear in H.15(519), the CMT Rate on such CMT Rate Interest Determination
Date shall be the rate for the period of the Index Maturity as may then be
published by either the Board of Governors of the Federal Reserve System or the
United States Department of the Treasury that the Calculation Agent determines
to be comparable to the rate which would otherwise have been published in
H.15(519). If the Board of
17
<PAGE>
Governors of the Federal Reserve System or the United States Department of the
Treasury does not publish a yield on United States Treasury securities at
"constant maturity" having the Index Maturity for such CMT Rate Interest
Determination Date, the CMT Rate on such CMT Rate Interest Determination Date
shall be calculated by the Calculation Agent and shall be a yield-to-maturity
based on the arithmetic mean of the secondary market bid prices at approximately
3:30 p.m., New York City time, on such CMT Rate Interest Determination Date of
three leading primary United States government securities dealers in The City of
New York (each, a "Reference Dealer") selected by the Calculation Agent (from
five such Reference Dealers and eliminating the highest quotation (or, in the
event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)) for United States Treasury securities
with an original maturity equal to the Index Maturity, a remaining term to
maturity no more than 1 year shorter than the Index Maturity and in a principal
amount that is representative for a single transaction in such securities in
such market at such time. If fewer than five but more than two such prices are
provided as requested, the CMT Rate on such CMT Rate Interest Determination Date
shall be based on the arithmetic mean of the bid prices obtained and neither the
highest nor lowest of such quotations shall be eliminated. If fewer than three
prices are provided as requested, the CMT Rate on such CMT Rate Interest
Determination Date shall be calculated by the Calculation Agent and shall be a
yield-to-maturity based on the arithmetic mean of the secondary market bid
prices as of approximately 3:30 p.m., New York City time, on such CMT Rate
Interest Determination Date of three Reference Dealers selected by the
Calculation Agent (from five such Reference Dealers and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)) for United States
Treasury securities with an original maturity greater than the Index Maturity, a
remaining term to maturity closest to the Index Maturity and in a principal
amount that is representative for a single transaction in such securities in
such market at such time. If fewer than five but more than two such prices are
provided as requested, the CMT Rate on such CMT Rate Interest Determination Date
shall be based on the arithmetic mean of the bid prices obtained and neither the
highest nor the lowest of such quotations shall be eliminated; provided,
however, that if fewer than three such prices are provided as requested, the CMT
Rate determined as of such CMT Rate Interest Determination Date shall be the CMT
Rate in effect on such CMT Rate Interest Determination Date. If two such United
States Treasury securities with an original maturity greater than the Index
Maturity have remaining terms to maturity equally close to the Index Maturity,
the quotes for the Treasury security with the shorter original term to maturity
will be used.
(ii) If "CMT Telerate Page 7052" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), the CMT Rate on the CMT Rate
Interest Determination Date shall be a percentage equal to the one-week or
one-month, as specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), average yield for United States Treasury securities
at "constant maturity" having the Index Maturity specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement) as set forth in
H.15(519) opposite the caption "Treasury Constant Maturities," as such yield is
displayed on Telerate, Inc. (or any successor service) on page 7052 (or any
other page as may replace such page on such service ) ("Telerate Page 7052") for
the week or month, as applicable, ended immediately preceding the week or month,
as applicable, in which such CMT Rate Interest Determination Date falls. If such
rate does not appear on the Telerate Page 7052, the CMT Rate on such CMT Rate
Interest Determination Date shall be a percentage equal to the one-week or
one-month, as specified on
18
<PAGE>
the face hereof (or, if this Note is in global form, in the Pricing Supplement),
average yield for United States Treasury securities at "constant maturity"
having the Index Maturity and for the week or month, as applicable, preceding
such CMT Rate Interest Determination Date as set forth in H.15(519) opposite the
caption "Treasury Constant Maturities". If such rate does not appear in
H.15(519), the CMT Rate on such CMT Rate Interest Determination Date shall be
the one-week or one-month, as specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), average yield for United States
Treasury securities at "constant maturity" having the Index Maturity as
otherwise announced by the Federal Reserve Bank of New York for the week or
month, as applicable, ended immediately preceding the week or month, as
applicable, in which such CMT Rate Interest Determination Date falls. If the
Federal Reserve Bank of New York does not publish a one-week or one-month, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), average yield on United States Treasury securities at "constant
maturity" having the Index Maturity for the applicable week or month, the CMT
Rate on such CMT Rate Interest Determination Date shall be calculated by the
Calculation Agent and shall be a yield-to-maturity based on the arithmetic mean
of the secondary market bid prices at approximately 3:30 p.m., New York City
time, on such CMT Rate Interest Determination Date of three Reference Dealers
selected by the Calculation Agent (from five such Reference Dealers and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)) for United States Treasury securities with an original maturity equal
to the Index Maturity, a remaining term to maturity of no more than 1 year
shorter than the Index Maturity and in a principal amount that is representative
for a single transaction in such securities in such market at such time. If
fewer than five but more than two such prices are provided as requested, the CMT
Rate on such CMT Rate Interest Determination Date shall be based on the
arithmetic mean of the bid prices obtained and neither the highest nor lowest of
such quotations shall be eliminated. If fewer than three prices are provided as
requested, the CMT Rate on such CMT Rate Interest Determination Date shall be
calculated by the Calculation Agent and shall be a yield-to-maturity based on
the arithmetic mean of the secondary market bid prices as of approximately 3:30
p.m., New York City time, on such CMT Rate Interest Determination Date of three
Reference Dealers selected by the Calculation Agent (from five such Reference
Dealers and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)) for United States Treasury securities with an original maturity
longer than the Index Maturity, a remaining term to maturity closest to the
Index Maturity and in a principal amount that is representative for a single
transaction in such securities in such market at such time. If fewer than five
but more than two such prices are provided as requested, the CMT Rate on such
CMT Rate Interest Determination Date shall be based on the arithmetic mean of
the bid prices obtained and neither the highest nor lowest of such quotations
shall be eliminated; provided, however, that if fewer than three such prices are
provided as requested, the CMT Rate determined as of such CMT Rate Interest
Determination Date shall be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two United States Treasury securities with an original
maturity greater than the Index Maturity have remaining terms to maturity
equally close to the Index Maturity, the quotes for the Treasury security with
the shorter original term to maturity will be used.
Determination of Commercial Paper Rate. If an Interest Rate Basis for this Note
is the Commercial Paper Rate, as specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement), the Commercial Paper Rate shall
be determined as of the applicable
19
<PAGE>
Interest Determination Date (a "Commercial Paper Rate Interest Determination
Date") as the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement) as published in
H.15(519) under the caption "Commercial Paper-Nonfinancial" or, if not so
published by 3:00 p.m., New York City time, on the related Calculation Date, the
Money Market Yield of the rate on such Commercial Paper Rate Interest
Determination Date for commercial paper having the Index Maturity as published
in H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "Commercial
Paper-Nonfinancial." If such rate is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on such Calculation Date, then the Commercial Paper Rate on such Commercial
Paper Rate Interest Determination Date will be calculated by the Calculation
Agent and shall be the Money Market Yield of the arithmetic mean of the offered
rates at approximately 11:00 a.m., New York City time, on such Commercial Paper
Rate Interest Determination Date of three leading dealers of United States
dollar commercial paper in The City of New York selected by the Calculation
Agent for commercial paper having the Index Maturity placed for industrial
issuers whose bond rating is "Aa," or the equivalent, from a nationally
recognized statistical rating organization; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate determined as of such Commercial Paper
Rate Interest Determination Date will be the Commercial Paper Rate in effect on
such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Money Market Yield = D x 360 x 100
--------------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable Interest Reset Period.
Determination of Eleventh District Cost of Funds Rate. If an Interest Rate Basis
for this Note is the Eleventh District Cost of Funds Rate, as specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement), the
Eleventh District Cost of Funds Rate shall be determined as of the applicable
Interest Determination Date (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), as the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls, as set
forth under the caption "11th District" on Telerate Page 7058 (as defined below)
as of 11:00 a.m., San Francisco time, on such Eleventh District Cost of Funds
Rate Interest Determination Date. If such rate does not appear on Telerate Page
7058 on the related Eleventh District Cost of Funds Rate Interest Determination
Date, the Eleventh District Cost of Funds Rate for such Eleventh District Cost
of Funds Rate Interest Determination Date shall be the monthly weighted average
cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding the
date of such announcement. If the FHLB of San Francisco fails to
20
<PAGE>
announce such rate for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, then the Eleventh
District Cost of Funds Rate determined as of such Eleventh District Cost of
Funds Rate Interest Determination Date shall be the Eleventh District Cost of
Funds Rate in effect on such Eleventh District Cost of Funds Rate Interest
Determination Date.
"Telerate Page 7058" means the display designated as page "7058" on the Bridge
Telerate Service (or such other page as may replace the 7058 page on that
service for the purpose of displaying the monthly weighted average costs of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District).
Determination of EURIBOR. If an Interest Rate Basis for this Note is EURIBOR, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), EURIBOR shall be determined as of the applicable Interest
Determination Date (a "EURIBOR Interest Determination Date"), in accordance with
the following provisions:
(i) With respect to any EURIBOR Interest Determination Date, EURIBOR will be:
(a) the rate for deposits in euro as sponsored, calculated and
published jointly by the European Banking Federation and ACI--The
Financial Market Association, or any company established by the joint
sponsors for purposes of compiling and publishing those rates, having the
Index Maturity specified on the face hereof (or if this Note is in global
form, in the Pricing Supplement), commencing on the applicable Interest
Reset Date, as that rate appears on Telerate, Inc., or any successor
service, on page 248 (or any other page as may replace such page on such
service) ("Telerate Page 248") as of 11:00 a.m., Brussels time, on the
applicable EURIBOR Interest Determination Date.
(b) if the rate referred to in clause (a) above does not appear on
Telerate Page 248, or is not so published by 11:00 a.m., Brussels time, on
the applicable EURIBOR Interest Determination Date, the rate calculated by
the Calculation Agent as the arithmetic mean of at least two quotations
obtained by the Calculation Agent after requesting the principal Euro-zone
(as defined hereinafter) offices of four major banks in the Euro-zone
interbank market, in the European interbank market, to provide the
Calculation Agent with its offered quotation for deposits in euro for the
period of the Index Maturity designated on the face hereof (or if this
Note is in global form, in the Pricing Supplement), commencing on the
applicable Interest Reset Date, to prime banks in the Euro-zone interbank
market at approximately 11:00 a.m., Brussels time, on the applicable
EURIBOR Interest Determination Date and in a principal amount not less
than the equivalent of U.S.$1,000,000 in euro that is representative for a
single transaction in euro in such market at such time.
(c) if fewer than two quotations referred to in clause (b) above are
provided, EURIBOR for such EURIBOR Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., Brussels time, on such EURIBOR
Interest Determination Date by four major banks in the Eurozone for loans
in euro to leading European banks, having the Index Maturity designated on
the face hereof (or if this Note is in global form, in the Pricing
21
<PAGE>
Supplement), commencing on the applicable Interest Reset Date and in
principal amount not less than the equivalent of U.S.$1,000,000 in euro
that is representative for a single transaction in euro in such market at
such time.
(d) if the banks so selected by the Calculation Agent are not
quoting as mentioned in clause (c) above, EURIBOR determined as of such
EURIBOR Interest Determination Date shall be EURIBOR in effect on such
EURIBOR Interest Determination Date.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the treaty establishing
the European Community, as amended by the treaty on European Union.
Determination of Federal Funds Rate. If an Interest Rate Basis for this Note is
the Federal Funds Rate, as specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement), the Federal Funds Rate shall be
determined as of the applicable Interest Determination Date (a "Federal Funds
Rate Interest Determination Date") as the rate on such date for United States
dollar federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)", as such rate is displayed on Bridge Telerate, Inc. (or any
successor service) on page 120 (or any other page as may replace such page on
such service) ("Telerate Page 120"), or, if such rate does not appear on
Telerate Page 120 or is not so published by 3:00 p.m., New York City time, on
the Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date for United States dollar federal funds as published in H.15 Daily Update,
or such other recognized electronic source used for the purpose of displaying
such rate, under the caption "Federal Funds (Effective)." If such rate does not
appear on Telerate Page 120 or is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on the related Calculation Date, then the Federal Funds Rate on such Federal
Funds Rate Interest Determination Date shall be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of United States dollar federal funds transactions in The City of New York
selected by the Calculation Agent, prior to 9:00 a.m., New York City time, on
such Federal Funds Rate Interest Determination Date; provided, however, that if
the brokers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate determined as of such Federal Funds Rate
Interest Determination Date will be the Federal Funds Rate in effect on such
Federal Funds Rate Interest Determination Date.
Determination of J.J. Kenny Rate. If an Interest Rate Basis for this Note is the
J.J. Kenny Rate, as specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the J.J. Kenny Rate shall be determined as of
the applicable Interest Determination Date (a "J.J. Kenny Interest Determination
Date") as the rate in the high grade weekly index (the "Weekly Index") on such
date made available by Kenny Information Systems ("Kenny") to the Calculation
Agent. The Weekly Index Maturity is, and shall be, based upon 30-day yield
evaluations at par of bonds, the interest of which is exempt from Federal income
taxation under the Internal Revenue Code of 1986, as amended (the "Code"), of
not less than five high grade component issuers selected by Kenny which shall
include, without limitation, issuers of general obligation bonds. The specific
issuers included among the component issuers may be changed
22
<PAGE>
from time to time by Kenny in its discretion. The bonds on which the Weekly
Index is based shall not include any bonds on which the interest is subject to a
minimum tax or similar tax under the Code, unless all tax-exempt bonds are
subject to such tax. In the event Kenny ceases to make available such Weekly
Index, a successor indexing agent will be selected by the Calculation Agent,
such index to reflect the prevailing rate for bonds rated in the highest
short-term rating category by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group in respect of issuers most closely resembling the high
grade component issuers selected by Kenny for its Weekly Index, the interest on
which is (i) variable on a weekly basis, (ii) exempt from Federal income
taxation under the Code, and (iii) not subject to a minimum tax or similar tax
under the Code, unless all tax-exempt bonds are subject to such tax. If such
successor indexing agent is not available, the rate for any J.J. Kenny Interest
Determination Date shall be 67% of the rate determined if the Treasury Rate
option had been originally selected.
Determination of LIBOR. If an Interest Rate Basis for this Note is LIBOR, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), LIBOR shall be determined by the Calculation Agent as of the
applicable Interest Determination Date (a "LIBOR Interest Determination Date"),
in accordance with the following provisions:
(i) if "LIBOR Telerate" is specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified on the face hereof as the method for calculating LIBOR,
LIBOR will be the rate for deposits in the Designated LIBOR Currency having the
Index Maturity specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), commencing on such Interest Reset Date, that appears
on the Designated LIBOR Page (as defined hereinafter) as of 11:00 a.m., London
time, on such LIBOR Interest Determination Date; or (b) if "LIBOR Reuters" is
specified on the face hereof, the arithmetic mean of the offered rates (unless
the Designated LIBOR Page by its terms provides only for a single rate, in which
case such single rate shall be used) for deposits in the Designated LIBOR
Currency having the Index Maturity, commencing on the applicable Interest Reset
Date, that appear (or, if only a single rate is required as aforesaid, appears)
on the Designated LIBOR Page (as defined hereinafter) as of 11:00 a.m., London
time, on such LIBOR Interest Determination Date. If fewer than two such offered
rates so appear, or if no such rate so appears, as applicable, LIBOR on such
LIBOR Interest Determination Date shall be determined in accordance with the
provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer than two
offered rates appear, or no rate appears, as the case may be, on the Designated
LIBOR Page as specified in clause (i) above, the Calculation Agent shall request
the principal London offices of each of four major reference banks in the London
interbank market, as selected by the Calculation Agent, to provide the
Calculation Agent with its offered quotation for deposits in the Designated
LIBOR Currency for the period of the Index Maturity, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date
and in a principal amount that is representative for a single transaction in the
Designated LIBOR Currency in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal
23
<PAGE>
Financial Center, on such LIBOR Interest Determination Date by three major banks
in such Principal Financial Center (as defined hereafter) selected by the
Calculation Agent for loans in the Designated LIBOR Currency to leading European
banks, having the Index Maturity and in a principal amount that is
representative for a single transaction in the Designated LIBOR Currency in such
market at such time; provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date shall be LIBOR in effect
on such LIBOR Interest Determination Date.
"Designated LIBOR Currency" means the currency specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement) as to which LIBOR
shall be calculated or, if no such currency is specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement), United States
dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on the face
hereof, the display on the Reuter Monitor Money Rates Service (or any successor
service) on the page specified on the face hereof (or any other page as may
replace such page on such service) for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR Currency, or (b) if
"LIBOR Telerate" is specified on the face hereof or neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified on the face hereof as the method for calculating
LIBOR, the display on Bridge Telerate, Inc. (or any successor service) on the
page specified on the face hereof (or any other page as may replace such page on
such service) for the purpose of displaying the London interbank rates of major
banks for the Designated LIBOR Currency.
"Principal Financial Center" means the capital city of the country to which the
Designated LIBOR Currency relates except that with respect to United States
dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders,
Italian lire, Portuguese escudos, South African rand and Swiss francs, the
"Principal Financial Center" shall be The City of New York, Sydney, Toronto,
Frankfurt, Amsterdam, Milan, London (solely in the case of the Designated LIBOR
Currency), Johannesburg and Zurich, respectively.
"London Banking Day" means any day (other than a Saturday or Sunday) on which
dealings in deposits in the Index Currency are transacted in the London
interbank market.
Determination of Prime Rate. If an Interest Rate Basis for this Note is the
Prime Rate, as specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under the
caption "Bank Prime Loan" or, if not published by 3:00 p.m., New York City time,
on the related Calculation Date, the rate on such Prime Rate Interest
Determination Date as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Bank Prime Loan." If such rate is not yet published in H.15(519), H.15
Daily Update or another recognized electronic source by 3:00 p.m., New York City
time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen US PRIME 1 Page (as defined hereinafter) as such
bank's prime rate or base lending rate as of 11:00 a.m., New York City time, on
such Prime Rate Interest Determination Date. If fewer than
24
<PAGE>
four such rates so appear on the Reuters Screen US PRIME 1 Page for such Prime
Rate Interest Determination Date, then the Prime Rate shall be the arithmetic
mean of the prime rates or base lending rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of business
on such Prime Rate Interest Determination Date by three major banks in The City
of New York selected by the Calculation Agent; provided, however, that if the
banks or trust companies so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor Money
Rates Service (or any successor service) on the "US PRIME 1" page (or such other
page as may replace the US PRIME 1 page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
Determination of Treasury Rate. If an Interest Rate Basis for this Note is the
Treasury Rate, as specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the Treasury Rate shall be determined as of
the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified on the face hereof
under the caption "INVESTMENT RATE" on the display on Telerate, Inc. (or any
successor service) on page 56 (or any other page as may replace such page on
such service) ("Telerate Page 56") or page 57 (or any other page as may replace
such page on such service) ("Telerate Page 57") or, if not so published by 3:00
p.m., New York City time, on the related Calculation Date, the Bond Equivalent
Yield (as defined hereinafter) of the rate for such Treasury Bills as published
in H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High." If such rate is not so published in
H.15 Daily Update or another recognized electronic source by 3:00 p.m., New York
City time, on the related Calculation Date, the Treasury Rate on such Treasury
Rate Interest Determination Date shall be Bond Equivalent Yield of the auction
rate of such Treasury Bills as announced by the United States Department of the
Treasury. In the event that such auction rate is not so announced by the United
States Department of the Treasury on such Calculation Date, or if no such
Auction is held, then the Treasury Rate on such Treasury Rate Interest
Determination Date shall be the Bond Equivalent Yield of the rate on such
Treasury Rate Interest Determination Date of Treasury Bills having the Index
Maturity as published in H.15(519) under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market" or, if not yet published by 3:00
p.m., New York City time, on the related Calculation Date, the rate on such
Treasury Rate Interest Determination Date of such Treasury Bills as published in
H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market." If such rate is not yet published
in H.15(519), H.15 Daily Update or another recognized electronic source by 3:00
p.m., New York City time, on the related Calculation Date, then the Treasury
Rate on such Treasury Rate Interest Determination Date shall be calculated by
the Calculation Agent and shall be the Bond Equivalent Yield of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 p.m., New York
City time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers selected by the Calculation
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index
25
<PAGE>
Maturity; provided, however, that if the dealers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate
determined as of such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Bond Equivalent Yield = D x N X 100
---------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the applicable
Interest Reset Period.
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), accrued interest hereon shall be an amount
calculated by multiplying the face amount hereof by an accrued interest factor.
Such accrued interest factor shall be computed by adding the interest factor
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), the interest factor for each such
day shall be computed and paid on the basis of a 360-day year of twelve 30-day
months if the Day Count Convention specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement) is "30/360" for the period
specified thereunder, or by dividing the applicable per annum interest rate by
360 if the Day Count Convention specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement) is "Actual/360" for the period
specified thereunder, or by dividing the applicable per annum interest rate by
the actual number of days in the year if the Day Count Convention specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement)
is "Actual/Actual" for the period specified thereunder. If no Day Count
Convention is specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), the interest factor for each day in the relevant
Interest Period shall be computed, if an Interest Rate Basis specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement) is
the CMT Rate, EURIBOR, or Treasury Rate or if the Specified Currency indicated
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) is Sterling, as if "Actual/Actual" had been specified thereon and,
in all other cases, as if "Actual/360" had been specified thereon. Unless
otherwise specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), if interest on this Note is to be calculated with
reference to two or more Interest Rate Bases as specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), the interest
factor will be calculated in each period in the same manner as if only one of
the applicable Interest Rate Bases applied.
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), if "Reference Rate Determination" is specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) in connection with the determination of the rate of interest on this
Note, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest
26
<PAGE>
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day and (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Maturity Date, as the case may be. All calculations in
respect of determining the interest rate applicable to this Note (other than any
calculations made by the Exchange Rate Agent) shall be made by the Calculation
Agent specified on the face hereof (or, if this Note is in global form, the
Pricing Supplement) or such successor thereto as is duly appointed by the Bank.
The determination of any interest rate by the Calculation Agent shall, in the
absence of manifest error, be conclusive for all purposes and binding upon the
holder hereof.
All percentages resulting from any calculation on this Note would be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or
0.09876545) would be rounded to 9.87655% (or 0.0987655%) and 9.876544% (or
0.09876544) would be rounded to 987654% (or 0.0987654)), and all dollar amounts
used in or resulting from such calculation will be rounded to the nearest cent
or, if the Specified Currency is other than dollars, to the nearest unit (with
one-half cent or unit being rounded upward).
At the request of the holder hereof, the Calculation Agent shall provide to the
holder hereof the interest rate hereon then in effect and, if determined, the
interest rate which shall become effective for the next Interest Period.
Notwithstanding the foregoing, the interest rate hereon shall not be greater
than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate,
if any, specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement). In addition to any Maximum Interest Rate applicable hereto
pursuant to the above provisions, the interest rate on this Note will in no
event be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application.
Redemption at the Option of the Bank
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), this Note will not be subject to any sinking
fund. This Note may be redeemed by the Bank either in whole or in part on and
after the Initial Redemption Date, if any, specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). If no Initial
Redemption Date is specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), this Note may not be redeemed prior to the
Maturity Date except as provided below in the event that any Additional Amounts
(as defined below) are required to be paid by the Bank with respect to this
Note. On and after the Initial Redemption Date, if any, this Note may be
redeemed in increments of US$1,000 (or, if the Specified Currency indicated on
the face hereof is other than the United States dollar, in such Authorized
Denominations specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement)) at the option of the Bank at the applicable
Redemption Price (as defined below) together with unpaid interest accrued hereon
at the applicable rate borne by this Note to the date of redemption (each such
date, a "Redemption Date"), on written notice given by or on behalf of the Bank
not more than 60 nor less than 30 calendar days prior to the Redemption Date
(unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement)); provided, however, that, in the event of
redemption of this Note in part only, the unredeemed portion
27
<PAGE>
thereof shall be an Authorized Denomination specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). In the event of
redemption of this Note in part only, a new Note for the unredeemed portion
hereof shall be issued in the name of the holder hereof upon the surrender of
this Note, or, where applicable, an appropriate notation will be made on the
schedule attached hereto for such notations.
The "Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) of the principal amount of this Note to be redeemed and shall
decline at each anniversary of the Initial Redemption Date specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) by the
Annual Redemption Percentage Reduction, if any, specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
Repayment at the Option of the Holder
This Note may be subject to repayment at the option of the holder hereof in
accordance with the terms hereof on any Holder's Optional Repayment Date(s), if
any, specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement). If no Holder's Optional Repayment Date is specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement),
this Note will not be repayable at the option of the holder hereof prior to the
Maturity Date. On any Holder's Optional Repayment Date, this Note will be
repayable in whole or in part in increments of US$1,000 (or, if the Specified
Currency indicated on the face hereof is other than the U.S. dollar, in such
Authorized Denominations specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement)) at the option of the holder hereof at
the repayment price equal to 100% of the principal amount to be repaid, together
with accrued and unpaid interest hereon payable to the date of repayment;
provided, however, that, in the event of repayment of this Note in part only,
the unrepaid portion hereof shall be an Authorized Denomination specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement). For
this Note to be repaid in whole or in part at the option of the holder hereof on
a Holder's Optional Repayment Date, this Note must be delivered, with the form
entitled "Option to Elect Repayment" attached hereto duly completed, to the
Domestic Paying Agent or the London Paying Agent (as appropriate in accordance
with such attached form) at the address set forth on such form or at such other
address which the Bank shall from time to time notify the holders of the Notes
not more than 60 nor less than 30 days prior to such Holder's Optional Repayment
Date. In the event of repayment of this Note in part only, a new Note for the
unrepaid portion hereof shall be issued in the name of the holder hereof upon
the surrender hereof, or, where applicable, an appropriate notation will be made
on the schedule attached hereto for such notations. Exercise of such repayment
option by the holder hereof shall be irrevocable.
Additional Amounts
All payments of principal (and premium, if any) and interest with respect to
this Note will be made without withholding or deduction at source for, or on
account of, any present or future taxes, fees, duties, assessments or
governmental charges of whatever nature imposed or levied by the United States
or any political subdivision or taxing authority thereof or therein, unless such
28
<PAGE>
withholding or deduction is required by (i) the laws (or any regulations or
rulings promulgated thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (ii) an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings including, without limitation, a holding by a
court of competent jurisdiction or by a taxing authority in the United States or
any political subdivision thereof). If a withholding or deduction at source is
required, the Bank will (subject to certain limitations and exceptions set forth
below) pay to the holder hereof on behalf of an owner of a beneficial interest
herein (an "Owner") who is a United States Alien (as defined below) such
additional amounts ("Additional Amounts") as may be necessary so that every net
payment of principal (and premium, if any) or interest made to the holder hereof
on behalf of such Owner, after such withholding or deduction, will not be less
than the amount provided for in this Note with respect to such Owner's interest;
provided, however, that the Bank shall not be required to make any payment of
Additional Amounts for or on account of:
(a) any tax, fee, duty, assessment or other governmental charge
which would not have been imposed but for (i) the existence of any present
or former connection between such Owner (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
Owner, if such Owner is an estate, trust, partnership or corporation) and
the United States, including, without limitation, such Owner (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) being
or having been a citizen or resident thereof or being or having been
present or engaged in trade or business therein or having had a permanent
establishment therein, or (ii) the presentation of this Note for payment
on a date more than 15 days after the date on which such payment became
due and payable or the date on which payment thereof is duly provided for,
whichever occurs later;
(b) any estate, inheritance, gift, sales, transfer, personal
property or similar tax, assessment or other governmental charge;
(c) any tax, fee, duty, assessment or other governmental charge
imposed by reason of such Owner's past or present status as a personal
holding company, foreign personal holding company, passive foreign
investment company or controlled foreign corporation with respect to the
United States or as a corporation which accumulates earnings to avoid
United States federal income tax;
(d) any tax, fee, duty, assessment or other governmental charge
which is payable otherwise than by withholding from payments of principal
or interest with respect to this Note;
(e) any tax, fee, duty, assessment or other governmental charge
imposed on interest received by anyone who owns (actually or
constructively) 10% or more of the total combined voting power of all
classes of stock of the Bank;
(f) any tax, fee, duty, assessment or other governmental charge
required to be withheld by any Paying Agent from any payment of principal
(and premium, if any) or interest with respect to this Note, if such
payment can be made without such withholding by any other Paying Agent
with respect to this Note;
29
<PAGE>
(g) any tax, fee, duty, assessment or other governmental charge
which would not have been imposed but for the failure to comply with
certification, information or other reporting requirements concerning the
nationality, residence, identity or connection with the United States of
the holder hereof or of such Owner, if such compliance is required by
statute or by regulation of the United States Treasury Department as a
precondition to relief or exemption from such tax, assessment or other
governmental charge; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g);
nor shall Additional Amounts be paid to any holder of this Note on behalf of any
Owner who is a fiduciary or partnership or other than the sole Owner to the
extent a beneficiary or settlor with respect to such fiduciary or a member of
such partnership or Owner would not have been entitled to payment of the
Additional Amounts had such beneficiary, settlor, member or Owner been the sole
Owner of this Note.
As used herein, the term "United States Alien" means any corporation,
individual, fiduciary or partnership that for United States federal income tax
purposes is a foreign corporation, nonresident alien individual, nonresident
alien fiduciary of a foreign estate or trust, or foreign partnership one or more
members of which is a foreign corporation, nonresident alien individual or
nonresident alien fiduciary of a foreign estate or trust.
If this Note is in bearer form and the Bank shall determine, based upon a
written opinion of independent counsel selected by the Bank, that any payment
made outside the United States by the Bank or any of its Paying Agents of the
full amount of the next scheduled payment of either principal (and premium, if
any) or interest due with respect to this Note would, under any present or
future laws or regulations of the United States affecting taxation or otherwise,
be subject to any certification, information or other reporting requirements of
any kind, the effect of which requirements is the disclosure to the Bank, any of
its Paying Agents or any governmental authority of the nationality, residence or
identity (as distinguished from status as a United States Alien) of any Owner of
this Note who is a United States Alien (other than such requirements which (i)
would not be applicable to a payment made to a custodian, nominee or other agent
of the Owner, or which can be satisfied by such a custodian, nominee or other
agent certifying to the effect that such Owner is a United States Alien;
provided, however, in each case that payment by such custodian, nominee or agent
to such Owner is not otherwise subject to any requirements referred to in this
sentence, (ii) are applicable only to payment by a custodian, nominee or other
agent of the Owner to or on behalf of such Owner, or (iii) would not be
applicable to a payment made by any other paying agent of the Bank), the Bank
shall redeem this Note as a whole but not in part at a redemption price equal to
the principal amount hereof (or, if this is an Original Issue Discount Note, the
Amortized Face Amount (as defined herein) hereof determined as of the date of
redemption), together, if appropriate, with accrued interest to, but excluding,
the date fixed for redemption, such redemption to take place on such date not
later than one year after notice of such determination has been given as
described herein. If the Bank becomes aware of an event that might give rise to
such certification, information or other reporting requirements, the Bank shall,
as soon as practicable, solicit advice of independent counsel selected by the
Bank to establish whether such certification, information or other reporting
requirements will apply and, if such requirements will, in the written opinion
of such counsel, apply, the Bank shall give
30
<PAGE>
prompt notice of such determination (a "Tax Notice") stating in such notice the
effective date of such certification, information or other reporting
requirements and, if applicable, the date by which the redemption shall take
place. Notwithstanding the foregoing, the Bank shall not redeem this Note if the
Bank, based upon the written opinion of independent counsel selected by the
Bank, shall subsequently determine not less than 30 days prior to the date fixed
for redemption that subsequent payments would not be subject to any such
requirements, in which case the Bank shall give prompt notice of such
determination and any earlier redemption notice shall thereby be revoked and of
no further effect.
Notwithstanding the foregoing, if and so long as the certification information
or other reporting requirements referred to in the preceding paragraph would be
fully satisfied by payment of a withholding, backup withholding tax or similar
charge, the Bank may elect prior to giving the Tax Notice to have the provisions
described in this paragraph apply in lieu of the provisions described in the
preceding paragraph, in which case the Tax Notice shall state the effective date
of such certification, information or reporting requirements and that the Bank
has elected to pay Additional Amounts rather than redeem this Note. In such
event, the Bank will also pay as Additional Amounts such sums as may be
necessary so that every net payment made following the effective date of such
certification, information or reporting requirements outside the United States
by the Bank or any of its Paying Agents of principal (and premium, if any) or
interest due with respect to this Note to the bearer hereof who certifies to the
effect that the beneficial owners of this Note are United States Aliens
(provided that such certification shall not have the effect of communicating to
the Bank or any of its Paying Agents or any governmental authority the
nationality, residence or identity of such beneficial owners) after deduction or
withholding for or on account of such withholding, backup withholding tax or
similar charge (other than a withholding, backup withholding tax or similar
charge which (i) is imposed as a result of certification, information or other
reporting requirements referred to in the second parenthetical clause of the
first sentence of the preceding paragraph or (ii) is imposed as a result of the
fact that the Bank or any of its Paying Agents has actual knowledge that the
bearer hereof or any beneficial owner of this Note is not a United States Alien
but is within the category of persons, corporations or other entities described
in clause (a)(i) of the third preceding paragraph, or (iii) is imposed as a
result of presentation of this Note for payment more than 15 days after the date
on which such payment becomes due and payable or on which payment thereof is
duly provided for, whichever occurs later), will not be less than the amount
provided for in this Note to be then due and payable. In the event the Bank
elects to pay such Additional Amounts, the Bank will have the right, at its sole
option, at any time, to redeem this Note, as a whole but not in part, at a
redemption price equal to the principal amount hereof (or, if this is an
Original Issue Discount Note, the Amortized Face Amount hereof determined as of
the date of redemption), together, if appropriate, with accrued interest to the
date fixed for redemption including any Additional Amounts required to be paid
under this paragraph. If the Bank has made the determination described in the
preceding paragraph with respect to certification, information or other
reporting requirements applicable to interest only and subsequently makes a
determination in the manner and of the nature referred to in such preceding
paragraph with respect to such requirements applicable to principal, the Bank
will redeem this Note in the manner and on the terms described in the preceding
paragraph (except as provided below), unless the Bank elects to have the
provisions of this paragraph apply rather than the provisions of the immediately
preceding paragraph. If in such circumstances this Note is to be redeemed, the
Bank will be obligated to pay Additional Amounts with respect to interest, if
any, accrued to the date of redemption. If the
31
<PAGE>
Bank has made the determination described in the preceding paragraph and
subsequently makes a determination in the manner and of the nature referred to
in such preceding paragraph that the level of withholding applicable to
principal or interest has been increased, the Bank will redeem this Note in the
manner and on the terms described in the preceding paragraph (except as provided
below), unless the Bank elects to have the provisions of this paragraph apply
rather than the provisions of the immediately preceding paragraph. If in such
circumstances this Note is to be redeemed, the Bank will be obligated to pay
Additional Amounts with respect to the original level of withholding on
principal and interest, if any, accrued to the date of redemption.
Whenever in this Note there is mentioned, in any context, the payment of the
principal of (or premium, if any) or interest on, or in respect of, this Note,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided for herein to the extent that, in such context, Additional
Amounts are, were or would be payable in respect hereof pursuant to the
provisions of this Note and express mention of the payment of Additional Amounts
(if applicable) in any provisions hereof shall not be construed as including
Additional Amounts in those provisions hereof where such express mention is not
made.
Except as specifically provided herein (or, if this Note is in global form, in
the Pricing Supplement) (i) neither the Bank nor any Paying Agent shall be
required to make, any payment with respect to any tax, fee, duty, assessment or
other governmental charge imposed by any government or a political subdivision
or taxing authority thereof or therein; (ii) a Paying Agent on behalf of the
Bank shall have the right, but not the duty, to withhold from any amounts
otherwise payable to a holder of this Note such amount as is necessary for the
payment of any such taxes, fees, duties, assessments or other governmental
charges; and (iii) if such an amount is withheld, the amount payable to the
holder of this Note shall be the amount otherwise payable reduced by the amount
so withheld.
The Bank may redeem this Note in whole but not in part at any time at a
redemption price equal to the principal amount hereof (or, if this is an
Original Issue Discount Note, the Amortized Face Amount hereof determined as of
the date of redemption), together with accrued interest to but excluding the
date fixed for redemption, if the Bank shall determine, based upon a written
opinion of independent counsel selected by the Bank, that as a result of any
change in or amendment to the laws (or any regulations or rulings promulgated
hereunder) of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in application or
official interpretation of any such laws, regulations or rulings, which
amendment or change is effective on or after the Original Issue Date, the Bank
would be required to pay Additional Amounts on the occasion of the next payment
due with respect to such Note.
Notice of intention to redeem this Note, in whole but not in part, pursuant to
the immediately preceding paragraph will be given (i) if this Note is in
registered form, to the registered holder of this Note at least once not less
than 30 days nor more than 60 days prior to the date fixed for redemption or
(ii) if this Note is in bearer form, by publication in accordance with
applicable law, provided that no such notice of redemption shall be given
earlier than 90 days prior to the effective date of such change or amendment and
that at the time notice of such redemption is given, such obligation to pay such
Additional Amounts remains in effect and cannot be avoided by the Bank's taking
reasonable measures available to it. From and after any redemption date, if
32
<PAGE>
monies for the redemption of this Note shall have been made available for
redemption on such redemption date, this Note shall cease to bear interest (and,
if this Note is a definitive bearer Note, any interest coupons appertaining
hereto (whether or not attached) maturing after the redemption date shall become
void and no payment shall be made in respect thereof), and the only right of the
holder of this Note shall be to receive payment of the principal amount hereof
(or, if this is an Original Issue Discount Note, the Amortized Face Amount
hereof) and all unpaid interest accrued to such redemption date.
Events of Default, Acceleration of Maturity
In respect of this Note, the occurrence of any of the following events shall
constitute an "Event of Default" with respect to this Note:
(i) default in the payment of any interest (including any Additional
Amounts) with respect to this Note when due, which continues for 30 days;
(ii) default, in the payment of any principal of, or premium, if
any, on, this Note when due;
(iii) whatever the reason for such 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, the entry by a court having
jurisdiction in the premises of:
(a) a decree or order for relief in respect of the Bank in an
involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, reorganization or other
similar law; or
(b) a decree or order appointing a conservator, receiver,
liquidator, assignee, trustee, sequestrator or any other similar
official of the Bank, or of substantially all of the property of the
Bank, or ordering the winding up or liquidation of the affairs of
the Bank, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(iv) the commencement by the Bank of a voluntary case or proceeding
under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or the commencement of any
bankruptcy or insolvency case or proceeding, or the filing by the Bank of
a petition or answer or consent seeking reorganization or relief under any
applicable United States federal or state law, or the consent by the Bank
to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Bank or of substantially all of
the property of the Bank, or the making by the Bank of an assignment for
the benefit of creditors, or the taking of corporate action by the Bank in
furtherance of any such action.
If an Event of Default shall occur and be continuing, the holder of this Note
may declare the principal amount of, and accrued interest and premium, if any,
on, this Note due and payable
33
<PAGE>
immediately by written notice to the Bank. Upon such declaration and notice,
such principal amount (and premium, if any) and accrued interest shall become
immediately due and payable. Any Event of Default with respect to this Note may
be waived by the holder thereof.
This Note contains no limitation on the amount of senior debt, deposits or other
obligations that rank senior to this Note that may be hereafter incurred or
assumed by the Bank.
Miscellaneous
Notwithstanding anything to the contrary contained herein, if this Note is
identified as a Discount Note on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the amount payable to the holder of this Note
in the event of redemption, repayment or acceleration of Maturity will be equal
to (i) the Amortized Face Amount (as defined below) as of the date of such
event, plus (ii) with respect to any redemption of this Note (other than as
provided above in the event that Additional Amounts are required to be paid by
the Bank with respect to this Note), the Initial Redemption Percentage specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) (as adjusted by the Annual Redemption Percentage Reduction specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), if any) minus 100% multiplied by the Issue Price specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement), net
of any portion of such Issue Price which has been paid prior to the date of
redemption, or the portion of the Issue Price (or the net amount) proportionate
to the portion of the unpaid principal amount to be redeemed, plus (iii) any
accrued interest to the date of such event the payment of which would constitute
qualified stated interest payments within the meaning of U.S. Treasury
Regulation 1. 1273-1 (c) under the Code. The "Amortized Face Amount" shall mean
an amount equal to (i) the Issue Price plus (ii) the aggregate portions of the
original issue discount (the excess of the amounts considered as part of the
"stated redemption price at maturity" of this Note within the meaning of Section
1273(a)(2) of the Code, whether denominated as principal or interest, over the
Issue Price) which shall theretofore have accrued pursuant to Section 1272 of
the Code (without regard to Section 1272(a)(7) of the Code) from the date of
issue of this Note to the date of determination, minus (iii) any amount
considered as part of the "stated redemption price at maturity" of this Note
which has been paid from the date of issue to the date of determination.
As used herein, "Business Day" means, unless otherwise specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), a day
which is both (i) a day (other than a Saturday or a Sunday) on which commercial
banks and foreign exchange markets settle payments in The City of New York, Glen
Allen, Virginia, and London; and (ii) either (a) if this is a Note denominated
in a Specified Currency other than euro, a day on which commercial banks and
foreign exchange markets settle payments in the principal financial center of
the country of the relevant Specified Currency (if other than the City of New
York or London) or (b) if this is a Note denominated in euro, a day (other than
a Saturday or a Sunday) on which the Trans-European Automated Real-Time Gross
Settlement Express Transfer (TARGET) System is open. As used herein, "London
Business Day" means any day (other than a Saturday or Sunday) on which
commercial banks and foreign exchange markets settle payments in London.
34
<PAGE>
Any action by the holder of this Note shall bind all future holders of this
Note, and of any Note issued in exchange or substitution hereof or in place
hereof, in respect of anything done or permitted by the Bank or by the Paying
Agents in pursuance of such action.
In case any Note shall at any time become mutilated, defaced, destroyed, lost or
stolen, and such Note or evidence of the loss, theft or destruction thereof
satisfactory to the Bank and the Registrar or London Issuing Agent, as the case
may be, and such other documents or proof as may be required by the Bank and the
Registrar or London Issuing Agent, as the case may be, shall be delivered to the
Registrar or London Issuing Agent, as the case may be, the Registrar or London
Issuing Agent, as the case may be, shall issue a new Note of like tenor and
principal amount, having a serial number not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Note or in lieu of the
Note destroyed, lost or stolen but, in the case of any destroyed, lost or stolen
Note, only upon receipt of evidence satisfactory to the Bank and the Registrar
or London Issuing Agent, as the case may be, that such Note was destroyed,
stolen or lost, and, if required, upon receipt of indemnity satisfactory to the
Bank and the Registrar or London Issuing Agent, as the case may be. Upon the
issuance of any substituted Note, the Bank may require the payment of a sum
sufficient to cover all expenses and reasonable charges connected with the
preparation and delivery of a new Note. If any Note which has matured or has
been redeemed or repaid or is about to mature or to be redeemed or repaid shall
become mutilated, defaced, destroyed, lost or stolen, the Bank may, instead of
issuing a substitute Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Note) upon
compliance by the holder with the provisions of this paragraph.
No recourse shall be had for the payment of principal of (and premium, if any)
or interest on, this Note for any claim based hereon, or otherwise in respect
hereof, against any shareholder, employee, agent, officer or director, as such,
past, present or future, of the Bank or of any successor organization, either
directly or through the Bank or any successor organization, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
The Notes are issued in accordance with the Global Agency Agreement. The Notes,
and any receipts or interest coupons appertaining thereto, may be amended by the
Bank, and the Global Agency Agreement may be amended by the parties thereto, (i)
for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective provision contained therein, (ii) to make any
further modifications of the terms of the Global Agency Agreement necessary or
desirable to allow for the issuance of any additional Notes (which modifications
shall not be materially adverse to holders of outstanding Notes) or (iii) in any
manner which the Bank (and, in the case of the Global Agency Agreement, the
parties thereto) may deem necessary or desirable and which shall not materially
adversely affect the interests of the holders of the Notes, or any receipts,
talons or interest coupons appertaining thereto, to all of which each holder of
Notes, receipts, talons or interest coupons shall, by acceptance thereof, be
deemed to have consented; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Note
affected thereby, (1) change the Maturity Date with respect to any Note or
reduce or cancel the amount payable at Maturity; (2) reduce the amount payable
or modify the payment date for any interest with respect to any Note or vary the
method
35
<PAGE>
of calculating the rate of interest with respect to any Note; (3) reduce any
Minimum Interest Rate and/or Maximum Interest Rate with respect to any Note; (4)
modify the currency in which payments under any Note and/or any receipts,
coupons or talons appertaining thereto are to be made; (5) change the obligation
of the Bank to pay Additional Amounts with respect to Notes, receipts, talons or
coupons; or (6) reduce the percentage in principal amount of outstanding Notes
the consent of the holders of which is necessary to modify the provisions of the
Notes or to waive any future compliance or past default. Any instrument given by
or on behalf of any holder of a Note in connection with any consent to any such
modification, amendment or waiver shall be irrevocable once given and shall be
conclusive and binding on all subsequent holders of such Note. Any
modifications, amendments or waivers to this Agreement or the provisions of the
Notes, receipts, talons or coupons shall be conclusive and binding on all
holders of Notes, receipts, talons or coupons, whether or not notation of such
modifications, amendments or waivers is made upon the Notes, receipts, talons or
coupons. It will not be necessary for the consent of the holders of Notes to
approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
No provision of this Note shall alter or impair the obligation of the Bank,
which is absolute and unconditional, to pay principal of (and premium, if any)
and interest on, and any Additional Amounts with respect to, this Note in the
Specified Currency indicated on the face hereof (or, as provided herein, in the
equivalent in U.S. dollars) at the times, places and rate herein prescribed.
No service charge shall be made to a holder of this Note for any transfer or
exchange of this Note, but the Bank may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
If this Note is in registered form, prior to due presentment of this Note for
registration of transfer, the Bank, Domestic Paying Agent, Registrar, London
Paying Agent, Luxembourg Paying Agent, Transfer Agent and Listing Agent
(collectively, together with any successors thereto, the "Agents") or any agent
of the Bank or the Agents may treat the holder in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Bank, the Agents nor any such agent shall be affected
by notice to the contrary except as required by applicable law.
All notices to the Bank under this Note shall be in writing and addressed to the
Bank at Capital One Bank, 8000 Jones Branch Road, McLean, Virginia 22102, USA,
Attention: Treasurer; telephone: (703) 8751000; and facsimile: (703) 875-1099 or
to such other address of the Bank as the Bank may notify the holders of the
Notes.
36
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to repay
this Note (or portion hereof specified below) pursuant to its terms at a price
equal to 100% of the principal amount hereof to be repaid, together with accrued
and unpaid interest hereon, payable to the date of repayment, to the
undersigned, at ______________
- ------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned.)
For this Note to be repaid, the undersigned must give to the London Paying
Agent, if this Note is in bearer form, at 9 Thomas More Street, London, E1W 1YT
or, if this Note is in registered form, to the Domestic Paying Agent at The
Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001-2697,
United States of America, or to the London Paying Agent at its address, as the
case may be, or at such other place or places of which the Bank shall from time
to time notify the holders of the Notes not more than 60 days nor less than 30
days prior to the date of repayment, this Note (and, if this Note is in
definitive bearer form, all interest coupons appertaining hereto maturing after
the repayment date) with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid, specify
the portion hereof (which shall be increments of US$1,000, or equivalent
denominations in other currencies) which the holder elects to have repaid and
specify the denomination or denominations (which shall be an Authorized
Denomination specified on the face of the within Note) of the Notes to be issued
to the holder for the portion of this Note not being repaid (in the absence of
any such specification, one such Note will be issued for the portion not being
repaid):
US$__________________________ ________________________________
Signature
NOTICE: The signature on this
"Option to Elect Repayment" form
must correspond with the name as
written upon the face of the within
Note in every particular, without
alteration or enlargement or any
Dated: ________________________ change whatsoever.
- ---------------------------------
Signature Guarantee NOTICE: The signature(s) should be guaranteed by an
eligible guarantor institution (banks, stockbrokers, savings and loan
associations, and credit unions with membership in an approved signature
guarantee medallion program), pursuant to Rule 17Ad- 15 under the Securities
Exchange Act of 1934.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4.3
<SEQUENCE>3
<FILENAME>dex443.txt
<DESCRIPTION>COPY OF FLOATING RATE NOTES
<TEXT>
<PAGE>
Exhibit 4.4.3
REGISTERED GLOBAL SENIOR NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE "DEPOSITARY") TO
CAPITAL ONE BANK (THE "BANK") OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN
EXCHANGE FOR, OR IN LIEU OF, THIS NOTE IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS A GLOBAL SECURITY AND, UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN
WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, IT MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
SENIOR NOTE: THIS NOTE IS A DIRECT, UNCONDITIONAL, UNSECURED AND UNSUBORDINATED
GENERAL OBLIGATION OF CAPITAL ONE BANK (THE "BANK"). THE OBLIGATIONS EVIDENCED
BY THIS NOTE RANK PARI PASSU WITH ALL OTHER UNSECURED AND UNSUBORDINATED
OBLIGATIONS OF THE BANK, EXCEPT OBLIGATIONS, INCLUDING ITS DOMESTIC (U.S.)
DEPOSITS, THAT ARE SUBJECT TO ANY PRIORITIES OR PREFERENCES UNDER APPLICABLE
LAW. THIS NOTE DOES NOT EVIDENCE A DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION ("FDIC") OR ANY OTHER INSURER.
THIS NOTE IS ISSUABLE ONLY IN MINIMUM DENOMINATIONS OF US$100,000 AND INTEGRAL
MULTIPLES OF US$1,000 IN EXCESS THEREOF. EACH OWNER OF A BENEFICIAL INTEREST IN
THIS NOTE IS REQUIRED TO HOLD A BENEFICIAL INTEREST OF US$100,000 PRINCIPAL
AMOUNT OR ANY INTEGRAL MULTIPLE OF US$1,000 IN EXCESS THEREOF OF THIS NOTE AT
ALL TIMES.
No. R- REGISTERED
---------
CUSIP No.: 14040NAB8
---------
ISIN No.: US14040NAB82
------------
Common Code: 011317499
---------
<PAGE>
CAPITAL ONE BANK
GLOBAL BANK NOTE
(Registered Global Note)
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT: $200,000,000
June 22, 2000 SPECIFIED CURRENCY:
MATURITY DATE:
June 23, 2003 |_| U.S. dollar
|_| FIXED RATE NOTE |_| Other:
|_| FLOATING RATE NOTE
CAPITAL ONE BANK, a bank organized under the laws of the Commonwealth of
Virginia (the "Bank"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal amount specified above as adjusted in
accordance with Schedule 1 hereto, on the Maturity Date specified above (except
to the extent redeemed or repaid prior to the Maturity Date) and to pay interest
thereon (i) in accordance with the provisions set forth on the reverse hereof
under the caption "Fixed Rate Interest Provisions," if this Note is designated
as a "Fixed Rate Note" above, or (ii) in accordance with the provisions set
forth on the reverse hereof under the caption "Floating Rate Interest
Provisions," if this Note is designated as a "Floating Rate Note" above, in each
case as such provisions may be modified or supplemented by the terms and
provisions set forth in the Pricing Supplement attached hereto (the "Pricing
Supplement"), and (to the extent that the payment of such interest shall be
legally enforceable) to pay interest at the Default Rate per annum specified in
the Pricing Supplement on any overdue principal and premium, if any, and on any
overdue installment or interest. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will be paid to the person in
whose name this Note (or any predecessor Note) is registered at the close of
business on the fifteenth calendar day (whether or not a Business Day (as
defined on the reverse hereof)) next preceding the applicable Interest Payment
Date (unless otherwise specified in the Pricing Supplement) (each, a "Regular
Record Date"); provided, however, that interest payable at Maturity (as defined
on the reverse hereof) will be payable to the person to whom principal shall be
payable. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the holder as of the close of business on such
Regular Record Date, and shall instead be payable to the person in whose name
this Note (or any predecessor Note) is registered at the close of business on a
special record date for the payment of such defaulted interest (the "Special
Record Date") to be fixed by the Registrar (as defined below), notice whereof
shall be given by the Registrar to the holder of this Note not less than 15
calendar days prior to such Special Record Date.
This Note is one of a duly authorized issue of the Bank's notes due from 30 days
to 30 years or more from date of issue (the "Notes"). The Notes are issued in
accordance with the Global Agency Agreement, dated as of June 6, 2000 (the
"Global Agency Agreement"), among the Bank and The Chase Manhattan Bank as
paying agent (the "Domestic Paying Agent") and as registrar (the "Registrar"),
The Chase Manhattan Bank, London Branch, as paying agent (the "London Paying
Agent") and as issuing agent (the "London Issuing Agent") and Chase Manhattan
Bank Luxembourg S.A. as transfer agent (the "Transfer Agent"), as paying agent
(the "Luxembourg Paying Agent", together with the Domestic Paying Agent and the
London Paying
2
<PAGE>
Agent, the "Paying Agents", and individually, a "Paying Agent") and Kredietbank
S.A. Luxembourgeoise as listing agent (the "Listing Agent"). The terms Domestic
Paying Agent, Registrar, London Paying Agent, London Issuing Agent, Luxembourg
Paying Agent, Transfer Agent and Listing Agent shall include any additional or
successor agents appointed in such capacities by the Bank.
The Bank shall cause to be kept at the office of the Registrar designated below
a register (the register maintained in such office or any other office or agency
of the Registrar, herein referred to as the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Bank shall provide for
the registration of Notes issued in registered form and of transfers of such
Notes. The Bank has initially appointed The Chase Manhattan Bank, acting through
its principal office at 450 West 33rd Street, 15th Floor, New York, New York
10001, as "Registrar" for the purpose of registering Notes issued in registered
form and transfers of such Notes. The Bank reserves the right to rescind such
designation at any time, and to transfer such function to another bank or
financial institution.
The transfer of this Note is registrable in the Note Register, upon surrender of
the Note for registration of transfer at the office or agency of the Registrar
or any transfer agent maintained for that purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar (or such transfer agent) duly executed by, the holder hereof or its
attorney duly authorized in writing.
Payment of principal of, and premium, if any, and interest on, this Note due at
Maturity will be made in immediately available funds upon presentation and
surrender of this Note at the office of a Paying Agent maintained for that
purpose; provided, that this Note is presented to such Paying Agent in time for
such Paying Agent to make such payment in accordance with its normal procedures.
Payments of interest an this Note (other than at Maturity) will be made by wire
transfer to such account as has been appropriately designated to a Paying Agent
by the person entitled to such payments.
Reference is made to the further provisions of this Note set forth on the
reverse hereof and in the Pricing Supplement, which further provisions shall for
all purposes have the same effect as if set forth at this place. In the event of
any conflict between the provisions contained herein or on the reverse hereof
and the provisions contained in the Pricing Supplement attached hereto, the
latter shall control. References herein to "this Note," "hereof," "herein" and
comparable terms shall include the Pricing Supplement attached hereto.
Unless the certificate of authentication hereon has been executed by the
Registrar, by manual signature of an authorized signatory, this Note shall not
be valid or obligatory for any purpose.
3
<PAGE>
This Note shall be governed by, and construed in accordance with, the laws of
the State of New York, without regard to the conflicts of law principles
thereof.
IN WITNESS WHEREOF, the Bank has caused this Note to be duly executed.
CAPITAL ONE BANK
By:
-------------------------------
Name:
Title:
Dated:
REGISTRAR'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Global
Agency Agreement.
THE CHASE MANHATTAN BANK,
as Registrar
By:
--------------------------
Name:
Title:
4
<PAGE>
PRICING SUPPLEMENT DATED JUNE 15, 2000
(to be read in conjunction with the Offering Circular Supplement dated June 15,
2000 and the Offering Circular dated June 6, 2000)
Capital One Bank
(a Bank Organized Pursuant to the Laws of Virginia)
Global Bank Notes
Floating Rate Notes due 2003
This Pricing Supplement should be read in conjunction with the Offering Circular
Supplement dated June 15, 2000 and the Offering Circular, dated June 6, 2000
(together, the "Offering Circular"), relating to the U.S.$5,000,000,000 Global
Bank Note Program of Capital One Bank. Unless otherwise defined herein, terms
used herein shall have the meanings ascribed to them in the Offering Circular.
[Include whichever of the following apply]
DESCRIPTION OF THE NOTES
1. Specified Currency and Principal Amount: US $200,000,000
2. Senior or Subordinated: Senior
3. Original Issue Date: June 22, 2000
4. Stated Maturity Date: June 23, 2003
5. Issue Price: 100%
6. (a) Authorized Denomination(s): $100,000 and integral multiples of
$1,000 in excess thereof
(b) Redenomination (Yes/No): No [If yes, give details]
7. Form of Note (Registered or Bearer): Registered
8. (a) Series Number: 1
(b) If forming part of an existing Series (Yes/No): No [If yes, give
details]
9. Interest Period:
|_| One Month
|_| Three Months
|_| Six Months
|_| Twelve Months
|_| Other (Specify Number of Months):
10. Interest Payment Date(s): March 23, June 23, September 23 and
December 23
5
<PAGE>
11. Record Dates (for Registered Notes with Maturities Greater
than One Year): Fifteen calendar days prior to each Interest
Payment Date.
12. Exchange Rate Agent (Registered Notes and Dual Currency
Notes):
13. Default Rate (if other than Interest Rate): % per annum
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
FIXED RATE NOTES
14. Interest Rate: % per annum
15. Day Count Convention:
|_| 30/360 for the period from _________ to __________
|_| Actual/360 for the period from _________ to ________
|_| Actual/Actual for the period from ________ to ________
|_| Other (specify convention and applicable period):
FLOATING RATE NOTES
16. Interest Rate Determination:
|_| ISDA Rate
|_| Reference Rate Determination
17. Calculation Agent, if not The Chase Manhattan Bank:
18. Maximum Interest Rate: % per annum
19. Minimum Interest Rate: % per annum
20. Day Count Convention:
|_| 30/360 for the period from _________ to __________
|_| Actual/360 for the period from June 22, 2000 to June 23,
2003
|_| Actual/Actual for the period from _________ to __________
|_| Other (specify convention and applicable period):
21. Business Day Convention:
|_| Floating Rate Convention
|_| Following Business Day Convention
|_| Modified Following Business Day Convention
|_| Preceding Business Day Convention
|_| Other (specify):
ISDA RATE
22. Margin: [+/-] % per annum
23. Floating Rate Option:
6
<PAGE>
24. Designated Maturity:
25. Reset Date:
REFERENCE RATE DETERMINATION
26. Initial Interest Rate: 3-month LIBOR + 95 basis points; to be
set 2 London Business Days prior to the Original Issue Date
27. Index Maturity: 3 months
28. Interest Rate Basis or Bases:
If CMT Rate: Specified CMT Telerate Page:
Specified CMT Maturity Index:
If EURIBOR:
If LIBOR: |_| LIBOR Telerate
|_| LIBOR Reuters
29. Index Currency: U.S. Dollars
30. Spread: + .95%
31. Spread Multiplier:
32. Initial Interest Determination Date: June 20, 2000
33. Interest Reset Period: Quarterly from and including each
Interest Payment Date (or the Original Issue Date in the case
of the Initial Interest Reset Period) to but excluding the
next Interest Payment Date or the Stated Maturity Date, as the
case may be.
34. Interest Reset Dates: Quarterly, on the first day of each
Interest Reset Period.
35. Interest Calculation:
|_| Regular Floating Rate Note
|_| Floating Rate/Fixed Rate Note
Fixed Rate Commencement Date:
Fixed Interest Rate: % per annum
|_| Inverse Floating Rate Note:
Fixed Interest Rate: % per annum
PROVISIONS REGARDING REDEMPTION/REPAYMENT
36. Initial Redemption Date:
37. Initial Redemption Percentage:
38. Annual Redemption Percentage Reduction:
39. Holder's Optional Repayment Date(s):
DISCOUNT NOTES (INCLUDING ZERO COUPON NOTES)
40. Discount Note (Yes/No):
7
<PAGE>
If Yes: Total Amount of OID:
Yield to Maturity:
Initial Accrual Period: %
Issue Price:
INDEXED NOTES
41. Index: [give details]
42. Formula:
43. Agent, if any, responsible for calculating the principal
and/or interest payable:
44. Provisions where calculation by reference to Index and/or
Formula is impossible or impracticable:
DUAL CURRENCY NOTES
45. Dual Currency Notes (Yes/No):
If Yes: Face Amount:
Face Amount Currency:
Optional Payment Currency:
Option Election Dates: [give details]
46. Designated Exchange Rate:
47. Option Value Calculation Agent:
48. Agent, if any, responsible for calculating the principal
and/or interest payable:
INSTALLMENT NOTES
49. Additional provisions relating to Installment Notes:
PARTLY PAID NOTES
50. Additional provisions relating to Partly Paid Notes:
GENERAL PROVISIONS
51. Additional or different Paying Agents:
52. Additional or different Registrars:
53. Additional or different London Issuing Agents:
54. Additional or different Transfer Agents:
55. "Business Day" definition (if other than as defined in the
Offering Circular):
56. Cost, if any, to be borne by Noteholders in connection with
exchanges for Definitive Bearer Notes:
57. Talons for future Coupons or Receipts to be attached to
Definitive Bearer Notes (Yes/No) and dates on which such
Talons mature:
[If yes, give details]
58. Additional selling restrictions: [give details]
8
<PAGE>
59. CUSIP: 14040NAB8
ISIN: US14040NAB82
Common Code: 011317499
Other (specify):
60. Details of additional/alternative clearance system approved by
the Bank:
61. Notes to be listed (Yes/No): Yes
If Yes, securities exchange(s): Luxembourg
62. Syndicated Issue (Yes/No): Yes
If Yes, names of managers and details of relevant stabilizing
manager, if any: J.P Morgan Securities Inc. and Salomon Smith
Barney Inc.
63. Clearance System(s):
|_| DTC only
|_| Euroclear and Clearstream, Luxembourg only
|_| DTC, and Euroclear and Clearstream, Luxembourg through DTC
|_| DTC, Euroclear and Clearstream, Luxembourg
|_| Other:
64. Name(s) of relevant Distribution Agent(s): J.P. Morgan
Securities Inc., Salomon Smith Barney Inc., Barclays Capital
Inc., Chase Securities Inc., Credit Suisse First Boston
Corporation, Deutsche Bank Securities Inc., Donaldson, Lufkin
& Jenrette Securities Corporation and Morgan Stanley & Co.
Incorporated
65. Other terms or special conditions:
66. Tax considerations:
Discount or Commission per Note: .250%
Selling Concession per Note: .150%
Reallowance per Note: .100
9
<PAGE>
[Reverse of Note]
The Notes are issuable only in denominations of US$100,000 and integral
multiples of US$1,000 in excess thereof (or equivalent denominations in other
currencies, subject to any other statutory or regulatory minimums). This Note,
and any Note issued in exchange or substitution herefor or in place hereof, or
upon registration of transfer, exchange or partial redemption or repayment of
this Note, may be issued only in an Authorized Denomination specified in the
Pricing Supplement (or, if this Note is in definitive form, specified on the
face hereof).
Unless otherwise provided herein (or, if this Note is in global form, in the
Pricing Supplement), the principal of, and premium, if any, and interest on,
this Note are payable in the Specified Currency indicated on the face hereof
(or, if such Specified Currency is not at the time of such payment legal tender
for the payment of public and private debts, in such other coin or currency of
the country which issued such Specified Currency as at the time of such payment
is legal tender for the payment of debts). If this Note is a DTC Global Note and
the Specified Currency indicated on the face hereof is other than U.S. dollars,
any such amounts paid by the Bank will be converted by The Chase Manhattan Bank,
as Exchange Rate Agent, or such other agent as may be specified in the Pricing
Supplement (or, if this Note is in definitive form, specified on the face
hereof), which for these purposes shall act as currency exchange agent (the
"Exchange Rate Agent"), into U.S. dollars for payment to the holder of this
Note.
If this Note is a DTC Global Note and the Specified Currency indicated on the
face hereof is other than the U.S. dollar, any U.S. dollar amount to be received
by the holder of this Note will be based on the Exchange Rate Agent's bid
quotation as of 11:00 a.m., London time, on the second day on which banks are
open for business in London, New York City and Glen Allen, Virginia, preceding
the applicable payment date, for the purchase of U.S. dollars with the Specified
Currency for settlement on such payment date of the aggregate amount of the
Specified Currency payable to all holders of Notes denominated other than in the
U.S. dollar scheduled to receive U.S. dollar payments. If such bid quotation is
not available, the Exchange Rate Agent will obtain a bid quotation from a
leading foreign exchange bank in London or New York City selected by the
Exchange Rate Agent for such purchase. If no such bids are available, payment of
the aggregate amount due to the holder of this Note on the payment date will be
made in the Specified Currency, subject to the other provisions of this Note
relating to payment in such Specified Currency. All currency exchange costs will
be borne by the holder of this Note by deductions from such payments. All
determinations referred to above made by the Exchange Rate Agent shall be at its
sole discretion and shall, in the absence of manifest error, be conclusive for
all purposes and binding upon the holder of this Note.
If this Note is a DTC Global Note and the Specified Currency indicated on the
face hereof is other than the U.S. dollar, the holder of this Note may elect to
receive payment of principal (and premium, if any) and interest on this Note in
the Specified Currency indicated on the face hereof by submitting a written
notice to the Paying Agents prior to 5:00 pm, New York City time, on the fifth
Business Day following the applicable Record Date in the case of interest and
the tenth calendar day prior to the payment date for the payment of principal.
Such notice, which may be mailed or hand delivered or sent by cable, telex or
facsimile transmission, shall contain (i) the
<PAGE>
holder's election to receive all or a portion of such payment in the Specified
Currency on the relevant Interest Payment Date or Maturity, as the case may be,
and (ii) wire transfer instructions to an account denominated in the Specified
Currency with respect to any payment to be made in the Specified Currency. Any
such election made with respect to this Note by the holder will remain in effect
with respect to any further payments of principal of, and premium, if any, and
interest on this Note payable to the holder of this Note unless such election is
revoked on or prior to the fifth Business Day following the applicable Record
Date in the case of interest and the tenth calendar day prior to the payment
date for the payment of principal.
If (i) this Note is a DTC Global Note and the holder of this Note shall have
duly made an election to receive all or a portion of a payment of principal of,
and premium, if any, or interest on this Note in the Specified Currency
indicated on the face hereof, or (ii) if this Note is not a DTC Global Note, in
the case of (i) or (ii) in the event the Specified Currency indicated on the
face hereof has been replaced by another currency (a "Replacement Currency"),
any amount due pursuant to this Note may be repaid, at the option of the Bank,
in the Replacement Currency or in U.S. dollars, at a rate of exchange which
takes into account the conversion, at the rate prevailing on the most recent
date on which official conversion rates were quoted or set by the national
government or other authority responsible for issuing the Replacement Currency,
from the Specified Currency to the Replacement Currency and, if necessary, the
conversion of the Replacement Currency into U.S. dollars at the rate prevailing
on the date of such conversion.
If the Specified Currency indicated on the face hereof is other than the U.S.
dollar and (i) this Note is a DTC Global Note and the holder of this Note shall
have duly made an election to receive all or a portion of a payment of principal
of, and premium, if any, or interest on this Note in the Specified Currency
indicated on the face hereof, or (ii) if this Note is not a DTC Global Note, in
the case of (i) or (ii) if such Specified Currency is not available due to the
imposition of exchange controls or other circumstances beyond the control of the
Bank, the Bank will be entitled to satisfy its obligations to the holder of this
Note by making such payments of principal of (and premium, if any) or interest
on this Note in U.S. dollars until, in the sole discretion of the Bank, the
Specified Currency is again available. In such circumstances, the U.S. dollar
amount to be received by the holder of this Note will be made on the basis of
the most recently available bid quotation from a leading foreign exchange bank
in London or New York City selected by the Exchange Rate Agent, for the purchase
of U.S. dollars with the Specified Currency for settlement on such payment date
of the aggregate amount of the Specified Currency payable to all holders of
Notes denominated other than in the U.S. dollar scheduled to receive U.S. dollar
payments. Any payment made under such circumstances in U.S. dollars, where the
payment is required to be made in the Specified Currency, will not constitute an
"Event of Default" with respect to this Note.
The Chase Manhattan Bank shall initially act as domestic paying agent (the
"Domestic Paying Agent") and the Bank has initially appointed The Chase
Manhattan Bank, London Branch, acting through its specified office in London as
London paying agent (the "London Paying Agent") and Chase Manhattan Bank
Luxembourg S.A. as Luxembourg paying agent (the "Luxembourg Paying Agent" and
together with the Domestic Paying Agent and the London Paying Agent, the "Paying
Agents," and each individually, a "Paying Agent," and such terms shall include
any additional or successor paying agents appointed pursuant to the Global
Agency Agreement (as defined on the face hereof)) in respect of the Notes. If
this Note is in registered form, this Note
11
<PAGE>
may be presented or surrendered for payment, and notices, designations or
requests in respect of payments with respect to this Note may be served, at the
office or agency of any Paying Agent maintained for that purpose. The Bank may
at any time rescind any designation of a Paying Agent, appoint any additional or
successor Paying Agents or approve a change in the office through which a Paying
Agent acts.
Subject to any fiscal or other laws and regulations applicable thereto in the
place of payment, payments on registered Notes to be made in a Specified
Currency other than the U.S. dollar and payments on bearer Notes will be made by
a check in the Specified Currency drawn on or by wire transfer to an account in
the Specified Currency (which, in the case of a payment in Yen to a non-resident
of Japan, shall be a non-resident account) maintained by the payee with a bank
(which, in the case of a payment in Yen to a non-resident of Japan, shall be an
authorized foreign exchange bank) in the Principal Financial Center of the
country of the Specified Currency, provided, however, that a check may not be
delivered to an address in, and an amount may not be transferred to an account
located in, the United States of America or its possessions by any office or
agency of the Bank or any Paying Agent.
Fixed Rate Interest Provisions
If this Note is designated as a "Fixed Rate Note" on the face hereof, the Bank
will pay interest on each Interest Payment Date specified in the Pricing
Supplement (or, if this Note is in definitive form, specified on the face
hereof) and on the Maturity Date or any Redemption Date (as defined below) or
Holder's Optional Repayment Date (as defined below) (each such Maturity Date,
Redemption Date and Holder's Optional Repayment Date and the date on which the
principal or an installment of principal is due and payable by declaration of
acceleration as provided herein being hereinafter referred to as a "Maturity"
with respect to the principal repayable on such date), commencing on the first
Interest Payment Date next succeeding the Original Issue Date specified on the
face hereof (or if the Original Issue Date is between a Record Date and the
Interest Payment Date immediately following such Record Date, on the Second
Interest Payment Date following the Original Issue Date), at the Interest Rate
per annum specified in the Pricing Supplement (or, if this Note is in definitive
form, specified on the face hereof), until the principal hereof is paid or duly
made available for payment.
Payments of interest hereon will include interest accrued from and including the
most recent Interest Payment Date to which interest on this Note (or any
predecessor Note) has been paid or duly provided for (or, if no interest has
been paid or duly provided for, from and including the Original Issue Date) to
but excluding the relevant Interest Payment Date or Maturity, as the case may
be. Unless otherwise specified in the Pricing Supplement (or, if this note is in
definitive form, on the face hereof), if the Maturity Date specified on the face
hereof falls more than one year from the Original Issue Date, interest payments
for this Note shall be computed and paid on the basis of a 360-day year of
twelve 30-day months. Unless otherwise specified in the Pricing Supplement (or,
if this Note is in definitive form, on the face hereof) if the Maturity Date
specified on the face hereof falls one year or less from the Original Issue
Date, interest payments for this Note shall be computed and paid on the basis of
the actual number of days in the year divided by 360.
12
<PAGE>
Unless otherwise provided herein, if any Interest Payment Date or the Maturity
of this Note falls on a day which is not a Business Day, the related payment of
principal of, or premium, if any, or interest on, this Note shall be made on the
next succeeding Business Day with the same force and effect as if made on the
date such payments were due, and no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date or the
Maturity, as the case may be.
Floating Rate Interest Provisions
If this Note is designated as a "Floating Rate Note" on the face hereof, the
Bank will pay interest on each Interest Payment Date specified in the Pricing
Supplement (or, if this Note is in definitive form specified on the face hereof)
and at Maturity, commencing on the first Interest Payment Date next succeeding
the Original Issue Date specified on the face hereof (or, if the Original Issue
Date is between a Record Date and the Interest Payment Date immediately
following such Record Date, on the second Interest Payment Date following the
Original Issue Date), at a rate per annum determined in accordance with the
provisions hereof (and, if this Note is in global form, in accordance with the
Pricing Supplement), until the principal hereof is paid or duly made available
for payment.
Payments of interest hereon will include interest accrued from and including the
most recent Interest Payment Date to which interest on this Note (or any
predecessor Note) has been paid or duly provided for (or, if no interest has
been paid or duly provided for, from and including the Original Issue Date) to
but excluding the relevant Interest Payment Date or Maturity, as the case may be
(each such period, an "Interest Period").
Unless otherwise specified herein (or, if this Note is in global form, in the
Pricing Supplement), if any Interest Payment Date (or other date which is
subject to adjustment in accordance with a Business Day Convention specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement))
in respect of this Note (other than an Interest Payment Date at Maturity) would
otherwise fall on a day that is not a Business Day, then, if the Business Day
Convention specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement) is:
(1) the "Floating Rate Convention," such Interest Payment Date (or other
date) shall be postponed to the next succeeding day which is a
Business Day unless it would thereby fall into the next succeeding
calendar month, in which event (A) such Interest Payment Date (or
other date) shall be brought forward to the next preceding Business
Day and (B) each subsequent Interest Payment Date (or other date)
shall be the last Business Day in the month which falls the number
of months or other period specified as the Interest Payment Period
on the face hereof after the preceding applicable Interest Payment
Date (or other date) occurred; or
(2) the "Following Business Day Convention," such Interest Payment Date
(or other date) shall be postponed to the next succeeding day which
is a Business Day; or
(3) the "Modified Following Business Day Convention," such Interest
Payment Date (or other date) shall be postponed to the next
succeeding day that is a Business Day unless it would thereby fall
into the next succeeding calendar month, in
13
<PAGE>
which event such Interest Payment Date (or other date) shall be
brought forward to the next preceding Business Day; or
(4) the "Preceding Business Day Convention," such Interest Payment Date
(or other date) shall be brought forward to the next preceding
Business Day.
If the Maturity of this Note falls on a day that is not a Business Day, the
related payment of principal of (and premium, if any) and interest on, this Note
will be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no interest shall accrue on the
amount so payable for the period from and after such Maturity.
If "ISDA Rate" is specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement) in connection with the determination of the
rate of interest on this Note, the rate of interest on this Note for each
Interest Period will be the relevant ISDA Rate (as defined below) plus or minus
the Margin, if any, specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement). Unless otherwise specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), "ISDA Rate"
means, with respect to any Interest Period, the rate equal to the Floating Rate
that would be determined by the Calculation Agent or other person specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement)
pursuant to an interest rate swap transaction if the Calculation Agent or that
other person were acting as calculation agent for that swap transaction in
accordance with the terms of an agreement in the form of the Interest Rate and
Currency Exchange Agreement published by the International Swaps and Derivatives
Association, Inc. (the "ISDA Agreement") and evidenced by a Confirmation (as
defined in the ISDA Agreement) incorporating the ISDA Definitions (as defined
below) and under which:
(A) the Floating Rate Option is as specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement);
(B) the Designated Maturity is the period specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), and
(C) the relevant Reset Date is either (i) if the applicable Floating
Rate Option is based on the London inter-bank offered rate for a
currency or on the Euro-zone inter-bank offered rate ("EURIBOR") for
a currency, the first day of that Interest Period or (ii) in any
other case, as specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement).
As used in this paragraph, "Floating Rate," "Calculation Agent," "Floating Rate
Option," "Designated Maturity," and "Reset Date" have the meanings ascribed to
those terms in the ISDA Definitions.
If "Reference Rate Determination" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement) in connection with the
determination of the rate of interest on this Note, this Note will bear interest
at a rate per annum equal to the Initial Interest Rate specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) until the
Initial Interest Reset Date specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) and thereafter at a rate per annum
determined as follows:
14
<PAGE>
1. If this Note is designated as a "Regular Floating Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) or if no
designation is made for Interest Calculation on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), then, except as described
below (or, if this Note is in global form, in the Pricing Supplement), this Note
shall bear interest at the rate determined by reference to the applicable
Interest Rate Basis or Bases specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement) (i) plus or minus the applicable
Spread, if any, and/or (ii) multiplied by the applicable Spread Multiplier, if
any, specified and applied in the manner described on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). Commencing on the
Initial Interest Reset Date, the rate at which interest on this Note is payable
shall be reset as of each Interest Reset Date specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement); provided, however,
that the interest rate in effect for the period from the Original Issue Date to
the Initial Interest Reset Date will be the Initial Interest Rate.
2. If this Note is designated as a "Floating Rate/Fixed Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), then,
except as described below (or, if this Note is in global form, in the Pricing
Supplement), this Note shall bear interest at the rate determined by reference
to the applicable Interest Rate Basis or Bases specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement) (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
Multiplier, if any, specified and applied in the manner described on the face
hereof (or, if this Note is in global form, in the Pricing Supplement).
Commencing on the Initial Interest Reset Date, the rate at which interest on
this Note is payable shall be reset as of each Interest Reset Date specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement);
provided, however, that (i) the interest rate in effect for the period from the
Original Issue Date to the Initial Interest Reset Date shall be the Initial
Interest Rate and (ii) the interest rate in effect commencing on, and including,
the Fixed Rate Commencement Date specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement) to the Maturity Date shall be the
Fixed Interest Rate, if such a rate is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), or if no such Fixed Interest
Rate is so specified, the interest rate in effect hereon on the Business Day
immediately preceding the Fixed Rate Commencement Date.
3. If this Note is designated as an "Inverse Floating Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), then,
except as described below (or, if this Note is in global form, in the Pricing
Supplement), this Note shall bear interest equal to the Fixed Interest Rate
indicated on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) minus the rate determined by reference to the applicable Interest
Rate Basis or Bases specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement) (i) plus or minus the applicable Spread, if
any, and/or (ii) multiplied by the applicable Spread Multiplier, if any,
specified and applied in the manner described on the face hereof (or, if this
Note is in global form, in the Pricing Supplement); provided, however, that,
unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the interest rate hereon will not be less than
zero percent. Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note is payable shall be reset as of each Interest Rate Reset
Date specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement); provided, however, that the interest rate in effect for the
period from the Original Issue Date to the Initial Interest Reset Date shall be
the Initial Interest Rate.
15
<PAGE>
Except as provided above, if "Reference Rate Determination" is specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement) in
connection with the determination of the rate of interest on this Note, the
interest rate in effect on each day shall be (a) if such day is an Interest
Reset Date, the interest rate determined as of the Interest Reset Determination
Date (as defined below) immediately preceding such Interest Reset Date or (b) if
such day is not an Interest Reset Date, the interest rate determined as of the
Interest Determination Date immediately preceding the next preceding Interest
Reset Date. Each Interest Rate Basis shall be the rate determined in accordance
with the applicable provision below. If any Interest Reset Date (which term
includes the term Initial Interest Reset Date unless the context otherwise
requires) would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be adjusted in accordance with the Business Day Convention
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement).
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the "Interest Determination Date" with respect
to the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate,
the J.J. Kenny Rate, and the Prime Rate will be the second Business Day
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to the Eleventh District Cost of Funds Rate will be the last working day
of the month immediately preceding each Interest Reset Date on which the Federal
Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the
Index (as defined below); the "Interest Determination Date" with respect to
EURIBOR will be the second day on which the TARGET system is open immediately
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to LIBOR shall be the second London Banking Day (as defined below)
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to the Treasury Rate will be the day in the week in which the related
Interest Reset Date falls on which day Treasury Bills (as defined below) are
normally auctioned (Treasury Bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held on
the preceding Friday); provided, however, that if an auction is held on the
Friday of the week preceding the related Interest Reset Date, the related
Interest Determination Date shall be such preceding Friday; and provided,
further, that if an auction shall fall on any Interest Reset Date, then the
Interest Reset Date shall instead be the first Business Day following such
auction. If the interest rate of this Note is determined with reference to two
or more Interest Rate Bases as specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), the Interest Determination Date
pertaining to this Note will be the latest Business Day which is at least two
Business Days prior to such Interest Reset Date on which each Interest Rate
Basis is determinable. Each Interest Rate Basis shall be determined on such
date, and the applicable interest rate shall take effect on the Interest Reset
Date.
Determination of CD Rate. If an Interest Rate Basis for this Note is the CD
Rate, as specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), the CD Rate shall be determined as of the applicable
Interest Determination Date (a "CD Rate Interest Determination Date") as the
rate on such date for negotiable United States dollar certificates of deposit
having the Index Maturity specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) as published in H.15(519) (as defined
below) under the heading "CDs (Secondary Market)". In the event that such rate
is not so published prior to 3:00 p.m., New York City time, on the Calculation
Date pertaining to such CD Rate Interest Determination Date,
16
<PAGE>
the CD Rate will be the rate on such CD Rate Interest Determination Date for
certificates of deposit having the Index Maturity specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement) as published in
H.15 Daily Update (as defined below), or another recognized electronic source
used for the purpose of displaying that rate, under the heading "CDs (secondary
market)". If such rate is published neither in H.15(519) nor in H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on such Calculation Date, the CD Rate for such CD Rate Interest Determination
Date will be calculated by the Calculation Agent and will be the arithmetic mean
of the secondary market offered rates as of 10:00 a.m., New York City time, on
such CD Rate Interest Determination Date, of three leading nonbank dealers of
negotiable United States dollar certificates of deposit in The City of New York
selected by the Calculation Agent for negotiable United States dollar
certificates of deposit of major United States money market banks for negotiable
certificates of deposit with a remaining maturity closest to the Index Maturity
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) in an amount that is representative for a single transaction in that
market at that time; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate determined on such CD Rate Interest Determination Date
will be the CD Rate in effect on such date.
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through the
world-wide-web site of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
Determination of CMT Rate. If an Interest Rate Basis for this Note is the CMT
Rate, as specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), the CMT Rate shall be determined by the Calculation
Agent as of the applicable Interest Determination Date (a "CMT Rate Interest
Determination Date") in accordance with the following provisions:
(i) If "CMT Telerate Page 7051" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), the CMT Rate on the CMT Rate
Interest Determination Date shall be a percentage equal to the yield for United
States Treasury securities at "constant maturity" having the Index Maturity
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) as set forth in H.15(519) under the caption "Treasury Constant
Maturities," as such yield is displayed on Telerate, Inc. (or any successor
service) on page 7051 (or any other page as may replace such page on such
service) ("Telerate Page 7051") for such CMT Rate Interest Determination Date.
If such rate does not appear on Telerate Page 7051, the CMT Rate on such CMT
Rate Interest Determination Date shall be a percentage equal to the yield for
United States Treasury securities at "constant maturity" having the Index
Maturity and for such CMT Rate Interest Determination Date as set forth in
H.15(519) under the caption "Treasury Constant Maturities". If such rate does
not appear in H.15(519), the CMT Rate on such CMT Rate Interest Determination
Date shall be the rate for the period of the Index Maturity as may then be
published by either the Board of Governors of the Federal Reserve System or the
United States Department of the Treasury that the Calculation Agent determines
to be comparable to the rate which would otherwise have been published in
H.15(519). If the Board of
17
<PAGE>
Governors of the Federal Reserve System or the United States Department of the
Treasury does not publish a yield on United States Treasury securities at
"constant maturity" having the Index Maturity for such CMT Rate Interest
Determination Date, the CMT Rate on such CMT Rate Interest Determination Date
shall be calculated by the Calculation Agent and shall be a yield-to-maturity
based on the arithmetic mean of the secondary market bid prices at approximately
3:30 p.m., New York City time, on such CMT Rate Interest Determination Date of
three leading primary United States government securities dealers in The City of
New York (each, a "Reference Dealer") selected by the Calculation Agent (from
five such Reference Dealers and eliminating the highest quotation (or, in the
event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)) for United States Treasury securities
with an original maturity equal to the Index Maturity, a remaining term to
maturity no more than 1 year shorter than the Index Maturity and in a principal
amount that is representative for a single transaction in such securities in
such market at such time. If fewer than five but more than two such prices are
provided as requested, the CMT Rate on such CMT Rate Interest Determination Date
shall be based on the arithmetic mean of the bid prices obtained and neither the
highest nor lowest of such quotations shall be eliminated. If fewer than three
prices are provided as requested, the CMT Rate on such CMT Rate Interest
Determination Date shall be calculated by the Calculation Agent and shall be a
yield-to-maturity based on the arithmetic mean of the secondary market bid
prices as of approximately 3:30 p.m., New York City time, on such CMT Rate
Interest Determination Date of three Reference Dealers selected by the
Calculation Agent (from five such Reference Dealers and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)) for United States
Treasury securities with an original maturity greater than the Index Maturity, a
remaining term to maturity closest to the Index Maturity and in a principal
amount that is representative for a single transaction in such securities in
such market at such time. If fewer than five but more than two such prices are
provided as requested, the CMT Rate on such CMT Rate Interest Determination Date
shall be based on the arithmetic mean of the bid prices obtained and neither the
highest nor the lowest of such quotations shall be eliminated; provided,
however, that if fewer than three such prices are provided as requested, the CMT
Rate determined as of such CMT Rate Interest Determination Date shall be the CMT
Rate in effect on such CMT Rate Interest Determination Date. If two such United
States Treasury securities with an original maturity greater than the Index
Maturity have remaining terms to maturity equally close to the Index Maturity,
the quotes for the Treasury security with the shorter original term to maturity
will be used.
(ii) If "CMT Telerate Page 7052" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), the CMT Rate on the CMT Rate
Interest Determination Date shall be a percentage equal to the one-week or
one-month, as specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), average yield for United States Treasury securities
at "constant maturity" having the Index Maturity specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement) as set forth in
H.15(519) opposite the caption "Treasury Constant Maturities," as such yield is
displayed on Telerate, Inc. (or any successor service) on page 7052 (or any
other page as may replace such page on such service ) ("Telerate Page 7052") for
the week or month, as applicable, ended immediately preceding the week or month,
as applicable, in which such CMT Rate Interest Determination Date falls. If such
rate does not appear on the Telerate Page 7052, the CMT Rate on such CMT Rate
Interest Determination Date shall be a percentage equal to the one-week or
one-month, as specified on
18
<PAGE>
the face hereof (or, if this Note is in global form, in the Pricing Supplement),
average yield for United States Treasury securities at "constant maturity"
having the Index Maturity and for the week or month, as applicable, preceding
such CMT Rate Interest Determination Date as set forth in H.15(519) opposite the
caption "Treasury Constant Maturities". If such rate does not appear in
H.15(519), the CMT Rate on such CMT Rate Interest Determination Date shall be
the one-week or one-month, as specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), average yield for United States
Treasury securities at "constant maturity" having the Index Maturity as
otherwise announced by the Federal Reserve Bank of New York for the week or
month, as applicable, ended immediately preceding the week or month, as
applicable, in which such CMT Rate Interest Determination Date falls. If the
Federal Reserve Bank of New York does not publish a one-week or one-month, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), average yield on United States Treasury securities at "constant
maturity" having the Index Maturity for the applicable week or month, the CMT
Rate on such CMT Rate Interest Determination Date shall be calculated by the
Calculation Agent and shall be a yield-to-maturity based on the arithmetic mean
of the secondary market bid prices at approximately 3:30 p.m., New York City
time, on such CMT Rate Interest Determination Date of three Reference Dealers
selected by the Calculation Agent (from five such Reference Dealers and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)) for United States Treasury securities with an original maturity equal
to the Index Maturity, a remaining term to maturity of no more than 1 year
shorter than the Index Maturity and in a principal amount that is representative
for a single transaction in such securities in such market at such time. If
fewer than five but more than two such prices are provided as requested, the CMT
Rate on such CMT Rate Interest Determination Date shall be based on the
arithmetic mean of the bid prices obtained and neither the highest nor lowest of
such quotations shall be eliminated. If fewer than three prices are provided as
requested, the CMT Rate on such CMT Rate Interest Determination Date shall be
calculated by the Calculation Agent and shall be a yield-to-maturity based on
the arithmetic mean of the secondary market bid prices as of approximately 3:30
p.m., New York City time, on such CMT Rate Interest Determination Date of three
Reference Dealers selected by the Calculation Agent (from five such Reference
Dealers and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)) for United States Treasury securities with an original maturity
longer than the Index Maturity, a remaining term to maturity closest to the
Index Maturity and in a principal amount that is representative for a single
transaction in such securities in such market at such time. If fewer than five
but more than two such prices are provided as requested, the CMT Rate on such
CMT Rate Interest Determination Date shall be based on the arithmetic mean of
the bid prices obtained and neither the highest nor lowest of such quotations
shall be eliminated; provided, however, that if fewer than three such prices are
provided as requested, the CMT Rate determined as of such CMT Rate Interest
Determination Date shall be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two United States Treasury securities with an original
maturity greater than the Index Maturity have remaining terms to maturity
equally close to the Index Maturity, the quotes for the Treasury security with
the shorter original term to maturity will be used.
Determination of Commercial Paper Rate. If an Interest Rate Basis for this Note
is the Commercial Paper Rate, as specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement), the Commercial Paper Rate shall
be determined as of the applicable
19
<PAGE>
Interest Determination Date (a "Commercial Paper Rate Interest Determination
Date") as the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement) as published in
H.15(519) under the caption "Commercial Paper-Nonfinancial" or, if not so
published by 3:00 p.m., New York City time, on the related Calculation Date, the
Money Market Yield of the rate on such Commercial Paper Rate Interest
Determination Date for commercial paper having the Index Maturity as published
in H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "Commercial
Paper-Nonfinancial." If such rate is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on such Calculation Date, then the Commercial Paper Rate on such Commercial
Paper Rate Interest Determination Date will be calculated by the Calculation
Agent and shall be the Money Market Yield of the arithmetic mean of the offered
rates at approximately 11:00 a.m., New York City time, on such Commercial Paper
Rate Interest Determination Date of three leading dealers of United States
dollar commercial paper in The City of New York selected by the Calculation
Agent for commercial paper having the Index Maturity placed for industrial
issuers whose bond rating is "Aa," or the equivalent, from a nationally
recognized statistical rating organization; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate determined as of such Commercial Paper
Rate Interest Determination Date will be the Commercial Paper Rate in effect on
such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Money Market Yield = D x 360 x 100
--------------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable Interest Reset Period.
Determination of Eleventh District Cost of Funds Rate. If an Interest Rate Basis
for this Note is the Eleventh District Cost of Funds Rate, as specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement), the
Eleventh District Cost of Funds Rate shall be determined as of the applicable
Interest Determination Date (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), as the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls, as set
forth under the caption "11th District" on Telerate Page 7058 (as defined below)
as of 11:00 a.m., San Francisco time, on such Eleventh District Cost of Funds
Rate Interest Determination Date. If such rate does not appear on Telerate Page
7058 on the related Eleventh District Cost of Funds Rate Interest Determination
Date, the Eleventh District Cost of Funds Rate for such Eleventh District Cost
of Funds Rate Interest Determination Date shall be the monthly weighted average
cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding the
date of such announcement. If the FHLB of San Francisco fails
20
<PAGE>
to announce such rate for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, then the Eleventh
District Cost of Funds Rate determined as of such Eleventh District Cost of
Funds Rate Interest Determination Date shall be the Eleventh District Cost of
Funds Rate in effect on such Eleventh District Cost of Funds Rate Interest
Determination Date.
"Telerate Page 7058" means the display designated as page "7058" on the Bridge
Telerate Service (or such other page as may replace the 7058 page on that
service for the purpose of displaying the monthly weighted average costs of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District).
Determination of EURIBOR. If an Interest Rate Basis for this Note is EURIBOR, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), EURIBOR shall be determined as of the applicable Interest
Determination Date (a "EURIBOR Interest Determination Date"), in accordance with
the following provisions:
(i) With respect to any EURIBOR Interest Determination Date, EURIBOR will be:
(a) the rate for deposits in euro as sponsored, calculated and
published jointly by the European Banking Federation and ACI--The
Financial Market Association, or any company established by the joint
sponsors for purposes of compiling and publishing those rates, having the
Index Maturity specified on the face hereof (or if this Note is in global
form, in the Pricing Supplement), commencing on the applicable Interest
Reset Date, as that rate appears on Telerate, Inc., or any successor
service, on page 248 (or any other page as may replace such page on such
service) ("Telerate Page 248") as of 11:00 a.m., Brussels time, on the
applicable EURIBOR Interest Determination Date.
(b) if the rate referred to in clause (a) above does not appear on
Telerate Page 248, or is not so published by 11:00 a.m., Brussels time, on
the applicable EURIBOR Interest Determination Date, the rate calculated by
the Calculation Agent as the arithmetic mean of at least two quotations
obtained by the Calculation Agent after requesting the principal Euro-zone
(as defined hereinafter) offices of four major banks in the Euro-zone
interbank market, in the European interbank market, to provide the
Calculation Agent with its offered quotation for deposits in euro for the
period of the Index Maturity designated on the face hereof (or if this
Note is in global form, in the Pricing Supplement), commencing on the
applicable Interest Reset Date, to prime banks in the Euro-zone interbank
market at approximately 11:00 a.m., Brussels time, on the applicable
EURIBOR Interest Determination Date and in a principal amount not less
than the equivalent of U.S.$1,000,000 in euro that is representative for a
single transaction in euro in such market at such time.
(c) if fewer than two quotations referred to in clause (b) above are
provided, EURIBOR for such EURIBOR Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., Brussels time, on such EURIBOR
Interest Determination Date by four major banks in the Eurozone for loans
in euro to leading European banks, having the Index Maturity designated on
the face hereof (or if this Note is in global form, in the Pricing
21
<PAGE>
Supplement), commencing on the applicable Interest Reset Date and in
principal amount not less than the equivalent of U.S.$1,000,000 in euro
that is representative for a single transaction in euro in such market at
such time.
(d) if the banks so selected by the Calculation Agent are not
quoting as mentioned in clause (c) above, EURIBOR determined as of such
EURIBOR Interest Determination Date shall be EURIBOR in effect on such
EURIBOR Interest Determination Date.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the treaty establishing
the European Community, as amended by the treaty on European Union.
Determination of Federal Funds Rate. If an Interest Rate Basis for this Note is
the Federal Funds Rate, as specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement), the Federal Funds Rate shall be
determined as of the applicable Interest Determination Date (a "Federal Funds
Rate Interest Determination Date") as the rate on such date for United States
dollar federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)", as such rate is displayed on Bridge Telerate, Inc. (or any
successor service) on page 120 (or any other page as may replace such page on
such service) ("Telerate Page 120"), or, if such rate does not appear on
Telerate Page 120 or is not so published by 3:00 p.m., New York City time, on
the Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date for United States dollar federal funds as published in H.15 Daily Update,
or such other recognized electronic source used for the purpose of displaying
such rate, under the caption "Federal Funds (Effective)." If such rate does not
appear on Telerate Page 120 or is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on the related Calculation Date, then the Federal Funds Rate on such Federal
Funds Rate Interest Determination Date shall be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of United States dollar federal funds transactions in The City of New York
selected by the Calculation Agent, prior to 9:00 a.m., New York City time, on
such Federal Funds Rate Interest Determination Date; provided, however, that if
the brokers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate determined as of such Federal Funds Rate
Interest Determination Date will be the Federal Funds Rate in effect on such
Federal Funds Rate Interest Determination Date.
Determination of J.J. Kenny Rate. If an Interest Rate Basis for this Note is the
J.J. Kenny Rate, as specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the J.J. Kenny Rate shall be determined as of
the applicable Interest Determination Date (a "J.J. Kenny Interest Determination
Date") as the rate in the high grade weekly index (the "Weekly Index") on such
date made available by Kenny Information Systems ("Kenny") to the Calculation
Agent. The Weekly Index Maturity is, and shall be, based upon 30-day yield
evaluations at par of bonds, the interest of which is exempt from Federal income
taxation under the Internal Revenue Code of 1986, as amended (the "Code"), of
not less than five high grade component issuers selected by Kenny which shall
include, without limitation, issuers of general obligation bonds. The specific
issuers included among the component issuers may be changed
22
<PAGE>
from time to time by Kenny in its discretion. The bonds on which the Weekly
Index is based shall not include any bonds on which the interest is subject to a
minimum tax or similar tax under the Code, unless all tax-exempt bonds are
subject to such tax. In the event Kenny ceases to make available such Weekly
Index, a successor indexing agent will be selected by the Calculation Agent,
such index to reflect the prevailing rate for bonds rated in the highest
short-term rating category by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group in respect of issuers most closely resembling the high
grade component issuers selected by Kenny for its Weekly Index, the interest on
which is (i) variable on a weekly basis, (ii) exempt from Federal income
taxation under the Code, and (iii) not subject to a minimum tax or similar tax
under the Code, unless all tax-exempt bonds are subject to such tax. If such
successor indexing agent is not available, the rate for any J.J. Kenny Interest
Determination Date shall be 67% of the rate determined if the Treasury Rate
option had been originally selected.
Determination of LIBOR. If an Interest Rate Basis for this Note is LIBOR, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), LIBOR shall be determined by the Calculation Agent as of the
applicable Interest Determination Date (a "LIBOR Interest Determination Date"),
in accordance with the following provisions:
(i) if "LIBOR Telerate" is specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified on the face hereof as the method for calculating LIBOR,
LIBOR will be the rate for deposits in the Designated LIBOR Currency having the
Index Maturity specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), commencing on such Interest Reset Date, that appears
on the Designated LIBOR Page (as defined hereinafter) as of 11:00 a.m., London
time, on such LIBOR Interest Determination Date; or (b) if "LIBOR Reuters" is
specified on the face hereof, the arithmetic mean of the offered rates (unless
the Designated LIBOR Page by its terms provides only for a single rate, in which
case such single rate shall be used) for deposits in the Designated LIBOR
Currency having the Index Maturity, commencing on the applicable Interest Reset
Date, that appear (or, if only a single rate is required as aforesaid, appears)
on the Designated LIBOR Page (as defined hereinafter) as of 11:00 a.m., London
time, on such LIBOR Interest Determination Date. If fewer than two such offered
rates so appear, or if no such rate so appears, as applicable, LIBOR on such
LIBOR Interest Determination Date shall be determined in accordance with the
provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer than two
offered rates appear, or no rate appears, as the case may be, on the Designated
LIBOR Page as specified in clause (i) above, the Calculation Agent shall request
the principal London offices of each of four major reference banks in the London
interbank market, as selected by the Calculation Agent, to provide the
Calculation Agent with its offered quotation for deposits in the Designated
LIBOR Currency for the period of the Index Maturity, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date
and in a principal amount that is representative for a single transaction in the
Designated LIBOR Currency in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal
23
<PAGE>
Financial Center, on such LIBOR Interest Determination Date by three major banks
in such Principal Financial Center (as defined hereafter) selected by the
Calculation Agent for loans in the Designated LIBOR Currency to leading European
banks, having the Index Maturity and in a principal amount that is
representative for a single transaction in the Designated LIBOR Currency in such
market at such time; provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date shall be LIBOR in effect
on such LIBOR Interest Determination Date.
"Designated LIBOR Currency" means the currency specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement) as to which LIBOR
shall be calculated or, if no such currency is specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement), United States
dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on the face
hereof, the display on the Reuter Monitor Money Rates Service (or any successor
service) on the page specified on the face hereof (or any other page as may
replace such page on such service) for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR Currency, or (b) if
"LIBOR Telerate" is specified on the face hereof or neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified on the face hereof as the method for calculating
LIBOR, the display on Bridge Telerate, Inc. (or any successor service) on the
page specified on the face hereof (or any other page as may replace such page on
such service) for the purpose of displaying the London interbank rates of major
banks for the Designated LIBOR Currency.
"Principal Financial Center" means the capital city of the country to which the
Designated LIBOR Currency relates except that with respect to United States
dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders,
Italian lire, Portuguese escudos, South African rand and Swiss francs, the
"Principal Financial Center" shall be The City of New York, Sydney, Toronto,
Frankfurt, Amsterdam, Milan, London (solely in the case of the Designated LIBOR
Currency), Johannesburg and Zurich, respectively.
"London Banking Day" means any day (other than a Saturday or Sunday) on which
dealings in deposits in the Index Currency are transacted in the London
interbank market.
Determination of Prime Rate. If an Interest Rate Basis for this Note is the
Prime Rate, as specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under the
caption "Bank Prime Loan" or, if not published by 3:00 p.m., New York City time,
on the related Calculation Date, the rate on such Prime Rate Interest
Determination Date as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Bank Prime Loan." If such rate is not yet published in H.15(519), H.15
Daily Update or another recognized electronic source by 3:00 p.m., New York City
time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen US PRIME 1 Page (as defined hereinafter) as such
bank's prime rate or base lending rate as of 11:00 a.m., New York City time, on
such Prime Rate Interest Determination Date. If fewer than
24
<PAGE>
four such rates so appear on the Reuters Screen US PRIME 1 Page for such Prime
Rate Interest Determination Date, then the Prime Rate shall be the arithmetic
mean of the prime rates or base lending rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of business
on such Prime Rate Interest Determination Date by three major banks in The City
of New York selected by the Calculation Agent; provided, however, that if the
banks or trust companies so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor Money
Rates Service (or any successor service) on the "US PRIME 1" page (or such other
page as may replace the US PRIME 1 page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
Determination of Treasury Rate. If an Interest Rate Basis for this Note is the
Treasury Rate, as specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the Treasury Rate shall be determined as of
the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified on the face hereof
under the caption "INVESTMENT RATE" on the display on Telerate, Inc. (or any
successor service) on page 56 (or any other page as may replace such page on
such service) ("Telerate Page 56") or page 57 (or any other page as may replace
such page on such service) ("Telerate Page 57") or, if not so published by 3:00
p.m., New York City time, on the related Calculation Date, the Bond Equivalent
Yield (as defined hereinafter) of the rate for such Treasury Bills as published
in H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High." If such rate is not so published in
H.15 Daily Update or another recognized electronic source by 3:00 p.m., New York
City time, on the related Calculation Date, the Treasury Rate on such Treasury
Rate Interest Determination Date shall be Bond Equivalent Yield of the auction
rate of such Treasury Bills as announced by the United States Department of the
Treasury. In the event that such auction rate is not so announced by the United
States Department of the Treasury on such Calculation Date, or if no such
Auction is held, then the Treasury Rate on such Treasury Rate Interest
Determination Date shall be the Bond Equivalent Yield of the rate on such
Treasury Rate Interest Determination Date of Treasury Bills having the Index
Maturity as published in H.15(519) under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market" or, if not yet published by 3:00
p.m., New York City time, on the related Calculation Date, the rate on such
Treasury Rate Interest Determination Date of such Treasury Bills as published in
H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market." If such rate is not yet published
in H.15(519), H.15 Daily Update or another recognized electronic source by 3:00
p.m., New York City time, on the related Calculation Date, then the Treasury
Rate on such Treasury Rate Interest Determination Date shall be calculated by
the Calculation Agent and shall be the Bond Equivalent Yield of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 p.m., New York
City time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers selected by the Calculation
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index
25
<PAGE>
Maturity; provided, however, that if the dealers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate
determined as of such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Bond Equivalent Yield = D x N
--------------------- X 100
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the applicable
Interest Reset Period.
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), accrued interest hereon shall be an amount
calculated by multiplying the face amount hereof by an accrued interest factor.
Such accrued interest factor shall be computed by adding the interest factor
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), the interest factor for each such
day shall be computed and paid on the basis of a 360-day year of twelve 30-day
months if the Day Count Convention specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement) is "30/360" for the period
specified thereunder, or by dividing the applicable per annum interest rate by
360 if the Day Count Convention specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement) is "Actual/360" for the period
specified thereunder, or by dividing the applicable per annum interest rate by
the actual number of days in the year if the Day Count Convention specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement)
is "Actual/Actual" for the period specified thereunder. If no Day Count
Convention is specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), the interest factor for each day in the relevant
Interest Period shall be computed, if an Interest Rate Basis specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement) is
the CMT Rate, EURIBOR, or Treasury Rate or if the Specified Currency indicated
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) is Sterling, as if "Actual/Actual" had been specified thereon and,
in all other cases, as if "Actual/360" had been specified thereon. Unless
otherwise specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), if interest on this Note is to be calculated with
reference to two or more Interest Rate Bases as specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), the interest
factor will be calculated in each period in the same manner as if only one of
the applicable Interest Rate Bases applied.
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), if "Reference Rate Determination" is specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) in connection with the determination of the rate of interest on this
Note, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest
26
<PAGE>
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day and (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Maturity Date, as the case may be. All calculations in
respect of determining the interest rate applicable to this Note (other than any
calculations made by the Exchange Rate Agent) shall be made by the Calculation
Agent specified on the face hereof (or, if this Note is in global form, the
Pricing Supplement) or such successor thereto as is duly appointed by the Bank.
The determination of any interest rate by the Calculation Agent shall, in the
absence of manifest error, be conclusive for all purposes and binding upon the
holder hereof.
All percentages resulting from any calculation on this Note would be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or
0.09876545) would be rounded to 9.87655% (or 0.0987655%) and 9.876544% (or
0.09876544) would be rounded to 987654% (or 0.0987654)), and all dollar amounts
used in or resulting from such calculation will be rounded to the nearest cent
or, if the Specified Currency is other than dollars, to the nearest unit (with
one-half cent or unit being rounded upward).
At the request of the holder hereof, the Calculation Agent shall provide to the
holder hereof the interest rate hereon then in effect and, if determined, the
interest rate which shall become effective for the next Interest Period.
Notwithstanding the foregoing, the interest rate hereon shall not be greater
than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate,
if any, specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement). In addition to any Maximum Interest Rate applicable hereto
pursuant to the above provisions, the interest rate on this Note will in no
event be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application.
Redemption at the Option of the Bank
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), this Note will not be subject to any sinking
fund. This Note may be redeemed by the Bank either in whole or in part on and
after the Initial Redemption Date, if any, specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). If no Initial
Redemption Date is specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), this Note may not be redeemed prior to the
Maturity Date except as provided below in the event that any Additional Amounts
(as defined below) are required to be paid by the Bank with respect to this
Note. On and after the Initial Redemption Date, if any, this Note may be
redeemed in increments of US$1,000 (or, if the Specified Currency indicated on
the face hereof is other than the United States dollar, in such Authorized
Denominations specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement)) at the option of the Bank at the applicable
Redemption Price (as defined below) together with unpaid interest accrued hereon
at the applicable rate borne by this Note to the date of redemption (each such
date, a "Redemption Date"), on written notice given by or on behalf of the Bank
not more than 60 nor less than 30 calendar days prior to the Redemption Date
(unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement)); provided, however, that, in the event of
redemption of this Note in part only, the unredeemed portion
27
<PAGE>
thereof shall be an Authorized Denomination specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). In the event of
redemption of this Note in part only, a new Note for the unredeemed portion
hereof shall be issued in the name of the holder hereof upon the surrender of
this Note, or, where applicable, an appropriate notation will be made on the
schedule attached hereto for such notations.
The "Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) of the principal amount of this Note to be redeemed and shall
decline at each anniversary of the Initial Redemption Date specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) by the
Annual Redemption Percentage Reduction, if any, specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
Repayment at the Option of the Holder
This Note may be subject to repayment at the option of the holder hereof in
accordance with the terms hereof on any Holder's Optional Repayment Date(s), if
any, specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement). If no Holder's Optional Repayment Date is specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement),
this Note will not be repayable at the option of the holder hereof prior to the
Maturity Date. On any Holder's Optional Repayment Date, this Note will be
repayable in whole or in part in increments of US$1,000 (or, if the Specified
Currency indicated on the face hereof is other than the U.S. dollar, in such
Authorized Denominations specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement)) at the option of the holder hereof at
the repayment price equal to 100% of the principal amount to be repaid, together
with accrued and unpaid interest hereon payable to the date of repayment;
provided, however, that, in the event of repayment of this Note in part only,
the unrepaid portion hereof shall be an Authorized Denomination specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement). For
this Note to be repaid in whole or in part at the option of the holder hereof on
a Holder's Optional Repayment Date, this Note must be delivered, with the form
entitled "Option to Elect Repayment" attached hereto duly completed, to the
Domestic Paying Agent or the London Paying Agent (as appropriate in accordance
with such attached form) at the address set forth on such form or at such other
address which the Bank shall from time to time notify the holders of the Notes
not more than 60 nor less than 30 days prior to such Holder's Optional Repayment
Date. In the event of repayment of this Note in part only, a new Note for the
unrepaid portion hereof shall be issued in the name of the holder hereof upon
the surrender hereof, or, where applicable, an appropriate notation will be made
on the schedule attached hereto for such notations. Exercise of such repayment
option by the holder hereof shall be irrevocable.
Additional Amounts
All payments of principal (and premium, if any) and interest with respect to
this Note will be made without withholding or deduction at source for, or on
account of, any present or future taxes, fees, duties, assessments or
governmental charges of whatever nature imposed or levied by the United States
or any political subdivision or taxing authority thereof or therein, unless such
28
<PAGE>
withholding or deduction is required by (i) the laws (or any regulations or
rulings promulgated thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (ii) an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings including, without limitation, a holding by a
court of competent jurisdiction or by a taxing authority in the United States or
any political subdivision thereof). If a withholding or deduction at source is
required, the Bank will (subject to certain limitations and exceptions set forth
below) pay to the holder hereof on behalf of an owner of a beneficial interest
herein (an "Owner") who is a United States Alien (as defined below) such
additional amounts ("Additional Amounts") as may be necessary so that every net
payment of principal (and premium, if any) or interest made to the holder hereof
on behalf of such Owner, after such withholding or deduction, will not be less
than the amount provided for in this Note with respect to such Owner's interest;
provided, however, that the Bank shall not be required to make any payment of
Additional Amounts for or on account of:
(a) any tax, fee, duty, assessment or other governmental charge
which would not have been imposed but for (i) the existence of any present
or former connection between such Owner (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
Owner, if such Owner is an estate, trust, partnership or corporation) and
the United States, including, without limitation, such Owner (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) being
or having been a citizen or resident thereof or being or having been
present or engaged in trade or business therein or having had a permanent
establishment therein, or (ii) the presentation of this Note for payment
on a date more than 15 days after the date on which such payment became
due and payable or the date on which payment thereof is duly provided for,
whichever occurs later;
(b) any estate, inheritance, gift, sales, transfer, personal
property or similar tax, assessment or other governmental charge;
(c) any tax, fee, duty, assessment or other governmental charge
imposed by reason of such Owner's past or present status as a personal
holding company, foreign personal holding company, passive foreign
investment company or controlled foreign corporation with respect to the
United States or as a corporation which accumulates earnings to avoid
United States federal income tax;
(d) any tax, fee, duty, assessment or other governmental charge
which is payable otherwise than by withholding from payments of principal
or interest with respect to this Note;
(e) any tax, fee, duty, assessment or other governmental charge
imposed on interest received by anyone who owns (actually or
constructively) 10% or more of the total combined voting power of all
classes of stock of the Bank;
(f) any tax, fee, duty, assessment or other governmental charge
required to be withheld by any Paying Agent from any payment of principal
(and premium, if any) or interest with respect to this Note, if such
payment can be made without such withholding by any other Paying Agent
with respect to this Note;
29
<PAGE>
(g) any tax, fee, duty, assessment or other governmental charge
which would not have been imposed but for the failure to comply with
certification, information or other reporting requirements concerning the
nationality, residence, identity or connection with the United States of
the holder hereof or of such Owner, if such compliance is required by
statute or by regulation of the United States Treasury Department as a
precondition to relief or exemption from such tax, assessment or other
governmental charge; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g);
nor shall Additional Amounts be paid to any holder of this Note on behalf of any
Owner who is a fiduciary or partnership or other than the sole Owner to the
extent a beneficiary or settlor with respect to such fiduciary or a member of
such partnership or Owner would not have been entitled to payment of the
Additional Amounts had such beneficiary, settlor, member or Owner been the sole
Owner of this Note.
As used herein, the term "United States Alien" means any corporation,
individual, fiduciary or partnership that for United States federal income tax
purposes is a foreign corporation, nonresident alien individual, nonresident
alien fiduciary of a foreign estate or trust, or foreign partnership one or more
members of which is a foreign corporation, nonresident alien individual or
nonresident alien fiduciary of a foreign estate or trust.
If this Note is in bearer form and the Bank shall determine, based upon a
written opinion of independent counsel selected by the Bank, that any payment
made outside the United States by the Bank or any of its Paying Agents of the
full amount of the next scheduled payment of either principal (and premium, if
any) or interest due with respect to this Note would, under any present or
future laws or regulations of the United States affecting taxation or otherwise,
be subject to any certification, information or other reporting requirements of
any kind, the effect of which requirements is the disclosure to the Bank, any of
its Paying Agents or any governmental authority of the nationality, residence or
identity (as distinguished from status as a United States Alien) of any Owner of
this Note who is a United States Alien (other than such requirements which (i)
would not be applicable to a payment made to a custodian, nominee or other agent
of the Owner, or which can be satisfied by such a custodian, nominee or other
agent certifying to the effect that such Owner is a United States Alien;
provided, however, in each case that payment by such custodian, nominee or agent
to such Owner is not otherwise subject to any requirements referred to in this
sentence, (ii) are applicable only to payment by a custodian, nominee or other
agent of the Owner to or on behalf of such Owner, or (iii) would not be
applicable to a payment made by any other paying agent of the Bank), the Bank
shall redeem this Note as a whole but not in part at a redemption price equal to
the principal amount hereof (or, if this is an Original Issue Discount Note, the
Amortized Face Amount (as defined herein) hereof determined as of the date of
redemption), together, if appropriate, with accrued interest to, but excluding,
the date fixed for redemption, such redemption to take place on such date not
later than one year after notice of such determination has been given as
described herein. If the Bank becomes aware of an event that might give rise to
such certification, information or other reporting requirements, the Bank shall,
as soon as practicable, solicit advice of independent counsel selected by the
Bank to establish whether such certification, information or other reporting
requirements will apply and, if such requirements will, in the written opinion
of such counsel, apply, the Bank shall give
30
<PAGE>
prompt notice of such determination (a "Tax Notice") stating in such notice the
effective date of such certification, information or other reporting
requirements and, if applicable, the date by which the redemption shall take
place. Notwithstanding the foregoing, the Bank shall not redeem this Note if the
Bank, based upon the written opinion of independent counsel selected by the
Bank, shall subsequently determine not less than 30 days prior to the date fixed
for redemption that subsequent payments would not be subject to any such
requirements, in which case the Bank shall give prompt notice of such
determination and any earlier redemption notice shall thereby be revoked and of
no further effect.
Notwithstanding the foregoing, if and so long as the certification information
or other reporting requirements referred to in the preceding paragraph would be
fully satisfied by payment of a withholding, backup withholding tax or similar
charge, the Bank may elect prior to giving the Tax Notice to have the provisions
described in this paragraph apply in lieu of the provisions described in the
preceding paragraph, in which case the Tax Notice shall state the effective date
of such certification, information or reporting requirements and that the Bank
has elected to pay Additional Amounts rather than redeem this Note. In such
event, the Bank will also pay as Additional Amounts such sums as may be
necessary so that every net payment made following the effective date of such
certification, information or reporting requirements outside the United States
by the Bank or any of its Paying Agents of principal (and premium, if any) or
interest due with respect to this Note to the bearer hereof who certifies to the
effect that the beneficial owners of this Note are United States Aliens
(provided that such certification shall not have the effect of communicating to
the Bank or any of its Paying Agents or any governmental authority the
nationality, residence or identity of such beneficial owners) after deduction or
withholding for or on account of such withholding, backup withholding tax or
similar charge (other than a withholding, backup withholding tax or similar
charge which (i) is imposed as a result of certification, information or other
reporting requirements referred to in the second parenthetical clause of the
first sentence of the preceding paragraph or (ii) is imposed as a result of the
fact that the Bank or any of its Paying Agents has actual knowledge that the
bearer hereof or any beneficial owner of this Note is not a United States Alien
but is within the category of persons, corporations or other entities described
in clause (a)(i) of the third preceding paragraph, or (iii) is imposed as a
result of presentation of this Note for payment more than 15 days after the date
on which such payment becomes due and payable or on which payment thereof is
duly provided for, whichever occurs later), will not be less than the amount
provided for in this Note to be then due and payable. In the event the Bank
elects to pay such Additional Amounts, the Bank will have the right, at its sole
option, at any time, to redeem this Note, as a whole but not in part, at a
redemption price equal to the principal amount hereof (or, if this is an
Original Issue Discount Note, the Amortized Face Amount hereof determined as of
the date of redemption), together, if appropriate, with accrued interest to the
date fixed for redemption including any Additional Amounts required to be paid
under this paragraph. If the Bank has made the determination described in the
preceding paragraph with respect to certification, information or other
reporting requirements applicable to interest only and subsequently makes a
determination in the manner and of the nature referred to in such preceding
paragraph with respect to such requirements applicable to principal, the Bank
will redeem this Note in the manner and on the terms described in the preceding
paragraph (except as provided below), unless the Bank elects to have the
provisions of this paragraph apply rather than the provisions of the immediately
preceding paragraph. If in such circumstances this Note is to be redeemed, the
Bank will be obligated to pay Additional Amounts with respect to interest, if
any, accrued to the date of redemption. If the
31
<PAGE>
Bank has made the determination described in the preceding paragraph and
subsequently makes a determination in the manner and of the nature referred to
in such preceding paragraph that the level of withholding applicable to
principal or interest has been increased, the Bank will redeem this Note in the
manner and on the terms described in the preceding paragraph (except as provided
below), unless the Bank elects to have the provisions of this paragraph apply
rather than the provisions of the immediately preceding paragraph. If in such
circumstances this Note is to be redeemed, the Bank will be obligated to pay
Additional Amounts with respect to the original level of withholding on
principal and interest, if any, accrued to the date of redemption.
Whenever in this Note there is mentioned, in any context, the payment of the
principal of (or premium, if any) or interest on, or in respect of, this Note,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided for herein to the extent that, in such context, Additional
Amounts are, were or would be payable in respect hereof pursuant to the
provisions of this Note and express mention of the payment of Additional Amounts
(if applicable) in any provisions hereof shall not be construed as including
Additional Amounts in those provisions hereof where such express mention is not
made.
Except as specifically provided herein (or, if this Note is in global form, in
the Pricing Supplement) (i) neither the Bank nor any Paying Agent shall be
required to make, any payment with respect to any tax, fee, duty, assessment or
other governmental charge imposed by any government or a political subdivision
or taxing authority thereof or therein; (ii) a Paying Agent on behalf of the
Bank shall have the right, but not the duty, to withhold from any amounts
otherwise payable to a holder of this Note such amount as is necessary for the
payment of any such taxes, fees, duties, assessments or other governmental
charges; and (iii) if such an amount is withheld, the amount payable to the
holder of this Note shall be the amount otherwise payable reduced by the amount
so withheld.
The Bank may redeem this Note in whole but not in part at any time at a
redemption price equal to the principal amount hereof (or, if this is an
Original Issue Discount Note, the Amortized Face Amount hereof determined as of
the date of redemption), together with accrued interest to but excluding the
date fixed for redemption, if the Bank shall determine, based upon a written
opinion of independent counsel selected by the Bank, that as a result of any
change in or amendment to the laws (or any regulations or rulings promulgated
hereunder) of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in application or
official interpretation of any such laws, regulations or rulings, which
amendment or change is effective on or after the Original Issue Date, the Bank
would be required to pay Additional Amounts on the occasion of the next payment
due with respect to such Note.
Notice of intention to redeem this Note, in whole but not in part, pursuant to
the immediately preceding paragraph will be given (i) if this Note is in
registered form, to the registered holder of this Note at least once not less
than 30 days nor more than 60 days prior to the date fixed for redemption or
(ii) if this Note is in bearer form, by publication in accordance with
applicable law, provided that no such notice of redemption shall be given
earlier than 90 days prior to the effective date of such change or amendment and
that at the time notice of such redemption is given, such obligation to pay such
Additional Amounts remains in effect and cannot be avoided by the Bank's taking
reasonable measures available to it. From and after any redemption date, if
32
<PAGE>
monies for the redemption of this Note shall have been made available for
redemption on such redemption date, this Note shall cease to bear interest (and,
if this Note is a definitive bearer Note, any interest coupons appertaining
hereto (whether or not attached) maturing after the redemption date shall become
void and no payment shall be made in respect thereof), and the only right of the
holder of this Note shall be to receive payment of the principal amount hereof
(or, if this is an Original Issue Discount Note, the Amortized Face Amount
hereof) and all unpaid interest accrued to such redemption date.
Events of Default, Acceleration of Maturity
In respect of this Note, the occurrence of any of the following events shall
constitute an "Event of Default" with respect to this Note:
(i) default in the payment of any interest (including any Additional
Amounts) with respect to this Note when due, which continues for 30 days;
(ii) default, in the payment of any principal of, or premium, if
any, on, this Note when due;
(iii) whatever the reason for such 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, the entry by a court having
jurisdiction in the premises of:
(a) a decree or order for relief in respect of the Bank in an
involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, reorganization or other
similar law; or
(b) a decree or order appointing a conservator, receiver,
liquidator, assignee, trustee, sequestrator or any other similar
official of the Bank, or of substantially all of the property of the
Bank, or ordering the winding up or liquidation of the affairs of
the Bank, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(iv) the commencement by the Bank of a voluntary case or proceeding
under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or the commencement of any
bankruptcy or insolvency case or proceeding, or the filing by the Bank of
a petition or answer or consent seeking reorganization or relief under any
applicable United States federal or state law, or the consent by the Bank
to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Bank or of substantially all of
the property of the Bank, or the making by the Bank of an assignment for
the benefit of creditors, or the taking of corporate action by the Bank in
furtherance of any such action.
If an Event of Default shall occur and be continuing, the holder of this Note
may declare the principal amount of, and accrued interest and premium, if any,
on, this Note due and payable
33
<PAGE>
immediately by written notice to the Bank. Upon such declaration and notice,
such principal amount (and premium, if any) and accrued interest shall become
immediately due and payable. Any Event of Default with respect to this Note may
be waived by the holder thereof.
This Note contains no limitation on the amount of senior debt, deposits or other
obligations that rank senior to this Note that may be hereafter incurred or
assumed by the Bank.
Miscellaneous
Notwithstanding anything to the contrary contained herein, if this Note is
identified as a Discount Note on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the amount payable to the holder of this Note
in the event of redemption, repayment or acceleration of Maturity will be equal
to (i) the Amortized Face Amount (as defined below) as of the date of such
event, plus (ii) with respect to any redemption of this Note (other than as
provided above in the event that Additional Amounts are required to be paid by
the Bank with respect to this Note), the Initial Redemption Percentage specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) (as adjusted by the Annual Redemption Percentage Reduction specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), if any) minus 100% multiplied by the Issue Price specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement), net
of any portion of such Issue Price which has been paid prior to the date of
redemption, or the portion of the Issue Price (or the net amount) proportionate
to the portion of the unpaid principal amount to be redeemed, plus (iii) any
accrued interest to the date of such event the payment of which would constitute
qualified stated interest payments within the meaning of U.S. Treasury
Regulation 1. 1273-1 (c) under the Code. The "Amortized Face Amount" shall mean
an amount equal to (i) the Issue Price plus (ii) the aggregate portions of the
original issue discount (the excess of the amounts considered as part of the
"stated redemption price at maturity" of this Note within the meaning of Section
1273(a)(2) of the Code, whether denominated as principal or interest, over the
Issue Price) which shall theretofore have accrued pursuant to Section 1272 of
the Code (without regard to Section 1272(a)(7) of the Code) from the date of
issue of this Note to the date of determination, minus (iii) any amount
considered as part of the "stated redemption price at maturity" of this Note
which has been paid from the date of issue to the date of determination.
As used herein, "Business Day" means, unless otherwise specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), a day
which is both (i) a day (other than a Saturday or a Sunday) on which commercial
banks and foreign exchange markets settle payments in The City of New York, Glen
Allen, Virginia, and London; and (ii) either (a) if this is a Note denominated
in a Specified Currency other than euro, a day on which commercial banks and
foreign exchange markets settle payments in the principal financial center of
the country of the relevant Specified Currency (if other than the City of New
York or London) or (b) if this is a Note denominated in euro, a day (other than
a Saturday or a Sunday) on which the Trans-European Automated Real-Time Gross
Settlement Express Transfer (TARGET) System is open. As used herein, "London
Business Day" means any day (other than a Saturday or Sunday) on which
commercial banks and foreign exchange markets settle payments in London.
34
<PAGE>
Any action by the holder of this Note shall bind all future holders of this
Note, and of any Note issued in exchange or substitution hereof or in place
hereof, in respect of anything done or permitted by the Bank or by the Paying
Agents in pursuance of such action.
In case any Note shall at any time become mutilated, defaced, destroyed, lost or
stolen, and such Note or evidence of the loss, theft or destruction thereof
satisfactory to the Bank and the Registrar or London Issuing Agent, as the case
may be, and such other documents or proof as may be required by the Bank and the
Registrar or London Issuing Agent, as the case may be, shall be delivered to the
Registrar or London Issuing Agent, as the case may be, the Registrar or London
Issuing Agent, as the case may be, shall issue a new Note of like tenor and
principal amount, having a serial number not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Note or in lieu of the
Note destroyed, lost or stolen but, in the case of any destroyed, lost or stolen
Note, only upon receipt of evidence satisfactory to the Bank and the Registrar
or London Issuing Agent, as the case may be, that such Note was destroyed,
stolen or lost, and, if required, upon receipt of indemnity satisfactory to the
Bank and the Registrar or London Issuing Agent, as the case may be. Upon the
issuance of any substituted Note, the Bank may require the payment of a sum
sufficient to cover all expenses and reasonable charges connected with the
preparation and delivery of a new Note. If any Note which has matured or has
been redeemed or repaid or is about to mature or to be redeemed or repaid shall
become mutilated, defaced, destroyed, lost or stolen, the Bank may, instead of
issuing a substitute Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Note) upon
compliance by the holder with the provisions of this paragraph.
No recourse shall be had for the payment of principal of (and premium, if any)
or interest on, this Note for any claim based hereon, or otherwise in respect
hereof, against any shareholder, employee, agent, officer or director, as such,
past, present or future, of the Bank or of any successor organization, either
directly or through the Bank or any successor organization, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
The Notes are issued in accordance with the Global Agency Agreement. The Notes,
and any receipts or interest coupons appertaining thereto, may be amended by the
Bank, and the Global Agency Agreement may be amended by the parties thereto, (i)
for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective provision contained therein, (ii) to make any
further modifications of the terms of the Global Agency Agreement necessary or
desirable to allow for the issuance of any additional Notes (which modifications
shall not be materially adverse to holders of outstanding Notes) or (iii) in any
manner which the Bank (and, in the case of the Global Agency Agreement, the
parties thereto) may deem necessary or desirable and which shall not materially
adversely affect the interests of the holders of the Notes, or any receipts,
talons or interest coupons appertaining thereto, to all of which each holder of
Notes, receipts, talons or interest coupons shall, by acceptance thereof, be
deemed to have consented; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Note
affected thereby, (1) change the Maturity Date with respect to any Note or
reduce or cancel the amount payable at Maturity; (2) reduce the amount payable
or modify the payment date for any interest with respect to any Note or vary the
method
35
<PAGE>
of calculating the rate of interest with respect to any Note; (3) reduce any
Minimum Interest Rate and/or Maximum Interest Rate with respect to any Note; (4)
modify the currency in which payments under any Note and/or any receipts,
coupons or talons appertaining thereto are to be made; (5) change the obligation
of the Bank to pay Additional Amounts with respect to Notes, receipts, talons or
coupons; or (6) reduce the percentage in principal amount of outstanding Notes
the consent of the holders of which is necessary to modify the provisions of the
Notes or to waive any future compliance or past default. Any instrument given by
or on behalf of any holder of a Note in connection with any consent to any such
modification, amendment or waiver shall be irrevocable once given and shall be
conclusive and binding on all subsequent holders of such Note. Any
modifications, amendments or waivers to this Agreement or the provisions of the
Notes, receipts, talons or coupons shall be conclusive and binding on all
holders of Notes, receipts, talons or coupons, whether or not notation of such
modifications, amendments or waivers is made upon the Notes, receipts, talons or
coupons. It will not be necessary for the consent of the holders of Notes to
approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
No provision of this Note shall alter or impair the obligation of the Bank,
which is absolute and unconditional, to pay principal of (and premium, if any)
and interest on, and any Additional Amounts with respect to, this Note in the
Specified Currency indicated on the face hereof (or, as provided herein, in the
equivalent in U.S. dollars) at the times, places and rate herein prescribed.
No service charge shall be made to a holder of this Note for any transfer or
exchange of this Note, but the Bank may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
If this Note is in registered form, prior to due presentment of this Note for
registration of transfer, the Bank, Domestic Paying Agent, Registrar, London
Paying Agent, Luxembourg Paying Agent, Transfer Agent and Listing Agent
(collectively, together with any successors thereto, the "Agents") or any agent
of the Bank or the Agents may treat the holder in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Bank, the Agents nor any such agent shall be affected
by notice to the contrary except as required by applicable law.
All notices to the Bank under this Note shall be in writing and addressed to the
Bank at Capital One Bank, 8000 Jones Branch Road, McLean, Virginia 22102, USA,
Attention: Treasurer; telephone: (703) 8751000; and facsimile: (703) 875-1099 or
to such other address of the Bank as the Bank may notify the holders of the
Notes.
36
<PAGE>
OPTION TO ELECT REPAYMENT
-------------------------
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to repay
this Note (or portion hereof specified below) pursuant to its terms at a price
equal to 100% of the principal amount hereof to be repaid, together with accrued
and unpaid interest hereon, payable to the date of repayment, to the
undersigned, at ______________
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned.)
For this Note to be repaid, the undersigned must give to the London Paying
Agent, if this Note is in bearer form, at 9 Thomas More Street, London, E1W 1YT
or, if this Note is in registered form, to the Domestic Paying Agent at The
Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001-2697,
United States of America, or to the London Paying Agent at its address, as the
case may be, or at such other place or places of which the Bank shall from time
to time notify the holders of the Notes not more than 60 days nor less than 30
days prior to the date of repayment, this Note (and, if this Note is in
definitive bearer form, all interest coupons appertaining hereto maturing after
the repayment date) with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid, specify
the portion hereof (which shall be increments of US$1,000, or equivalent
denominations in other currencies) which the holder elects to have repaid and
specify the denomination or denominations (which shall be an Authorized
Denomination specified on the face of the within Note) of the Notes to be issued
to the holder for the portion of this Note not being repaid (in the absence of
any such specification, one such Note will be issued for the portion not being
repaid):
US$__________________________ ________________________________
Signature
Dated: ______________________ NOTICE: The signature on this
"Option to Elect Repayment" form
must correspond with the name as
written upon the face of the within
Note in every particular, without
alteration or enlargement or any
change whatsoever.
- ---------------------------------
Signature Guarantee
NOTICE: The signature(s) should be
guaranteed by an eligible guarantor
institution (banks, stockbrokers,
savings and loan associations, and
credit unions with membership in an
approved signature guarantee
medallion program), pursuant to
Rule 17Ad- 15 under the Securities
Exchange Act of 1934.
37
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4.4
<SEQUENCE>4
<FILENAME>dex444.txt
<DESCRIPTION>COPY OF 8 1/4% FIXED RATE NOTES
<TEXT>
<PAGE>
Exhibit 4.4.4
REGISTERED GLOBAL SENIOR NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE "DEPOSITARY") TO
CAPITAL ONE BANK (THE "BANK") OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN
EXCHANGE FOR, OR IN LIEU OF, THIS NOTE IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS A GLOBAL SECURITY AND, UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN
WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, IT MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
SENIOR NOTE: THIS NOTE IS A DIRECT, UNCONDITIONAL, UNSECURED AND UNSUBORDINATED
GENERAL OBLIGATION OF CAPITAL ONE BANK (THE "BANK"). THE OBLIGATIONS EVIDENCED
BY THIS NOTE RANK PARI PASSU WITH ALL OTHER UNSECURED AND UNSUBORDINATED
OBLIGATIONS OF THE BANK, EXCEPT OBLIGATIONS, INCLUDING ITS DOMESTIC (U.S.)
DEPOSITS, THAT ARE SUBJECT TO ANY PRIORITIES OR PREFERENCES UNDER APPLICABLE
LAW. THIS NOTE DOES NOT EVIDENCE A DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION ("FDIC") OR ANY OTHER INSURER.
THIS NOTE IS ISSUABLE ONLY IN MINIMUM DENOMINATIONS OF US$100,000 AND INTEGRAL
MULTIPLES OF US$1,000 IN EXCESS THEREOF. EACH OWNER OF A BENEFICIAL INTEREST IN
THIS NOTE IS REQUIRED TO HOLD A BENEFICIAL INTEREST OF US$100,000 PRINCIPAL
AMOUNT OR ANY INTEGRAL MULTIPLE OF US$1,000 IN EXCESS THEREOF OF THIS NOTE AT
ALL TIMES.
No. R- REGISTERED
---------
CUSIP No.: 14040NAC6
----------
ISIN No.: US14040NAC65
------------
Common Code: 011315445
---------
<PAGE>
CAPITAL ONE BANK
GLOBAL BANK NOTE
(Registered Global Note)
ORIGINAL ISSUE DATE: June 22, 2000 PRINCIPAL AMOUNT:$800,000,000
SPECIFIED CURRENCY:
MATURITY DATE: June 15, 2005 |_| U.S. dollar
|_| FIXED RATE NOTE |_| Other:
|_| FLOATING RATE NOTE
CAPITAL ONE BANK, a bank organized under the laws of the Commonwealth of
Virginia (the "Bank"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal amount specified above as adjusted in
accordance with Schedule 1 hereto, on the Maturity Date specified above (except
to the extent redeemed or repaid prior to the Maturity Date) and to pay interest
thereon (i) in accordance with the provisions set forth on the reverse hereof
under the caption "Fixed Rate Interest Provisions," if this Note is designated
as a "Fixed Rate Note" above, or (ii) in accordance with the provisions set
forth on the reverse hereof under the caption "Floating Rate Interest
Provisions," if this Note is designated as a "Floating Rate Note" above, in each
case as such provisions may be modified or supplemented by the terms and
provisions set forth in the Pricing Supplement attached hereto (the "Pricing
Supplement"), and (to the extent that the payment of such interest shall be
legally enforceable) to pay interest at the Default Rate per annum specified in
the Pricing Supplement on any overdue principal and premium, if any, and on any
overdue installment or interest. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will be paid to the person in
whose name this Note (or any predecessor Note) is registered at the close of
business on the fifteenth calendar day (whether or not a Business Day (as
defined on the reverse hereof)) next preceding the applicable Interest Payment
Date (unless otherwise specified in the Pricing Supplement) (each, a "Regular
Record Date"); provided, however, that interest payable at Maturity (as defined
on the reverse hereof) will be payable to the person to whom principal shall be
payable. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the holder as of the close of business on such
Regular Record Date, and shall instead be payable to the person in whose name
this Note (or any predecessor Note) is registered at the close of business on a
special record date for the payment of such defaulted interest (the "Special
Record Date") to be fixed by the Registrar (as defined below), notice whereof
shall be given by the Registrar to the holder of this Note not less than 15
calendar days prior to such Special Record Date.
This Note is one of a duly authorized issue of the Bank's notes due from 30 days
to 30 years or more from date of issue (the "Notes"). The Notes are issued in
accordance with the Global Agency Agreement, dated as of June 6, 2000 (the
"Global Agency Agreement"), among the Bank and The Chase Manhattan Bank as
paying agent (the "Domestic Paying Agent") and as registrar (the "Registrar"),
The Chase Manhattan Bank, London Branch, as paying agent (the "London Paying
Agent") and as issuing agent (the "London Issuing Agent") and Chase Manhattan
Bank Luxembourg S.A. as transfer agent (the "Transfer Agent"), as paying agent
(the "Luxembourg
2
<PAGE>
Paying Agent", together with the Domestic Paying Agent and the London Paying
Agent, the "Paying Agents", and individually, a "Paying Agent") and Kredietbank
S.A. Luxembourgeoise as listing agent (the "Listing Agent"). The terms Domestic
Paying Agent, Registrar, London Paying Agent, London Issuing Agent, Luxembourg
Paying Agent, Transfer Agent and Listing Agent shall include any additional or
successor agents appointed in such capacities by the Bank.
The Bank shall cause to be kept at the office of the Registrar designated below
a register (the register maintained in such office or any other office or agency
of the Registrar, herein referred to as the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Bank shall provide for
the registration of Notes issued in registered form and of transfers of such
Notes. The Bank has initially appointed The Chase Manhattan Bank, acting through
its principal office at 450 West 33rd Street, 15th Floor, New York, New York
10001, as "Registrar" for the purpose of registering Notes issued in registered
form and transfers of such Notes. The Bank reserves the right to rescind such
designation at any time, and to transfer such function to another bank or
financial institution.
The transfer of this Note is registrable in the Note Register, upon surrender of
the Note for registration of transfer at the office or agency of the Registrar
or any transfer agent maintained for that purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar (or such transfer agent) duly executed by, the holder hereof or its
attorney duly authorized in writing.
Payment of principal of, and premium, if any, and interest on, this Note due at
Maturity will be made in immediately available funds upon presentation and
surrender of this Note at the office of a Paying Agent maintained for that
purpose; provided, that this Note is presented to such Paying Agent in time for
such Paying Agent to make such payment in accordance with its normal procedures.
Payments of interest an this Note (other than at Maturity) will be made by wire
transfer to such account as has been appropriately designated to a Paying Agent
by the person entitled to such payments.
Reference is made to the further provisions of this Note set forth on the
reverse hereof and in the Pricing Supplement, which further provisions shall for
all purposes have the same effect as if set forth at this place. In the event of
any conflict between the provisions contained herein or on the reverse hereof
and the provisions contained in the Pricing Supplement attached hereto, the
latter shall control. References herein to "this Note," "hereof," "herein" and
comparable terms shall include the Pricing Supplement attached hereto.
Unless the certificate of authentication hereon has been executed by the
Registrar, by manual signature of an authorized signatory, this Note shall not
be valid or obligatory for any purpose.
3
<PAGE>
This Note shall be governed by, and construed in accordance with, the laws of
the State of New York, without regard to the conflicts of law principles
thereof.
IN WITNESS WHEREOF, the Bank has caused this Note to be duly executed.
CAPITAL ONE BANK
By:
---------------------------------------
Name:
Title:
Dated:
REGISTRAR'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the
within-mentioned Global Agency Agreement.
THE CHASE MANHATTAN BANK,
as Registrar
By:
--------------------------
Name:
Title:
4
<PAGE>
PRICING SUPPLEMENT DATED JUNE 15, 2000
(to be read in conjunction with the Offering Circular Supplement dated June 15,
2000 and the Offering Circular dated June 6, 2000)
Capital One Bank
(a Bank Organized Pursuant to the Laws of Virginia)
Global Bank Notes
Fixed Rate Notes due 2005
This Pricing Supplement should be read in conjunction with the Offering Circular
Supplement dated June 15, 2000 and the Offering Circular, dated June 6, 2000
(together, the "Offering Circular"), relating to the U.S.$5,000,000,000 Global
Bank Note Program of Capital One Bank. Unless otherwise defined herein, terms
used herein shall have the meanings ascribed to them in the Offering Circular.
[Include whichever of the following apply]
DESCRIPTION OF THE NOTES
1. Specified Currency and Principal Amount: US $800,000,000
2. Senior or Subordinated: Senior
3. Original Issue Date: June 22, 2000
4. Stated Maturity Date: June 15, 2005
5. Issue Price: 99.622%
6. (a) Authorized Denomination(s): $100,000 and integral multiples
of $1,000 in excess thereof
(b) Redenomination (Yes/No): No [If yes, give details]
7. Form of Note (Registered or Bearer): Registered
8. (a) Series Number: 2
(b) If forming part of an existing Series (Yes/No): [If yes, give
details]
9. Interest Period:
|_| One Month
|_| Three Months
|_| Six Months
|_| Twelve Months
|_| Other (Specify Number of Months):
10. Interest Payment Date(s): June 15 and December 15
5
<PAGE>
11. Record Dates (for Registered Notes with Maturities Greater
than One Year): the June 1 and the December 1 preceding each
Interest Payment Date
12. Exchange Rate Agent (Registered Notes and Dual Currency
Notes):
13. Default Rate (if other than Interest Rate): % per annum
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
FIXED RATE NOTES
14. Interest Rate: 8 1/4% per annum
15. Day Count Convention:
|_| 30/360 for the period from June 22, 2000 to June 15,
2005
|_| Actual/360 for the period from _________ to ________
|_| Actual/Actual for the period from ________ to ________
|_| Other (specify convention and applicable period):
FLOATING RATE NOTES
16. Interest Rate Determination:
|_| ISDA Rate
|_| Reference Rate Determination
17. Calculation Agent, if not The Chase Manhattan Bank:
18. Maximum Interest Rate: % per annum
19. Minimum Interest Rate: % per annum
20. Day Count Convention:
|_| 30/360 for the period from _________ to __________
|_| Actual/360 for the period from _________ to __________
|_| Actual/Actual for the period from _________ to __________
|_| Other (specify convention and applicable period):
21. Business Day Convention:
|_| Floating Rate Convention
|_| Following Business Day Convention
|_| Modified Following Business Day Convention
|_| Preceding Business Day Convention
|_| Other (specify):
ISDA RATE
22. Margin: [+/-] % per annum
23. Floating Rate Option:
6
<PAGE>
24. Designated Maturity:
25. Reset Date:
REFERENCE RATE DETERMINATION
26. Initial Interest Rate:
27. Index Maturity:
28. Interest Rate Basis or Bases:
If CMT Rate: Specified CMT Telerate Page:
Specified CMT Maturity Index:
If EURIBOR:
If LIBOR: |_| LIBOR Telerate
|_| LIBOR Reuters
29. Index Currency:
30. Spread: [+/-] %
31. Spread Multiplier:
32. Initial Interest Reset Date:
33. Interest Determination Period:
34. Interest Reset Dates:
35. Interest Calculation:
|_| Regular Floating Rate Note
|_| Floating Rate/Fixed Rate Note
Fixed Rate Commencement Date:
Fixed Interest Rate: % per annum
|_| Inverse Floating Rate Note:
Fixed Interest Rate: % per annum
PROVISIONS REGARDING REDEMPTION/REPAYMENT
36. Initial Redemption Date:
37. Initial Redemption Percentage:
38. Annual Redemption Percentage Reduction:
39. Holder's Optional Repayment Date(s):
DISCOUNT NOTES (INCLUDING ZERO COUPON NOTES)
40. Discount Note (Yes/No):
If Yes: Total Amount of OID:
Yield to Maturity:
Initial Accrual Period: %
7
<PAGE>
Issue Price:
INDEXED NOTES
41. Index: [give details]
42. Formula:
43. Agent, if any, responsible for calculating the principal and/or
interest payable:
44. Provisions where calculation by reference to Index and/or Formula is
impossible or impracticable:
DUAL CURRENCY NOTES
45. Dual Currency Notes (Yes/No):
If Yes: Face Amount:
Face Amount Currency:
Optional Payment Currency:
Option Election Dates: [give details]
46. Designated Exchange Rate:
47. Option Value Calculation Agent:
48. Agent, if any, responsible for calculating the principal
and/or interest payable:
INSTALLMENT NOTES
49. Additional provisions relating to Installment Notes:
PARTLY PAID NOTES
50. Additional provisions relating to Partly Paid Notes:
GENERAL PROVISIONS
51. Additional or different Paying Agents:
52. Additional or different Registrars:
53. Additional or different London Issuing Agents:
54. Additional or different Transfer Agents:
55. "Business Day" definition (if other than as defined in the
Offering Circular):
56. Cost, if any, to be borne by Noteholders in connection with
exchanges for Definitive Bearer Notes:
57. Talons for future Coupons or Receipts to be attached to Definitive
Bearer Notes (Yes/No) and dates on which such Talons mature:
[If yes, give details]
58. Additional selling restrictions: [give details]
59. CUSIP: 14040NAC6
ISIN: US14040NAC65
Common Code: 011315445
8
<PAGE>
Other (specify):
60. Details of additional/alternative clearance system approved by
the Bank:
61. Notes to be listed (Yes/No): Yes
If Yes, securities exchange(s): Luxembourg
62. Syndicated Issue (Yes/No):Yes
If Yes, names of managers and details of relevant stabilizing
manager, if any: J.P. Morgan Securities Inc. and Salomon Smith
Barney Inc.
63. Clearance System(s):
|_| DTC only
|_| Euroclear and Clearstream, Luxembourg only
|_| DTC, and Euroclear and Clearstream, Luxembourg through DTC
|_| DTC, Euroclear and Clearstream, Luxembourg
|_| Other:
64. Name(s) of relevant Distribution Agent(s): J.P. Morgan Securities
Inc., Salomon Smith Barney Inc., Barclays Capital Inc., Chase
Securities Inc., Credit Suisse First Boston Corporation, Deutsche
Bank Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Morgan Stanley & Co. Incorporated
65. Other terms or special conditions:
66. Tax considerations:
67. Discount or Commission per Note: .350%
68. Selling Concession per Note: .200%
69. Reallowance per Note: .150%
9
<PAGE>
[Reverse of Note]
The Notes are issuable only in denominations of US$100,000 and integral
multiples of US$1,000 in excess thereof (or equivalent denominations in other
currencies, subject to any other statutory or regulatory minimums). This Note,
and any Note issued in exchange or substitution herefor or in place hereof, or
upon registration of transfer, exchange or partial redemption or repayment of
this Note, may be issued only in an Authorized Denomination specified in the
Pricing Supplement (or, if this Note is in definitive form, specified on the
face hereof).
Unless otherwise provided herein (or, if this Note is in global form, in the
Pricing Supplement), the principal of, and premium, if any, and interest on,
this Note are payable in the Specified Currency indicated on the face hereof
(or, if such Specified Currency is not at the time of such payment legal tender
for the payment of public and private debts, in such other coin or currency of
the country which issued such Specified Currency as at the time of such payment
is legal tender for the payment of debts). If this Note is a DTC Global Note and
the Specified Currency indicated on the face hereof is other than U.S. dollars,
any such amounts paid by the Bank will be converted by The Chase Manhattan Bank,
as Exchange Rate Agent, or such other agent as may be specified in the Pricing
Supplement (or, if this Note is in definitive form, specified on the face
hereof), which for these purposes shall act as currency exchange agent (the
"Exchange Rate Agent"), into U.S. dollars for payment to the holder of this
Note.
If this Note is a DTC Global Note and the Specified Currency indicated on the
face hereof is other than the U.S. dollar, any U.S. dollar amount to be received
by the holder of this Note will be based on the Exchange Rate Agent's bid
quotation as of 11:00 a.m., London time, on the second day on which banks are
open for business in London, New York City and Glen Allen, Virginia, preceding
the applicable payment date, for the purchase of U.S. dollars with the Specified
Currency for settlement on such payment date of the aggregate amount of the
Specified Currency payable to all holders of Notes denominated other than in the
U.S. dollar scheduled to receive U.S. dollar payments. If such bid quotation is
not available, the Exchange Rate Agent will obtain a bid quotation from a
leading foreign exchange bank in London or New York City selected by the
Exchange Rate Agent for such purchase. If no such bids are available, payment of
the aggregate amount due to the holder of this Note on the payment date will be
made in the Specified Currency, subject to the other provisions of this Note
relating to payment in such Specified Currency. All currency exchange costs will
be borne by the holder of this Note by deductions from such payments. All
determinations referred to above made by the Exchange Rate Agent shall be at its
sole discretion and shall, in the absence of manifest error, be conclusive for
all purposes and binding upon the holder of this Note.
If this Note is a DTC Global Note and the Specified Currency indicated on the
face hereof is other than the U.S. dollar, the holder of this Note may elect to
receive payment of principal (and premium, if any) and interest on this Note in
the Specified Currency indicated on the face hereof by submitting a written
notice to the Paying Agents prior to 5:00 pm, New York City time, on the fifth
Business Day following the applicable Record Date in the case of interest and
the tenth calendar day prior to the payment date for the payment of principal.
Such notice, which may be mailed or hand delivered or sent by cable, telex or
facsimile transmission, shall contain (i) the
10
<PAGE>
holder's election to receive all or a portion of such payment in the Specified
Currency on the relevant Interest Payment Date or Maturity, as the case may be,
and (ii) wire transfer instructions to an account denominated in the Specified
Currency with respect to any payment to be made in the Specified Currency. Any
such election made with respect to this Note by the holder will remain in effect
with respect to any further payments of principal of, and premium, if any, and
interest on this Note payable to the holder of this Note unless such election is
revoked on or prior to the fifth Business Day following the applicable Record
Date in the case of interest and the tenth calendar day prior to the payment
date for the payment of principal.
If (i) this Note is a DTC Global Note and the holder of this Note shall have
duly made an election to receive all or a portion of a payment of principal of,
and premium, if any, or interest on this Note in the Specified Currency
indicated on the face hereof, or (ii) if this Note is not a DTC Global Note, in
the case of (i) or (ii) in the event the Specified Currency indicated on the
face hereof has been replaced by another currency (a "Replacement Currency"),
any amount due pursuant to this Note may be repaid, at the option of the Bank,
in the Replacement Currency or in U.S. dollars, at a rate of exchange which
takes into account the conversion, at the rate prevailing on the most recent
date on which official conversion rates were quoted or set by the national
government or other authority responsible for issuing the Replacement Currency,
from the Specified Currency to the Replacement Currency and, if necessary, the
conversion of the Replacement Currency into U.S. dollars at the rate prevailing
on the date of such conversion.
If the Specified Currency indicated on the face hereof is other than the U.S.
dollar and (i) this Note is a DTC Global Note and the holder of this Note shall
have duly made an election to receive all or a portion of a payment of principal
of, and premium, if any, or interest on this Note in the Specified Currency
indicated on the face hereof, or (ii) if this Note is not a DTC Global Note, in
the case of (i) or (ii) if such Specified Currency is not available due to the
imposition of exchange controls or other circumstances beyond the control of the
Bank, the Bank will be entitled to satisfy its obligations to the holder of this
Note by making such payments of principal of (and premium, if any) or interest
on this Note in U.S. dollars until, in the sole discretion of the Bank, the
Specified Currency is again available. In such circumstances, the U.S. dollar
amount to be received by the holder of this Note will be made on the basis of
the most recently available bid quotation from a leading foreign exchange bank
in London or New York City selected by the Exchange Rate Agent, for the purchase
of U.S. dollars with the Specified Currency for settlement on such payment date
of the aggregate amount of the Specified Currency payable to all holders of
Notes denominated other than in the U.S. dollar scheduled to receive U.S. dollar
payments. Any payment made under such circumstances in U.S. dollars, where the
payment is required to be made in the Specified Currency, will not constitute an
"Event of Default" with respect to this Note.
The Chase Manhattan Bank shall initially act as domestic paying agent (the
"Domestic Paying Agent") and the Bank has initially appointed The Chase
Manhattan Bank, London Branch, acting through its specified office in London as
London paying agent (the "London Paying Agent") and Chase Manhattan Bank
Luxembourg S.A. as Luxembourg paying agent (the "Luxembourg Paying Agent" and
together with the Domestic Paying Agent and the London Paying Agent, the "Paying
Agents," and each individually, a "Paying Agent," and such terms shall include
any additional or successor paying agents appointed pursuant to the Global
Agency Agreement (as defined on the face hereof)) in respect of the Notes. If
this Note is in registered form, this Note
11
<PAGE>
may be presented or surrendered for payment, and notices, designations or
requests in respect of payments with respect to this Note may be served, at the
office or agency of any Paying Agent maintained for that purpose. The Bank may
at any time rescind any designation of a Paying Agent, appoint any additional or
successor Paying Agents or approve a change in the office through which a Paying
Agent acts.
Subject to any fiscal or other laws and regulations applicable thereto in the
place of payment, payments on registered Notes to be made in a Specified
Currency other than the U.S. dollar and payments on bearer Notes will be made by
a check in the Specified Currency drawn on or by wire transfer to an account in
the Specified Currency (which, in the case of a payment in Yen to a non-resident
of Japan, shall be a non-resident account) maintained by the payee with a bank
(which, in the case of a payment in Yen to a non-resident of Japan, shall be an
authorized foreign exchange bank) in the Principal Financial Center of the
country of the Specified Currency, provided, however, that a check may not be
delivered to an address in, and an amount may not be transferred to an account
located in, the United States of America or its possessions by any office or
agency of the Bank or any Paying Agent.
Fixed Rate Interest Provisions
If this Note is designated as a "Fixed Rate Note" on the face hereof, the Bank
will pay interest on each Interest Payment Date specified in the Pricing
Supplement (or, if this Note is in definitive form, specified on the face
hereof) and on the Maturity Date or any Redemption Date (as defined below) or
Holder's Optional Repayment Date (as defined below) (each such Maturity Date,
Redemption Date and Holder's Optional Repayment Date and the date on which the
principal or an installment of principal is due and payable by declaration of
acceleration as provided herein being hereinafter referred to as a "Maturity"
with respect to the principal repayable on such date), commencing on the first
Interest Payment Date next succeeding the Original Issue Date specified on the
face hereof (or if the Original Issue Date is between a Record Date and the
Interest Payment Date immediately following such Record Date, on the Second
Interest Payment Date following the Original Issue Date), at the Interest Rate
per annum specified in the Pricing Supplement (or, if this Note is in definitive
form, specified on the face hereof), until the principal hereof is paid or duly
made available for payment.
Payments of interest hereon will include interest accrued from and including the
most recent Interest Payment Date to which interest on this Note (or any
predecessor Note) has been paid or duly provided for (or, if no interest has
been paid or duly provided for, from and including the Original Issue Date) to
but excluding the relevant Interest Payment Date or Maturity, as the case may
be. Unless otherwise specified in the Pricing Supplement (or, if this note is in
definitive form, on the face hereof), if the Maturity Date specified on the face
hereof falls more than one year from the Original Issue Date, interest payments
for this Note shall be computed and paid on the basis of a 360-day year of
twelve 30-day months. Unless otherwise specified in the Pricing Supplement (or,
if this Note is in definitive form, on the face hereof) if the Maturity Date
specified on the face hereof falls one year or less from the Original Issue
Date, interest payments for this Note shall be computed and paid on the basis of
the actual number of days in the year divided by 360.
12
<PAGE>
Unless otherwise provided herein, if any Interest Payment Date or the Maturity
of this Note falls on a day which is not a Business Day, the related payment of
principal of, or premium, if any, or interest on, this Note shall be made on the
next succeeding Business Day with the same force and effect as if made on the
date such payments were due, and no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date or the
Maturity, as the case may be.
Floating Rate Interest Provisions
If this Note is designated as a "Floating Rate Note" on the face hereof, the
Bank will pay interest on each Interest Payment Date specified in the Pricing
Supplement (or, if this Note is in definitive form specified on the face hereof)
and at Maturity, commencing on the first Interest Payment Date next succeeding
the Original Issue Date specified on the face hereof (or, if the Original Issue
Date is between a Record Date and the Interest Payment Date immediately
following such Record Date, on the second Interest Payment Date following the
Original Issue Date), at a rate per annum determined in accordance with the
provisions hereof (and, if this Note is in global form, in accordance with the
Pricing Supplement), until the principal hereof is paid or duly made available
for payment.
Payments of interest hereon will include interest accrued from and including the
most recent Interest Payment Date to which interest on this Note (or any
predecessor Note) has been paid or duly provided for (or, if no interest has
been paid or duly provided for, from and including the Original Issue Date) to
but excluding the relevant Interest Payment Date or Maturity, as the case may be
(each such period, an "Interest Period").
Unless otherwise specified herein (or, if this Note is in global form, in the
Pricing Supplement), if any Interest Payment Date (or other date which is
subject to adjustment in accordance with a Business Day Convention specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement))
in respect of this Note (other than an Interest Payment Date at Maturity) would
otherwise fall on a day that is not a Business Day, then, if the Business Day
Convention specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement) is:
(1) the "Floating Rate Convention," such Interest Payment Date (or other
date) shall be postponed to the next succeeding day which is a
Business Day unless it would thereby fall into the next succeeding
calendar month, in which event (A) such Interest Payment Date (or
other date) shall be brought forward to the next preceding Business
Day and (B) each subsequent Interest Payment Date (or other date)
shall be the last Business Day in the month which falls the number
of months or other period specified as the Interest Payment Period
on the face hereof after the preceding applicable Interest Payment
Date (or other date) occurred; or
(2) the "Following Business Day Convention," such Interest Payment Date
(or other date) shall be postponed to the next succeeding day which
is a Business Day; or
(3) the "Modified Following Business Day Convention," such Interest
Payment Date (or other date) shall be postponed to the next
succeeding day that is a Business Day unless it would thereby fall
into the next succeeding calendar month, in
13
<PAGE>
which event such Interest Payment Date (or other date) shall be
brought forward to the next preceding Business Day; or
(4) the "Preceding Business Day Convention," such Interest Payment Date
(or other date) shall be brought forward to the next preceding
Business Day.
If the Maturity of this Note falls on a day that is not a Business Day, the
related payment of principal of (and premium, if any) and interest on, this Note
will be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no interest shall accrue on the
amount so payable for the period from and after such Maturity.
If "ISDA Rate" is specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement) in connection with the determination of the
rate of interest on this Note, the rate of interest on this Note for each
Interest Period will be the relevant ISDA Rate (as defined below) plus or minus
the Margin, if any, specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement). Unless otherwise specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), "ISDA Rate"
means, with respect to any Interest Period, the rate equal to the Floating Rate
that would be determined by the Calculation Agent or other person specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement)
pursuant to an interest rate swap transaction if the Calculation Agent or that
other person were acting as calculation agent for that swap transaction in
accordance with the terms of an agreement in the form of the Interest Rate and
Currency Exchange Agreement published by the International Swaps and Derivatives
Association, Inc. (the "ISDA Agreement") and evidenced by a Confirmation (as
defined in the ISDA Agreement) incorporating the ISDA Definitions (as defined
below) and under which:
(A) the Floating Rate Option is as specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement);
(B) the Designated Maturity is the period specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), and
(C) the relevant Reset Date is either (i) if the applicable Floating
Rate Option is based on the London inter-bank offered rate for a
currency or on the Euro-zone inter-bank offered rate ("EURIBOR") for
a currency, the first day of that Interest Period or (ii) in any
other case, as specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement).
As used in this paragraph, "Floating Rate," "Calculation Agent," "Floating Rate
Option," "Designated Maturity," and "Reset Date" have the meanings ascribed to
those terms in the ISDA Definitions.
If "Reference Rate Determination" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement) in connection with the
determination of the rate of interest on this Note, this Note will bear interest
at a rate per annum equal to the Initial Interest Rate specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) until the
Initial Interest Reset Date specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) and thereafter at a rate per annum
determined as follows:
14
<PAGE>
1. If this Note is designated as a "Regular Floating Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) or if no
designation is made for Interest Calculation on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), then, except as described
below (or, if this Note is in global form, in the Pricing Supplement), this Note
shall bear interest at the rate determined by reference to the applicable
Interest Rate Basis or Bases specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement) (i) plus or minus the applicable
Spread, if any, and/or (ii) multiplied by the applicable Spread Multiplier, if
any, specified and applied in the manner described on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). Commencing on the
Initial Interest Reset Date, the rate at which interest on this Note is payable
shall be reset as of each Interest Reset Date specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement); provided, however,
that the interest rate in effect for the period from the Original Issue Date to
the Initial Interest Reset Date will be the Initial Interest Rate.
2. If this Note is designated as a "Floating Rate/Fixed Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), then,
except as described below (or, if this Note is in global form, in the Pricing
Supplement), this Note shall bear interest at the rate determined by reference
to the applicable Interest Rate Basis or Bases specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement) (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
Multiplier, if any, specified and applied in the manner described on the face
hereof (or, if this Note is in global form, in the Pricing Supplement).
Commencing on the Initial Interest Reset Date, the rate at which interest on
this Note is payable shall be reset as of each Interest Reset Date specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement);
provided, however, that (i) the interest rate in effect for the period from the
Original Issue Date to the Initial Interest Reset Date shall be the Initial
Interest Rate and (ii) the interest rate in effect commencing on, and including,
the Fixed Rate Commencement Date specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement) to the Maturity Date shall be the
Fixed Interest Rate, if such a rate is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), or if no such Fixed Interest
Rate is so specified, the interest rate in effect hereon on the Business Day
immediately preceding the Fixed Rate Commencement Date.
3. If this Note is designated as an "Inverse Floating Rate Note" on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), then,
except as described below (or, if this Note is in global form, in the Pricing
Supplement), this Note shall bear interest equal to the Fixed Interest Rate
indicated on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) minus the rate determined by reference to the applicable Interest
Rate Basis or Bases specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement) (i) plus or minus the applicable Spread, if
any, and/or (ii) multiplied by the applicable Spread Multiplier, if any,
specified and applied in the manner described on the face hereof (or, if this
Note is in global form, in the Pricing Supplement); provided, however, that,
unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the interest rate hereon will not be less than
zero percent. Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note is payable shall be reset as of each Interest Rate Reset
Date specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement); provided, however, that the interest rate in effect for the
period from the Original Issue Date to the Initial Interest Reset Date shall be
the Initial Interest Rate.
15
<PAGE>
Except as provided above, if "Reference Rate Determination" is specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement) in
connection with the determination of the rate of interest on this Note, the
interest rate in effect on each day shall be (a) if such day is an Interest
Reset Date, the interest rate determined as of the Interest Reset Determination
Date (as defined below) immediately preceding such Interest Reset Date or (b) if
such day is not an Interest Reset Date, the interest rate determined as of the
Interest Determination Date immediately preceding the next preceding Interest
Reset Date. Each Interest Rate Basis shall be the rate determined in accordance
with the applicable provision below. If any Interest Reset Date (which term
includes the term Initial Interest Reset Date unless the context otherwise
requires) would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be adjusted in accordance with the Business Day Convention
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement).
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the "Interest Determination Date" with respect
to the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate,
the J.J. Kenny Rate, and the Prime Rate will be the second Business Day
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to the Eleventh District Cost of Funds Rate will be the last working day
of the month immediately preceding each Interest Reset Date on which the Federal
Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the
Index (as defined below); the "Interest Determination Date" with respect to
EURIBOR will be the second day on which the TARGET system is open immediately
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to LIBOR shall be the second London Banking Day (as defined below)
preceding each Interest Reset Date; the "Interest Determination Date" with
respect to the Treasury Rate will be the day in the week in which the related
Interest Reset Date falls on which day Treasury Bills (as defined below) are
normally auctioned (Treasury Bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held on
the preceding Friday); provided, however, that if an auction is held on the
Friday of the week preceding the related Interest Reset Date, the related
Interest Determination Date shall be such preceding Friday; and provided,
further, that if an auction shall fall on any Interest Reset Date, then the
Interest Reset Date shall instead be the first Business Day following such
auction. If the interest rate of this Note is determined with reference to two
or more Interest Rate Bases as specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), the Interest Determination Date
pertaining to this Note will be the latest Business Day which is at least two
Business Days prior to such Interest Reset Date on which each Interest Rate
Basis is determinable. Each Interest Rate Basis shall be determined on such
date, and the applicable interest rate shall take effect on the Interest Reset
Date.
Determination of CD Rate. If an Interest Rate Basis for this Note is the CD
Rate, as specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), the CD Rate shall be determined as of the applicable
Interest Determination Date (a "CD Rate Interest Determination Date") as the
rate on such date for negotiable United States dollar certificates of deposit
having the Index Maturity specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) as published in H.15(519) (as defined
below) under the heading "CDs (Secondary Market)". In the event that such rate
is not so published prior to 3:00 p.m., New York City time, on the Calculation
Date pertaining to such CD Rate Interest Determination Date,
16
<PAGE>
the CD Rate will be the rate on such CD Rate Interest Determination Date for
certificates of deposit having the Index Maturity specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement) as published in
H.15 Daily Update (as defined below), or another recognized electronic source
used for the purpose of displaying that rate, under the heading "CDs (secondary
market)". If such rate is published neither in H.15(519) nor in H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on such Calculation Date, the CD Rate for such CD Rate Interest Determination
Date will be calculated by the Calculation Agent and will be the arithmetic mean
of the secondary market offered rates as of 10:00 a.m., New York City time, on
such CD Rate Interest Determination Date, of three leading nonbank dealers of
negotiable United States dollar certificates of deposit in The City of New York
selected by the Calculation Agent for negotiable United States dollar
certificates of deposit of major United States money market banks for negotiable
certificates of deposit with a remaining maturity closest to the Index Maturity
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) in an amount that is representative for a single transaction in that
market at that time; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate determined on such CD Rate Interest Determination Date
will be the CD Rate in effect on such date.
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through the
world-wide-web site of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
Determination of CMT Rate. If an Interest Rate Basis for this Note is the CMT
Rate, as specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), the CMT Rate shall be determined by the Calculation
Agent as of the applicable Interest Determination Date (a "CMT Rate Interest
Determination Date") in accordance with the following provisions:
(i) If "CMT Telerate Page 7051" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), the CMT Rate on the CMT Rate
Interest Determination Date shall be a percentage equal to the yield for United
States Treasury securities at "constant maturity" having the Index Maturity
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) as set forth in H.15(519) under the caption "Treasury Constant
Maturities," as such yield is displayed on Telerate, Inc. (or any successor
service) on page 7051 (or any other page as may replace such page on such
service) ("Telerate Page 7051") for such CMT Rate Interest Determination Date.
If such rate does not appear on Telerate Page 7051, the CMT Rate on such CMT
Rate Interest Determination Date shall be a percentage equal to the yield for
United States Treasury securities at "constant maturity" having the Index
Maturity and for such CMT Rate Interest Determination Date as set forth in
H.15(519) under the caption "Treasury Constant Maturities". If such rate does
not appear in H.15(519), the CMT Rate on such CMT Rate Interest Determination
Date shall be the rate for the period of the Index Maturity as may then be
published by either the Board of
17
<PAGE>
Governors of the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the rate
which would otherwise have been published in H.15(519). If the Board of
Governors of the Federal Reserve System or the United States Department of the
Treasury does not publish a yield on United States Treasury securities at
"constant maturity" having the Index Maturity for such CMT Rate Interest
Determination Date, the CMT Rate on such CMT Rate Interest Determination Date
shall be calculated by the Calculation Agent and shall be a yield-to-maturity
based on the arithmetic mean of the secondary market bid prices at approximately
3:30 p.m., New York City time, on such CMT Rate Interest Determination Date of
three leading primary United States government securities dealers in The City of
New York (each, a "Reference Dealer") selected by the Calculation Agent (from
five such Reference Dealers and eliminating the highest quotation (or, in the
event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)) for United States Treasury securities
with an original maturity equal to the Index Maturity, a remaining term to
maturity no more than 1 year shorter than the Index Maturity and in a principal
amount that is representative for a single transaction in such securities in
such market at such time. If fewer than five but more than two such prices are
provided as requested, the CMT Rate on such CMT Rate Interest Determination Date
shall be based on the arithmetic mean of the bid prices obtained and neither the
highest nor lowest of such quotations shall be eliminated. If fewer than three
prices are provided as requested, the CMT Rate on such CMT Rate Interest
Determination Date shall be calculated by the Calculation Agent and shall be a
yield-to-maturity based on the arithmetic mean of the secondary market bid
prices as of approximately 3:30 p.m., New York City time, on such CMT Rate
Interest Determination Date of three Reference Dealers selected by the
Calculation Agent (from five such Reference Dealers and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)) for United States
Treasury securities with an original maturity greater than the Index Maturity, a
remaining term to maturity closest to the Index Maturity and in a principal
amount that is representative for a single transaction in such securities in
such market at such time. If fewer than five but more than two such prices are
provided as requested, the CMT Rate on such CMT Rate Interest Determination Date
shall be based on the arithmetic mean of the bid prices obtained and neither the
highest nor the lowest of such quotations shall be eliminated; provided,
however, that if fewer than three such prices are provided as requested, the CMT
Rate determined as of such CMT Rate Interest Determination Date shall be the CMT
Rate in effect on such CMT Rate Interest Determination Date. If two such United
States Treasury securities with an original maturity greater than the Index
Maturity have remaining terms to maturity equally close to the Index Maturity,
the quotes for the Treasury security with the shorter original term to maturity
will be used.
(ii) If "CMT Telerate Page 7052" is specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement), the CMT Rate on the CMT Rate
Interest Determination Date shall be a percentage equal to the one-week or
one-month, as specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), average yield for United States Treasury securities
at "constant maturity" having the Index Maturity specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement) as set forth in
H.15(519) opposite the caption "Treasury Constant Maturities," as such yield is
displayed on Telerate, Inc. (or any successor service) on page 7052 (or any
other page as may replace such page on such service ) ("Telerate Page 7052") for
the week or month, as applicable, ended immediately preceding the week or month,
as applicable, in which such CMT Rate Interest Determination Date falls. If such
rate does not appear on the Telerate Page 7052, the CMT Rate on such CMT Rate
Interest Determination Date shall be a percentage equal to the one-week or
one-month, as specified on
18
<PAGE>
the face hereof (or, if this Note is in global form, in the Pricing Supplement),
average yield for United States Treasury securities at "constant maturity"
having the Index Maturity and for the week or month, as applicable, preceding
such CMT Rate Interest Determination Date as set forth in H.15(519) opposite the
caption "Treasury Constant Maturities". If such rate does not appear in
H.15(519), the CMT Rate on such CMT Rate Interest Determination Date shall be
the one-week or one-month, as specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), average yield for United States
Treasury securities at "constant maturity" having the Index Maturity as
otherwise announced by the Federal Reserve Bank of New York for the week or
month, as applicable, ended immediately preceding the week or month, as
applicable, in which such CMT Rate Interest Determination Date falls. If the
Federal Reserve Bank of New York does not publish a one-week or one-month, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), average yield on United States Treasury securities at "constant
maturity" having the Index Maturity for the applicable week or month, the CMT
Rate on such CMT Rate Interest Determination Date shall be calculated by the
Calculation Agent and shall be a yield-to-maturity based on the arithmetic mean
of the secondary market bid prices at approximately 3:30 p.m., New York City
time, on such CMT Rate Interest Determination Date of three Reference Dealers
selected by the Calculation Agent (from five such Reference Dealers and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)) for United States Treasury securities with an original maturity equal
to the Index Maturity, a remaining term to maturity of no more than 1 year
shorter than the Index Maturity and in a principal amount that is representative
for a single transaction in such securities in such market at such time. If
fewer than five but more than two such prices are provided as requested, the CMT
Rate on such CMT Rate Interest Determination Date shall be based on the
arithmetic mean of the bid prices obtained and neither the highest nor lowest of
such quotations shall be eliminated. If fewer than three prices are provided as
requested, the CMT Rate on such CMT Rate Interest Determination Date shall be
calculated by the Calculation Agent and shall be a yield-to-maturity based on
the arithmetic mean of the secondary market bid prices as of approximately 3:30
p.m., New York City time, on such CMT Rate Interest Determination Date of three
Reference Dealers selected by the Calculation Agent (from five such Reference
Dealers and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)) for United States Treasury securities with an original maturity
longer than the Index Maturity, a remaining term to maturity closest to the
Index Maturity and in a principal amount that is representative for a single
transaction in such securities in such market at such time. If fewer than five
but more than two such prices are provided as requested, the CMT Rate on such
CMT Rate Interest Determination Date shall be based on the arithmetic mean of
the bid prices obtained and neither the highest nor lowest of such quotations
shall be eliminated; provided, however, that if fewer than three such prices are
provided as requested, the CMT Rate determined as of such CMT Rate Interest
Determination Date shall be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two United States Treasury securities with an original
maturity greater than the Index Maturity have remaining terms to maturity
equally close to the Index Maturity, the quotes for the Treasury security with
the shorter original term to maturity will be used.
Determination of Commercial Paper Rate. If an Interest Rate Basis for this Note
is the Commercial Paper Rate, as specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement), the Commercial Paper Rate shall
be determined as of the applicable
19
<PAGE>
Interest Determination Date (a "Commercial Paper Rate Interest Determination
Date") as the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement) as published in
H.15(519) under the caption "Commercial Paper-Nonfinancial" or, if not so
published by 3:00 p.m., New York City time, on the related Calculation Date, the
Money Market Yield of the rate on such Commercial Paper Rate Interest
Determination Date for commercial paper having the Index Maturity as published
in H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "Commercial
Paper-Nonfinancial." If such rate is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on such Calculation Date, then the Commercial Paper Rate on such Commercial
Paper Rate Interest Determination Date will be calculated by the Calculation
Agent and shall be the Money Market Yield of the arithmetic mean of the offered
rates at approximately 11:00 a.m., New York City time, on such Commercial Paper
Rate Interest Determination Date of three leading dealers of United States
dollar commercial paper in The City of New York selected by the Calculation
Agent for commercial paper having the Index Maturity placed for industrial
issuers whose bond rating is "Aa," or the equivalent, from a nationally
recognized statistical rating organization; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate determined as of such Commercial Paper
Rate Interest Determination Date will be the Commercial Paper Rate in effect on
such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Money Market Yield = D x 360 x 100
--------------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable Interest Reset Period.
Determination of Eleventh District Cost of Funds Rate. If an Interest Rate Basis
for this Note is the Eleventh District Cost of Funds Rate, as specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement), the
Eleventh District Cost of Funds Rate shall be determined as of the applicable
Interest Determination Date (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), as the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls, as set
forth under the caption "11th District" on Telerate Page 7058 (as defined below)
as of 11:00 a.m., San Francisco time, on such Eleventh District Cost of Funds
Rate Interest Determination Date. If such rate does not appear on Telerate Page
7058 on the related Eleventh District Cost of Funds Rate Interest Determination
Date, the Eleventh District Cost of Funds Rate for such Eleventh District Cost
of Funds Rate Interest Determination Date shall be the monthly weighted average
cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding the
date of such announcement. If the FHLB of San Francisco fails to
20
<PAGE>
announce such rate for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, then the Eleventh
District Cost of Funds Rate determined as of such Eleventh District Cost of
Funds Rate Interest Determination Date shall be the Eleventh District Cost of
Funds Rate in effect on such Eleventh District Cost of Funds Rate Interest
Determination Date.
"Telerate Page 7058" means the display designated as page "7058" on the Bridge
Telerate Service (or such other page as may replace the 7058 page on that
service for the purpose of displaying the monthly weighted average costs of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District).
Determination of EURIBOR. If an Interest Rate Basis for this Note is EURIBOR, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), EURIBOR shall be determined as of the applicable Interest
Determination Date (a "EURIBOR Interest Determination Date"), in accordance with
the following provisions:
(i) With respect to any EURIBOR Interest Determination Date, EURIBOR will be:
(a) the rate for deposits in euro as sponsored, calculated and
published jointly by the European Banking Federation and ACI--The
Financial Market Association, or any company established by the joint
sponsors for purposes of compiling and publishing those rates, having the
Index Maturity specified on the face hereof (or if this Note is in global
form, in the Pricing Supplement), commencing on the applicable Interest
Reset Date, as that rate appears on Telerate, Inc., or any successor
service, on page 248 (or any other page as may replace such page on such
service) ("Telerate Page 248") as of 11:00 a.m., Brussels time, on the
applicable EURIBOR Interest Determination Date.
(b) if the rate referred to in clause (a) above does not appear on
Telerate Page 248, or is not so published by 11:00 a.m., Brussels time, on
the applicable EURIBOR Interest Determination Date, the rate calculated by
the Calculation Agent as the arithmetic mean of at least two quotations
obtained by the Calculation Agent after requesting the principal Euro-zone
(as defined hereinafter) offices of four major banks in the Euro-zone
interbank market, in the European interbank market, to provide the
Calculation Agent with its offered quotation for deposits in euro for the
period of the Index Maturity designated on the face hereof (or if this
Note is in global form, in the Pricing Supplement), commencing on the
applicable Interest Reset Date, to prime banks in the Euro-zone interbank
market at approximately 11:00 a.m., Brussels time, on the applicable
EURIBOR Interest Determination Date and in a principal amount not less
than the equivalent of U.S.$1,000,000 in euro that is representative for a
single transaction in euro in such market at such time.
(c) if fewer than two quotations referred to in clause (b) above are
provided, EURIBOR for such EURIBOR Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., Brussels time, on such EURIBOR
Interest Determination Date by four major banks in the Eurozone for loans
in euro to leading European banks, having the Index Maturity designated on
the face hereof (or if this Note is in global form, in the Pricing
21
<PAGE>
Supplement), commencing on the applicable Interest Reset Date and in
principal amount not less than the equivalent of U.S.$1,000,000 in euro
that is representative for a single transaction in euro in such market at
such time.
(d) if the banks so selected by the Calculation Agent are not
quoting as mentioned in clause (c) above, EURIBOR determined as of such
EURIBOR Interest Determination Date shall be EURIBOR in effect on such
EURIBOR Interest Determination Date.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the treaty establishing
the European Community, as amended by the treaty on European Union.
Determination of Federal Funds Rate. If an Interest Rate Basis for this Note is
the Federal Funds Rate, as specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement), the Federal Funds Rate shall be
determined as of the applicable Interest Determination Date (a "Federal Funds
Rate Interest Determination Date") as the rate on such date for United States
dollar federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)", as such rate is displayed on Bridge Telerate, Inc. (or any
successor service) on page 120 (or any other page as may replace such page on
such service) ("Telerate Page 120"), or, if such rate does not appear on
Telerate Page 120 or is not so published by 3:00 p.m., New York City time, on
the Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date for United States dollar federal funds as published in H.15 Daily Update,
or such other recognized electronic source used for the purpose of displaying
such rate, under the caption "Federal Funds (Effective)." If such rate does not
appear on Telerate Page 120 or is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by 3:00 p.m., New York City time,
on the related Calculation Date, then the Federal Funds Rate on such Federal
Funds Rate Interest Determination Date shall be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of United States dollar federal funds transactions in The City of New York
selected by the Calculation Agent, prior to 9:00 a.m., New York City time, on
such Federal Funds Rate Interest Determination Date; provided, however, that if
the brokers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate determined as of such Federal Funds Rate
Interest Determination Date will be the Federal Funds Rate in effect on such
Federal Funds Rate Interest Determination Date.
Determination of J.J. Kenny Rate. If an Interest Rate Basis for this Note is the
J.J. Kenny Rate, as specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the J.J. Kenny Rate shall be determined as of
the applicable Interest Determination Date (a "J.J. Kenny Interest Determination
Date") as the rate in the high grade weekly index (the "Weekly Index") on such
date made available by Kenny Information Systems ("Kenny") to the Calculation
Agent. The Weekly Index Maturity is, and shall be, based upon 30-day yield
evaluations at par of bonds, the interest of which is exempt from Federal income
taxation under the Internal Revenue Code of 1986, as amended (the "Code"), of
not less than five high grade component issuers selected by Kenny which shall
include, without limitation, issuers of general obligation bonds. The specific
issuers included among the component issuers may be changed
22
<PAGE>
from time to time by Kenny in its discretion. The bonds on which the Weekly
Index is based shall not include any bonds on which the interest is subject to a
minimum tax or similar tax under the Code, unless all tax-exempt bonds are
subject to such tax. In the event Kenny ceases to make available such Weekly
Index, a successor indexing agent will be selected by the Calculation Agent,
such index to reflect the prevailing rate for bonds rated in the highest
short-term rating category by Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group in respect of issuers most closely resembling the high
grade component issuers selected by Kenny for its Weekly Index, the interest on
which is (i) variable on a weekly basis, (ii) exempt from Federal income
taxation under the Code, and (iii) not subject to a minimum tax or similar tax
under the Code, unless all tax-exempt bonds are subject to such tax. If such
successor indexing agent is not available, the rate for any J.J. Kenny Interest
Determination Date shall be 67% of the rate determined if the Treasury Rate
option had been originally selected.
Determination of LIBOR. If an Interest Rate Basis for this Note is LIBOR, as
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), LIBOR shall be determined by the Calculation Agent as of the
applicable Interest Determination Date (a "LIBOR Interest Determination Date"),
in accordance with the following provisions:
(i) if "LIBOR Telerate" is specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement) or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified on the face hereof as the method for calculating LIBOR,
LIBOR will be the rate for deposits in the Designated LIBOR Currency having the
Index Maturity specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), commencing on such Interest Reset Date, that appears
on the Designated LIBOR Page (as defined hereinafter) as of 11:00 a.m., London
time, on such LIBOR Interest Determination Date; or (b) if "LIBOR Reuters" is
specified on the face hereof, the arithmetic mean of the offered rates (unless
the Designated LIBOR Page by its terms provides only for a single rate, in which
case such single rate shall be used) for deposits in the Designated LIBOR
Currency having the Index Maturity, commencing on the applicable Interest Reset
Date, that appear (or, if only a single rate is required as aforesaid, appears)
on the Designated LIBOR Page (as defined hereinafter) as of 11:00 a.m., London
time, on such LIBOR Interest Determination Date. If fewer than two such offered
rates so appear, or if no such rate so appears, as applicable, LIBOR on such
LIBOR Interest Determination Date shall be determined in accordance with the
provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer than two
offered rates appear, or no rate appears, as the case may be, on the Designated
LIBOR Page as specified in clause (i) above, the Calculation Agent shall request
the principal London offices of each of four major reference banks in the London
interbank market, as selected by the Calculation Agent, to provide the
Calculation Agent with its offered quotation for deposits in the Designated
LIBOR Currency for the period of the Index Maturity, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date
and in a principal amount that is representative for a single transaction in the
Designated LIBOR Currency in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal
23
<PAGE>
Financial Center, on such LIBOR Interest Determination Date by three major banks
in such Principal Financial Center (as defined hereafter) selected by the
Calculation Agent for loans in the Designated LIBOR Currency to leading European
banks, having the Index Maturity and in a principal amount that is
representative for a single transaction in the Designated LIBOR Currency in such
market at such time; provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date shall be LIBOR in effect
on such LIBOR Interest Determination Date.
"Designated LIBOR Currency" means the currency specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement) as to which LIBOR
shall be calculated or, if no such currency is specified on the face hereof (or,
if this Note is in global form, in the Pricing Supplement), United States
dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on the face
hereof, the display on the Reuter Monitor Money Rates Service (or any successor
service) on the page specified on the face hereof (or any other page as may
replace such page on such service) for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR Currency, or (b) if
"LIBOR Telerate" is specified on the face hereof or neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified on the face hereof as the method for calculating
LIBOR, the display on Bridge Telerate, Inc. (or any successor service) on the
page specified on the face hereof (or any other page as may replace such page on
such service) for the purpose of displaying the London interbank rates of major
banks for the Designated LIBOR Currency.
"Principal Financial Center" means the capital city of the country to which the
Designated LIBOR Currency relates except that with respect to United States
dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders,
Italian lire, Portuguese escudos, South African rand and Swiss francs, the
"Principal Financial Center" shall be The City of New York, Sydney, Toronto,
Frankfurt, Amsterdam, Milan, London (solely in the case of the Designated LIBOR
Currency), Johannesburg and Zurich, respectively.
"London Banking Day" means any day (other than a Saturday or Sunday) on which
dealings in deposits in the Index Currency are transacted in the London
interbank market.
Determination of Prime Rate. If an Interest Rate Basis for this Note is the
Prime Rate, as specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under the
caption "Bank Prime Loan" or, if not published by 3:00 p.m., New York City time,
on the related Calculation Date, the rate on such Prime Rate Interest
Determination Date as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Bank Prime Loan." If such rate is not yet published in H.15(519), H.15
Daily Update or another recognized electronic source by 3:00 p.m., New York City
time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen US PRIME 1 Page (as defined hereinafter) as such
bank's prime rate or base lending rate as of 11:00 a.m., New York City time, on
such Prime Rate Interest Determination Date. If fewer than
24
<PAGE>
four such rates so appear on the Reuters Screen US PRIME 1 Page for such Prime
Rate Interest Determination Date, then the Prime Rate shall be the arithmetic
mean of the prime rates or base lending rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of business
on such Prime Rate Interest Determination Date by three major banks in The City
of New York selected by the Calculation Agent; provided, however, that if the
banks or trust companies so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor Money
Rates Service (or any successor service) on the "US PRIME 1" page (or such other
page as may replace the US PRIME 1 page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
Determination of Treasury Rate. If an Interest Rate Basis for this Note is the
Treasury Rate, as specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the Treasury Rate shall be determined as of
the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified on the face hereof
under the caption "INVESTMENT RATE" on the display on Telerate, Inc. (or any
successor service) on page 56 (or any other page as may replace such page on
such service) ("Telerate Page 56") or page 57 (or any other page as may replace
such page on such service) ("Telerate Page 57") or, if not so published by 3:00
p.m., New York City time, on the related Calculation Date, the Bond Equivalent
Yield (as defined hereinafter) of the rate for such Treasury Bills as published
in H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High." If such rate is not so published in
H.15 Daily Update or another recognized electronic source by 3:00 p.m., New York
City time, on the related Calculation Date, the Treasury Rate on such Treasury
Rate Interest Determination Date shall be Bond Equivalent Yield of the auction
rate of such Treasury Bills as announced by the United States Department of the
Treasury. In the event that such auction rate is not so announced by the United
States Department of the Treasury on such Calculation Date, or if no such
Auction is held, then the Treasury Rate on such Treasury Rate Interest
Determination Date shall be the Bond Equivalent Yield of the rate on such
Treasury Rate Interest Determination Date of Treasury Bills having the Index
Maturity as published in H.15(519) under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market" or, if not yet published by 3:00
p.m., New York City time, on the related Calculation Date, the rate on such
Treasury Rate Interest Determination Date of such Treasury Bills as published in
H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market." If such rate is not yet published
in H.15(519), H.15 Daily Update or another recognized electronic source by 3:00
p.m., New York City time, on the related Calculation Date, then the Treasury
Rate on such Treasury Rate Interest Determination Date shall be calculated by
the Calculation Agent and shall be the Bond Equivalent Yield of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 p.m., New York
City time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers selected by the Calculation
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index
25
<PAGE>
Maturity; provided, however, that if the dealers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate
determined as of such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Bond Equivalent Yield = D x N X 100
---------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the applicable
Interest Reset Period.
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), accrued interest hereon shall be an amount
calculated by multiplying the face amount hereof by an accrued interest factor.
Such accrued interest factor shall be computed by adding the interest factor
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise specified on the face hereof (or, if this Note is
in global form, in the Pricing Supplement), the interest factor for each such
day shall be computed and paid on the basis of a 360-day year of twelve 30-day
months if the Day Count Convention specified on the face hereof (or, if this
Note is in global form, in the Pricing Supplement) is "30/360" for the period
specified thereunder, or by dividing the applicable per annum interest rate by
360 if the Day Count Convention specified on the face hereof (or, if this Note
is in global form, in the Pricing Supplement) is "Actual/360" for the period
specified thereunder, or by dividing the applicable per annum interest rate by
the actual number of days in the year if the Day Count Convention specified on
the face hereof (or, if this Note is in global form, in the Pricing Supplement)
is "Actual/Actual" for the period specified thereunder. If no Day Count
Convention is specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement), the interest factor for each day in the relevant
Interest Period shall be computed, if an Interest Rate Basis specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement) is
the CMT Rate, EURIBOR, or Treasury Rate or if the Specified Currency indicated
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) is Sterling, as if "Actual/Actual" had been specified thereon and,
in all other cases, as if "Actual/360" had been specified thereon. Unless
otherwise specified on the face hereof (or, if this Note is in global form, in
the Pricing Supplement), if interest on this Note is to be calculated with
reference to two or more Interest Rate Bases as specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), the interest
factor will be calculated in each period in the same manner as if only one of
the applicable Interest Rate Bases applied.
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), if "Reference Rate Determination" is specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) in connection with the determination of the rate of interest on this
Note, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest
26
<PAGE>
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day and (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Maturity Date, as the case may be. All calculations in
respect of determining the interest rate applicable to this Note (other than any
calculations made by the Exchange Rate Agent) shall be made by the Calculation
Agent specified on the face hereof (or, if this Note is in global form, the
Pricing Supplement) or such successor thereto as is duly appointed by the Bank.
The determination of any interest rate by the Calculation Agent shall, in the
absence of manifest error, be conclusive for all purposes and binding upon the
holder hereof.
All percentages resulting from any calculation on this Note would be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or
0.09876545) would be rounded to 9.87655% (or 0.0987655%) and 9.876544% (or
0.09876544) would be rounded to 987654% (or 0.0987654)), and all dollar amounts
used in or resulting from such calculation will be rounded to the nearest cent
or, if the Specified Currency is other than dollars, to the nearest unit (with
one-half cent or unit being rounded upward).
At the request of the holder hereof, the Calculation Agent shall provide to the
holder hereof the interest rate hereon then in effect and, if determined, the
interest rate which shall become effective for the next Interest Period.
Notwithstanding the foregoing, the interest rate hereon shall not be greater
than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate,
if any, specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement). In addition to any Maximum Interest Rate applicable hereto
pursuant to the above provisions, the interest rate on this Note will in no
event be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application.
Redemption at the Option of the Bank
Unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), this Note will not be subject to any sinking
fund. This Note may be redeemed by the Bank either in whole or in part on and
after the Initial Redemption Date, if any, specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). If no Initial
Redemption Date is specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), this Note may not be redeemed prior to the
Maturity Date except as provided below in the event that any Additional Amounts
(as defined below) are required to be paid by the Bank with respect to this
Note. On and after the Initial Redemption Date, if any, this Note may be
redeemed in increments of US$1,000 (or, if the Specified Currency indicated on
the face hereof is other than the United States dollar, in such Authorized
Denominations specified on the face hereof (or, if this Note is in global form,
in the Pricing Supplement)) at the option of the Bank at the applicable
Redemption Price (as defined below) together with unpaid interest accrued hereon
at the applicable rate borne by this Note to the date of redemption (each such
date, a "Redemption Date"), on written notice given by or on behalf of the Bank
not more than 60 nor less than 30 calendar days prior to the Redemption Date
(unless otherwise specified on the face hereof (or, if this Note is in global
form, in the Pricing Supplement)); provided, however, that, in the event of
redemption of this Note in part only, the unredeemed portion
27
<PAGE>
thereof shall be an Authorized Denomination specified on the face hereof (or, if
this Note is in global form, in the Pricing Supplement). In the event of
redemption of this Note in part only, a new Note for the unredeemed portion
hereof shall be issued in the name of the holder hereof upon the surrender of
this Note, or, where applicable, an appropriate notation will be made on the
schedule attached hereto for such notations.
The "Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) of the principal amount of this Note to be redeemed and shall
decline at each anniversary of the Initial Redemption Date specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement) by the
Annual Redemption Percentage Reduction, if any, specified on the face hereof
(or, if this Note is in global form, in the Pricing Supplement), of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
Repayment at the Option of the Holder
This Note may be subject to repayment at the option of the holder hereof in
accordance with the terms hereof on any Holder's Optional Repayment Date(s), if
any, specified on the face hereof (or, if this Note is in global form, in the
Pricing Supplement). If no Holder's Optional Repayment Date is specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement),
this Note will not be repayable at the option of the holder hereof prior to the
Maturity Date. On any Holder's Optional Repayment Date, this Note will be
repayable in whole or in part in increments of US$1,000 (or, if the Specified
Currency indicated on the face hereof is other than the U.S. dollar, in such
Authorized Denominations specified on the face hereof (or, if this Note is in
global form, in the Pricing Supplement)) at the option of the holder hereof at
the repayment price equal to 100% of the principal amount to be repaid, together
with accrued and unpaid interest hereon payable to the date of repayment;
provided, however, that, in the event of repayment of this Note in part only,
the unrepaid portion hereof shall be an Authorized Denomination specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement). For
this Note to be repaid in whole or in part at the option of the holder hereof on
a Holder's Optional Repayment Date, this Note must be delivered, with the form
entitled "Option to Elect Repayment" attached hereto duly completed, to the
Domestic Paying Agent or the London Paying Agent (as appropriate in accordance
with such attached form) at the address set forth on such form or at such other
address which the Bank shall from time to time notify the holders of the Notes
not more than 60 nor less than 30 days prior to such Holder's Optional Repayment
Date. In the event of repayment of this Note in part only, a new Note for the
unrepaid portion hereof shall be issued in the name of the holder hereof upon
the surrender hereof, or, where applicable, an appropriate notation will be made
on the schedule attached hereto for such notations. Exercise of such repayment
option by the holder hereof shall be irrevocable.
Additional Amounts
All payments of principal (and premium, if any) and interest with respect to
this Note will be made without withholding or deduction at source for, or on
account of, any present or future taxes, fees, duties, assessments or
governmental charges of whatever nature imposed or levied by the United States
or any political subdivision or taxing authority thereof or therein, unless such
28
<PAGE>
withholding or deduction is required by (i) the laws (or any regulations or
rulings promulgated thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (ii) an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings including, without limitation, a holding by a
court of competent jurisdiction or by a taxing authority in the United States or
any political subdivision thereof). If a withholding or deduction at source is
required, the Bank will (subject to certain limitations and exceptions set forth
below) pay to the holder hereof on behalf of an owner of a beneficial interest
herein (an "Owner") who is a United States Alien (as defined below) such
additional amounts ("Additional Amounts") as may be necessary so that every net
payment of principal (and premium, if any) or interest made to the holder hereof
on behalf of such Owner, after such withholding or deduction, will not be less
than the amount provided for in this Note with respect to such Owner's interest;
provided, however, that the Bank shall not be required to make any payment of
Additional Amounts for or on account of:
(a) any tax, fee, duty, assessment or other governmental charge
which would not have been imposed but for (i) the existence of any present
or former connection between such Owner (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
Owner, if such Owner is an estate, trust, partnership or corporation) and
the United States, including, without limitation, such Owner (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) being
or having been a citizen or resident thereof or being or having been
present or engaged in trade or business therein or having had a permanent
establishment therein, or (ii) the presentation of this Note for payment
on a date more than 15 days after the date on which such payment became
due and payable or the date on which payment thereof is duly provided for,
whichever occurs later;
(b) any estate, inheritance, gift, sales, transfer, personal
property or similar tax, assessment or other governmental charge;
(c) any tax, fee, duty, assessment or other governmental charge
imposed by reason of such Owner's past or present status as a personal
holding company, foreign personal holding company, passive foreign
investment company or controlled foreign corporation with respect to the
United States or as a corporation which accumulates earnings to avoid
United States federal income tax;
(d) any tax, fee, duty, assessment or other governmental charge
which is payable otherwise than by withholding from payments of principal
or interest with respect to this Note;
(e) any tax, fee, duty, assessment or other governmental charge
imposed on interest received by anyone who owns (actually or
constructively) 10% or more of the total combined voting power of all
classes of stock of the Bank;
(f) any tax, fee, duty, assessment or other governmental charge
required to be withheld by any Paying Agent from any payment of principal
(and premium, if any) or interest with respect to this Note, if such
payment can be made without such withholding by any other Paying Agent
with respect to this Note;
29
<PAGE>
(g) any tax, fee, duty, assessment or other governmental charge
which would not have been imposed but for the failure to comply with
certification, information or other reporting requirements concerning the
nationality, residence, identity or connection with the United States of
the holder hereof or of such Owner, if such compliance is required by
statute or by regulation of the United States Treasury Department as a
precondition to relief or exemption from such tax, assessment or other
governmental charge; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g);
nor shall Additional Amounts be paid to any holder of this Note on behalf of any
Owner who is a fiduciary or partnership or other than the sole Owner to the
extent a beneficiary or settlor with respect to such fiduciary or a member of
such partnership or Owner would not have been entitled to payment of the
Additional Amounts had such beneficiary, settlor, member or Owner been the sole
Owner of this Note.
As used herein, the term "United States Alien" means any corporation,
individual, fiduciary or partnership that for United States federal income tax
purposes is a foreign corporation, nonresident alien individual, nonresident
alien fiduciary of a foreign estate or trust, or foreign partnership one or more
members of which is a foreign corporation, nonresident alien individual or
nonresident alien fiduciary of a foreign estate or trust.
If this Note is in bearer form and the Bank shall determine, based upon a
written opinion of independent counsel selected by the Bank, that any payment
made outside the United States by the Bank or any of its Paying Agents of the
full amount of the next scheduled payment of either principal (and premium, if
any) or interest due with respect to this Note would, under any present or
future laws or regulations of the United States affecting taxation or otherwise,
be subject to any certification, information or other reporting requirements of
any kind, the effect of which requirements is the disclosure to the Bank, any of
its Paying Agents or any governmental authority of the nationality, residence or
identity (as distinguished from status as a United States Alien) of any Owner of
this Note who is a United States Alien (other than such requirements which (i)
would not be applicable to a payment made to a custodian, nominee or other agent
of the Owner, or which can be satisfied by such a custodian, nominee or other
agent certifying to the effect that such Owner is a United States Alien;
provided, however, in each case that payment by such custodian, nominee or agent
to such Owner is not otherwise subject to any requirements referred to in this
sentence, (ii) are applicable only to payment by a custodian, nominee or other
agent of the Owner to or on behalf of such Owner, or (iii) would not be
applicable to a payment made by any other paying agent of the Bank), the Bank
shall redeem this Note as a whole but not in part at a redemption price equal to
the principal amount hereof (or, if this is an Original Issue Discount Note, the
Amortized Face Amount (as defined herein) hereof determined as of the date of
redemption), together, if appropriate, with accrued interest to, but excluding,
the date fixed for redemption, such redemption to take place on such date not
later than one year after notice of such determination has been given as
described herein. If the Bank becomes aware of an event that might give rise to
such certification, information or other reporting requirements, the Bank shall,
as soon as practicable, solicit advice of independent counsel selected by the
Bank to establish whether such certification, information or other reporting
requirements will apply and, if such requirements will, in the written opinion
of such counsel, apply, the Bank shall give
30
<PAGE>
prompt notice of such determination (a "Tax Notice") stating in such notice the
effective date of such certification, information or other reporting
requirements and, if applicable, the date by which the redemption shall take
place. Notwithstanding the foregoing, the Bank shall not redeem this Note if the
Bank, based upon the written opinion of independent counsel selected by the
Bank, shall subsequently determine not less than 30 days prior to the date fixed
for redemption that subsequent payments would not be subject to any such
requirements, in which case the Bank shall give prompt notice of such
determination and any earlier redemption notice shall thereby be revoked and of
no further effect.
Notwithstanding the foregoing, if and so long as the certification information
or other reporting requirements referred to in the preceding paragraph would be
fully satisfied by payment of a withholding, backup withholding tax or similar
charge, the Bank may elect prior to giving the Tax Notice to have the provisions
described in this paragraph apply in lieu of the provisions described in the
preceding paragraph, in which case the Tax Notice shall state the effective date
of such certification, information or reporting requirements and that the Bank
has elected to pay Additional Amounts rather than redeem this Note. In such
event, the Bank will also pay as Additional Amounts such sums as may be
necessary so that every net payment made following the effective date of such
certification, information or reporting requirements outside the United States
by the Bank or any of its Paying Agents of principal (and premium, if any) or
interest due with respect to this Note to the bearer hereof who certifies to the
effect that the beneficial owners of this Note are United States Aliens
(provided that such certification shall not have the effect of communicating to
the Bank or any of its Paying Agents or any governmental authority the
nationality, residence or identity of such beneficial owners) after deduction or
withholding for or on account of such withholding, backup withholding tax or
similar charge (other than a withholding, backup withholding tax or similar
charge which (i) is imposed as a result of certification, information or other
reporting requirements referred to in the second parenthetical clause of the
first sentence of the preceding paragraph or (ii) is imposed as a result of the
fact that the Bank or any of its Paying Agents has actual knowledge that the
bearer hereof or any beneficial owner of this Note is not a United States Alien
but is within the category of persons, corporations or other entities described
in clause (a)(i) of the third preceding paragraph, or (iii) is imposed as a
result of presentation of this Note for payment more than 15 days after the date
on which such payment becomes due and payable or on which payment thereof is
duly provided for, whichever occurs later), will not be less than the amount
provided for in this Note to be then due and payable. In the event the Bank
elects to pay such Additional Amounts, the Bank will have the right, at its sole
option, at any time, to redeem this Note, as a whole but not in part, at a
redemption price equal to the principal amount hereof (or, if this is an
Original Issue Discount Note, the Amortized Face Amount hereof determined as of
the date of redemption), together, if appropriate, with accrued interest to the
date fixed for redemption including any Additional Amounts required to be paid
under this paragraph. If the Bank has made the determination described in the
preceding paragraph with respect to certification, information or other
reporting requirements applicable to interest only and subsequently makes a
determination in the manner and of the nature referred to in such preceding
paragraph with respect to such requirements applicable to principal, the Bank
will redeem this Note in the manner and on the terms described in the preceding
paragraph (except as provided below), unless the Bank elects to have the
provisions of this paragraph apply rather than the provisions of the immediately
preceding paragraph. If in such circumstances this Note is to be redeemed, the
Bank will be obligated to pay Additional Amounts with respect to interest, if
any, accrued to the date of redemption. If the
31
<PAGE>
Bank has made the determination described in the preceding paragraph and
subsequently makes a determination in the manner and of the nature referred to
in such preceding paragraph that the level of withholding applicable to
principal or interest has been increased, the Bank will redeem this Note in the
manner and on the terms described in the preceding paragraph (except as provided
below), unless the Bank elects to have the provisions of this paragraph apply
rather than the provisions of the immediately preceding paragraph. If in such
circumstances this Note is to be redeemed, the Bank will be obligated to pay
Additional Amounts with respect to the original level of withholding on
principal and interest, if any, accrued to the date of redemption.
Whenever in this Note there is mentioned, in any context, the payment of the
principal of (or premium, if any) or interest on, or in respect of, this Note,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided for herein to the extent that, in such context, Additional
Amounts are, were or would be payable in respect hereof pursuant to the
provisions of this Note and express mention of the payment of Additional Amounts
(if applicable) in any provisions hereof shall not be construed as including
Additional Amounts in those provisions hereof where such express mention is not
made.
Except as specifically provided herein (or, if this Note is in global form, in
the Pricing Supplement) (i) neither the Bank nor any Paying Agent shall be
required to make, any payment with respect to any tax, fee, duty, assessment or
other governmental charge imposed by any government or a political subdivision
or taxing authority thereof or therein; (ii) a Paying Agent on behalf of the
Bank shall have the right, but not the duty, to withhold from any amounts
otherwise payable to a holder of this Note such amount as is necessary for the
payment of any such taxes, fees, duties, assessments or other governmental
charges; and (iii) if such an amount is withheld, the amount payable to the
holder of this Note shall be the amount otherwise payable reduced by the amount
so withheld.
The Bank may redeem this Note in whole but not in part at any time at a
redemption price equal to the principal amount hereof (or, if this is an
Original Issue Discount Note, the Amortized Face Amount hereof determined as of
the date of redemption), together with accrued interest to but excluding the
date fixed for redemption, if the Bank shall determine, based upon a written
opinion of independent counsel selected by the Bank, that as a result of any
change in or amendment to the laws (or any regulations or rulings promulgated
hereunder) of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in application or
official interpretation of any such laws, regulations or rulings, which
amendment or change is effective on or after the Original Issue Date, the Bank
would be required to pay Additional Amounts on the occasion of the next payment
due with respect to such Note.
Notice of intention to redeem this Note, in whole but not in part, pursuant to
the immediately preceding paragraph will be given (i) if this Note is in
registered form, to the registered holder of this Note at least once not less
than 30 days nor more than 60 days prior to the date fixed for redemption or
(ii) if this Note is in bearer form, by publication in accordance with
applicable law, provided that no such notice of redemption shall be given
earlier than 90 days prior to the effective date of such change or amendment and
that at the time notice of such redemption is given, such obligation to pay such
Additional Amounts remains in effect and cannot be avoided by the Bank's taking
reasonable measures available to it. From and after any redemption date, if
32
<PAGE>
monies for the redemption of this Note shall have been made available for
redemption on such redemption date, this Note shall cease to bear interest (and,
if this Note is a definitive bearer Note, any interest coupons appertaining
hereto (whether or not attached) maturing after the redemption date shall become
void and no payment shall be made in respect thereof), and the only right of the
holder of this Note shall be to receive payment of the principal amount hereof
(or, if this is an Original Issue Discount Note, the Amortized Face Amount
hereof) and all unpaid interest accrued to such redemption date.
Events of Default, Acceleration of Maturity
In respect of this Note, the occurrence of any of the following events shall
constitute an "Event of Default" with respect to this Note:
(i) default in the payment of any interest (including any Additional
Amounts) with respect to this Note when due, which continues for 30 days;
(ii) default, in the payment of any principal of, or premium, if
any, on, this Note when due;
(iii) whatever the reason for such 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, the entry by a court having
jurisdiction in the premises of:
(a) a decree or order for relief in respect of the Bank in an
involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, reorganization or other
similar law; or
(b) a decree or order appointing a conservator, receiver,
liquidator, assignee, trustee, sequestrator or any other similar
official of the Bank, or of substantially all of the property of the
Bank, or ordering the winding up or liquidation of the affairs of
the Bank, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(iv) the commencement by the Bank of a voluntary case or proceeding
under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or the commencement of any
bankruptcy or insolvency case or proceeding, or the filing by the Bank of
a petition or answer or consent seeking reorganization or relief under any
applicable United States federal or state law, or the consent by the Bank
to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Bank or of substantially all of
the property of the Bank, or the making by the Bank of an assignment for
the benefit of creditors, or the taking of corporate action by the Bank in
furtherance of any such action.
If an Event of Default shall occur and be continuing, the holder of this Note
may declare the principal amount of, and accrued interest and premium, if any,
on, this Note due and payable
33
<PAGE>
immediately by written notice to the Bank. Upon such declaration and notice,
such principal amount (and premium, if any) and accrued interest shall become
immediately due and payable. Any Event of Default with respect to this Note may
be waived by the holder thereof.
This Note contains no limitation on the amount of senior debt, deposits or other
obligations that rank senior to this Note that may be hereafter incurred or
assumed by the Bank.
Miscellaneous
Notwithstanding anything to the contrary contained herein, if this Note is
identified as a Discount Note on the face hereof (or, if this Note is in global
form, in the Pricing Supplement), the amount payable to the holder of this Note
in the event of redemption, repayment or acceleration of Maturity will be equal
to (i) the Amortized Face Amount (as defined below) as of the date of such
event, plus (ii) with respect to any redemption of this Note (other than as
provided above in the event that Additional Amounts are required to be paid by
the Bank with respect to this Note), the Initial Redemption Percentage specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement) (as adjusted by the Annual Redemption Percentage Reduction specified
on the face hereof (or, if this Note is in global form, in the Pricing
Supplement), if any) minus 100% multiplied by the Issue Price specified on the
face hereof (or, if this Note is in global form, in the Pricing Supplement), net
of any portion of such Issue Price which has been paid prior to the date of
redemption, or the portion of the Issue Price (or the net amount) proportionate
to the portion of the unpaid principal amount to be redeemed, plus (iii) any
accrued interest to the date of such event the payment of which would constitute
qualified stated interest payments within the meaning of U.S. Treasury
Regulation 1. 1273-1 (c) under the Code. The "Amortized Face Amount" shall mean
an amount equal to (i) the Issue Price plus (ii) the aggregate portions of the
original issue discount (the excess of the amounts considered as part of the
"stated redemption price at maturity" of this Note within the meaning of Section
1273(a)(2) of the Code, whether denominated as principal or interest, over the
Issue Price) which shall theretofore have accrued pursuant to Section 1272 of
the Code (without regard to Section 1272(a)(7) of the Code) from the date of
issue of this Note to the date of determination, minus (iii) any amount
considered as part of the "stated redemption price at maturity" of this Note
which has been paid from the date of issue to the date of determination.
As used herein, "Business Day" means, unless otherwise specified on the face
hereof (or, if this Note is in global form, in the Pricing Supplement), a day
which is both (i) a day (other than a Saturday or a Sunday) on which commercial
banks and foreign exchange markets settle payments in The City of New York, Glen
Allen, Virginia, and London; and (ii) either (a) if this is a Note denominated
in a Specified Currency other than euro, a day on which commercial banks and
foreign exchange markets settle payments in the principal financial center of
the country of the relevant Specified Currency (if other than the City of New
York or London) or (b) if this is a Note denominated in euro, a day (other than
a Saturday or a Sunday) on which the Trans-European Automated Real-Time Gross
Settlement Express Transfer (TARGET) System is open. As used herein, "London
Business Day" means any day (other than a Saturday or Sunday) on which
commercial banks and foreign exchange markets settle payments in London.
34
<PAGE>
Any action by the holder of this Note shall bind all future holders of this
Note, and of any Note issued in exchange or substitution hereof or in place
hereof, in respect of anything done or permitted by the Bank or by the Paying
Agents in pursuance of such action.
In case any Note shall at any time become mutilated, defaced, destroyed, lost or
stolen, and such Note or evidence of the loss, theft or destruction thereof
satisfactory to the Bank and the Registrar or London Issuing Agent, as the case
may be, and such other documents or proof as may be required by the Bank and the
Registrar or London Issuing Agent, as the case may be, shall be delivered to the
Registrar or London Issuing Agent, as the case may be, the Registrar or London
Issuing Agent, as the case may be, shall issue a new Note of like tenor and
principal amount, having a serial number not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Note or in lieu of the
Note destroyed, lost or stolen but, in the case of any destroyed, lost or stolen
Note, only upon receipt of evidence satisfactory to the Bank and the Registrar
or London Issuing Agent, as the case may be, that such Note was destroyed,
stolen or lost, and, if required, upon receipt of indemnity satisfactory to the
Bank and the Registrar or London Issuing Agent, as the case may be. Upon the
issuance of any substituted Note, the Bank may require the payment of a sum
sufficient to cover all expenses and reasonable charges connected with the
preparation and delivery of a new Note. If any Note which has matured or has
been redeemed or repaid or is about to mature or to be redeemed or repaid shall
become mutilated, defaced, destroyed, lost or stolen, the Bank may, instead of
issuing a substitute Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Note) upon
compliance by the holder with the provisions of this paragraph.
No recourse shall be had for the payment of principal of (and premium, if any)
or interest on, this Note for any claim based hereon, or otherwise in respect
hereof, against any shareholder, employee, agent, officer or director, as such,
past, present or future, of the Bank or of any successor organization, either
directly or through the Bank or any successor organization, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
The Notes are issued in accordance with the Global Agency Agreement. The Notes,
and any receipts or interest coupons appertaining thereto, may be amended by the
Bank, and the Global Agency Agreement may be amended by the parties thereto, (i)
for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective provision contained therein, (ii) to make any
further modifications of the terms of the Global Agency Agreement necessary or
desirable to allow for the issuance of any additional Notes (which modifications
shall not be materially adverse to holders of outstanding Notes) or (iii) in any
manner which the Bank (and, in the case of the Global Agency Agreement, the
parties thereto) may deem necessary or desirable and which shall not materially
adversely affect the interests of the holders of the Notes, or any receipts,
talons or interest coupons appertaining thereto, to all of which each holder of
Notes, receipts, talons or interest coupons shall, by acceptance thereof, be
deemed to have consented; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Note
affected thereby, (1) change the Maturity Date with respect to any Note or
reduce or cancel the amount payable at Maturity; (2) reduce the amount payable
or modify the payment date for any interest with respect to any Note or vary the
method
35
<PAGE>
of calculating the rate of interest with respect to any Note; (3) reduce any
Minimum Interest Rate and/or Maximum Interest Rate with respect to any Note; (4)
modify the currency in which payments under any Note and/or any receipts,
coupons or talons appertaining thereto are to be made; (5) change the obligation
of the Bank to pay Additional Amounts with respect to Notes, receipts, talons or
coupons; or (6) reduce the percentage in principal amount of outstanding Notes
the consent of the holders of which is necessary to modify the provisions of the
Notes or to waive any future compliance or past default. Any instrument given by
or on behalf of any holder of a Note in connection with any consent to any such
modification, amendment or waiver shall be irrevocable once given and shall be
conclusive and binding on all subsequent holders of such Note. Any
modifications, amendments or waivers to this Agreement or the provisions of the
Notes, receipts, talons or coupons shall be conclusive and binding on all
holders of Notes, receipts, talons or coupons, whether or not notation of such
modifications, amendments or waivers is made upon the Notes, receipts, talons or
coupons. It will not be necessary for the consent of the holders of Notes to
approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
No provision of this Note shall alter or impair the obligation of the Bank,
which is absolute and unconditional, to pay principal of (and premium, if any)
and interest on, and any Additional Amounts with respect to, this Note in the
Specified Currency indicated on the face hereof (or, as provided herein, in the
equivalent in U.S. dollars) at the times, places and rate herein prescribed.
No service charge shall be made to a holder of this Note for any transfer or
exchange of this Note, but the Bank may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
If this Note is in registered form, prior to due presentment of this Note for
registration of transfer, the Bank, Domestic Paying Agent, Registrar, London
Paying Agent, Luxembourg Paying Agent, Transfer Agent and Listing Agent
(collectively, together with any successors thereto, the "Agents") or any agent
of the Bank or the Agents may treat the holder in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Bank, the Agents nor any such agent shall be affected
by notice to the contrary except as required by applicable law.
All notices to the Bank under this Note shall be in writing and addressed to the
Bank at Capital One Bank, 8000 Jones Branch Road, McLean, Virginia 22102, USA,
Attention: Treasurer; telephone: (703) 8751000; and facsimile: (703) 875-1099 or
to such other address of the Bank as the Bank may notify the holders of the
Notes.
36
<PAGE>
OPTION TO ELECT REPAYMENT
-------------------------
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to repay
this Note (or portion hereof specified below) pursuant to its terms at a price
equal to 100% of the principal amount hereof to be repaid, together with accrued
and unpaid interest hereon, payable to the date of repayment, to the
undersigned, at ______________
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned.)
For this Note to be repaid, the undersigned must give to the London Paying
Agent, if this Note is in bearer form, at 9 Thomas More Street, London, E1W 1YT
or, if this Note is in registered form, to the Domestic Paying Agent at The
Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001-2697,
United States of America, or to the London Paying Agent at its address, as the
case may be, or at such other place or places of which the Bank shall from time
to time notify the holders of the Notes not more than 60 days nor less than 30
days prior to the date of repayment, this Note (and, if this Note is in
definitive bearer form, all interest coupons appertaining hereto maturing after
the repayment date) with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid, specify
the portion hereof (which shall be increments of US$1,000, or equivalent
denominations in other currencies) which the holder elects to have repaid and
specify the denomination or denominations (which shall be an Authorized
Denomination specified on the face of the within Note) of the Notes to be issued
to the holder for the portion of this Note not being repaid (in the absence of
any such specification, one such Note will be issued for the portion not being
repaid):
US$__________________________ ________________________________
Signature
Dated: ______________________ NOTICE: The signature on this
"Option to Elect Repayment" form
must correspond with the name as
written upon the face of the within
Note in every particular, without
alteration or enlargement or any
change whatsoever.
- ---------------------------------
Signature Guarantee
NOTICE: The signature(s) should be
guaranteed by an eligible guarantor
institution (banks, stockbrokers,
savings and loan associations, and
credit unions with membership in an
approved signature guarantee
medallion program), pursuant to
Rule 17Ad- 15 under the Securities
Exchange Act of 1934.
37
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2.1
<SEQUENCE>5
<FILENAME>dex1021.txt
<DESCRIPTION>LEASE AGREEMENT
<TEXT>
<PAGE>
Exhibit 10.2.1
- --------------------------------------------------------------------------------
LEASE AGREEMENT
Dated as of December 5, 2000
among
FIRST UNION DEVELOPMENT CORPORATION,
as Lessor
and
CAPITAL ONE F.S.B. and
CAPITAL ONE BANK,
jointly and severally as Lessee
- --------------------------------------------------------------------------------
This Lease Agreement is subject to a security interest in favor of First Union
National Bank, as the agent for the Primary Financing Parties and respecting the
Security Documents, as the agent for the Secured Parties (the "Agent") under a
-----
Security Agreement dated as of December 5, 2000, between First Union Development
Corporation, as the Borrower and the Agent, as amended, modified, extended,
supplemented and/or restated from time to time in accordance with the applicable
provisions thereof. This Lease Agreement has been executed in several
counterparts. To the extent, if any, that this Lease Agreement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease
Agreement may be created through the transfer or possession of any counterpart
other than the original counterpart containing the receipt therefor executed by
the Agent on the signature page hereof.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I .................................................................................. 1
1.1 Definitions....................................................................... 1
1.2 Interpretation.................................................................... 2
ARTICLE II .................................................................................. 2
2.1 Property.......................................................................... 2
2.2 Lease Term........................................................................ 2
2.3 Title............................................................................. 3
2.4 Lease Supplement.................................................................. 3
ARTICLE III .................................................................................. 3
3.1 Rent.............................................................................. 3
3.2 Payment of Basic Rent............................................................. 3
3.3 Supplemental Rent................................................................. 4
3.4 Performance on a Non-Business Day................................................. 4
3.5 Rent Payment Provisions........................................................... 4
ARTICLE IV ................................................................................. 5
4.1 Taxes; Utility Charges............................................................ 5
ARTICLE V ................................................................................. 5
5.1 Quiet Enjoyment................................................................... 5
ARTICLE VI ................................................................................. 5
6.1 Net Lease......................................................................... 5
6.2 No Termination or Abatement....................................................... 5
ARTICLE VII ................................................................................. 5
7.1 Ownership of the Properties....................................................... 5
ARTICLE VIII ................................................................................. 5
8.1 Condition of the Property......................................................... 5
8.2 Possession and Use of the Property................................................ 5
8.3 Integrated Property............................................................... 5
ARTICLE IX ................................................................................. 5
9.1 Compliance With Legal Requirements, Insurance Requirements and Manufacturer's
Specifications and Standards..................................................... 5
ARTICLE X ................................................................................. 5
10.1 Maintenance and Repair; Return................................................... 5
10.2 Environmental Inspection......................................................... 5
ARTICLE XI ................................................................................. 5
11.1 Modifications.................................................................... 5
ARTICLE XII ................................................................................. 5
12.1 Warranty of Title; Waiver of Landlord's Lien..................................... 5
ARTICLE XIII ................................................................................. 5
13.1 Permitted Contests Other Than in Respect of Indemnities.......................... 5
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
13.2 Impositions, Utility Charges, Other Matters; Compliance with Legal
Requirements .................................................................. 5
ARTICLE XIV ............................................................................... 5
14.1 Public Liability and Workers' Compensation Insurance........................... 5
14.2 Permanent Hazard and Other Insurance........................................... 5
14.3 Coverage....................................................................... 5
14.4 Self-Insurance................................................................. 5
ARTICLE XV ............................................................................... 5
15.1 Casualty and Condemnation...................................................... 5
15.2 Environmental Matters.......................................................... 5
15.3 Notice of Environmental Matters................................................ 5
ARTICLE XVI ............................................................................... 5
16.1 Termination Upon Certain Events................................................ 5
16.2 Procedures..................................................................... 5
ARTICLE XVII ............................................................................... 5
17.1 Lease Events of Default........................................................ 5
17.2 Surrender of Possession........................................................ 5
17.3 Reletting...................................................................... 5
17.4 Damages........................................................................ 5
17.5 Power of Sale.................................................................. 5
17.6 Final Liquidated Damages....................................................... 5
17.7 Environmental Costs............................................................ 5
17.8 Waiver of Certain Rights....................................................... 5
17.9 Assignment of Rights Under Contracts........................................... 5
17.10 Remedies Cumulative............................................................ 5
17.11 Lessee's Right to Cure by Purchase of the Property............................. 5
ARTICLE XVIII............................................................................... 5
18.1 Lessor's Right to Cure Lessee's Lease Defaults................................. 5
ARTICLE XIX ............................................................................... 5
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option................ 5
19.2 No Purchase or Termination With Respect to Less than All of a Property......... 5
ARTICLE XX ............................................................................... 5
20.1 Purchase Option or Sale Option-General Provisions.............................. 5
20.2 Lessee Purchase Option......................................................... 5
20.3 Third Party Sale Option........................................................ 5
ARTICLE XXI ............................................................................... 5
21.1 [Intentionally Omitted]........................................................ 5
ARTICLE XXII ............................................................................... 5
22.1 Sale Procedure................................................................. 5
22.2 Application of Proceeds of Sale................................................ 5
22.3 Indemnity for Excessive Wear................................................... 5
22.4 Appraisal Procedure............................................................ 5
22.5 Certain Obligations Continue................................................... 5
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE XXIII.................................................................................. 5
23.1 Holding Over...................................................................... 5
ARTICLE XXIV .................................................................................. 5
24.1 Risk of Loss...................................................................... 5
ARTICLE XXV .................................................................................. 5
25.1 Assignment........................................................................ 5
25.2 Subleases......................................................................... 5
ARTICLE XXVI .................................................................................. 5
26.1 No Waiver......................................................................... 5
ARTICLE XXVII.................................................................................. 5
27.1 Acceptance of Surrender........................................................... 5
27.2 No Merger of Title................................................................ 5
ARTICLE XXVIII.................................................................................. 5
28.1 [Reserved]........................................................................ 5
ARTICLE XXIX .................................................................................. 5
29.1 Notices........................................................................... 5
ARTICLE XXX .................................................................................. 5
30.1 Miscellaneous..................................................................... 5
30.2 Amendments and Modifications...................................................... 5
30.3 Successors and Assigns............................................................ 5
30.4 Headings and Table of Contents.................................................... 5
30.5 Counterparts...................................................................... 5
30.6 GOVERNING LAW..................................................................... 5
30.7 Calculation of Rent............................................................... 5
30.8 Memoranda of Lease and Lease Supplement........................................... 5
30.9 Allocations between the Lenders and Lessor........................................ 5
30.10 Limitations on Recourse........................................................... 5
30.11 WAIVERS OF JURY TRIAL............................................................. 5
30.12 Exercise of Lessor Rights......................................................... 5
30.13 SUBMISSION TO JURISDICTION; VENUE................................................. 5
30.14 USURY SAVINGS PROVISION........................................................... 5
30.15 Lease Senior...................................................................... 5
</TABLE>
EXHIBITS
EXHIBIT A - Lease Supplement and Memo of Lease
iii
<PAGE>
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT dated as of December 5, 2000 (as amended, modified,
extended, supplemented and/or restated from time to time, this "Lease") is among
-----
FIRST UNION DEVELOPMENT CORPORATION, a North Carolina corporation, as lessor
(the "Lessor"), CAPITAL ONE, F.S.B., a federal savings bank ("FSB") and CAPITAL
------ ---
ONE BANK, a Virginia banking corporation ("COB") jointly and severally, as
---
lessee (collectively, FSB and COB may be hereinafter referred to as the
"Lessee").
------
W I T N E S S E T H:
- - - - - - - - - -
A. WHEREAS, subject to the terms and conditions of the Participation
Agreement and the Agency Agreement, Lessor will (i) ground lease one or more
parcels of real property, some of which will (or may) have existing Improvements
thereon, from Lessee or an Affiliate and (ii) fund the acquisition,
installation, testing, use, development, construction, operation, maintenance,
repair, refurbishment and restoration of the Property by the Construction Agent;
and
B. WHEREAS, the Interim Term shall commence with respect to the
Property on the Closing Date and the Basic Term shall commence with respect to
the Property upon the Rent Commencement Date; and
C. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to
lease from Lessor, the Property.
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 Definitions.
-----------
For purposes of this Lease, capitalized terms used in this Lease
and not otherwise defined herein shall have the meanings assigned to them in
Appendix A to that certain Participation Agreement dated as of December 5, 2000
- ----------
(as amended, modified, extended, supplemented and/or restated from time to time
in accordance with the applicable provisions thereof, the "Participation
-------------
Agreement") among Lessee, Capital One Financial Corporation, as the Guarantor,
- ---------
Lessor, the various financial institutions and other institutional investors
which are parties thereto from time to time as Tranche A Note Purchasers, the
various banks and other lending institutions which are parties thereto from time
to time as Tranche B Lenders, First Union National Bank, as agent for the
Primary Financing Parties and, respecting the Security Documents, as the agent
for the Secured Parties, and First Union National Bank, as the Escrow
<PAGE>
Agent. Unless otherwise indicated, references in this Lease to articles,
sections, paragraphs, clauses, appendices, schedules and exhibits are to the
same contained in this Lease.
1.2 Interpretation.
--------------
The rules of usage set forth in Appendix A to the Participation
----------
Agreement shall apply to this Lease.
ARTICLE II
2.1 Property.
--------
Subject to the terms and conditions hereinafter set forth and
contained in the Lease Supplement relating to the Property, Lessor hereby leases
to Lessee and Lessee hereby leases from Lessor, the Property.
2.2 Lease Term.
----------
The interim term of this Lease with respect to the Property (the
"Interim Term") shall begin upon the Closing Date (the "Commencement Date") and
------------ -----------------
shall end on the Rent Commencement Date, unless the Interim Term is earlier
terminated. The basic term of this Lease with respect to the Property (the
"Basic Term") shall begin upon the Rent Commencement Date and shall end on the
----------
tenth anniversary of the Closing Date, unless the Basic Term is earlier
terminated.
Not less than one hundred eighty (180) days and no more than two
hundred forty (240) days prior to the end of the Basic Term, Lessee may give
Lessor and the Agent written notice of Lessee's desire to extend the Basic Term.
Lessor, each Primary Financing Party and the Agent shall each make a
determination, in the absolute a nd sole discretion of each such party, not
later than one hundred twenty-five (125) days prior to the then current
Expiration Date whether or not such party will agree to extend the Expiration
Date as requested; provided, however, that failure by any such party to respond
-------- -------
(not later than one hundred twenty-five (125) days prior to the then current
Expiration Date) to Lessee's request shall be deemed to constitute a refusal by
such party to the extension of the Expiration Date. In response to Lessee's
request for an extension of the Expiration Date, if (a) Lessor, each Primary
Financing Party and the Agent shall agree in writing to the requested extension,
then the Term shall be extended and shall expire on the agreed upon date or (b)
Lessor, any Primary Financing Party or the Agent shall refuse (or be deemed to
have refused) to agree to the requested extension, then the Basic Term shall not
be extended and shall expire on the then current Expiration Date; provided,
--------
however, if any Primary Financing Party shall refuse (or be deemed to have
- -------
refused) to agree to the requested extension, Lessee shall have the right to
cause such Primary Financing Party to be replaced with another Person in
accordance with Section 5.14 of the Participation Agreement.
2
<PAGE>
2.3 Title.
-----
The Property is leased to Lessee without any representation or
warranty, express or implied, by Lessor and subject to the rights of parties in
possession (if any), the existing state of title (including without limitation
the Permitted Liens) and all applicable Legal Requirements. Lessee shall in no
event have any recourse against Lessor for any defect in Lessor's title to the
Property or any interest of Lessee therein other than for Lessor Liens.
2.4 Lease Supplement.
----------------
On or prior to the Commencement Date, Lessee and Lessor shall each execute
and deliver a Lease Supplement for the Property effective as of such
Commencement Date in substantially the form of EXHIBIT A hereto; provided, on or
--------- --------
prior to the Rent Commencement Date, Lessee and Lessor shall, upon the
reasonable request of either party, execute and deliver an amended and restated
Lease Supplement for the Property effective as of such Rent Commencement Date.
ARTICLE III
3.1 Rent.
----
(a) Lessee shall pay Basic Rent in arrears on each Scheduled
Interest Payment Date; provided, however, Lessee shall have no obligation
-------- -------
to pay Basic Rent with respect to the Property until the Rent Commencement
Date; provided, further, any amount of Basic Rent payable on the Scheduled
-------- -------
Interest Payment Date occurring on July 1, 2010 shall be paid on June 30,
2010.
(b) Basic Rent shall be due and payable in lawful money of the
United States and shall be paid by wire transfer of immediately available
funds on the due date therefor to such account at such bank as Lessor shall
from time to time direct.
(c) Lessee's inability or failure to take possession of all or any
portion of any Property when delivered by Lessor, whether or not
attributable to any act or omission of Lessor, the Construction Agent,
Lessee or any other Person or for any other reason whatsoever, shall not
delay or otherwise affect Lessee's obligation to pay Rent for such Property
in accordance with the terms of this Lease.
(d) Lessee shall make all payments of Rent payable to Lessor prior
to 12:00 Noon, Charlotte, North Carolina time, on the applicable date for
payment of such amount.
3.2 Payment of Basic Rent.
---------------------
Basic Rent shall be paid absolutely net to Lessor or its designee,
so that this Lease shall yield to Lessor the full amount thereof, without
setoff, deduction or reduction.
3
<PAGE>
3.3 Supplemental Rent.
-----------------
Lessee shall pay to the Person entitled thereto any and all
Supplemental Rent when and as the same shall become due and payable. All such
payments of Supplemental Rent payable to any Financing Party shall be in the
full amount thereof, without setoff, deduction or reduction. Lessee shall pay
to the appropriate Person, as Supplemental Rent due and owing to such Person,
among other things, on demand, (a) any and all payment obligations (except for
amounts payable as Basic Rent, including without limitation principal or
interest (but not including any payments of the Lessor under Section 5.15 of the
Participation Agreement) due and owing under any Notes, amounts specifically
excluded from indemnification by the Lessee pursuant to Sections 11.1 and 11.2
of the Participation Agreement and amounts due and owing or otherwise payable or
incurred as a result of or in connection with any sale of an assignment or
participation interest by any Tranche B Lender or Tranche A Note Purchaser and
payment obligations of one Financing Party to another Financing Party) owing
from time to time under the Operative Agreements by any Person to the Agent, the
Lessor, the Escrow Agent, any Primary Financing Party, or any other Person
(provided, unless such obligation is expressly stated as an obligation of the
Lessee, the Lessee shall only be responsible for such obligation to the extent
it is reasonable for a lessee to bear responsibility for such obligation in a
transaction of the type evidenced by the Operative Agreements), (b) interest at
the applicable Overdue Rate on any portion of any installment of Basic Rent not
paid when due for the period for which the same shall be overdue and on any
portion of any payment of Supplemental Rent payable to any Financing Party not
paid when due for the period from the due date until the same shall be paid and
(c) amounts referenced as Supplemental Rent obligations pursuant to Section 8.3
of the Participation Agreement. It shall be an additional Supplemental Rent
obligation of Lessee to pay to the appropriate Person all rent and other amounts
when such become due and owing from time to time under the Ground Lease and
without the necessity of any notice from Lessor with regard thereto. The
expiration or other termination of Lessee's obligations to pay Basic Rent
hereunder shall not limit or modify the obligations of Lessee with respect to
Supplemental Rent. Unless expressly provided otherwise in this Lease, in the
event of any failure on the part of Lessee to pay and discharge any Supplemental
Rent as and when due, Lessee shall also promptly pay and discharge any fine,
penalty, interest or cost which may be assessed or added for nonpayment or late
payment of such Supplemental Rent, all of which shall also constitute
Supplemental Rent.
3.4 Performance on a Non-Business Day.
---------------------------------
If any Basic Rent is required hereunder on a day that is not a
Business Day, then such Basic Rent shall be due on the corresponding Scheduled
Interest Payment Date. If any Supplemental Rent is required hereunder on a day
that is not a Business Day, then such Supplemental Rent shall be due on the next
succeeding Business Day.
3.5 Rent Payment Provisions.
-----------------------
Lessee shall make payment of all Basic Rent and Supplemental Rent
when due regardless of whether any of the Operative Agreements pursuant to which
same is calculated and is owing shall have been rejected, avoided or disavowed
in any bankruptcy or insolvency
4
<PAGE>
proceeding involving any of the parties to any of the Operative Agreements. Such
Operative Agreements, including without limitation provisions relating to the
payment of Supplemental Rent with the proceeds of Advances pursuant to Section
8.3(d) of the Participation Agreement, and their related definitions are
incorporated herein by reference and shall survive any termination, amendment or
rejection of any such Operative Agreements.
ARTICLE IV
4.1 Taxes; Utility Charges.
----------------------
Subject to the terms of Article XIII relating to permitted
contests, Lessee shall pay or cause to be paid all Impositions with respect to
the Property and/or the use, occupancy, operation, repair, access, maintenance
or operation thereof and all charges for electricity, power, gas, oil, water,
telephone, sanitary sewer service and all other rents, utilities and operating
expenses of any kind or type used in or on any Property during the Term. Upon
Lessor's reasonable request, Lessee shall provide from time to time Lessor with
evidence of all such payments referenced in the foregoing sentence. Lessee shall
be entitled to receive any credit or refund with respect to any Imposition or
utility charge paid by Lessee. Unless a Lease Event of Default shall have
occurred and be continuing, the amount of any credit or refund received by
Lessor on account of any Imposition or utility charge paid by Lessee, net of the
costs and expenses incurred by Lessor in obtaining such credit or refund, shall
be promptly paid over to Lessee. All charges for utilities imposed with respect
to the Property for a period during which this Lease expires or terminates shall
be adjusted and prorated on a daily basis between Lessor and Lessee, and each
party shall pay or reimburse the other for such party's pro rata share thereof.
ARTICLE V
5.1 Quiet Enjoyment.
---------------
Subject to the rights of Lessor contained in Sections 17.2, 17.3
and 20.3