Filed Pursuant to Rule 424(b)(2)
Registration No. 333-51828
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 22, 2000
U.S.$500,000,000
[AMERICAN EXPRESS LOGO] AMERICAN EXPRESS COMPANY
5 1/2% Notes due September 12, 2006
--------------
We will pay interest on the notes semiannually on March 15 and September 15
of each year. The first interest payment will be made on March 15, 2002. The
notes will mature on September 12, 2006. We may not redeem them prior to
maturity unless certain events occur involving United States taxation. We
describe these events under the heading 'Description of Notes - Redemption Upon
a Tax Event' on page S-14 of this prospectus supplement.
The notes offered by this prospectus supplement constitute a further
issuance of, and are consolidated and form a single series with, our outstanding
5 1/2% Notes due September 12, 2006 issued as of September 12, 2001 in the
principal amount of U.S.$500,000,000. Upon completion of this offering, the
aggregate principal amount of outstanding notes of this series will be
U.S.$1,000,000,000.
We will only issue the notes in book entry form registered in the name of
the nominee of The Depository Trust Company. Beneficial interests in the notes
will be shown on, and transfers of such interests will be made only through,
records maintained by The Depository Trust Company and its participants,
including Clearstream Banking, societe anonyme, and the Euroclear System. Except
as described in this prospectus supplement, we will not issue notes in
definitive form.
The underwriters are offering the notes for sale both inside and outside the
United States. We have applied to list the notes on the Luxembourg Stock
Exchange.
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS THE COMPANY(1)
---------------- -------------- ----------------
Per Note................................... 100.949% .35% 100.599%
Total...................................... U.S.$504,745,000 U.S.$1,750,000 U.S.$502,995,000
(1) Does not include accrued interest from September 12, 2001 in the amount of
U.S.$5,194,444 payable by the purchasers.
Delivery of the notes in book-entry form only will be made on or about
November 20, 2001.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
LEHMAN BROTHERS BANC OF AMERICA SECURITIES LLC
BNP PARIBAS
ORMES CAPITAL MARKETS, INC.
TOKYO-MITSUBISHI INTERNATIONAL PLC
UTENDAHL CAPITAL PARTNERS, L.P.
WACHOVIA SECURITIES
The date of this prospectus supplement is November 15, 2001.
--------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
SUMMARY OF THE OFFERING............... S-3
INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE........................ S-5
CONSOLIDATED CAPITALIZATION OF
AMERICAN EXPRESS COMPANY AND
SUBSIDIARIES........................ S-6
AMERICAN EXPRESS COMPANY AND
CONSOLIDATED SUBSIDIARIES --
SELECTED FINANCIAL DATA............. S-7
RATIO OF EARNINGS TO FIXED CHARGES.... S-8
DIRECTORS AND PRINCIPAL EXECUTIVE
OFFICERS OF AMERICAN EXPRESS
COMPANY............................. S-9
USE OF PROCEEDS....................... S-9
DESCRIPTION OF NOTES.................. S-10
UNITED STATES TAX CONSIDERATIONS...... S-16
UNDERWRITING.......................... S-19
NOTICE TO CANADIAN RESIDENTS.......... S-22
LEGAL MATTERS......................... S-23
GENERAL INFORMATION................... S-23
PAGE
----
PROSPECTUS
ABOUT THIS PROSPECTUS................. 2
WHERE YOU CAN FIND MORE INFORMATION... 2
AMERICAN EXPRESS COMPANY.............. 3
USE OF PROCEEDS....................... 4
DESCRIPTION OF DEBT SECURITIES........ 4
DESCRIPTION OF PREFERRED SHARES....... 11
DESCRIPTION OF DEPOSITARY SHARES...... 12
DESCRIPTION OF COMMON SHARES.......... 14
DESCRIPTION OF SECURITIES WARRANTS.... 15
DESCRIPTION OF CURRENCY WARRANTS...... 16
DESCRIPTION OF OTHER WARRANTS......... 16
PLAN OF DISTRIBUTION.................. 17
LEGAL MATTERS......................... 19
EXPERTS............................... 19
--------------
THE LUXEMBOURG STOCK EXCHANGE TAKES NO RESPONSIBILITY FOR THE CONTENTS OF
THIS DOCUMENT, MAKES NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS AND
EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM
OR IN RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT AND
THE ACCOMPANYING PROSPECTUS.
OFFERS AND SALES OF THE NOTES ARE SUBJECT TO RESTRICTIONS IN RELATION TO THE
UNITED KINGDOM, DETAILS OF WHICH ARE SET OUT IN 'UNDERWRITING' BELOW. THE
DISTRIBUTION OF THIS PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS AND THE
OFFERING OF THE NOTES IN CERTAIN OTHER JURISDICTIONS MAY ALSO BE RESTRICTED BY
LAW. WE ARE NOT, AND THE UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE
NOTES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
IN CONNECTION WITH THIS OFFERING, BANC OF AMERICA SECURITIES LLC AND LEHMAN
BROTHERS INC. OR THEIR RESPECTIVE AFFLILIATES MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT LEVELS
WHICH MIGHT NOT OTHERWISE PREVAIL. IN ANY JURISDICTION WHERE THERE CAN ONLY BE
ONE STABILIZING AGENT, LEHMAN BROTHERS INC. OR ITS AFFILIATES SHALL EFFECT SUCH
TRANSACTIONS. THIS STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME
AND WILL BE CARRIED OUT IN COMPLIANCE WITH THE APPLICABLE LAWS, REGULATIONS AND
RULES.
THE COMPANY ACCEPTS RESPONSIBILITY FOR THE INFORMATION CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS.
In this prospectus supplement and accompanying prospectus, unless otherwise
specified or the context otherwise requires, references to 'dollars', '$' and
'U.S.$' are to United States dollars.
S-2
SUMMARY OF THE OFFERING
The following summary highlights information contained elsewhere in this
prospectus supplement. You should read this summary in conjunction with the more
detailed information appearing elsewhere in this prospectus supplement and
accompanying prospectus.
Issuer....................................... American Express Company (the 'Company').
Securities Offered........................... U.S.$500,000,000 principal amount of 5 1/2% notes due
September 12, 2006. The notes constitute a further
issuance of our 5 1/2% Notes due September 12, 2006
first issued as of September 12, 2001 and form a
single series with those notes. The notes will have
the same Common Code, ISIN and CUSIP numbers and will
trade interchangeably with the previously issued
notes of this series immediately upon settlement.
Upon completion of this offering, U.S.$1,000,000,000
aggregate principal amount of notes of this series
will be outstanding.
Use of Proceeds.............................. We will use the money raised from the sale of the
notes for general corporate purposes. Net proceeds to
be paid to us will be approximately U.S.$502,995,000
exclusive of accrued interest.
Maturity Date................................ September 12, 2006.
Interest Payment Dates....................... March 15 and September 15 of each year, beginning
March 15, 2002.
Interest Rate................................ 5 1/2% per annum.
Redemption................................... We may not redeem the notes prior to maturity unless
certain events occur involving United States
taxation. See 'Description of Notes -- Redemption
Upon a Tax Event'.
Markets...................................... The notes are offered for sale in those jurisdictions
both inside and outside the United States where it is
legal to make such offers. See 'Underwriting'.
Listing...................................... We have applied to list the notes on the Luxembourg
Stock Exchange. Our outstanding 5 1/2% Notes due
September 12, 2006 first issued as of September 12,
2001 are currently listed on the Luxembourg Stock
Exchange.
Form and Settlement.......................... We will issue the notes in the form of one or more
fully registered global certificates (the 'Global
Notes'), which we will deposit on or about
November 20, 2001 with, or on behalf of, The
Depository Trust Company, New York, New York (the
'Depository') and register in the name of Cede & Co.,
the Depository's nominee, for the accounts of the
participants in the Depository, including Euroclear
Bank S.A./N.V., as operator of the Euroclear System
('Euroclear'), and Clearstream Banking, societe
anonyme ('Clearstream, Luxembourg'). Except as
described in this prospectus supplement, beneficial
interests in the Global Notes will be represented
through book-entry accounts of financial institutions
acting on behalf of beneficial owners as direct and
indirect participants in the Depository. You may
choose to hold interests in the Global Notes through
the Depository
S-3
or through Euroclear or Clearstream, Luxembourg if
they are participants in such systems, or indirectly
through organizations that are participants in such
systems. Euroclear and Clearstream, Luxembourg will
hold interests on behalf of their participants
through their respective depositaries, The Chase
Manhattan Bank and Citibank, N.A., which in turn will
hold such interests in accounts as participants of
the Depository. See 'Description of
Notes -- Book-Entry, Delivery and Form'. Initial
settlement for the notes will be made in immediately
available funds in U.S. dollars. Secondary market
trading between Depository participants of beneficial
interests in the Global Notes will be settled in
immediately available funds using the Depository's
Same-Day Funds Settlement System. Secondary market
trading of beneficial interests in the Global Notes
between Clearstream, Luxembourg participants and/or
Euroclear participants will settle in immediately
available funds.
Withholding Tax.............................. We will pay principal of and interest on the notes
beneficially owned by a United States Alien Holder
without withholding or deduction for United States
withholding taxes subject to the requirements and
limitations set forth in this prospectus supplement
under the heading 'United States Tax Considerations'.
S-4
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We file annual, quarterly and current reports and other information with the
Securities and Exchange Commission (the 'SEC'). You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. The Company's SEC filings are
also available to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to 'incorporate by reference' the information we file with
it, which means that we can disclose important information to you by referring
you to those documents that are considered part of this prospectus supplement.
Later information that we file with the SEC will automatically update and
supersede this information. The Company incorporates by reference the documents
listed below and any future filings made with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the 'Exchange Act')
until the offering of these notes has been completed.
Annual Report on Form 10-K for the year ended December 31, 2000 as amended
on Form 10-K/A (Amendment No. 1 dated June 21, 2001) (the '2000 10-K
Report').
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001,
June 30, 2001 and September 30, 2001.
Current Reports on Form 8-K dated January 22, 2001, February 7, 2001,
April 2, 2001, April 12, 2001, April 23, 2001, April 23, 2001, April 24,
2001, July 18, 2001, July 23, 2001, July 23, 2001, August 1, 2001,
September 11, 2001, September 17, 2001 and October 22, 2001.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address or number:
American Express Company
90 Hudson Street
Jersey City, New Jersey 07302
Attention: Secretary
(201) 209-4999
The financial statements which we have incorporated in this prospectus
supplement by reference to the 2000 10-K Report have been audited by Ernst &
Young LLP, 787 Seventh Avenue, New York, New York 10019, independent certified
public accountants, to the extent indicated in their report included in the 2000
10-K Report. We have incorporated by reference the financial statements in this
prospectus supplement in reliance upon the report of that firm, given on their
authority as experts in accounting and auditing.
Ernst & Young has given and not withdrawn their written consent to the
incorporation by reference of their report dated February 8, 2001 from the 2000
10-K Report on the Company's audited financial statements for the financial year
ended December 31, 2000.
S-5
CONSOLIDATED CAPITALIZATION OF AMERICAN EXPRESS COMPANY
AND SUBSIDIARIES
The table below shows the capitalization of American Express Company and its
subsidiaries as of September 30, 2001. The 'As Adjusted' column reflects our
issuance of the notes in this offering. You should read this table along with
our consolidated financial statements, which are included in the documents
incorporated by reference into this prospectus supplement and the accompanying
prospectus.
SEPTEMBER 30, 2001
------------------------------
AS
ACTUAL ADJUSTED
------ --------
(IN MILLIONS OF U.S. DOLLARS)
(UNAUDITED)
Long-Term Debt.............................................. $ 7,158 $ 7,658
Guaranteed preferred beneficial interests in the Company's
junior subordinated deferrable interest debentures........ 500 500
Shareholders' Equity:
Common shares, $.20 par value, authorized 3.6 billion
shares; issued and outstanding 1,336 million shares... 267 267
Capital surplus......................................... 5,473 5,473
Retained earnings....................................... 6,230 6,230
Other comprehensive income, net of tax:
Net unrealized securities gains..................... 754 754
Net unrealized derivative losses.................... (445) (445)
Foreign currency translation adjustments............ (51) (51)
------- -------
Accumulated other comprehensive income.................. 258 258
------- -------
Total shareholders' equity...................... 12,228 12,228
------- -------
Total Capitalization........................................ $19,886 $20,386
------- -------
------- -------
Other than as described in this prospectus supplement and the accompanying
prospectus, there has been no material change in the consolidated capitalization
of American Express Company and its subsidiaries since September 30, 2001.
S-6
AMERICAN EXPRESS COMPANY AND CONSOLIDATED SUBSIDIARIES
SELECTED FINANCIAL DATA
(IN MILLIONS OF U.S. DOLLARS)
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
OPERATING RESULTS
Net revenues.......... $ 16,711 $ 17,609 $ 23,675 $ 21,278 $ 19,132 $ 17,760 $ 16,380
Expenses.............. 15,463 14,614 19,767 17,840 16,207 15,010 13,716
Net income............ 1,014 2,133 2,810 2,475 2,141 1,991 1,901
Adjusted income*...... 1,014 2,133 2,810 2,475 2,201 1,991 1,739
Return on average
shareholders'
equity**............ 14.2% 25.5% 25.3% 25.3% 24.0% 23.5% 22.8%
BALANCE SHEET
Cash and cash
equivalents......... $ 9,860 $ 8,959 $ 8,487 $ 7,471 $ 4,092 $ 4,179 $ 2,677
Accounts receivable
and accrued
interest, net....... 28,273 28,749 30,543 26,467 22,224 21,774 20,491
Investments........... 45,291 42,437 43,747 43,052 41,299 39,648 38,339
Loans, net............ 25,558 23,944 26,088 23,582 21,054 20,109 18,518
Total assets.......... 145,557 153,626 154,423 148,517 126,933 120,003 108,512
Customers' deposits... 13,075 13,116 13,870 12,197 10,398 9,444 9,555
Travelers Cheques
outstanding......... 6,624 6,564 6,127 6,213 5,823 5,634 5,838
Insurance and annuity
reserves............ 24,277 24,357 24,098 25,011 25,433 26,165 25,674
Short-term debt....... 30,808 31,034 36,030 30,627 22,605 20,570 18,402
Long-term debt........ 7,158 4,589 4,711 5,995 7,019 7,873 6,552
Shareholders'
equity.............. 12,228 11,213 11,684 10,095 9,698 9,574 8,528
---------
* Adjusted income for 1998 is adjusted to exclude the following items: $138
million credit loss provision at American Express Bank relating to its
Asia/Pacific portfolio, as well as income of $78 million representing gains
on the sale of First Data Corporation shares and a preferred dividend based
on Lehman Brothers Holdings Inc.'s earnings. Adjusted income for 1996 is
adjusted to exclude a $300 million gain on the exchange of the Company's Debt
Exchangeable for Common Stock and a $138 million restructuring charge.
** Return on average shareholders' equity is based on adjusted income from
continuing operations in 1996 and excludes the effect of Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities.
S-7
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our historical ratios of earnings to fixed
charges for the periods indicated:
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
2001 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges...... 1.51 2.25 2.48 2.24 2.22 2.17
In computing the ratio of earnings to fixed charges, 'earnings' consist of
pretax income from continuing operations, interest expense and other
adjustments. Interest expense includes interest expense related to the
international banking operations of the Company and cardmember lending
activities of American Express Travel Related Services Company, Inc., which is
netted against interest and dividends and cardmember lending net finance charge
revenue, respectively, in our Consolidated Statement of Income.
For purposes of computing 'earnings', other adjustments included adding the
amortization of capitalized interest, the net loss of affiliates accounted for
under the equity method whose debt is not guaranteed by us, the minority
interest in the earnings of majority-owned subsidiaries with fixed charges, and
the interest component of rental expense and subtracting undistributed net
income of affiliates accounted for at equity.
'Fixed charges' consist of interest and other adjustments, including
capitalized interest costs and the interest component of rental expense.
S-8
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF
AMERICAN EXPRESS COMPANY
Our Directors and Executive Officers are as follows:
DIRECTORS
---------
NAME PRINCIPAL OCCUPATION
---- --------------------
Daniel F. Akerson.................... Chairman and Chief Executive Officer, XO Communications,
Inc.
Edwin L. Artzt....................... Former Chairman of the Board and Chief Executive Officer,
The Procter & Gamble Company
Charlene Barshefsky.................. Senior International Partner, Wilmer, Cutler & Pickering
William G. Bowen..................... President, The Andrew W. Mellon Foundation
Kenneth I. Chenault.................. Chairman and Chief Executive Officer of the Company
Peter R. Dolan....................... President and Chief Executive Officer, Bristol-Myers Squibb
Company
Beverly Sills Greenough.............. Chairman, Lincoln Center for the Performing Arts
F. Ross Johnson...................... Chairman and Chief Executive Officer, RJM Group
Vernon E. Jordan, Jr................. Senior Managing Director, Lazard Freres & Co.
Jan Leschly.......................... Chairman and Chief Executive Officer, Care Capital LLC
Richard McGinn....................... Former Chairman and Chief Executive Officer, Lucent
Technologies, Inc.
Frank P. Popoff...................... Former Chairman and Chief Executive Officer, The Dow
Chemical Company
EXECUTIVE OFFICERS
------------------
NAME OFFICE
---- ------
Kenneth I. Chenault.................. Chairman and Chief Executive Officer of the Company; Chairman and
Chief Executive Officer, American Express Travel Related Services
Company, Inc. ('TRS')
Jonathan S. Linen.................... Vice Chairman of the Company
James Cracchiolo..................... Group President, Global Financial Services of the Company
Gary Crittenden...................... Executive Vice President and Chief Financial Officer of the
Company
Ursula F. Fairbairn.................. Executive Vice President, Human Resources and Quality of the
Company
Edward P. Gilligan................... Group President, Global Corporate Services, TRS
John D. Hayes........................ Executive Vice President, Global Advertising and Brand Management
of the Company
David C. House....................... Group President, Global Establishment Services and Travelers
Cheque Group, TRS
Alfred Kelly, Jr..................... Group President, U.S. Consumer and Small Business Services Group,
TRS
Louise M. Parent..................... Executive Vice President and General Counsel of the Company
Glen Salow........................... Executive Vice President and Chief Information Officer of the
Company
Thomas Schick........................ Executive Vice President, Corporate Affairs and Communications of
the Company
USE OF PROCEEDS
We will use the net proceeds from the sale of the notes for general
corporate purposes. Net proceeds to be paid to us will be approximately
U.S.$502,995,000 exclusive of accrued interest.
S-9
DESCRIPTION OF NOTES
This description of the terms of the notes adds information to the
description of the general terms and provisions of debt securities in the
accompanying prospectus. If this description differs in any way from the
description in the accompanying prospectus, you should rely on this description.
GENERAL
The notes are initially being offered in the principal amount of
U.S.$500,000,000. The notes will form a single series with the U.S.$500,000,000
aggregate principal amount of 5 1/2% Notes due September 12, 2006 that we issued
as of September 12, 2001. The notes will have the same Common Code, ISIN and
CUSIP numbers as the other notes of this series and will trade interchangeably
with the other notes of this series immediately upon settlement. The issuance of
the notes will increase the aggregate principal amount of the notes of this
series to U.S.$1,000,000,000. We may, without consent of the holders, increase
such principal amount in the future, on the same terms and conditions and with
the same Common Code, ISIN and CUSIP numbers as the notes being offered hereby,
as more fully described in ' -- Further Issues' below. The notes will be our
unsecured obligations and will mature on September 12, 2006. The notes will rank
prior to all subordinated indebtedness of the Company and on an equal basis with
all other senior unsecured indebtedness of the Company.
We will pay interest on the notes from September 12, 2001 at the rate per
annum set forth on the cover page of this prospectus supplement, on March 15 and
September 15 of each year, beginning March 15, 2002, to the persons who are
registered as the owners of the notes at the close of business on the 15th day
preceding the applicable interest payment date, subject to certain exceptions.
Interest on the notes will be paid on the basis of a 360-day year comprised of
twelve 30-day months. We will not redeem the notes prior to maturity unless
certain events occur involving United States taxation. In such event, we will
redeem the notes at a redemption price of 100% of their principal amount plus
accrued and unpaid interest to the date of redemption. See ' -- Redemption Upon
a Tax Event'. If any day on which a payment is due is not a Business Day (as
defined below), then the holder of the note shall not be entitled to payment of
the amount due until the next Business Day and shall not be entitled to any
additional principal, interest or other payment as a result of such delay except
as otherwise provided under ' -- Payment of Additional Amounts'. 'Business Day'
means any day which is not a Saturday or Sunday or any other day on which banks
in New York City and, if definitive notes are issued, in Luxembourg, are
authorized or obligated by law or regulation to close.
BOOK-ENTRY, DELIVERY AND FORM
We will issue the notes in the form of one or more fully registered global
notes (the 'Global Notes') in denominations of U.S.$1,000 or integral multiples
of U.S.$1,000. We will deposit the notes with, or on behalf of, The Depository
Trust Company, New York, New York (the 'Depository') and will register the notes
in the name of Cede & Co., the Depository's nominee. Your beneficial interests
in the Global Notes will be represented through book-entry accounts of financial
institutions acting on your behalf as direct and indirect participants in the
Depository ('DTC Participants'). You may elect to hold interests in the Global
Notes either through the Depository (inside the United States) or through
Clearstream Banking, societe anonyme ('Clearstream, Luxembourg'), or Euroclear
Bank S.A./N.V., as operator of the Euroclear System ('Euroclear') (outside of
the United States) if they are participants in such systems, or indirectly
through organizations which are participants in such systems. Clearstream,
Luxembourg and Euroclear will hold interests on behalf of their participants
through customers' securities accounts in Clearstream, Luxembourg's and
Euroclear's names on the books of their respective depositaries, which in turn
will hold such interests in customers' securities accounts in the depositaries'
names on the books of the Depository. Citibank, N.A. will act as depositary for
Clearstream, Luxembourg, and The Chase Manhattan Bank will act as depositary for
Euroclear (in such capacities, the 'U.S. Depositaries'). Except as set forth
below, the Global Notes may be transferred, in whole and not in part, only to
another nominee of the Depository or to a successor of the Depository or its
nominee.
As long as the notes are represented by the Global Notes, we will pay
principal of and interest on the notes to or as directed by the Depository as
the registered holder of the Global Notes. Payments to
S-10
the Depository will be in immediately available funds by wire transfer. The
Depository, Euroclear or Clearstream, Luxembourg, as applicable, will credit the
relevant accounts of their participants on the applicable date.
We have been advised by the Depository, Clearstream, Luxembourg and
Euroclear, respectively, as follows:
As to the Depository: The Depository has advised us that it is a
limited-purpose trust company organized under the New York Banking Law, a
'banking organization' within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a 'clearing corporation' within the
meaning of the New York Uniform Commercial Code, and a 'clearing agency'
registered pursuant to the provisions of Section 17A of the Exchange Act.
The Depository was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions, such as
transfers and pledges, among its participants in such securities through
electronic computerized book-entry changes in accounts of the participants,
thereby eliminating the need for physical movement of securities
certificates. The Depository's participants include securities brokers and
dealers (including the underwriters), banks, trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) own the Depository. Access to the Depository's book-entry
system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.
As to Clearstream, Luxembourg: Clearstream, Luxembourg has advised us that
it is incorporated under the laws of Luxembourg as a professional
depositary. Clearstream, Luxembourg holds securities for its participating
organizations ('Clearstream, Luxembourg Participants') and facilitates the
clearance and settlement of securities transactions between Clearstream,
Luxembourg Participants through electronic book-entry changes in accounts
of Clearstream, Luxembourg Participants, thereby eliminating the need for
physical movement of certificates. Clearstream, Luxembourg provides to
Clearstream, Luxembourg Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Clearstream,
Luxembourg interfaces with domestic markets in several countries. As a
bank, Clearstream, Luxembourg is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Sector. Clearstream,
Luxembourg Participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations and may
include the underwriters of this offering. Indirect access to Clearstream,
Luxembourg is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship
with a Clearstream, Luxembourg Participant either directly or indirectly.
Clearstream, Luxembourg is an indirect participant in the Depository.
Payments on notes held beneficially through Clearstream, Luxembourg will be
credited to cash accounts of Clearstream, Luxembourg Participants in
accordance with its rules and procedures, to the extent received by the
U.S. Depositary for Clearstream, Luxembourg.
As to Euroclear: Euroclear has advised us that it was created in 1968 to
hold securities for participants of the Euroclear System ('Euroclear
Participants') and to clear and settle transactions between Euroclear
Participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of certificates
and any risk from lack of simultaneous transfers of securities and cash.
Euroclear provides various other services, including securities lending and
borrowing and interfaces with domestic markets in several countries.
Euroclear is operated by Euroclear Bank S.A./N.V. (the 'Euroclear
Operator'), under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation (the 'Cooperative'). All operations are conducted
by the Euroclear Operator, and all Euroclear securities clearance accounts
and Euroclear cash accounts are accounts with the Euroclear Operator, not
the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional
financial intermediaries and may include the underwriters. Indirect access
to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a
S-11
Euroclear Participant, either directly or indirectly. Euroclear is an
indirect participant in the Depository.
The Euroclear Operator is a Belgian bank. The Belgian Banking Commission
regulates and examines the Euroclear Operator.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable
Belgian law (collectively, the 'Terms and Conditions'). The Terms and
Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are
held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear Operator acts under
the Terms and Conditions only on behalf of Euroclear Participants, and has
no record of or relationship with persons holding through Euroclear
Participants.
Payments on notes held beneficially through Euroclear will be credited to
the cash accounts of Euroclear Participants in accordance with the Terms
and Conditions, to the extent received by the Euroclear Operator and by
Euroclear. In the event definitive notes are issued, we will appoint a
paying agent and transfer agent in Luxembourg.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Investors will make initial payment for the notes in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with Depository rules and will be settled in
immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Clearstream, Luxembourg Participants
and/or Euroclear Participants will occur in the ordinary way in accordance with
the applicable rules and operating procedures of Clearstream, Luxembourg and
Euroclear and will be settled using the procedures applicable to conventional
eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depository on the one hand, and directly or indirectly through
Clearstream, Luxembourg or Euroclear Participants, on the other, will be
effected in the Depository in accordance with the Depository rules on behalf of
the relevant European international clearing system by its U.S. Depositary. Such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(based on European time). The relevant European international clearing system
will, if the transaction meets its settlement requirements, deliver instructions
to its U.S. Depositary to take action to effect final settlement on its behalf
by delivering or receiving notes in the Depository, and making or receiving
payment in accordance with normal procedures for same-day funds settlement
applicable to the Depository. Clearstream, Luxembourg Participants and Euroclear
Participants may not deliver instructions directly to their respective U.S.
Depositaries.
Because of time-zone differences, credits of notes received in Clearstream,
Luxembourg or Euroclear as a result of a transaction with a DTC Participant will
be made during subsequent securities settlement processing and dated the
business day following the Depository settlement date. Such credits or any
transactions in such notes settled during such processing will be reported to
the relevant Euroclear or Clearstream, Luxembourg Participants on such business
day. Cash received in Clearstream, Luxembourg or Euroclear as a result of sales
of notes by or through a Clearstream, Luxembourg Participant or a Euroclear
Participant to a DTC Participant will be received with value on the Depository
settlement date but will be available in the relevant Clearstream, Luxembourg or
Euroclear cash account only as of the business day following settlement in the
Depository.
Although the Depository, Clearstream, Luxembourg and Euroclear have agreed
to the foregoing procedures in order to facilitate transfers of notes among
participants of the Depository, Clearstream, Luxembourg and Euroclear, they are
under no obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
S-12
DEFINITIVE NOTES
We will issue notes in definitive form in exchange for the Global Notes in
the following instances. If the Depository notifies us that it is unwilling or
unable to continue as depository for the Global Notes or if the Depository
ceases to be a clearing agency registered under the Exchange Act and we do not
appoint a successor depository within 90 days, we will issue notes in definitive
form. We will also issue definitive notes in exchange for the Global Notes if an
event of default with respect to the notes occurs and is continuing as described
under 'Description of Debt Securities -- Events of Default, Notice and Waiver'
in the accompanying prospectus. If we issue definitive notes, the notes may be
presented for registration of transfer and exchange at the office of the Trustee
in New York, New York and the Paying Agent in Luxembourg. In such circumstances,
we will pay principal of, and interest on, the notes at the office of the
Trustee in New York, New York and at the office of the Paying Agent in
Luxembourg. We will make payments of principal on the notes only against
surrender of such notes. Payment of interest on any interest payment date on any
notes will be made to the person in whose name such note is registered on the
February 28 or August 31, as the case may be, immediately preceding such
interest payment date, except that interest payable at maturity will be payable
to the person to whom the principal of the note is paid. All payments of
principal and interest will be made by U.S. dollar check drawn on a bank in the
City of New York and mailed to the person in whose name such notes are
registered at such person's address as provided in the register. For holders of
at least U.S.$1,000,000 in aggregate principal amount of notes, we will make
payment by wire transfer to a U.S. dollar account maintained by the payee with a
bank in the City of New York or in Europe, provided that the Trustee receives a
written request from such holder to such effect designating such account no
later than the February 28 or August 31, as the case may be, immediately
preceding such interest payment date.
PAYMENT OF ADDITIONAL AMOUNTS
We will, subject to the exceptions and limitations set forth below, pay as
additional interest on the notes, such additional amounts as are necessary in
order that the net payment by us or a paying agent of the principal of and
interest on the notes to a holder who is a United States Alien Holder (as
defined below), after deduction for any present or future tax, assessment or
governmental charge of the United States or a political subdivision or taxing
authority thereof or therein, imposed by withholding with respect to the
payment, will not be less than the amount that would have been payable had no
withholding or deduction been required.
However, our obligation to pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an estate,
trust, partnership or corporation, or a person holding a power over an
estate or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in a trade or business in
the United States or having or having had a permanent establishment in
the United States:
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States, a corporation that has
accumulated earnings to avoid United States federal income tax or a
private foundation or other tax-exempt organization; or
(d) being or having been a '10-percent shareholder' of the Company as
defined in section 871(h)(3) of the United States Internal Revenue Code
of 1986, as amended (the 'Code'), or any successor provision or being or
having been a bank whose receipt of interest on a note is described in
section 881(c)(3)(A) of the Code or any successor provision;
(2) to any holder that is not the sole beneficial owner of the note, or
a portion thereof, or that is a fiduciary or partnership, but only to the
extent that the beneficial owner, a beneficiary or settlor with respect to
the fiduciary, or a member of the partnership would not have been entitled
to the
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payment of an additional amount had the beneficial owner, beneficiary,
settlor or member received directly its beneficial or distributive share of
the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the holder or any other person
to comply with certification, identification or information reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the holder or beneficial owner of such note, if
compliance is required by statute or by regulation of the United States
Treasury Department, without regard to any tax treaty, or by an applicable
income tax treaty to which the United States is a party as a precondition to
exemption from such tax, assessment or other governmental charge;
(4) to a tax, assessment or governmental charge that is imposed
otherwise than by withholding by the Company or a paying agent from the
payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth or
personal property tax or a similar tax, assessment or governmental charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest on
any note, if such payment can be made without such withholding by any other
paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5), (6)
and (7).
The notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable thereto.
Except as specifically provided under this heading 'Payment of Additional
Amounts' and under the heading ' -- Redemption Upon a Tax Event', we shall not
be required to make any payment with respect to any tax, assessment or
governmental charge imposed by any government or a political subdivision or
taxing authority thereof or therein.
REDEMPTION UPON A TAX EVENT
If (a) we become or will become obligated to pay additional amounts as
described herein under the heading ' -- Payment of Additional Amounts' as a
result of any change in, or amendment to, the laws (or any regulations or
rulings promulgated thereunder) of the United States (or any political
subdivision or taxing authority thereof or therein), or any change in, or
amendment to, any official position regarding the application or interpretation
of such laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after the date of this prospectus supplement, or (b) a
taxing authority of the United States takes an action on or after the date of
this prospectus supplement, whether or not such action is taken with respect to
us or any of our affiliates, that results in a substantial probability that we
will or may be required to pay such additional amounts, then we may in either
case, at our option, redeem, as a whole, but not in part, the notes on at least
30 days' and no more than 60 days' prior written notice, at a redemption price
equal to 100% of their principal amount, together with interest accrued thereon
to the date fixed for redemption. In order to exercise this right, we must
determine, in our business judgment, that the obligation to pay such additional
amounts cannot be avoided by the use of reasonable measures available to us, not
including substitution of the obligor under the notes. We may not redeem the
notes based on the reason in clause (b) of the first sentence of this paragraph
unless we have received an opinion of independent counsel to the effect that an
action taken by a taxing authority of the United States results in a substantial
probability that we will or may be required to pay the additional amounts
described above under the heading ' -- Payment of Additional Amounts' and we
have delivered to the Trustee a certificate, signed by a duly authorized
officer, stating that based on such opinion we are entitled to redeem the notes
pursuant to their terms.
FURTHER ISSUES
We may from time to time, without notice to or the consent of the registered
holders of the notes, create and issue further notes ranking on an equal basis
with the notes in all respects (or in all respects
S-14
except for the payment of interest accruing prior to the issue date of such
further notes or except for the first payment of interest following the issue
date of such further notes). Such further notes shall be consolidated and form a
single series with the notes and shall have the same terms as to status,
redemption or otherwise as the notes.
TRUSTEE
The Trustee for the notes is First Union National Bank, pursuant to the
First Supplemental Indenture dated as of October 25, 2000 to the indenture dated
as of May 1, 1997 between the Company and PNC Bank, National Association, as
trustee (the 'Indenture'). The Trustee provides banking and corporate trust
services to us and many of our subsidiaries worldwide. The Trustee is a
depositary of funds for us and holds our common shares for customers of the
Trustee, including customers over whose accounts the Trustee has discretionary
authority. The principal corporate trust office of the Trustee is First Union
National Bank, 12 East 49th Street, 37th Floor, New York, New York 10017.
NOTICES
Notices to holders of the notes will be published in a leading daily
newspaper in The City of New York, in London, and, so long as the notes are
listed on the Luxembourg Stock Exchange, in Luxembourg. It is expected that
publication will be made in The City of New York in The Wall Street Journal, in
London in the Financial Times, and in Luxembourg in the Luxemburger Wort. Any
such notice shall be considered given on the date of publication or, if
published more than once, on the first date of publication.
APPLICABLE LAW
The notes, the Indenture and the First Supplemental Indenture will be
governed by and construed in accordance with the laws of the State of New York.
S-15
UNITED STATES TAX CONSIDERATIONS
In the opinion of Bruce A. Cogan, Vice President-General Tax Counsel of the
Company, the following discussion summarizes the material United States federal
income tax consequences of the ownership and disposition of notes to initial
holders of the notes purchasing the notes at the public offering price set forth
on the cover page of this prospectus supplement. The discussion below is based
on the Code, administrative pronouncements, judicial decisions and existing and
proposed Treasury Regulations, and interpretations of the foregoing, changes to
any of which subsequent to the date of this prospectus supplement may affect the
tax consequences described herein. The discussion addresses only the tax
consequences to initial holders holding notes as capital assets within the
meaning of section 1221 of the Code. It does not discuss all of the tax
consequences that may be relevant to holders in light of their particular
circumstances or to holders subject to special rules, such as certain financial
institutions, insurance companies, dealers in securities or foreign currencies,
United States Holders (as defined below) whose functional currency (as defined
in Code section 985) is not the U.S. dollar, persons holding notes in connection
with a hedging transaction, 'straddle', conversion transaction or other
integrated transaction, traders in securities that elect to mark to market,
holders liable for alternative minimum tax or persons who have ceased to be
United States citizens or to be taxed as resident aliens. Persons considering
the purchase of the notes should consult their tax advisors concerning the
application of United States federal income and other tax laws, as well as the
laws of any state, local or foreign taxing jurisdictions, to their particular
situations.
As used under this heading 'United States Tax Considerations' and under the
headings 'Description of Notes -- Payment of Additional Amounts' and
'Description of Notes -- Redemption Upon a Tax Event,' the following definitions
will apply:
'United States' means the United States of America (including the States
and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction.
'United States Holder' means a beneficial owner of a note that is, for
United States federal income tax purposes: (a) a citizen or resident of the
United States, (b) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, or (c) an estate or trust the income of which is
subject to United States federal income taxation regardless of it source.
'United States Alien Holder' means a beneficial owner of a note that is,
for United States federal income tax purposes: (a) a nonresident alien
individual, (b) a foreign corporation, (c) a nonresident alien fiduciary of
a foreign estate or trust or (d) a foreign partnership one or more of the
members of which is a nonresident alien individual, a foreign corporation
or a nonresident alien fiduciary of a foreign estate or trust.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
Payments of Interest
Interest on a note will generally be taxable to a United States Holder as
ordinary interest income at the time it accrues or is received in accordance
with the United States Holder's method of accounting for federal income tax
purposes.
Amortizable Bond Premium
A United States Holder that purchases a note for an amount in excess of the
sum of all amounts payable on the note after the purchase date other than
'qualified stated interest' will be considered to have purchased the note at a
'premium'. The holder may elect to amortize the premium over the remaining term
of the note, using a constant yield method, as an offset to interest includible
in income. If the holder does not elect to amortize the premium, it will
decrease the gain or increase the loss that would otherwise be recognized on
disposition of the note. The election to amortize premium on a constant yield
method will also apply to all other debt obligations held or subsequently
acquired by a United States Holder on or after the first day of the first
taxable year to which the election applies. This election may not be revoked
without the consent of the Internal Revenue Service ('IRS'). A United States
Holder should consult its own tax advisor before making this election.
S-16
Sales, Exchange or Retirement
Upon the sale, exchange or retirement of a note, a United States Holder will
recognize gain or loss equal to the difference between the amount realized on
the sale, exchange or retirement of the note and the holder's adjusted tax basis
in the note. A United States Holder's adjusted tax basis in a note will
generally equal the cost of the note to such Holder. The amount realized
excludes any interest accrued between interest payment dates and not previously
included in income, which will be includible in income as interest in accordance
with the United States Holder's method of accounting. Such gain or loss will be
capital gain or loss and will be long-term capital gain or loss if at the time
of the sale, exchange or retirement the note has been held for more than one
year. Under current law, the excess of net long-term capital gains over net
short-term capital losses is taxed at a lower rate than ordinary income for
certain non-corporate taxpayers. The distinction between gain or loss and
ordinary income or loss is also relevant for purposes of, among other things,
the limitations on the deductibility of capital losses.
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
Under present United States federal tax law, and subject to the discussion
below concerning backup withholding:
(a) payments of principal and interest on a note to a United States
Alien Holder will not be subject to the 30% United States federal
withholding tax; provided that (i) the holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (ii) the holder is not a
controlled foreign corporation for United States tax purposes that is
related to the Company through stock ownership and is not a bank whose
receipt of interest on a note is described in section 881(c)(3)(A) of the
Code, and (iii) the statement requirement set forth in section 871(h) or
section 881(c) of the Code has been fulfilled with respect to the beneficial
owner, as described below;
(b) a United States Alien Holder of a note will not be subject to United
States federal income tax on any gain realized on the sale, exchange or
retirement of the note unless the gain is effectively connected with the
holder's trade or business in the United States or, in the case of an
individual, the holder is present in the United States for 183 days or more
in the taxable year in which the sale, exchange or retirement occurs and
certain other conditions are met; and
(c) a note owned by an individual who is not, for United States estate
tax purposes, a citizen or resident of the United States at the time of his
death will not be subject to United States federal estate tax as a result of
such individual's death, provided that the individual does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and, at the time of the
individual's death, payments with respect to the note would not have been
effectively connected to the conduct by the individual of a trade or
business in the United States.
The statement requirement referred to in subparagraph (a) will be fulfilled
if the beneficial owner of a note certifies on IRS Form W-8BEN, or other
successor form, under penalties of perjury, that it is not a United States
person and provides its name and address, and (i) the beneficial owner files
such form with the withholding agent or (ii) in the case of a note held on
behalf of the beneficial owners by a securities clearing organization, bank or
other financial institution holding customers' securities in the ordinary course
of its trade or business, the financial institution files with the withholding
agent a statement that it has received such form from the holder and furnishes
the withholding agent with a copy thereof. With respect to notes held by a
foreign partnership, unless a foreign partnership has entered into a qualifying
withholding agreement with the IRS, for interest and disposition proceeds, the
foreign partnership will generally be required (and may be permitted earlier),
in addition to providing an intermediary IRS Form W-8IMY or other successor
form, to attach an appropriate certification by each partner. Prospective
investors, including foreign partnerships and their partners, should consult
their tax advisers regarding possible additional reporting requirements.
If a United States Alien Holder of a note is engaged in a trade or business
in the United States, and if interest on the note (or gain realized on its sale,
exchange or other disposition) is effectively connected with the conduct of such
trade or business, the United States Alien Holder, although it may be exempt
from the withholding tax discussed in the preceding paragraphs, will be subject
to regular United States
S-17
income tax on such effectively connected income, generally in the same manner as
if it were a United States Holder. See 'Tax Consequences to United States
Holders' above. In lieu of the certificate described in the preceding paragraph,
such a Holder will be required to provide to the withholding agent a properly
executed IRS Form W-8ECI, or other successor form, to claim an exemption from
withholding tax. In addition, if the United States Alien Holder is a foreign
corporation, it may be subject to a 30% branch profits tax (unless reduced or
eliminated by an applicable treaty) on its earnings and profits for the taxable
year attributable to its effectively connected income, subject to certain
adjustments.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, information reporting
requirements apply to certain payments of principal, premium and interest made
to, and to the proceeds of sales before maturity by, non-corporate United States
Holders. In addition, backup withholding will apply if the non-corporate United
States Holder (i) fails to furnish its Taxpayer Identification Number ('TIN')
which, for an individual, is his or her Social Security Number, (ii) furnishes
an incorrect TIN, (iii) is notified by the IRS that it has failed to properly
report payments of interest and dividends, or (iv) under certain circumstances,
fails to certify, under penalty of perjury, that it has furnished a correct TIN
and has not been notified by the IRS that it is subject to backup withholding
for failure to report interest and dividend payments. Holders should consult
their tax advisers regarding their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption if applicable.
Backup withholding will not apply to payments made on a note to United
States Alien Holders if the certifications required by sections 871(h) and
881(c) as described above are received, provided that the Company or its paying
agent, as the case may be, does not have actual knowledge that the payee is a
United States person.
Payments on the sale, exchange or other disposition of a note made to or
through a foreign office of a broker generally will not be subject to backup
withholding or information reporting. However, if the broker is (i) a United
States person, (ii) a controlled foreign corporation for United States federal
income tax purposes, (iii) a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a specified
three-year period or (iv) a foreign partnership with certain connections to the
United States, then information reporting will be required unless the broker has
in its records documentary evidence that the beneficial owner is not a United
States person and certain other conditions are met or the beneficial owner
otherwise establishes an exemption. Backup withholding may apply to any payment
that the broker is required to report if the broker has actual knowledge that
the payee is a United States person. Payments to or through the United States
office of a broker will be subject to backup withholding and information
reporting unless the beneficial owner certifies, under penalties of perjury,
that it is not a United States person or otherwise establishes an exemption.
Any amounts withheld from a payment to a United States Alien Holder under
the backup withholding rules may be allowed as a credit against the holder's
United States federal income tax liability and may entitle the holder to a
refund, provided that the required information is furnished to the IRS.
Each holder of a note should be aware that if it does not properly provide
the required IRS form, or if the IRS form (or, if permissible, a copy of such
form) is not properly transmitted to and received by the United States person
otherwise required to withhold United States federal income tax, payments on the
note may be subject to United States withholding at a 30% rate (or backup
withholding) and the holder will not be entitled to any additional amounts from
the Company described under the heading 'Description of Notes -- Payment of
Additional Amounts' with respect to such tax. Each holder should accordingly
consult its tax advisor as to how to fulfill the statement requirement described
above to avoid the 30% withholding tax and regarding the application of backup
withholding (and information reporting) in its particular situation, the
availability of an exemption therefrom, and the procedure for obtaining an
exemption, if available, including which IRS forms to use for these purposes.
S-18
UNDERWRITING
Under the terms and subject to the conditions contained in a terms agreement
dated November 15, 2001 incorporating by reference an underwriting agreement
dated October 1, 1991, we have agreed to sell to the underwriters named below,
for whom Banc of America Securities LLC and Lehman Brothers Inc. are acting as
representatives, the following respective principal amounts of the notes.
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
Banc of America Securities LLC............................. $215,000,000
Lehman Brothers Inc. ...................................... 215,000,000
BNP Paribas Securities Corp. .............................. 20,000,000
First Union Securities, Inc. .............................. 20,000,000
Tokyo-Mitsubishi International plc......................... 20,000,000
Ormes Capital Markets, Inc................................. 5,000,000
Utendahl Capital Partners, L.P. ........................... 5,000,000
----------------
Total.............................................. U.S.$500,000,000
----------------
----------------
The terms agreement provides that the underwriters are obligated to purchase
all of the notes if any are purchased. The terms agreement also provides that if
an underwriter defaults the purchase commitments of non-defaulting underwriters
may be increased or the offering of notes may be terminated.
The underwriters propose to offer the notes initially at the public offering
price on the cover page of this prospectus supplement, and to selling group
members at that price less a selling concession of 0.200% of the principal
amount per note. The underwriters and selling group members may allow a discount
of 0.125% of the principal amount per note on sales to other broker/dealers.
After the initial public offering, the representatives may change the public
offering price and concession and discount to broker/dealers.
The notes are offered for sale in those jurisdictions both inside and
outside the United States where it is legal to make such offers.
We estimate that our out of pocket expenses for this offering will be
approximately U.S.$450,000. The underwriters have agreed to reimburse us for
certain of these expenses.
In connection with the offering, Banc of America Securities LLC and Lehman
Brothers Inc. may engage in stabilizing transactions, over-allotment
transactions, syndicate covering transactions and penalty bids.
Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum.
Over-allotment involves sales by the representatives of notes in excess of
the principal amount of notes the underwriters are obligated to purchase,
which creates a syndicate short position. The representatives will close
out any short position by purchasing notes in the open market.
Syndicate covering transactions involve purchases of notes in the open
market after the distribution has been completed in order to cover
syndicate short positions. A short position is likely to be created if the
representatives are concerned that there may be downward pressure on the
price of the notes in the open market after pricing that could adversely
affect investors who purchase in the offering.
Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the notes originally sold by such syndicate
member are purchased in a stabilizing transaction or a syndicate covering
transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty bids
may have the effect of raising or maintaining the market price of the notes or
preventing or retarding a decline in the market price of the notes. As a result,
the price of the notes may be higher than the price that might otherwise exist
in the open market. These transactions may be effected on the Luxembourg Stock
Exchange or otherwise and, if commenced, may be discontinued at any time.
S-19
We have applied to list the notes on the Luxembourg Stock Exchange where our
outstanding 5 1/2% Notes due September 12, 2006 first issued as of
September 12, 2001 are listed. We have been advised by the underwriters that one
or more of them intend to make a market in the notes but are not obligated to do
so and may discontinue market making at any time without notice. No assurance
can be given as to the liquidity of, or the existence of trading markets for,
the notes.
Each of the underwriters has agreed that it will only offer or sell the
notes in compliance with the laws and regulations in any jurisdiction applicable
to such offer or sale and it has not taken and will not take any action in any
jurisdiction, other than the United States, that would permit a public offering
of the notes, or possession or distribution of any prospectus or any amendment
or supplement thereto or any offering or publicity material relating to the
notes, in any country or jurisdiction where action for that purpose is required.
Each underwriter has represented and agreed that
(a) it has not offered or sold, and, prior to the expiration of the
period of six months from the closing date for the issue of the notes, will
not offer or sell any notes to persons in the United Kingdom, except to
those persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purpose
of their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995,
(b) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 (the 'FSA') and, after they come into force,
all applicable provisions of the Financial Services and Markets Act 2000
(the 'FSMA') with respect to anything done by it in relation to the notes
in, from or otherwise involving the United Kingdom, and
(c) it has only issued or passed on and will only issue or pass on in
the United Kingdom, before the repeal of Section 57 of the FSA, any document
received by it in connection with the issue of the notes to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a
person to whom the document may otherwise lawfully be issued or passed on.
After the repeal of Section 57 of the FSA, it will only communicate or cause
to be communicated any invitation or inducement to engage in investment
activity (within the meaning of the FSMA) received by it in connection with
the issue or sale of the notes in circumstances in which Section 21(1) of
the FSMA does not apply to us.
You may be required to pay stamp taxes and other charges in accordance with
the laws and practices of the country of purchase in addition to the issue price
set forth on the cover page of this prospectus supplement.
Banc of America Securities LLC and Lehman Brothers Inc. will make the notes
available for distribution on the internet through a proprietary web site and/or
a third-party system operated by Market Axess Inc., an internet-based
communications technology provider. Market Axess Inc. is providing the system as
a conduit to communications between Banc of America Securities LLC and its
customers and Lehman Brothers Inc. and its customers and is not a party to this
offering. Banc of America Securities LLC and Lehman Brothers Inc. do not believe
that Market Axess Inc. will function as an underwriter or agent of this
offering, nor do they believe that Market Axess Inc. will act as a broker for
any customer of Banc of America Securities LLC or Lehman Brothers Inc. Market
Axess Inc. is a registered broker-dealer and will receive compensation from Banc
of America Securities LLC and Lehman Brothers Inc. based on transactions Banc of
America Securities LLC and Lehman Brothers Inc. transact through the system.
Banc of America Securities LLC and Lehman Brothers Inc. will make the notes
available to their customers through internet distributions, whether made
through a proprietary or third party system, on the same terms as distributions
made through other channels.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act of 1933, as amended, or contribute to payments which the
underwriters may be requested to make in that respect.
First Union Securities, Inc. ('FUSI'), a subsidiary of Wachovia Corporation,
conducts its investment banking, institutional and capital markets businesses
under the trade name of Wachovia Securities. Any references to 'Wachovia
Securities' in this prospectus, however, do not include Wachovia Securities,
Inc.,
S-20
a separate broker-dealer subsidiary of Wachovia Corporation and sister affiliate
of FUSI, which may or may not be participating as a separate selling dealer in
the distribution of the notes.
In the ordinary course of their respective businesses, the underwriters or
their affiliates engage in investment banking, general financing and/or banking
transactions with the Company.
The notes will trade interchangeably with U.S.$500,000,000 of our 5 1/2%
Notes due September 12, 2006 that we issued as of September 12, 2001.
S-21
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the notes in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of notes are made. Any resale of the notes in Canada must be made under
applicable securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made under available statutory
exemptions or under a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the notes.
REPRESENTATIONS OF PURCHASERS
By purchasing the notes in Canada and accepting a purchase confirmation, a
purchaser is representing to us and the dealer from whom the purchase
confirmation is received that
the purchaser is entitled under applicable provincial securities laws to
purchase the notes without the benefit of a prospectus qualified under
those securities laws,
where required by law, that the purchaser is purchasing as principal and
not as agent, and
the purchaser has reviewed the text above under 'Resale Restrictions'.
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside Canada.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of notes should consult their own legal and tax advisors
with respect to the tax consequences of an investment in the notes in their
particular circumstances and about the eligibility of the notes for investment
by the purchaser under relevant Canadian legislation.
S-22
LEGAL MATTERS
The validity of the securities will be passed upon for us by Louise M.
Parent, Esq., Executive Vice President and General Counsel of American Express
Company. Certain legal matters will be passed upon for the underwriters by
Cleary, Gottlieb, Steen & Hamilton, New York, New York. From time to time,
Cleary, Gottlieb, Steen & Hamilton provides legal services to American Express
Company and its subsidiaries.
GENERAL INFORMATION
1. Application has been made to list the notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-Laws of the Company and a legal notice relating to the
issuance of the notes have been deposited prior to listing with Greffier en Chef
du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may be
obtained upon request. Copies of the above documents together with this
prospectus supplement, the accompanying prospectus, the Indenture, the
Supplemental Indenture and the documents incorporated by reference as well as
the future year end accounts, so long as any of the notes are outstanding, will
be available free of charge at the main office of Deutsche Bank Luxembourg SA in
Luxembourg. Deutsche Bank Luxembourg SA will act as intermediary between the
Luxembourg Stock Exchange and the Company and the holders of the notes.
2. Other than as disclosed or contemplated herein or in the documents
incorporated by reference herein, there has been no material adverse change in
the financial position of the Company since September 30, 2001.
3. The Independent Auditors of the Company are Ernst & Young LLP, New York.
4. Neither the Company nor any of its subsidiaries is involved in
litigation, arbitration or administrative proceedings relating to claims or
amounts that are material in the context of the issue of the notes and the
Company is not aware of any such litigation, arbitration or administrative
proceedings pending or threatened.
5. Resolutions relating to the issue and sale of the notes were adopted by
the Board of Directors of the Company on July 26, 1993, July 28, 1997 and
November 27, 2000.
6. The notes have been assigned Euroclear and Clearstream, Luxembourg Common
Code No. 013537917, International Security Identification Number (ISIN)
US025816AN95 and CUSIP No. 025816AN9.
S-23
$4,550,000,000
[AMERICAN EXPRESS LOGO] American Express Company
Debt Securities
Preferred Shares
Depositary Shares
Common Shares
Warrants
-------------------
American Express Company may offer from time to time in one or more series:
unsecured debt securities,
preferred shares, par value $1.66 2/3 per share,
depositary shares,
common shares, par value $0.20 per share,
warrants to purchase debt securities, preferred shares, common shares or
equity securities issued by one of our affiliated or unaffiliated
corporations or other entity,
currency warrants entitling the holder to receive the cash value in U.S.
dollars of the right to purchase or the right to sell foreign currencies or
composite currencies, or
warrants relating to other items or indices.
We may offer any combination of these securities at prices and on terms to
be determined at or prior to the time of sale. In addition, various selling
shareholders may offer and sell common shares from time to time. All of these
securities will have an initial offering price no greater than $4,550,000,000,
although American Express may increase this amount in the future.
American Express and the selling shareholders may offer and sell securities
to or through underwriters, dealers and agents or directly to purchasers. The
names of any underwriters or agents involved in the sale of securities and their
compensation will be described in the accompanying prospectus supplement. The
names of any selling shareholders and their relationship to American Express
will also be described in the accompanying prospectus supplement.
This prospectus may not be used to consummate a sale of these securities
unless accompanied by a supplement to the prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
The date of this prospectus is December 22, 2000.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission using a shelf registration process. Under
this process, American Express may sell from time to time any combination of the
securities described in this prospectus and the selling shareholders may sell
shares of common stock in one or more offerings for an initial purchase price of
up to $4,550,000,000.
This prospectus describes the general terms of these securities and the
general manner in which American Express and the selling shareholders will offer
the securities. Each time these securities are sold, we will provide a
supplemental prospectus that describes the specific terms of these securities
and the specific manner in which they may be offered. You should read the
prospectus supplement and this prospectus, along with the documents incorporated
by reference and described under the heading 'WHERE YOU CAN FIND MORE
INFORMATION', before making your investment decision.
WHERE YOU CAN FIND MORE INFORMATION
American Express files annual, quarterly, current reports, proxy statements
and other information with the SEC. You may read and copy any document American
Express files at the SEC's public reference rooms in Washington, D.C., New York,
New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. American Express's SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov.
The SEC allows American Express to incorporate by reference the information
it files with the SEC, which means that we can disclose important information to
you by referring you to those documents. The information that we incorporate by
reference is considered to be part of this prospectus.
Information that American Express files later with the SEC will
automatically update and supersede this information. This means that you must
look at all of the SEC filings that we incorporate by reference to determine if
any of the statements in this prospectus or in any documents previously
incorporated by reference have been modified or superseded. American Express
incorporates by reference into this prospectus the following documents:
Annual Report on Form 10-K for the year ended December 31, 1999, as amended
by Form 10-K/A on June 30, 2000.
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000.
Current Reports on Form 8-K dated January 26, 2000, February 3, 2000,
April 26, 2000, April 27, 2000, May 3, 2000, June 27, 2000, July 25, 2000
as amended by Form 8-K/A on July 31, 2000, August 2, 2000, October 10,
2000, October 23, 2000 and November 17, 2000.
The description of the Company's common shares contained in the
Registration Statement on Form 8-A dated November 13, 1984, as amended on
Form 8-A/A on June 12, 2000.
All documents filed by American Express Company under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of
the initial registration statement and before effectiveness of the
registration statement, and after the date of this prospectus and before
the termination of this offering.
You may request a copy of these filings at no cost, by writing or
telephoning American Express at the following address or number:
American Express Company
200 Vesey Street
New York, New York 10285
Attention: Secretary
(212) 640-2000
The financial statements which we have incorporated into this prospectus by
reference to the annual report on Form 10-K for the year ended December 31, 1999
have been audited by Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, independent certified public accountants, to the extent indicated in
their
2
report included in this annual report. We have incorporated by reference the
financial statements in this prospectus in reliance upon the report of that
firm, given on their authority as experts in accounting and auditing.
AMERICAN EXPRESS COMPANY
American Express Company through its subsidiaries is in the business of
providing travel related services, financial advisory services and international
banking services throughout the world.
We offer travel related services principally through American Express Travel
Related Services Company, Inc. and its subsidiaries, or TRS. These services
include a variety of products and services, including among others, a global
card network, issuing and processing services, the American Express' Card, the
Optima' Card and other consumer and corporate lending and banking products, the
American Express' Travelers Cheque and other stored value products, business
expense management products and services, corporate and consumer travel products
and services, magazine publishing, and merchant transaction processing, point of
sale and back office products and services. At December 31, 1999, there were 46
million American Express Cards in force worldwide, and worldwide American
Express Card billed business for the year ended December 31, 1999 was $254.1
billion. Travelers Cheque sales for the year ended December 31, 1999 were $23.3
billion.
American Express Financial Corporation, or AEFC, and its subsidiaries are
engaged in providing a variety of financial products and services to help
individuals, businesses and institutions establish and achieve their financial
goals. AEFC's products and services include financial planning and advice,
insurance and annuities, a variety of investment products, including investment
certificates, mutual funds and limited partnerships, investment advisory
services, trust and employee plan administration services, tax preparation and
bookkeeping services, personal auto and homeowner's insurance and retail
securities brokerage services. At December 31, 1999, American Express Financial
Advisors Inc., AEFC's principal marketing subsidiary, maintained a nationwide
financial planning field force of over 11,000 persons. At December 31, 1999,
AEFC's assets owned and/or managed totaled approximately $262.5 billion.
American Express Bank Ltd., or AEBL, and its subsidiaries offers products
that meet the financial service needs of three client groups: corporations,
financial institutions and affluent individuals. AEBL's five business lines are
commercial, correspondent, and private banking, personal financial services and
global trading. AEBL does not do business in the United States except as it
relates to its activities outside the United States.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our historical ratios of earnings to fixed
charges for the periods indicated:
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
2000 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges........ 2.30 2.48 2.24 2.22 2.17 1.86
For purposes of computing the ratio of earnings to fixed charges, 'earnings'
means pre-tax earnings plus the amortization of capitalized interest, the net
loss of affiliates accounted for under the equity method whose debt is not
guaranteed by American Express, the minority interest in the earnings of
majority-owned subsidiaries with fixed charges, and the interest component of
rental expense minus undistributed net income of affiliates accounted for under
the equity method. 'Fixed charges' consist of interest expense and other
adjustments, including capitalized interest costs and the interest component of
rental expense. 'Interest expense' includes interest expense related to the
international banking operations of American Express and TRS's cardmember
lending activities, which is netted against interest and dividends and
cardmember lending net finance charge revenue, respectively, in our consolidated
statement of income.
3
USE OF PROCEEDS
Except as may be otherwise set forth in the prospectus supplement
accompanying this prospectus, we will use the net proceeds we receive from sales
of these securities for general corporate purposes. We will not receive any
proceeds from the sale of common shares by the selling shareholders.
DESCRIPTION OF DEBT SECURITIES
The debt securities covered by this prospectus will be our direct unsecured
obligations. The debt securities will be either senior debt securities, that
rank on an equal basis with all our other senior unsecured and unsubordinated
debt, or they will be subordinated debt securities that will have a junior
position to all of our senior unsecured debt.
The following description briefly sets forth certain general terms and
provisions of the debt securities. The prospectus supplement for a particular
series of debt securities will describe the particular terms of the debt
securities we offer and the extent to which such general provisions may apply to
that particular series of debt securities.
Our senior debt securities will be issued under a senior debt indenture. Our
subordinated debt securities will be issued under a subordinated debt indenture.
The trustee under both indentures is PNC Bank, National Association. The senior
debt indenture and the subordinated debt indenture are sometimes referred to in
this prospectus individually as an 'indenture' and collectively as the
'indentures'. Forms of the indenture have been filed with the SEC and are
incorporated by reference in the registration statement on Form S-3
(No. 333-50997) under the Securities Act of 1933 of which this prospectus forms
a part.
The following summaries of certain provisions of the indentures are not
complete and are qualified in their entirety by reference to the indentures. You
should read the indentures for further information. If we make no distinction in
the following summaries between the senior debt securities and the subordinated
debt securities or between the indentures, such summaries refer to any debt
securities and either indenture. Where appropriate, we use parentheses to refer
you to the particular sections of the applicable indenture. Any reference to
particular sections or defined terms of the applicable indenture in any
statement under this heading qualifies the entire statement and incorporates by
reference the applicable definition into that statement.
PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES
GENERAL
The indentures allow us to issue senior and subordinated debt securities
from time to time up to the aggregate principal amount we authorize from time to
time. We may issue the debt securities in one or more series with the same or
different terms. We may not issue all debt securities of the same series at the
same time. All debt securities of the same series need not bear interest at the
same rate or mature on the same date. Each indenture permits the appointment of
a different trustee for each series of debt securities. If there is at any time
more than one trustee under the indentures, the term 'trustee' means each such
trustee and will apply to each such trustee only with respect to those series of
debt securities for which it is serving as trustee.
We may sell debt securities at a substantial discount below their stated
principal amount that bear no interest or below market rates of interest. The
applicable prospectus supplement will describe the Federal income tax
consequences and special investment considerations applicable to any such series
of debt securities.
TERMS SPECIFIED IN THE PROSPECTUS SUPPLEMENT
You should read the prospectus supplement that accompanies this prospectus
for information with respect to the debt securities being offered, including:
the designation, aggregate principal amount and authorized denominations of
the debt securities;
the percentage of the principal amount at which we will sell the debt
securities;
whether the debt securities will be senior or subordinated debt;
the maturity date or the method for determining the maturity date;
the terms for conversion or exchange, if any, of the debt securities;
4
the interest rate or rates, if any, or the method for computing such rate
or rates;
the interest payment dates or the method for determining such dates;
whether the debt securities will be issued in fully registered form or in
bearer form or any combination thereof;
whether the debt securities will be issued in the form of one or more
global securities and whether such global securities are to be issuable in
a temporary global form or permanent global form;
if other than U.S. dollars, the currency or currencies or currency unit or
units in which debt securities may be denominated and purchased and the
currency or currencies or currency unit or units in which principal,
premium, if any, and any interest may be payable;
if the currency for which debt securities may be purchased or in which
principal, premium, if any, and any interest may be payable is at the
election of American Express or the purchaser, the manner in which such an
election may be made and the terms of such election;
any mandatory or optional sinking fund, redemption or other similar terms;
any index or other method used to determine the amount of principal,
premium, if any, and interest, if any, on the debt securities;
if a trustee other than PNC Bank is named for the debt securities, the name
of such trustee;
any material provisions of the applicable indenture described in this
prospectus that do not apply to the debt securities; and
any other specific terms of the debt securities.
PAYMENT
Unless otherwise specified in the applicable prospectus supplement,
principal and interest, if any, on the debt securities will be payable initially
at the principal corporate trust office of the trustee. At our option, payment
of interest may be made, subject to collection, by check. ('SS'12.02) The
principal corporate trust office of the trustee on the date of this prospectus
is PNC Bank, National Association, One Oliver Plaza, 210 Sixth Avenue,
Pittsburgh, Pennsylvania 15222.
If the principal of or interest, if any, on any series of debt securities is
payable in foreign currencies or foreign currency units or if debt securities
are sold for foreign currencies or foreign currency units, the restrictions,
elections, tax consequences, specific terms and other information with respect
to such debt securities will be described in the applicable prospectus
supplement.
FORM OF DEBT SECURITIES
We will issue each debt security in global -- i.e. book-entry -- form,
unless we specify otherwise in the applicable prospectus supplement. We may
issue debt securities solely in fully registered form without coupons, solely in
bearer form with or without coupons or both as registered securities and bearer
securities. ('SS'11.01)
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with or on behalf
of a depositary identified in the applicable prospectus supplement. Global
securities will be issued in registered form and may be in either temporary or
permanent form.
The related prospectus supplement will describe the specific terms of the
depositary arrangement with respect to that series of debt securities. We
anticipate that the following provisions will apply to all depositary
arrangements.
Unless otherwise specified in an applicable prospectus supplement, global
securities to be deposited with or on behalf of a depositary will be registered
in the name of such depositary or its nominee. Upon the issuance of a global
security, the depositary for such global security will credit the respective
principal amounts of the debt securities represented by such global security to
the participants that have accounts with such depositary or its
5
nominee. Ownership of beneficial interests in such global securities will be
limited to participants in the depositary or persons that may hold interests
through these participants.
A participant's ownership of beneficial interests in these global securities
will be shown on the records maintained by the depositary or its nominee. The
transfer of a participant's beneficial interest will only be effected through
these records. A person whose ownership of beneficial interests in these global
securities is held through participants will be shown on, and the transfer of
that ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner of such global security, we will consider such depositary or
such nominee, to be the sole owner or holder of the debt securities represented
by such global security. Except as described below, owners of beneficial
interests in global securities will not be entitled to have debt securities of
the series represented by such global security registered in their names and
will not receive or be entitled to receive physical delivery of debt securities
of such series in definitive form. We will not consider owners of beneficial
interests in global securities to be the owners or holders of those debt
securities under the indenture.
We will make payment of principal of, premium, if any, and any interest on
global securities to the depositary or its nominee, as the case may be, as the
registered owner or the holder of the global security. Neither American Express,
the trustee, any paying agent nor the securities registrar for such debt
securities will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in a global security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests. ('SS'3.09)
We expect that the depositary for a permanent global security, upon receipt
of any payment in respect of a permanent global security, will immediately
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such global security
as shown on the records of such depositary. We also expect that payments by
participants to owners of beneficial interests in such global security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in 'street name', and will be the
responsibility of such participants.
We may at any time and in our sole discretion determine not to have any debt
securities represented by one or more global securities. In such event, we will
issue debt securities in definitive form in exchange for all of the global
securities representing such debt securities. ('SS'3.05)
If set forth in the applicable prospectus supplement, an owner of a
beneficial interest in a global security may, on terms acceptable to us and the
depositary, receive debt securities of such series in definitive form. In any
such instance, an owner of a beneficial interest in a global security will be
entitled to physical delivery in definitive form of debt securities of the
series represented by such global security equal in principal amount to such
beneficial interest and to have such debt securities registered in its name.
Registered and Bearer Securities
Registered securities may be exchangeable for other debt securities of the
same series, registered in the same name, for the same aggregate principal
amount in authorized denominations and will be transferable at any time or from
time to time at the office of the trustee. The holder will not pay a service
charge for any such exchange or transfer except for any tax or governmental
charge incidental thereto. ('SS'3.05) If permitted by applicable laws and
regulations, the prospectus supplement will describe the terms upon which
registered securities may be exchanged for bearer securities of the series. If
any bearer securities are issued, any restrictions applicable to the offer, sale
or delivery of bearer securities and the terms upon which bearer securities may
be exchanged for registered securities of the same series will be described in
the prospectus supplement.
6
CONSOLIDATION, MERGER AND SALE OF ASSETS
American Express, without the consent of the holders of any of the
outstanding debt securities under either indenture, may consolidate with or
merge into, or convey or transfer its properties and assets substantially as an
entirety to, any corporation organized under the laws of the United States of
America or any State or the District of Columbia, provided, that:
the successor corporation assumes our obligations on all the debt
securities and under the indentures;
after giving effect to the transaction no event of default under the
indentures, and no event which, after notice or lapse of time, or both,
would become an event of default, will have occurred and be continuing; and
that various other conditions are met.
Neither indenture restricts a merger or consolidation in which American
Express is the surviving corporation. ('SS'10.01)
MODIFICATION OF THE INDENTURES
We may modify or amend the indentures without the consent of the holders of
any of our outstanding debt securities for various enumerated purposes,
including the naming, by a supplemental indenture, of a trustee other than PNC
Bank for a series of debt securities. We may modify or amend the indenture with
the consent of the holders of a majority in aggregate principal amount of the
debt securities of each series affected by the modification or amendment.
However, no such modification or amendment may, without the consent of the
holder of each debt security affected thereby:
modify the terms of payment of principal or interest; or
reduce the stated percentage of holders of debt securities necessary to
modify or amend the indentures or waive our compliance with certain
provisions of the indentures and certain defaults thereunder. ('SS'11.02)
EVENTS OF DEFAULT, NOTICE AND WAIVER
The indenture provides holders of debt securities with remedies if we fail
to perform specific obligations, such as making payments on the debt securities.
You should review these provisions carefully in order to understand what
constitutes an event of default under the indentures.
Unless stated otherwise in the prospectus supplement, an event of default
with respect to any series of debt securities under each indenture will be:
default in the payment of the principal of, or premium, if any, on any debt
security of such series at its maturity;
default in making a sinking fund payment, if any, when due and payable;
default for 30 days in the payment of any installment of interest on any
debt security of such series;
default for 90 days after written notice in the observance or performance
of any other covenant in the relevant indenture;
certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee for American Express or
its property;
an event of default with respect to any other series of debt securities
outstanding under the applicable indenture or an event of default under any
other indebtedness of American Express for borrowed money in excess of
$50,000,000 which results in an aggregate principal amount of at least
$50,000,000 of such other series of debt securities or such other
indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise become due and payable and such acceleration
has not been rescinded or annulled within 10 days after notice of default
is given; and
any other event of default provided in or pursuant to the applicable
resolution of the Board of Directors or supplemental indenture under which
such series of debt securities is issued. ('SS'7.01)
7
The trustee may withhold notice to the holders of any series of debt
securities of any default with respect to such series (except in the payment of
principal, premium or interest) if it considers such withholding in the interest
of such holders. ('SS'8.02)
If an event of default with respect to any series of debt securities has
occurred and is continuing, the trustee or the holders of not less than 25% in
aggregate principal amount of the debt securities of such series may declare the
principal of all the debt securities of such series to be due and payable
immediately. ('SS'7.02)
Each indenture contains a provision entitling the trustee to be indemnified
by the holders before proceeding to exercise any right or power under the
indenture at the request of any of the holders. ('SS'8.03) Each indenture
provides that the holders of a majority in aggregate principal amount of the
outstanding debt securities of any series may direct the time, method and place
of conducting any proceeding for any remedy available to the trustee or
exercising any trust or power conferred upon the trustee, with respect to the
debt securities of such series. ('SS'7.12) The right of a holder to institute a
proceeding with respect to the applicable indenture is subject to certain
conditions precedent, including notice and indemnity to the trustee. However,
the holder has an absolute right to the receipt of principal of, premium, if
any, and interest, if any, on the debt securities of any series on the
respective stated maturities (as defined in the indentures) and to institute
suit for the enforcement of these rights. ('SS'SS'7.07 and 7.08)
The holders of not less than a majority in aggregate principal amount of the
outstanding debt securities of any series may on behalf of the holders of all
the debt securities of such series waive any past defaults. Each holder of a
debt security affected by a default must consent to a waiver of:
a default in payment of the principal of or premium, if any, or interest,
if any, on any debt security of such series;
a default in the payment of any sinking fund installment or analogous
obligation with respect to the debt securities of such series; and
a default in respect of a covenant or provision of the applicable indenture
which cannot be amended or modified without the consent of the holder of
each outstanding debt security affected. ('SS'7.13)
We will furnish to the trustee annual statements as to the fulfillment of
its obligations under each indenture. ('SS'SS'9.04 and 12.05).
CONCERNING THE TRUSTEE
PNC Bank, the current trustee under the indentures, provides banking and
corporate trust services to American Express and extends credit to American
Express and many of its subsidiaries worldwide. The trustee is a depository of
our funds and holds our common shares for the benefit of its customers,
including customers over whose accounts the trustee has discretionary authority.
If a bank or trust company other than PNC Bank is to act as trustee for a series
of debt securities, the applicable prospectus supplement will provide
information concerning such other trustee.
DEFEASANCE OF THE INDENTURE AND DEBT SECURITIES
The indentures permit us to be discharged from our obligations under the
indentures and the debt securities if we comply with the following procedures.
This discharge from our obligations is referred to in this prospectus as
defeasance.
Unless the applicable prospectus supplement states otherwise, if we deposit
with the trustee sufficient cash and/or government securities to pay and
discharge the principal and premium, if any, and interest, if any, to the date
of maturity on such series of debt securities then from and after the
ninety-first day following such deposit:
we will be deemed to have paid and discharged the entire indebtedness on
the debt securities of any series; and
our obligations under each indenture with respect to the debt securities of
such series will cease to be in effect.
Following such defeasance, holders of the applicable debt securities would
be able to look only to the trust fund for payment of principal and premium, if
any, and interest, if any, on their debt securities.
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Such defeasance may be treated as a taxable exchange of the related debt
securities for obligations of the trust or a direct interest in the money or
government securities held in the trust. In that case holders of such debt
securities would recognize gain or loss as if the trust obligations or the money
or government securities held in the trust, as the case may be, had actually
been received by the holders in exchange for their debt securities. Such holders
thereafter might be required to include as income a different amount of income
than in the absence of such defeasance. We urge prospective investors to consult
their own tax advisors as to the specific tax consequences of defeasance.
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED SECURITIES
GENERAL
We are issuing subordinated debt securities under the subordinated debt
indenture. Holders of subordinated debt securities should recognize that
contractual provisions in the subordinated debt indenture may prohibit us from
making payments on these securities. The subordinated debt securities will rank
on an equal basis with certain other subordinated debt of American Express that
may be outstanding from time to time and will rank junior to all senior
indebtedness (as defined below) of American Express (including any senior debt
securities) that may be outstanding from time to time.
If subordinated debt securities are issued under the subordinated indenture,
the aggregate principal amount of senior indebtedness outstanding as of a recent
date will be set forth in the applicable prospectus supplement. The subordinated
indenture does not restrict the amount of senior indebtedness that we may incur.
SUBORDINATION
The payment of the principal of, and premium, if any, and interest on the
subordinated debt securities is expressly subordinated, to the extent and in the
manner set forth in the subordinated indenture, in right of payment to the prior
payment in full of all of our senior indebtedness. ('SS'13.01) The term senior
indebtedness is defined in the subordinated indenture as indebtedness we incur
for money borrowed, all deferrals, renewals or extensions of any such
indebtedness and all evidences of indebtedness issued in exchange for any such
indebtedness. Senior indebtedness also includes our guarantees of the foregoing
items of indebtedness for money borrowed by persons other than American Express,
unless, in any such case, such indebtedness or guarantee provides by its terms
that it will not constitute senior indebtedness.
The subordinated debt indenture provides that, unless all principal of and
any premium or interest on, the senior indebtedness has been paid in full, or
provision has been made to make these payments in full, no payment or other
distribution may be made with respect to the subordinated indebtedness in the
following circumstances:
any acceleration of the principal amount due on the subordinated debt
securities;
the dissolution or winding-up or total or partial liquidation or
reorganization of American Express, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings;
a default in the payment of principal, premium, if any, sinking fund or
interest with respect to any senior indebtedness; or
an event of default (other than a default in the payment of principal,
premium, if any, sinking funds or interest) with respect to any senior
indebtedness, as defined in the instrument under which the same is
outstanding, permitting the holders of senior indebtedness to accelerate
its maturity, and such event of default has not been cured or waived.
A merger, consolidation or conveyance of all or substantially all of our assets
on the terms and conditions provided in the subordinated indenture will not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of these subordination provisions.
If the holders of subordinated securities receive any payment or
distribution of assets of American Express not permitted by the subordination
provisions, the holders of subordinated debt securities will have to repay such
amount to the holders of the senior debt securities or to the trustee.
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SUBROGATION
After the payment in full of all senior indebtedness, the holders of the
subordinated debt securities will be subrogated to the rights of the holders of
senior indebtedness to receive payments or distributions of assets or securities
of American Express applicable to the senior indebtedness until the subordinated
debt securities are paid in full. Under these subrogation provisions, no
payments or distributions to the holders of senior indebtedness which otherwise
would have been payable or distributable to holders of the subordinated debt
securities will be deemed to be a payment by us to or on the account of the
senior indebtedness. These provisions of the subordinated indenture are intended
solely for the purpose of defining the relative rights of the holders of the
subordinated debt securities and the holders of the senior debt securities.
Nothing contained in the subordinated indenture is intended to impair the
absolute obligation of American Express to pay the principal of and interest on
the subordinated debt securities in accordance with their terms or to affect the
relative rights of the holders of the subordinated debt securities and creditors
of American Express other than the holders of the senior indebtedness. These
subrogation provisions of the subordinated indenture will not prevent the holder
of any subordinated debt security from exercising all remedies otherwise
permitted by applicable law upon default of such security, subject to the rights
of subordination described above.
PROVISIONS APPLICABLE SOLELY TO SENIOR SECURITIES
RESTRICTIONS AS TO LIENS
The senior indenture includes a covenant providing that we will not at any
time directly or indirectly create, or allow to exist or be created, any
mortgage, pledge, encumbrance or lien of any kind upon:
any shares of capital stock owned by American Express of any of American
Express Travel Related Services Company, Inc., American Express Bank Ltd.
or American Express Financial Corporation, so long as they continue to be
our subsidiaries, which we refer to collectively as the 'principal
subsidiaries'; or
any shares of capital stock owned by American Express of a subsidiary that
owns, directly or indirectly, capital stock of the principal subsidiaries.
Such liens are permitted if we provide that the senior debt securities will
be secured by such lien equally and ratably with any and all other obligations
also secured, for as long as any such other obligations are so secured. However,
we may incur or allow to exist upon the stock of the principal subsidiaries
liens for taxes, assessments or other governmental charges or levies which are
not yet due or are payable without penalty or which we are contesting in good
faith, or liens of judgments that are on appeal or are discharged within
60 days. ('SS'12.07(a))
This covenant will cease to be binding on us with respect to any series of
the senior debt securities to which such covenant applies following discharge of
such senior debt securities. ('SS'12.07(b))
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DESCRIPTION OF PREFERRED SHARES
GENERAL
The following briefly summarizes the material terms of our preferred shares,
other than pricing and related terms which are disclosed in the applicable
prospectus supplement. You should read the applicable prospectus supplement
together with the certificate of designation relating to such series and our
restated certificate of incorporation for a more detailed description of a
particular series of preferred shares and other provisions that may be important
to you.
Under our restated certificate of incorporation, we are authorized to issue
20,000,000 preferred shares, par value $1.66 2/3 per share. We do not currently
have any outstanding preferred shares and therefore all 20,000,000 shares are
still available for issuance. Our board of directors is authorized to issue our
preferred shares from time to time in one or more series with such designations,
voting powers, dividend rates, rights of redemption, conversion rights or other
special rights, preferences and limitations as may be stated in resolutions
adopted by the board of directors.
The preferred shares will have the dividend, liquidation and voting rights
set forth below unless otherwise provided in the prospectus supplement relating
to a particular series of preferred shares. You should read the prospectus
supplement relating to the particular series of the preferred shares being
offered for specific terms, including:
the title, number of shares offered and liquidation preference per share;
the price per share;
the dividend rate, the dates on which dividends will be payable, the
conditions under which dividends will be payable or the method of
determining such rate, dates and conditions;
whether dividends will be cumulative or noncumulative and, if cumulative,
the dates from which dividends will commence to accumulate;
whether dividends are participating or non-participating;
any redemption, sinking fund or analogous provisions;
any conversion or exchange provisions;
whether we have elected to offer depositary shares with respect to the
preferred shares as described below under 'Depositary Shares';
whether the preferred shares will have voting rights, in addition to the
voting rights described below, and, if so, the terms of such voting rights;
the procedures for any auction and remarketing of the preferred shares; and
any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions.
When issued, the preferred shares will be fully paid and nonassessable.
DIVIDEND RIGHTS
All preferred shares will be of equal rank with each other regardless of
series. If the stated dividends or the amounts payable on liquidation are not
paid in full, the preferred shares of all series will share ratably in the
payment of dividends and in any distribution of assets.
RIGHTS UPON LIQUIDATION
Unless otherwise specified in the applicable prospectus supplement, in the
event of a liquidation each series of the preferred shares will rank on an equal
basis with all other outstanding preferred shares and prior to the common stock
as to dividends and distributions.
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VOTING RIGHTS
Except as described below, the holders of preferred shares have no voting
rights, other than as may be required by law. Whenever dividends payable on the
preferred shares of any series will be in arrears in an aggregate amount at
least equal to six full quarterly dividends on such series, the holders of the
outstanding preferred shares of all series will have the special right, voting
separately as a single class, to elect two directors at the next succeeding
annual meeting of shareholders. Subject to the terms of any outstanding series
of preferred shares, the holders of common stock and the holders of one or more
series of preferred shares then entitled to vote will have the right, voting as
a single class, to elect the remaining authorized number of directors.
At each meeting of shareholders at which the holders of the preferred shares
will have this special right, the presence in person or by proxy of the holders
of record of one-third of the total number of the preferred shares of all series
then issued and outstanding will constitute a quorum of such class. Each
director elected by the holders of the preferred shares of all series will hold
office until the annual meeting of shareholders next succeeding his election and
until his successor, if any, is elected by such holders and qualified or until
his death, resignation or removal in the manner provided in our by-laws. A
director elected by the holders of the preferred shares of all series may only
be removed without cause by such holders. In case any vacancy will occur among
the directors elected by the holders of the preferred shares of all series such
vacancy may be filled for the unexpired portion of the term by vote of the
remaining director elected by such shareholders, or his successor in office. If
such vacancy occurs more than 90 days prior to the first anniversary of the next
preceding annual meeting of shareholders, the vacancy may be filled by the vote
of such shareholders given at a special meeting of such shareholders called for
the purpose. Whenever all arrears of dividends on the preferred shares of all
series will have been paid and dividends for the current quarterly period will
have been paid or declared and provided for, the right of the holders of the
preferred shares of all series to elect two directors will terminate at the next
succeeding annual meeting of shareholders.
The consent of the holders of at least two-thirds of the outstanding
preferred shares voting separately as a single class will be required for:
the authorization of any class of shares ranking prior to the preferred
shares as to dividends or upon liquidation, dissolution or winding up;
an increase in the authorized amount of any class of shares ranking prior
to the preferred shares; or
the authorization of any amendment to the restated certificate of
incorporation or the by-laws that would adversely affect the relative
rights, preferences or limitations of the preferred shares. If any such
amendment will adversely affect the relative rights, preferences or
limitations of one or more, but not all, of the series of preferred shares
then outstanding, the consent of the holders of at least two-thirds of the
outstanding preferred shares of the several series so affected will be
required in lieu of the consent of the holders of at least two-thirds of
the outstanding preferred shares of all series.
In any case in which the holders of the preferred shares will be entitled to
vote separately as a single class, each holder of preferred shares of any series
will be entitled to one vote for each such share held.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any prospectus supplement of certain
provisions of the deposit agreement, the depositary shares and the depositary
receipts is a summary of general terms and is not complete. This description is
subject to, and qualified in its entirety by, reference to the forms of deposit
agreement and depositary receipts relating to each series of preferred shares
which have been or will be filed with the SEC in connection with the offering of
such series of preferred shares. You should read such documents for further
information.
GENERAL
We may elect to offer fractional interests in preferred shares rather than
preferred shares. If we do, we will select a depositary that will issue to the
public receipts for depositary shares, each of which will represent fractional
interests of a particular series of preferred shares. These depositary receipts
will be distributed in accordance with the terms of the offering described in
the related prospectus supplement.
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The depositary will be a bank or trust company that has its principal office
in the United States and has a combined capital and surplus of at least
$50,000,000. We will deposit the preferred shares underlying the depositary
shares with the depositary under the terms of a separate deposit agreement. The
prospectus supplement relating to a series of depositary shares will set forth
the name and address of the depositary. Subject to the terms of the deposit
agreement, the owners of depositary shares will be entitled to all the rights
and preferences of the preferred shares underlying such depositary shares,
including dividend, voting, redemption, conversion and liquidation rights. Each
owner of depositary shares will be entitled to these rights and preferences in
proportion to the applicable fractional interests in preferred shares underlying
their depositary shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends or other cash
distributions received in respect of preferred shares to the record holders of
the related depositary shares in proportion to the number of such depositary
shares owned by such holders on the relevant record date. The depositary will
distribute only such amount, however, as can be distributed without attributing
to any holder of depositary shares a fraction of one cent. Any balance that is
not distributed due to this restriction will be added to and treated as part of
the next sum received by the depositary for distribution to record holders of
depositary shares.
In the event of a non-cash distribution, the depositary will distribute
property received by it to the record holders of depositary shares. If, however,
the depositary determines that it is not feasible to make such distribution, the
depositary may, with our approval, sell such property and distribute instead the
net proceeds from such sale.
The deposit agreement will also contain provisions relating to the manner in
which any subscription or similar rights we offer to holders of the preferred
shares will be made available to the holders of depositary shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of the preferred shares that underlies the depositary shares is
redeemed, the depositary will in turn redeem the depositary shares. The
depositary will redeem the depositary shares from the proceeds it receives from
the redemption, in whole or in part, of the preferred shares it holds. The
depositary will mail notice of any such redemption to the record holders of the
depositary shares to be redeemed between 30 and 60 days prior to the date fixed
for redemption. The redemption price per depositary share will be equal to the
applicable fraction of the redemption price per share payable with respect to
such series of the preferred shares. If less than all of the depositary shares
are to be redeemed, the depositary will select the depositary shares to be
redeemed by lot or redeem such shares pro rata.
The depositary shares called for redemption will no longer be deemed to be
outstanding after the date fixed for redemption. All rights of the holders of
the depositary shares will cease, except the right to receive the moneys,
securities or other property payable upon such redemption upon surrender to the
depositary of the depositary receipts evidencing such depositary shares.
VOTING THE PREFERRED SHARES
The holders of depositary shares will be entitled to instruct the depositary
as to the exercise of the voting rights of the preferred shares held by the
depositary. Upon the receipt of notice of any meeting at which the holders of
the preferred shares are entitled to vote, the depositary will mail the
information contained in such notice of meeting to the record holders of the
depositary shares relating to such preferred shares. Each record holder of such
depositary shares on the record date (which will be the same date as the record
date for the preferred shares) will be entitled to instruct the depositary as to
the exercise of the voting rights pertaining to the number of shares of
preferred shares underlying such depositary shares in accordance with such
instructions. American Express will agree to take all action that may be deemed
necessary by the depositary in order to enable the depositary to carry out this
obligation.
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AMENDMENT AND TERMINATION OF DEPOSITARY AGREEMENT
At any time, American Express and the depositary may agree to amend the form
of depositary receipt evidencing the depositary shares or any provision of the
deposit agreement. However, any amendment which materially and adversely alters
the rights of the existing holders of depositary shares will not be effective
unless such amendment has been approved by the record holders of at least a
majority of the depositary shares then outstanding.
American Express or the depositary may terminate a deposit agreement only
if:
all outstanding depositary shares relating to the depositary agreement have
been redeemed; or
in connection with any liquidation, dissolution or winding up of American
Express there has been a final distribution in respect of the relevant
series of preferred shares which has been distributed to the holders of the
related depositary shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with the initial deposit of the
preferred shares and any redemption of the preferred shares. Holders of the
depositary shares will pay transfer and other taxes and governmental charges and
such other charges as described in the deposit agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering a notice to American
Express. We may at any time remove the depositary. Such resignation or removal
will take effect upon the appointment of a successor depositary and its
acceptance of such appointment. Such successor depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The depositary will forward to the holders of depositary shares all reports
and communications from American Express which are delivered to the depositary
and which American Express is required to furnish to the holders of the
preferred shares.
Neither the depositary nor American Express will be liable if it is
prevented or delayed in performing its obligations under the deposit agreement
by law or any circumstance beyond its control. The obligations of American
Express and the depositary under the deposit agreement will be limited to
performance in good faith of their duties thereunder. American Express and the
depositary will not be obligated to prosecute or defend any legal proceeding in
respect of any depositary shares or preferred shares unless a satisfactory
indemnity is provided. American Express and the depositary may rely upon written
advice of counsel or accountants, information provided by persons presenting
preferred shares for deposit, holders of depositary shares or other persons
believed to be competent.
DESCRIPTION OF COMMON SHARES
The following summary does not purport to be complete. You should read the
applicable provisions of the New York Business Corporation Law, our restated
certificate of incorporation and by-laws.
We are authorized to issue up to 3,600,000,000 common shares, par value $.20
each. At October 31, 2000, we had outstanding 1,329,976,393 common shares. As of
December 31, 1999, we had reserved approximately 243,000,000 common shares for
issuance with respect to various employee stock plans, employee benefit plans,
convertible debentures, and the dividend reinvestment plan.
Subject to the prior dividend rights of the holders of any preferred shares,
holders of common shares are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor.
14
Each common share is entitled to one vote on all matters submitted to a vote
of shareholders. Holders of the common shares do not have cumulative voting
rights. In the event of any liquidation, dissolution or winding up of American
Express, after the satisfaction in full of the liquidation preferences of
holders of any preferred shares, holders of common shares are entitled to
ratable distribution of the remaining assets available for distribution to
shareholders. The common shares are not subject to redemption by operation of a
sinking fund or otherwise. Holders of common shares are not entitled to
pre-emptive rights. The issued and outstanding common shares are fully paid and
nonassessable.
DESCRIPTION OF SECURITIES WARRANTS
We may issue warrants for the purchase of:
debt securities,
preferred shares,
depositary shares,
common shares, or
equity securities issued by one of our affiliated or unaffiliated
corporations or other entity.
We may issue these securities warrants independently or together with any
other securities offered by any prospectus supplement. The securities warrants
may be attached to or separate from such securities. Each series of securities
warrants will be issued under a separate warrant agreement to be entered into
between us and a warrant agent. The warrant agent will act solely as our agent
in connection with the securities warrants of such series and will not assume
any obligation or relationship of agency or trust for or with any holders or
beneficial owners of securities warrants. The following summary sets forth
certain general terms and provisions of the securities warrants offered by this
prospectus. Further terms of the securities warrants and the applicable
securities warrant agreement will be described in the applicable prospectus
supplement.
The applicable prospectus supplement will describe the following terms,
where applicable, of the securities warrants in respect of which this prospectus
is being delivered:
the title and aggregate number;
the price or prices at which they will be issued;
the currencies in which the price of the securities warrants may be
payable;
the designation, aggregate principal amount and terms of the securities
purchasable upon exercise;
the designation and terms of the securities with which the securities
warrants are issued and the number of the securities warrants issued with
each such security;
the currency or currencies, including composite currencies, in which the
principal of or any premium or interest on the securities purchasable upon
exercise of the securities warrant will be payable;
if applicable, the date on and after which the securities warrants and the
related securities will be separately transferable;
the price at which and currency or currencies, including composite
currencies, in which the securities purchasable upon exercise of the
securities warrants may be purchased;
the date on which the right to exercise the securities warrants will
commence and the date on which such right will expire;
the minimum or maximum amount of the securities warrants which may be
exercised at any one time;
information with respect to book-entry procedures, if any;
a discussion of certain Federal income tax considerations; and
any other terms of the securities warrants, including terms, procedures and
limitations relating to the exchange and exercise of the securities
warrants.
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DESCRIPTION OF CURRENCY WARRANTS
We may issue warrants entitling the holder to receive the cash value in U.S.
dollars of the right to purchase or the right to sell foreign currencies or
composite currencies. The following description of the terms of these currency
warrants contains only some of the general terms and provisions of these
warrants. The particular terms of the currency warrants offered by any
prospectus supplement and the extent, if any, to which such general provisions
may not apply to the currency warrants then offered will be described in the
applicable prospectus supplement.
Each issue of currency warrants will be issued under a warrant agreement to
be entered into between us and a warrant agent. The currency warrant agent will
act solely as our agent under the applicable currency warrant agreement and will
not assume any obligation or relationship of agency or trust for or with any
holders of such currency warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of the currency warrants in respect of which this prospectus
is being delivered:
the aggregate amount and number;
the offering price;
the designated currency, which currency may be a foreign currency or a
composite currency, and information regarding such currency or composite
currency;
the date on which the right to exercise the currency warrants commences and
the date on which such right expires;
the manner in which the currency warrants may be exercised;
the circumstances which will cause the currency warrants to be deemed
automatically exercised;
the minimum number, if any, of the currency warrants exercisable at any one
time and any other restrictions on exercise;
the method of determining the amount payable in connection with the
exercise of the currency warrants, including the strike price or range of
strike prices of the currency warrants, the method of determining the spot
exchange rate and the U.S. Dollar settlement value for the currency
warrants;
the securities exchange on which the currency warrants will be listed, if
any;
whether the currency warrants will, from the perspective of holders, be
represented by certificates or issued in book-entry form;
the place or places at which payment of the cash settlement value of the
currency warrants is to be made, if applicable;
information with respect to book-entry procedures, if any;
the plan of distribution of the currency warrants, and
any other terms of the currency warrants.
Prospective purchasers of the currency warrants should be aware of special
Federal income tax considerations applicable to instruments such as the currency
warrants. The prospectus supplement relating to each issue of currency warrants
will describe such tax considerations.
DESCRIPTION OF OTHER WARRANTS
We may issue other warrants to buy or sell:
debt securities of or guaranteed by the United States,
currencies,
units of a stock index or stock basket,
a commodity or a unit of a commodity index, or
another item or unit of an index.
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We refer to the property in the above clauses as the 'warrant property'.
Other warrants will be settled either through physical delivery of the warrant
property or through payment of a cash settlement value as set forth in the
applicable prospectus supplement. Other warrants will be issued under a warrant
agreement to be entered into between us and a warrant agent. The other warrant
agent will act solely as our agent under the applicable other warrant agreement
and will not assume any obligation or relationship of agency or trust for or
with any holders of such other warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of the other warrants:
the title and aggregate number;
the offering price;
the material risk factors;
the warrant property;
the procedures and conditions relating to exercise;
the date on which the right to exercise will commence and the date on which
such right will expire;
the identity of the other warrant agent for the other warrants;
whether the certificates evidencing the other warrants will be issuable in
definitive registered form or global form or both;
a discussion of Federal income tax considerations applicable to the other
warrants; and
any other terms of the other warrants, including any terms that may be
required or advisable under applicable law.
The other warrants may entail significant risks, including, without
limitation, the possibility of significant fluctuations in the market for the
applicable warranty property, potential illiquidity in the secondary market and
the risk that they will expire worthless. These risks will vary depending on the
particular terms of the other warrants and will be more fully described in the
applicable prospectus supplement.
PLAN OF DISTRIBUTION
American Express and the selling shareholders may sell the securities
described in this prospectus from time to time in one or more of the following
ways:
to or through underwriters or dealers;
directly to one or more purchasers;
through agents; or
through a combination of any of such methods of sale.
The prospectus supplement with respect to the offered securities will
describe the terms of the offering, including:
the name or names of any agents or underwriters,
the purchase price of such securities and the proceeds to American Express
from such sale,
any underwriting discounts and other items constituting underwriters' or
agents' compensation,
any initial public offering price,
any discounts or concessions allowed or reallowed or paid to dealers,
any selling shareholders, and
any securities exchanges on which such securities may be listed.
Only agents or underwriters named in the prospectus supplement are deemed to
be agents or underwriters in connection with the securities offered thereby. If
underwriters are used in the sale, the securities will be
17
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, either:
at a fixed public offering price or prices,
at market prices prevailing at the time of sale,
at varying prices determined at the time of sale, or
at negotiated prices.
The obligations of the underwriters to purchase the securities will be
subject to various conditions precedent, and the underwriters will be obligated
to purchase all of the securities of the series offered by the prospectus
supplement relating to such series if any of such securities are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
American Express and the selling shareholders may also sell securities
directly or through agents designated from time to time. Any agent involved in
the offering and sale of the offered securities is named in the applicable
prospectus supplement. Any commissions payable by us or the selling shareholders
to such agent are set forth in the applicable prospectus supplement. Unless
otherwise indicated in such prospectus supplement, any such agent is acting on a
best efforts basis for the period of its appointment.
If so indicated in a prospectus supplement, we will authorize agents,
underwriters or dealers to solicit offers by certain institutional investors to
purchase securities providing for payment and delivery on a future date
specified in such prospectus supplement. There may be limitations on the minimum
amount that may be purchased by any such institutional investor or on the
portion of the aggregate principal amount of the particular securities that may
be sold pursuant to such arrangements.
Institutional investors to which such offers may be made, when authorized,
include, commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions we may approve. The obligations of any such purchasers under this
delayed delivery and payment arrangement will only be subject to the following
two conditions:
at the time of delivery the purchase of the particular securities by an
institution will not be prohibited under the laws of any jurisdiction in
the United States to which such institution is subject; and
if the particular securities are being sold to underwriters, American
Express will have sold to such underwriters the total principal amount of
such securities or number of warrants less the principal amount or number
thereof, as the case may be, covered by such arrangements.
Underwriters will not have any responsibility in respect of the validity of
such arrangements or the performance of American Express or such institutional
investors.
Shares of our common stock may be offered or sold in connection with the
settlement of forward purchase contracts we enter into from time to time with a
financial institution. The financial institution may be deemed to be an
underwriter or may be deemed to be a selling shareholder. If any such sales are
conducted, whether the third party is deemed to be an underwriter or a selling
shareholder, the prospectus supplement related to such sales will set forth, as
required, the following information:
the identity of the underwriter or selling shareholder,
the amount of shares being sold,
the aggregate number of shares held by the financial institution before and
after the proposed sale,
and any material arrangements between us and the financial institution
within the past three years.
In connection with an offering, the underwriters may purchase and sell
securities in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by underwriters of a greater number of
securities than they are required to purchase in an offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the securities while an
offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased securities
sold by or for the account of the underwriter in stabilizing or short-covering
transactions.
18
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the securities. As a result, the price of the
securities may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on an exchange or
automated quotation system, if the securities are listed on that exchange or
admitted for trading on that automated quotation system, or in the
over-the-counter market or otherwise.
Agents and underwriters may be entitled under agreements entered into with
American Express to indemnification by American Express against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribution with respect to payments which the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may be customers
of, may engage in transactions with, or perform services for, American Express
in the ordinary course of business.
LEGAL MATTERS
Louise M. Parent, Esq., our Executive Vice President and General Counsel,
will pass upon the validity of the securities for us. Unless provided otherwise
in the applicable prospectus supplement, the validity of the securities will be
passed upon for any underwriters or agents by Cleary, Gottlieb, Steen &
Hamilton, New York, New York.
EXPERTS
The consolidated financial statements and schedules to financial statements
of American Express included or incorporated by reference in our Annual Report
on Form 10-K for the year ended December 31, 1999 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report included in the
Annual Report on Form 10-K and incorporated in this prospectus by reference. We
have incorporated by reference into this prospectus our consolidated financial
statements and schedules to financial statements in reliance upon such report
given upon the authority of Ernst & Young as experts in auditing and accounting.
Ernst & Young LLP have reported that they have applied limited procedures,
in accordance with professional standards for a review of such information, with
respect to the unaudited consolidated interim financial information for the nine
month periods ended September 30, 2000 and 1999 that we have incorporated by
reference into this prospectus and registration statement. However, their
separate report, included in our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000, and incorporated herein by reference, states that they
did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted considering the limited nature of the review
procedures applied. The independent auditors are not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their report on the
unaudited interim financial information because that report is not a 'report' or
a 'part' of the Registration Statement prepared or certified by the auditors
within the meaning of Sections 7 and 11 of the Securities Act of 1933.
19
PRINCIPAL OFFICES OF
AMERICAN EXPRESS COMPANY
200 Vesey Street
World Financial Center
New York, New York 10285
TRUSTEE
FIRST UNION NATIONAL BANK
12 East 49th Street, 37th Floor
New York, New York 10017
LUXEMBOURG STOCK EXCHANGE LISTING AND PAYING AGENT
DEUTSCHE BANK LUXEMBOURG SA
2 Boulevard Konrad Adenauer
L1115 Luxembourg
LEGAL ADVISERS
To American Express Company as to To American Express Company as to
Certain Matters of United States Law Certain Matters of United States Tax Law
LOUISE M. PARENT BRUCE A. COGAN
Executive Vice President and General Counsel Vice President-General Tax Counsel
American Express Company American Express Company
90 Hudson Street 90 Hudson Street
Jersey City, New Jersey 07302 Jersey City, New Jersey 07302
To the Underwriters
as to United States Law
CLEARY, GOTTLIEB, STEEN & HAMILTON
One Liberty Plaza
New York, New York 10006
INDEPENDENT AUDITORS TO
AMERICAN EXPRESS COMPANY
ERNST & YOUNG LLP
787 Seventh Avenue
New York, New York 10019
[AMERICAN EXPRESS LOGO]
STATEMENT OF DIFFERENCES
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The section symbol shall be expressed as ................................ 'SS'