Filed
Pursuant to Rule 424(b)(2)
Registration No. 333-143226
PROSPECTUS SUPPLEMENT
(To Prospectus May 24, 2007)
$3,000,000,000
PARKER-HANNIFIN
CORPORATION
Medium-Term Notes,
Series A
Due Nine Months or More from Date of Issue
We may offer from time to time our medium-term notes,
series A. Each time we issue notes, we will attach a
pricing supplement to this prospectus supplement. We will
provide the specific terms of any notes offered in a pricing
supplement, which terms will include:
Maturity. The notes will mature nine months or
more from the date they are issued.
Interest Rate. The interest rate on each note
will be either a fixed rate, which may be zero in the case of
certain original issue discount notes, an amortizing fixed rate
or a floating rate. Floating rate interest may be based on one
or more of the following rates:
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CD Rate
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Commercial Paper Rate
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Federal Funds Rate
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LIBOR
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Prime Rate
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Treasury Rate
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CMT Rate
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Any other rate specified in the applicable pricing supplement.
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Interest Payment Date. Interest on each fixed
rate note, amortizing fixed rate note or floating rate note will
be payable on each interest payment date set forth in this
prospectus supplement and in the applicable pricing supplement.
Redemption. Redemption provisions applicable
to the notes will be specified in the applicable pricing
supplement.
Currency. The notes may be denominated in
U.S. dollars or in a foreign or composite currency.
Denomination. The notes will be issued in
fully registered form in denominations of $1,000, increasing in
integral multiples of $1,000 or other specified denominations
for foreign or composite currencies.
Each note will be in book entry form through The Depository
Trust Company or certificated form.
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.
We may offer the notes on a continuous basis through the agents
listed below, who have agreed to use reasonable efforts to sell
the notes. We may also sell the notes to the agents as principal
for resale at terms agreed to by us. If we sell all of the
notes, we expect to receive proceeds of between $2,996,250,000
and $2,977,500,000 after paying the agents discounts and
commissions of between $3,750,000 and $22,500,000. However, the
agents discounts and commissions may exceed these amounts
with respect to sales of notes with stated maturities of
30 years or more.
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BANC OF AMERICA SECURITIES
LLC
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KEYBANC CAPITAL MARKETS
INC.
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May 28, 2008
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-18
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S-19
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S-28
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S-29
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Prospectus
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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 prospectus supplement and the accompanying
prospectus are not an offer to sell these securities and are not
soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted. The information
contained in this prospectus supplement and the accompanying
prospectus is accurate only as of the date of this prospectus
supplement and the date of the accompanying prospectus,
regardless of the time of delivery of this prospectus supplement
or any sale of the medium-term notes, series A.
ABOUT
THIS PROSPECTUS SUPPLEMENT; PRICING SUPPLEMENTS
We may use this prospectus supplement, together with the
accompanying prospectus and an attached pricing supplement, to
offer our medium-term notes, series A, from time to time.
The total initial offering price of notes that may be offered by
this prospectus supplement is $3,000,000,000.
This prospectus supplement sets forth the terms of the
medium-term notes, series A, that we may offer. It
supplements the description of the debt securities contained in
the accompanying prospectus. If any particular term of our
medium-term notes, series A, described in this prospectus
supplement is inconsistent with any general terms described in
the accompanying prospectus, the particular term described in
this prospectus supplement will control. Capitalized terms used
but not defined in this prospectus supplement have the meanings
set forth in the accompanying prospectus or the indenture under
which the notes are issued. References in this prospectus
supplement to notes are only to the medium-term
notes, series A, we may issue under this prospectus
supplement and not to any other notes we may issue under the
accompanying prospectus.
Each time we issue notes, we will attach a pricing supplement to
this prospectus supplement. The pricing supplement will contain
the specific description of the notes being offered and the
terms of the offering. The pricing supplement may also add,
update or change information in this prospectus supplement or
the accompanying prospectus. If any information in the pricing
supplement is inconsistent with this prospectus supplement, the
information in the pricing supplement will control.
You should read and consider all information contained in this
prospectus supplement and the accompanying prospectus and
pricing supplement in making your investment decision. You
should also read and consider the information in the documents
we have referred you to in Where You Can Find More
Information on page 2 of the accompanying prospectus.
IMPORTANT
CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for the notes in
U.S. dollars, and payments of principal, premium, if any,
and interest on the notes will also be made in
U.S. dollars, unless the applicable pricing supplement
provides that purchasers are instead required to pay for the
notes in a specified currency,
and/or that
payments of principal, premium, if any, and interest on the
notes will be made in a specified currency. Currently, there are
limited facilities in the United States for the conversion of
U.S. dollars into foreign or composite currencies and vice
versa. In addition, most banks do not currently offer
non-U.S. dollar
denominated checking or savings account facilities in the United
States. Accordingly, unless otherwise specified in a pricing
supplement or unless alternative arrangements are made, payment
of principal, premium, if any, and interest on notes in a
specified currency other than U.S. dollars will be made to
an account at a bank outside the United States. See
Description of Notes and Foreign Currency
Risks.
If the applicable pricing supplement provides for payments of
principal of and interest on a
non-U.S. dollar
denominated note to be made in U.S. dollars or for payments
of principal of and interest on a U.S. dollar denominated
note to be made in a specified currency other than
U.S. dollars, the conversion of the specified currency into
U.S. dollars or U.S. dollars into the specified
currency, as the case may be, will be handled by the exchange
rate agent identified in the pricing supplement. Any agent may
act, from time to time, as exchange rate agent. The costs of
conversion will be borne by the holder of a note through
deductions from the payments.
DESCRIPTION
OF NOTES
The following description of the material terms of the notes
offered by this prospectus supplement is in addition to, and if
inconsistent replaces, the description and general terms of the
notes set forth under Description of Debt Securities
in the accompanying prospectus. The terms and conditions set
forth in this section will apply to each note unless otherwise
specified in the applicable pricing supplement and in that note.
S-1
General
We will issue the notes under an Indenture, dated as of
May 3, 1996, between us and Wells Fargo Bank, N.A. (as
successor to National City Bank), as trustee. We may also issue
other debt securities, in addition to the medium-term notes,
series A, under the Indenture. The notes will rank equal to
all of our other unsecured and unsubordinated indebtedness. The
notes may be issued from time to time in an aggregate principal
amount of up to $3,000,000,000 or the equivalent thereof in one
or more foreign or composite currencies. The Indenture allows us
to reopen a series of securities, including the notes, and issue
additional securities of that series without the consent of the
holders of the series.
For the purpose of this prospectus supplement:
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the principal amount of any original issue discount note (as
defined below) means the issue price (as defined below) of that
note; and
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the principal amount of any note issued in a foreign or
composite currency means the U.S. dollar equivalent on the
date of issue of the issue price of that note.
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The notes will mature on any day nine months or more from the
date of issue, as set forth in the applicable pricing
supplement. Except as may be provided in the applicable pricing
supplement, the notes will be issued only in fully registered
form in denominations of $1,000 each.
We may, from time to time, without the consent of the then
existing holders of a series of notes, reopen the series of
notes and issue additional notes with the same term (except the
issue price and issue date, but including maturity and interest
payment terms) as notes issued on an earlier date. After the
additional notes are issued, they will be fungible with the
previously issued notes to the extent set forth in the
applicable pricing supplement.
The notes will be offered on a continuing basis, and each note
will be issued initially as either a global note or a definitive
note. Except as set forth in the accompanying prospectus under
Description of Debt Securities Global
Securities, global notes will not be issuable as
definitive notes. The laws of some states may require that
certain purchasers of securities take physical delivery of the
securities in definitive form. These limits and laws may impair
your ability to own, transfer or pledge beneficial interests in
global securities. See Book-Entry System
below.
We will maintain an agency in New York, New York for the
presentation of notes for payment of principal and interest,
registration of notes for transfer and exchange of the notes.
However, global notes will be exchangeable only in the manner
and to the extent set forth in the accompanying prospectus under
Description of Debt Securities Global
Securities. On the date of this prospectus supplement, the
paying agent for the payment, transfer and exchange of the notes
is Wells Fargo Bank, N.A. acting through its corporate trust
office at 625 Marquette Avenue; N9311-110, Minneapolis, MN 55479.
The applicable pricing supplement will specify:
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the issue price of each note to be sold pursuant to that pricing
supplement (unless the note is to be sold at 100% of its
principal amount);
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the interest rate or interest rate formula;
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maturity;
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currency;
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principal amount; and
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any other terms on which each note will be issued.
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S-2
Certain
Definitions
Unless otherwise provided in the applicable pricing supplement,
the following terms will have the meanings set forth below:
Authorized denominations means:
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with respect to notes denominated in U.S. dollars,
U.S. $1,000 or integral multiples of U.S. $1,000 above
that; and
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with respect to notes denominated in foreign or composite
currencies, the equivalent of $1,000 (rounded to an integral
multiple of 1,000 units of the specified currency), or
integral multiples of 1,000 units above that of the
specified currency, as determined by reference to the market
exchange rate (as defined below) for the specific currency on
the business day (as defined below) immediately preceding the
date of issuance.
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Business day means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which
banking institutions are authorized or obligated by law or
executive order to close in New York City, and
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with respect to LIBOR notes, is also a London banking day (as
defined below);
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with respect to notes denominated in a specified currency other
than U.S. dollars, euros or Australian dollars, in the
principal financial center of the country of the specified
currency;
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with respect to notes denominated in euros, any day on which the
Trans-European Automated Real-Time Gross Settlement Express
Transfer (TARGET) System or any successor system is open for
business; and
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with respect to notes denominated in Australian dollars, in
Sydney.
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Depositary means The Depository Trust Company.
Index currency means the currency specified in the
applicable pricing supplement as the currency for which LIBOR
shall be calculated. If no currency is specified in the
applicable pricing supplement, the index currency will be
U.S. dollars.
Interest payment date, with respect to any note,
means the date on which, under the terms of the note, regularly
scheduled interest is payable.
Issue price means the first price at which each note
is sold to the public pursuant to a pricing supplement.
London banking day means any day on which dealings
in deposits in the index currency are transacted in the London
interbank market.
Market exchange rate means the noon dollar buying
rate in New York City for cable transfers of a specified
currency published by the Federal Reserve Bank of New York.
Original issue discount note means any note that
provides for an amount less than the principal amount to be due
and payable upon a declaration of acceleration of the maturity
pursuant to the Indenture.
Record date, with respect to any interest payment
date, means the date 15 calendar days prior to that interest
payment date, whether or not that date is a business day.
Interest
and Principal Payments
We will pay interest to the person in whose name the note is
registered at the close of business on the applicable record
date. However, we will pay the interest payable upon maturity,
redemption or repayment, whether or not the date of maturity,
redemption or repayment is an interest payment date, to the
person to whom principal is payable.
We will pay the initial interest payment on a note on the first
interest payment date falling after the date the note is issued.
However, unless otherwise specified in the applicable pricing
supplement, we will make payments of interest or, in the case of
an amortizing note, principal and interest, on a note issued
less than 15 calendar days before an interest payment date on
the next succeeding interest payment date to the holder of
record on the record date with respect to that succeeding
interest payment date.
S-3
We will make U.S. dollar denominated payments of interest,
other than interest payable at maturity or on the date of
redemption or repayment if we redeem or repay a note before
maturity, by check mailed to the address of the person entitled
to the interest payment as shown on the note register. We will
make U.S. dollar denominated payments of principal,
premium, if any, and interest upon maturity, redemption or
repayment in immediately available funds against presentation
and surrender of the note. Notwithstanding the foregoing:
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the depositary, as holder of global notes, will be entitled to
receive payments of interest by wire transfer of immediately
available funds; and
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a holder of U.S. $10,000,000 (or the equivalent) or more in
aggregate principal amount of definitive notes having the same
interest payment date will be entitled to receive payments of
interest by wire transfer of immediately available funds upon
written request to the paying agent, provided the request is
received not later than 15 calendar days prior to the applicable
interest payment date.
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Unless otherwise specified in the applicable pricing supplement,
a beneficial owner of global notes denominated in a specified
currency electing to receive payments of principal or any
premium or interest in a currency other than U.S. dollars
must notify the participant through which its interest is held
on or before the applicable record date, in the case of a
payment of interest, and the 16th day prior to maturity, in
the case of principal or premium, of a beneficial owners
election to receive all or a portion of the payment in a
specified currency. The participant must notify the depositary
of the election on or before the third business day after the
applicable record date. The depositary will notify the paying
agent of the election on or before the fifth business day after
such record date. If complete instructions are received by the
participant and forwarded by the participant to the depositary,
and by the depositary to the paying agent, on or before those
dates, the beneficial owner will receive payments in the
specified currency by wire transfer of immediately available
funds to an account maintained by the payee with a bank located
outside the United States. Otherwise, the beneficial owner will
receive payments in U.S. dollars.
Certain notes we may issue, including original issue discount
notes, may be considered to be issued with original issue
discount, which must be included in income for U.S. federal
income tax purposes under a constant yield method. See
Material U.S. Federal Income Tax
Considerations Tax Consequences to
Holders Original Issue Discount Notes below.
Unless otherwise specified in the applicable pricing supplement,
if the principal of any original issue discount note is declared
to be due and payable immediately as described under
Description of Debt Securities Events of
Default in the accompanying prospectus, the amount of
principal due and payable with respect to any original issue
discount note will be limited to the aggregate principal amount
of the note multiplied by the sum of its issue price (expressed
as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the
date of declaration. The amortization will be calculated using
the interest method computed in accordance with
generally accepted accounting principles in effect on the date
of declaration. Special considerations applicable to any
original issue discount notes will be set forth in the
applicable pricing supplement.
Payment
Currency
If the applicable pricing supplement provides for payments of
interest and principal on a
non-U.S. dollar
denominated note to be made, at the option of the holder of the
note, in U.S. dollars, we will cause conversion of the
specified currency into U.S. dollars to be made. The
exchange rate agent will determine the conversion ratio based on
the highest bid quotation in New York City received by the
exchange rate agent at approximately 11:00 a.m., New York
City time, on the second business day preceding the applicable
payment date. The exchange rate agent will determine the highest
bid quotation by receiving bid quotations from three recognized
foreign exchange dealers, one of which may be the exchange rate
agent, for the purchase by the quoting dealer of the specified
currency for U.S. dollars for settlement on each payment
date in the aggregate amount of the specified currency payable
to the holders of notes and at which the applicable dealer
commits to execute a contract. If these bid quotations are not
available, payments will be made in the specified currency. All
currency exchange costs will be borne by the holders of notes
through deductions from the payments made.
S-4
Except as set forth below, if the principal of, premium, if any,
or interest on, any note is payable in a specified currency
other than U.S. dollars and the specified currency:
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is not available to us for making payments due to the imposition
of exchange controls or other circumstances beyond our control;
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is no longer used by the government of the country issuing the
currency; or
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is no longer used for the settlement of transactions by public
institutions within the international banking community,
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then we will be entitled to satisfy our obligations to holders
of the notes by making payments in U.S. dollars on the
basis of the market exchange rate on the date of the payment or,
if the market exchange rate is not available on that date, as of
the most recent practicable date. Any payment made under these
circumstances in U.S. dollars where the required payment is
in a specified currency other than U.S. dollars will not
constitute an event of default as described under
Description of Debt Securities Events of
Default in the accompanying prospectus.
All determinations referred to above made by us or our agent
will be at our sole discretion and will, in the absence of
manifest error, be conclusive for all purposes and binding on
holders of notes.
Fixed
Rate Notes
Each fixed rate note we issue will bear interest from the date
of issuance at the annual rate stated on its face, except as
described below under Extension of
Maturity, until the principal of the note is paid or made
available for payment. Unless otherwise specified in the
applicable pricing supplement:
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interest on fixed rate notes will be computed on the basis of a
360-day year
of twelve
30-day
months;
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payments of interest on fixed rate notes other than amortizing
notes will be made semiannually on January 1 and July 1 of each
year and at maturity or upon any earlier redemption or repayment;
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payments of principal and interest on amortizing notes, which
are securities on which payments of principal and interest are
made in equal installments over the life of the security, will
be made either quarterly on January 1, April 1, July 1
and October 1, or semiannually on January 1 and
July 1, as set forth in the applicable pricing supplement,
and at maturity or upon any earlier redemption or
repayment; and
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payments with respect to amortizing notes will be applied first
to interest due and payable and then to the reduction of the
unpaid principal amount.
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A table setting forth repayment information in respect of each
amortizing note will be provided to the original purchaser and
will be available, upon request, to subsequent holders.
If any interest payment date for any fixed rate note falls on a
day that is not a business day, the interest payment will be
made on the next succeeding business day, and no interest on the
payment will accrue for the period from and after the interest
payment date. If the maturity, or date of redemption or
repayment, of any fixed rate note falls on a day that is not a
business day, the payment of interest and principal (and
premium, if any) will be made on the next succeeding business
day, and no interest on the payment will accrue for the period
from and after the maturity date, or date of redemption or
repayment.
Interest payments for fixed rate notes will include accrued
interest from and including the date of issue or from and
including the last date in respect of which interest has been
paid, as the case may be, to, but excluding, the interest
payment date or the date of maturity or earlier redemption or
repayment, as the case may be. We may change the interest rates
we agree to pay, without notice, on any newly issued fixed rate
notes, but any change on newly issued fixed rate notes will not
affect any fixed rate notes previously issued or that we have
agreed to issue.
Floating
Rate Notes
Each floating rate note we issue will bear interest from the
date of issuance until the principal is paid or made available
for payment at a base rate determined by reference to an
interest rate basis or formula, which may be
S-5
adjusted by a spread
and/or
spread multiplier (each as defined below). The applicable
pricing supplement will designate one or more of the following
base rates, as applicable, to each floating rate note:
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the CD rate;
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the commercial paper rate;
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the federal funds rate;
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LIBOR;
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the prime rate;
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the treasury rate;
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the CMT rate; or
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another base rate or interest rate formula that is set forth in
the pricing supplement and in the floating rate note.
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The index maturity for any floating rate note is the
period of maturity of the instrument or obligation from which
the base rate is calculated and will be specified in the
applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement,
the interest rate on each floating rate note will be calculated
by reference to the specified base rate plus or minus the
spread, if any,
and/or
multiplied by the spread multiplier, if any. The
spread is the number of basis points (one
one-hundredth of a percentage point) specified in the applicable
pricing supplement to be added to or subtracted from the base
rate for the floating rate note. The spread
multiplier is the percentage specified in the applicable
pricing supplement to be applied to the base rate for the
floating rate note.
As specified in the applicable pricing supplement, a floating
rate note may also have either or both of the following:
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a maximum limit, or ceiling, on the rate of interest which may
accrue during any interest period, which we refer to as
maximum interest rate; and
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a minimum limit, or floor, on the rate of interest which may
accrue during any interest period, which we refer to as
minimum interest rate.
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In addition to any maximum interest rate that may be applicable
to any floating rate note, the interest rate on a floating rate
note will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by U.S. law of
general application. Under current New York law, the maximum
rate of interest, subject to certain exceptions, for any loan in
an amount less than $250,000 is 16% per year and for any loan in
the amount of $250,000 or more but less than $2,500,000 is 25%
per year on a simple interest basis. These limits do not apply
to loans of $2,500,000 or more.
Interest Reset Dates. Unless otherwise
specified in the applicable pricing supplement, the rate of
interest on each floating rate note will be reset according to
an interest reset period, which will be daily,
weekly, monthly, quarterly, semiannually or annually. We refer
to the first day of each interest reset period as an
interest reset date. The applicable pricing
supplement will specify the applicable interest reset period.
Unless otherwise specified in the pricing supplement, the
interest reset date will be:
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in the case of floating rate notes which reset daily, each
business day;
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in the case of floating rate notes (other than treasury rate
notes) which reset weekly, the Wednesday of each week; in the
case of treasury rate notes which reset weekly, the Tuesday of
each week, except as provided below;
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in the case of floating rate notes which reset monthly, the
third Wednesday of each month;
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in the case of floating rate notes which reset quarterly, the
third Wednesday of March, June, September and December;
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S-6
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in the case of floating rate notes which reset semiannually, the
third Wednesday of two months of each year, as specified in the
applicable pricing supplement; and
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in the case of floating rate notes which reset annually, the
third Wednesday of one month of each year, as specified in the
applicable pricing supplement;
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provided, that (a) the interest rate in effect from the
date of issue to the first interest reset date with respect to a
floating rate note will be the initial interest rate
set forth in the applicable pricing supplement and
(b) unless otherwise specified in the applicable pricing
supplement, the interest rate in effect for the ten calendar
days immediately prior to maturity, redemption or repayment will
be the rule in effect on the tenth calendar day preceding the
maturity, redemption or repayment date. If any interest reset
date for any floating rate note is not a business day, the
interest reset date will be postponed to the next succeeding
business day, except that in the case of a LIBOR note, if such
business day is in the next succeeding calendar month, the
interest reset date will be the immediately preceding business
day.
Interest Payment Dates. Except as provided
below or as otherwise specified in the applicable pricing
supplement, interest on floating rate notes will be payable on
the following interest payment dates:
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in the case of floating rate notes with a daily, weekly or
monthly interest reset date, on the third Wednesday of each
month or on the third Wednesday of March, June, September and
December, as specified in the applicable pricing supplement;
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in the case of floating rate notes with a quarterly interest
reset date, on the third Wednesday of March, June, September and
December;
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in the case of floating rate notes with a semiannual interest
reset date, on the third Wednesday of the two months specified
in the applicable pricing supplement; and
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in the case of floating rate notes with an annual interest reset
date, on the third Wednesday of the month specified in the
applicable pricing supplement.
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If any interest payment date for any floating rate note falls on
a day that is not a business day, the interest payment date will
be postponed to the next succeeding business day with respect to
such floating rate note, except that, in the case of a LIBOR
note, if the next succeeding business day is in the next
succeeding calendar month, the interest payment date will be the
immediately preceding business day. If the maturity date or any
earlier redemption or repayment date of a floating rate note
would fall on a day that is not a business day, the payment of
principal, premium, if any, and interest will be made on the
next succeeding business day, and no interest on such payment
will accrue for the period from and after such maturity,
redemption or repayment date, as the case may be.
Interest Determination Dates. As used below,
the interest determination date pertaining to the
interest reset date for the floating rate notes we may issue is
as follows:
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for federal funds rate notes and prime rate notes, the business
day preceding the relevant interest reset date;
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for CD rate notes, commercial paper rate notes and CMT rate
notes, the second business day preceding the relevant interest
reset date;
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for a LIBOR note, the second London banking day preceding the
relevant interest reset date; and
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for a treasury rate note, the day of the week in which the
relevant interest reset date falls on which treasury bills (as
defined below) would normally be auctioned. Treasury bills are
normally sold at auction on Monday of each week, unless that day
is a legal holiday, in which case the auction is normally held
on the following Tuesday, but that auction may be held on the
preceding Friday. If, as the result of a legal holiday, an
auction is held on the preceding Friday, that Friday will be the
interest determination date pertaining to the interest reset
date occurring in the next succeeding week. If an auction falls
on a day that is an interest reset date, such interest reset
date will be the next following business day.
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S-7
Unless otherwise specified in the applicable pricing supplement,
the calculation date, where applicable, pertaining
to an interest determination date will be the earlier of:
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the tenth calendar day after that interest determination date,
or, if such day is not a business day, the next succeeding
business day; or
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the business day preceding the applicable interest payment date
or maturity date, as the case may be.
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Calculation of Interest. Unless otherwise
specified in the applicable pricing supplement, interest
payments for floating rate notes will be the amount of interest
accrued from and including the date of issue or from and
including the last date to which interest has been paid to, but
excluding, the interest payment date or maturity date or date of
redemption or repayment.
Accrued interest on floating rate notes will be calculated by
multiplying the principal amount of the floating rate note by an
accrued interest factor. The accrued interest factor will be
computed by adding the interest factor calculated for each day
in the period for which interest is being paid. Unless otherwise
specified in the applicable pricing supplement, the interest
factor for each day in the period is computed by dividing the
interest rate applicable to that day:
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by 360, in the case of CD rate notes, commercial paper rate
notes, federal funds rate notes, LIBOR notes and prime rate
notes; or
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by the actual number of days in the year, in the case of
treasury rate notes and CMT rate notes.
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All percentages used in or resulting from any calculation of the
rate of interest on a floating rate note will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% or .09876545 would be rounded to
9.87655% or .0987655 and 9.876544% or .09876544 would be rounded
to 9.87654% or .0987654). All dollar amounts used in or
resulting from the interest calculation on floating rate notes
will be rounded to the nearest cent, with one-half cent rounded
upward. The interest rate in effect on any interest reset date
will be the applicable rate as reset on that date. The interest
rate applicable to any other day is the interest rate from the
immediately preceding interest reset date or, if none, the
initial interest rate.
Unless otherwise stated in the applicable pricing supplement,
the calculation agent with respect to any issue of floating rate
notes will be Wells Fargo Bank, N.A. Upon the request of the
holder of any floating rate note, the calculation agent will
provide the interest rate then in effect and, if determined, the
interest rate that will become effective on the next interest
reset date with respect to the relevant floating rate note.
Interest rates will be determined by the calculation agent as
follows:
CD Rate Notes. CD rate notes will bear
interest at the interest rate, calculated with reference to the
CD rate and the spread
and/or
spread multiplier, if any, and subject to the minimum interest
rate and the maximum interest rate, if any, specified in the CD
rate notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement,
CD rate means, the rate on any interest
determination date for negotiable U.S. dollar certificates
of deposit having the index maturity designated in the
applicable pricing supplement as published by the Board of
Governors of the Federal Reserve System in Statistical
Release H.15(519), Selected Interest Rates, or any
successor publication of the Board of Governors of the Federal
Reserve System, which we refer to as H.15(519),
under the heading CDs (Secondary Market).
If the CD rate cannot be determined as described above, then the
following procedures will apply.
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If that rate is not published by 3:00 p.m., New York City
time, on the calculation date pertaining to the relevant
interest determination date then the CD rate will be the rate on
the interest determination date for negotiable U.S. dollar
certificates of deposit of the index maturity designated in the
applicable pricing supplement available through the world-wide
web site of the Board of Governors of the Federal Reserve System
at
http://www.federalreserve.gov/releases/h15/update,
or any successor site or publication of the Board of Governors
of the Federal Reserve System, which we refer to as H.15
Daily Update, under the heading CDs (Secondary
Market).
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S-8
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If that rate is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source by
3:00 p.m., New York City time, on the calculation date
pertaining to the relevant interest determination date, then the
CD rate on the interest determination date will be calculated by
the calculation agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York
City time, on the interest determination date for certificates
of deposit in an amount that is representative for a single
transaction at that time with a remaining maturity closest to
the index maturity designated in the pricing supplement of three
leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in New York City selected by the
calculation agent for negotiable U.S. dollar certificates
of deposit of major U.S. money center banks.
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If the dealers selected by the calculation agent are not quoting
rates as set forth in the prior paragraph, the CD rate in effect
for the applicable period will be the same as the CD rate for
the immediately preceding interest reset period (or, if there
was no such interest reset period, then the rate of interest
payable will be the initial interest rate).
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Commercial Paper Rate Notes. Commercial paper
rate notes will bear interest at the interest rate, calculated
with reference to the commercial paper rate and the spread
and/or
spread multiplier, if any, and subject to the minimum interest
rate and the maximum interest rate, if any, specified in the
commercial paper rate notes and in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement,
commercial paper rate means, the money market yield
(as defined below) of the rate on any interest determination
date for commercial paper having the index maturity specified in
the applicable pricing supplement, as published in H.15(519),
under the heading Commercial Paper
Nonfinancial.
If the commercial paper rate cannot be determined as described
above, then the following procedures will apply.
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If that rate is not published by 3:00 p.m., New York City
time, on the calculation date pertaining to the relevant
interest determination date, then the commercial paper rate will
be the money market yield of the rate on that interest
determination date for commercial paper of the specified index
maturity as published in the H.15 Daily Update or another
recognized electronic source used for the purpose of displaying
the applicable rate, under the heading Commercial
Paper Nonfinancial.
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If the rate is not yet published in H.15(519), H.15 Daily Update
or another recognized electronic source by 3:00 p.m., New
York City time, on the calculation date pertaining to the
relevant interest determination date, then the commercial paper
rate will be the money market yield of the arithmetic mean of
the offered rates as of 11:00 a.m., New York City time, on
the interest determination date of three leading dealers of
commercial paper in New York City selected by the calculation
agent for commercial paper of the specified index maturity,
placed for an industrial issuer whose bond rating is
AA, or the equivalent, from a nationally recognized
statistical rating agency.
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If the dealers selected by the calculation agent are not quoting
offered rates as set forth in the prior paragraph, the
commercial paper rate in effect for the applicable period will
be the same as the commercial paper rate for the immediately
preceding interest reset period (or, if there was no such
interest rate period, then the rate of interest payable will be
the initial interest rate).
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The money market yield means a yield calculated in
accordance with the following formula:
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D x 360
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money market yield
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=
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x
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100
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360 - (D x M)
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where D refers to the applicable per annum rate for
commercial paper quoted on a bank discount basis and expressed
as a decimal, and M refers to the actual number of
days for which interest is being calculated.
Federal Funds Rate Notes. Federal funds rate
notes will bear interest at the interest rate, calculated with
reference to the federal funds rate and the spread
and/or
spread multiplier, if any, and subject to the minimum interest
rate and the maximum interest rate, if any, specified in the
federal funds rate notes and in the applicable pricing
supplement.
S-9
Unless otherwise specified in the applicable pricing supplement,
federal funds rate means, the rate on any interest
determination date for U.S. dollar federal funds as
published in H.15(519) under the heading Federal Funds
(Effective), as that rate is displayed on Reuters Screen
FEDFUNDS1. Reuters Screen means the display on
Reuters Monitor Money Rate Services or any successor or
replacement service, on the page or pages or any successor or
replacement page or pages on that service.
If the federal funds rate cannot be determined as described
above, then the following procedures will apply.
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If that rate is no longer displayed on Reuters Screen FEDFUNDS1
by 3:00 p.m., New York City time, on the calculation date
pertaining to such interest determination date, then the federal
funds rate will be the rate on the relevant interest
determination date as published in the H.15 Daily Update or
another recognized electronic source used for the purpose of
displaying the applicable rate, under the heading Federal
Funds (Effective Rate).
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If that rate does not appear on Reuters Screen FEDFUNDS1 or is
not yet published in H.15(519), H.15 Daily Update or another
recognized electronic source by 3:00 p.m., New York City
time, on the calculation date pertaining to the relevant
interest determination date, then the federal funds rate for
that interest determination date will be calculated by the
calculation agent and will be the arithmetic mean of the rates
for the last transaction in overnight federal funds, as of
9:00 a.m., New York City time, on that interest
determination date, arranged by three leading brokers of
U.S. dollar federal funds transactions in New York City
selected by the calculation agent.
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If the brokers selected by the calculation agent are not quoting
rates as set forth in the prior paragraph, the federal funds
rate in effect for the applicable period will be the same as the
federal funds rate for the immediately preceding interest reset
period (or, if there was no such interest rate period, then the
rate of interest payable will be the initial interest rate).
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LIBOR Notes. LIBOR notes will bear interest at
the interest rate, calculated with reference to LIBOR and the
spread
and/or
spread multiplier, if any, and subject to the minimum interest
rate and the maximum interest rate, if any, specified in the
LIBOR notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement,
LIBOR for each interest determination date will be
determined by the calculation agent as follows. As of the
interest determination date, LIBOR will be the arithmetic mean
of the offered rates appearing on the Reuters Screen LIBOR page
(as defined below) (unless that page by its terms provides only
for a single rate, in which case that single rate will be used)
for deposits in the index currency having the index maturity
designated in the applicable pricing supplement, commencing on
the second London banking day immediately following that
interest determination date, that appear on the Designated LIBOR
Page as of 11:00 a.m., London time, on that interest
determination date, if at least two such offered rates appear
(unless only a single rate is required) on such Reuters Screen
LIBOR Page.
If fewer than two offered rates referenced above appear, LIBOR
in respect of the related interest determination date will be
determined as follows:
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The calculation agent will request the principal London offices
of each of four major reference banks in the London interbank
market, as selected by the calculation agent, to provide the
calculation agent with its offered quotation for deposits in the
index currency for the period of the index maturity designated
in the applicable pricing supplement, commencing on the second
London banking day immediately following that interest
determination date, to prime banks in the London interbank
market at approximately 11:00 a.m., London time, on that
interest determination date and in a principal amount that is
representative of a single transaction in the index currency in
such market at such time. If at least two quotations are
provided, LIBOR determined on the applicable interest
determination date will be the arithmetic mean of these
quotations.
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If fewer than two quotations are provided, LIBOR determined on
such interest determination date will be the arithmetic mean of
the rates quoted at approximately 11:00 a.m. (or such other
time specified in the applicable pricing supplement), in the
applicable principal financial center for the country of the
index currency on such interest determination date, by three
major banks in that principal financial center selected by the
calculation agent for loans in the index currency to leading
European banks, having the index maturity
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S-10
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designated in the applicable pricing supplement and in a
principal amount that is representative for a single transaction
in the index currency in such market at such time.
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If the banks are not quoting as set forth in the prior
paragraph, LIBOR in effect for the applicable period will be the
same as LIBOR for the immediately preceding interest reset
period (or, if there was no such interest reset period, then the
rate of interest payable will be the initial interest rate).
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Reuters Screen LIBOR Page means the display on the
Reuters Monitor Money Rates Service, or any successor or
replacement service, on the page designated as
LIBOR01 or any successor or replacement page or
pages for the purpose of displaying the London interbank rates
of major banks for the applicable index currency.
Prime Rate Notes. Prime rate notes will bear
interest at the interest rate calculated with reference to the
prime rate and the spread
and/or
spread multiplier, if any, and subject to the minimum interest
rate and the maximum interest rate, if any, specified in the
prime rate notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement,
prime rate means, the rate set forth in H.15(519) on
any interest determination date opposite the heading Bank
Prime Loan.
If the prime rate cannot be determined as described above, then
the following procedures will apply.
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If that rate is not yet published by 3:00 p.m., New York
City time, on the related calculation date pertaining to the
relevant interest determination date, then the prime rate will
be as published in the H.15 Daily Update, or another recognized
electronic source used for the purpose of displaying that rate,
under the heading Bank Prime Loan.
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If that rate is not yet published in H.15(519), H.15 Daily
Update, or another recognized electronic source by
3:00 p.m., New York City time, on the calculation date
pertaining to the relevant interest determination date, then the
prime rate for the interest determination date will be the
arithmetic mean of the rates of interest publicly announced by
each bank named on the Reuters Screen USPRIME1 (as defined
below) as such banks prime rate or base lending rate as in
effect for that interest determination date as quoted on the
Reuters Screen USPRIME1 on that interest determination date.
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If fewer than four rates appear on the Reuters Screen USPRIME1
for the interest determination rate, then the rate will be the
arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a
360-day year
as of the close of business on that interest determination date
by at least two of the three major money center banks in New
York City selected by the calculation agent from which
quotations are requested.
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If the banks selected by the calculation agent are not quoting
rates as set forth in the prior paragraph, the prime rate in
effect for the applicable period will be the same as the prime
rate for the immediately preceding interest reset period (or, if
there was no such interest reset period, then the rate of
interest payable will be the initial interest rate).
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Reuters Screen USPRIME1 means the display designated
as the USPRIME1 page on the Reuters Monitor Money
Rates Services (or such other page as may replace the USPRIME1
on that service for the purpose of displaying prime rates or
base lending rates of major U.S. banks).
Treasury Rate Notes. Treasury rate notes will
bear interest at the interest rate calculated with reference to
the treasury rate and the spread
and/or
spread multiplier, if any, and subject to the minimum interest
rate and the maximum interest rate, if any, specified in the
treasury rate notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement,
treasury rate means, the rate for the auction held
on any interest determination date of direct obligations of the
United States treasury bills, having the index
maturity designated in the applicable pricing supplement, as
that rate appears on Reuters Screen US AUCTION 10111.
S-11
If the treasury rate cannot be determined as described above,
then the following procedures will apply.
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If that rate is no longer displayed on Reuters Screen US AUCTION
10111 by 3:00 p.m., New York City time, on the calculation
date pertaining to the relevant interest determination date,
then the treasury rate will be the bond equivalent yield (as
described below) for the type of treasury bill described above,
as published in the H.15 Daily Update or another recognized
electronic source used for the purpose of displaying such rate,
under the heading U.S. Government Securities/
Treasury Bills/ Auction High.
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If that rate is not yet published in the H.15 Daily Update or
another recognized electronic source by 3:00 p.m., New York
City time, on the calculation date pertaining to the relevant
interest determination date, then the treasury rate will be the
bond equivalent yield of the auction rate, for treasury bills of
the kind described above, as announced by the
U.S. Department of the Treasury.
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If the auction rate described in the prior paragraph is not so
announced by the U.S. Department of Treasury, or if no such
auction is held, then the treasury rate will be the bond
equivalent yield of the rate set forth in H.15(519) for that
interest determination date and for treasury bills having a
remaining maturity closest to the index maturity designated in
the applicable pricing supplement under the heading
U.S. Government Securities/Treasury Bills/Secondary
Market.
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If the rate described in the prior paragraph is not yet
published in H.15(519) by 3:00 p.m., New York City time, on
the calculation date pertaining to the relevant interest
determination date, then the treasury rate will be the rate for
that interest determination date and for the type of treasury
bill described above, as published in H.15 Daily Update or such
other recognized electronic source used for the purpose of
displaying such rate under the heading
U.S. Government Securities/ Treasury Bills/ Secondary
Market.
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If the rate described in the prior paragraph is not yet
published in the H.15 Daily Update or another recognized
electronic source by 3:00 p.m., New York City time, then
the treasury rate will be the bond equivalent yield of the
arithmetic mean of the secondary market bid rates as of
approximately 3:30 p.m., New York City time, on that
interest determination date, of three primary
U.S. government securities dealers in New York City
selected by the calculation agent for the issue of treasury
bills with a remaining maturity closest to the index maturity
designated in the applicable pricing supplement.
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If the dealers selected by the calculation agent are not quoting
bid rates as set forth in the prior paragraph, the treasury rate
in effect for the applicable period will be the same as the
treasury rate for the immediately preceding interest reset
period (or, if there was no such interest rate period, then the
rate of interest payable will be the initial interest rate).
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The bond equivalent yield means a yield calculated
in accordance with the following formula:
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D x N
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bond equivalent yield =
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x 100
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360 - (D x M)
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where D refers to the applicable per annum rate for
treasury bills quoted on a bank discount basis, N
refers to 365 or 366, as the case may be, and M
refers to the actual number of days for which interest is being
calculated.
CMT Rate Notes. CMT rate notes will bear
interest at the interest rate calculated with reference to the
CMT rate and the spread
and/or
spread multiplier, if any, and subject to the minimum interest
rate and the maximum interest rate, if any, specified in the CMT
rate notes and in the applicable pricing supplement.
Unless otherwise indicated in an applicable pricing supplement,
CMT rate means, with respect to any interest
determination date, the rate displayed on the Designated CMT
Reuters Page (as defined below) under the caption
Treasury Constant Maturities
Federal Reserve Board Release H.15 Mondays
Approximately 3:45 p.m., under the column for the
Designated CMT Maturity Index (as defined below) for:
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if the Designated CMT Reuters Page is Reuters Screen FRBCMT the
rate on that interest determination date; and
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if the Designated CMT Reuters Page is Reuters Screen FEDCMT the
week or the month, as applicable, ended immediately preceding
the week in which the related interest determination date occurs.
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S-12
If the CMT rate cannot be determined as described above, then
the following procedures will apply.
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If that rate is no longer displayed on the relevant page, or if
not displayed by 3:00 p.m., New York City time, on the
calculation date pertaining to the relevant interest
determination date, then the CMT rate for that interest
determination date will be the treasury constant maturity rate
for the Designated CMT Maturity Index as published in the
H.l5(519).
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If that rate is no longer published in the H.15(519), or, if not
published by 3:00 p.m., New York City time, on the
calculation date pertaining to the relevant interest
determination date, then the CMT rate for that interest
determination date will be the treasury constant maturity rate
(or other U.S. Treasury rate) for the Designated CMT
Maturity Index for that interest determination date then
published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury
that the calculation agent determines to be comparable to the
rate formerly displayed on the Designated CMT Telerate Page and
published in the H.15(519).
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If that information is not provided by 3:00 p.m., New York
City time, on the calculation date pertaining to the relevant
interest determination date, then the CMT rate for the interest
determination date will be calculated by the calculation agent
and will be a yield to maturity, based on the arithmetic mean of
the secondary market closing offered rates as of approximately
3:30 p.m., New York City time, on the interest
determination date reported, according to their written records,
by three leading primary U.S. government securities
dealers, each referred to as a reference dealer, in
New York City (which may include the agent or their affiliates)
selected by the calculation agent. The calculation agent will
select the three reference dealers from a group of five, after
consultation with us, by eliminating the highest quotation (or,
in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)),
for the most recently issued direct noncallable fixed rate
obligations of the United States, which we refer as
treasury notes, with an original maturity of
approximately the Designated CMT Maturity Index and remaining
term to maturity of not less than such Designated CMT Maturity
Index minus one year and in a principal amount that is
representative for a single transaction in the securities in
that market at that time.
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If the calculation agent cannot obtain three treasury notes
quotations, the CMT rate for that interest determination date
will be calculated by the calculation agent and will be a yield
to maturity based on the arithmetic mean of the secondary market
offered rates as of approximately 3:30 p.m., New York City
time, on the interest determination date of three reference
dealers in New York City (using the same method described
above), for treasury notes with an original maturity of the
number of years that is the next highest to the Designated CMT
Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in a principal amount that is
representative for a single transaction in the securities in
that market at that time.
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If three or four, and not five, of such reference dealers are
quoting rates as described above, then the CMT rate will be
based on the arithmetic mean of the offer rates obtained and
neither the highest nor the lowest of such quotes will be
eliminated.
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If fewer than three reference dealers selected by the
calculation agent are quoting rates as described above, the CMT
rate for that interest reset date will be the same as the CMT
rate for the immediately preceding interest reset period (or, if
there was no such interest reset period, the rate of interest
payable will be the initial interest rate).
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If two treasury notes with an original maturity as described
above have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the quotes for the Treasury note
with the shorter remaining term to maturity will be used.
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Designated CMT Reuters Page means the display on
Reuters Screen or any successor service, on the page designated
in an applicable pricing supplement, or any other page as may
replace that page on that service for the purpose of displaying
treasury constant maturities as reported in H.15(519), for the
purpose of displaying treasury constant maturities as reported
in H.15(519). If no page is specified in the applicable pricing
supplement, the Designated CMT Reuters Page will be 7052 for the
most recent week.
S-13
Designated CMT Maturity Index means the original
period to maturity of the U.S. Treasury
securities (either 1, 2, 3, 5, 7, 10, 20 or
30 years) specified in an applicable pricing supplement
with respect to which the CMT rate will be calculated. If no
maturity is specified in the applicable pricing supplement, the
Designated CMT Maturity Index will be two years.
Renewable Notes. We may also issue from time
to time variable rate renewable notes that will bear interest at
the interest rate calculated with reference to a base rate and
the spread
and/or
spread multiplier, if any, and subject to the minimum interest
rate and the maximum interest rate, if any, specified in the
renewable notes and in the applicable pricing supplement.
The renewable notes will mature on an interest payment date as
specified in the applicable pricing supplement, which we refer
to as the initial maturity date, unless the maturity
of all or any portion of the principal amount is extended in
accordance with the procedures described below. On the interest
payment dates in May and November in each year (unless different
interest payment dates are specified in the applicable pricing
supplement), we refer to each such interest payment date as an
election date, the maturity of the renewable notes
will be extended to the interest payment date occurring twelve
months after the election date, unless the holder thereof elects
to terminate the automatic extension of the maturity of the
renewable notes or of any portion thereof having a principal
amount of $1,000 or any integral multiple of $1,000 in excess
thereof by delivering a notice to such effect to the paying
agent not less than nor more than a number of days to be
specified in the applicable pricing supplement prior to such
election date. The option may be exercised with respect to less
than the entire principal amount of the renewable notes, but the
principal amount for which that option is not exercised must be
at least $1,000 or any larger amount that is an integral
multiple of $1,000. Notwithstanding the foregoing, the maturity
of the renewable notes may not be extended beyond the final
maturity date, as specified in the applicable pricing supplement.
If the holder elects to terminate the automatic extension of the
maturity of any portion of the principal amount of the renewable
notes and that election is not revoked as described below, that
portion of the principal amount of renewable notes will become
due and payable on the interest payment date falling six months
(unless another period is specified in the applicable pricing
supplement) after the election date prior to which the holder
made such election.
An election to terminate the automatic extension of maturity may
be revoked as to any portion of the renewable notes having a
principal amount of $1,000 or any integral multiple of $1,000 in
excess thereof by delivering a notice to that effect to the
paying agent on any day following the effective date of the
election to terminate the automatic extension of maturity and
prior to the date 15 days before the date on which that
portion would otherwise mature. The revocation may be made for
less than the entire principal amount of the renewable notes for
which the automatic extension of maturity has been terminated,
but the principal amount of the renewable notes for which the
automatic extension of maturity has been terminated and not
revoked must be at least $1,000 or any larger amount that is an
integral multiple of $1,000. Notwithstanding the foregoing, a
revocation may not be made during the period from and including
a record date to, but excluding the immediately succeeding
interest payment date.
An election to terminate the automatic extension of the maturity
of the renewable notes, if not revoked as described above by the
holder making the election or any subsequent holder, will be
binding upon such subsequent holder.
The renewable notes may be redeemed in whole or in part at our
option on the interest payment dates in each year specified in
the applicable pricing supplement, commencing with the interest
payment date specified in the applicable pricing supplement. The
redemption price will be stated in the applicable pricing
supplement, and will be payable together with accrued and unpaid
interest to the date of redemption. Notwithstanding anything to
the contrary in this prospectus supplement, notice of redemption
will be provided by mailing a notice of such redemption to each
holder by first class mail, postage prepaid, at least
180 days prior to the date fixed for redemption.
S-14
Discount
Notes
We may, from time to time, issue original issue discount notes.
The pricing supplement applicable to the original issue discount
notes may provide that holders of those notes will not receive
periodic payments of interest. In addition, if an event of
default with respect to the original issue discount notes occurs
and is continuing, the holders or the trustee may declare the
principal amount of the original issue discount notes due and
payable in the manner described in the accompanying prospectus.
See Description of Debt Securities Events of
Default. Our obligation to pay the principal of, and
premium and interest, if any, on the original issue discount
notes will terminate upon our payment of the following:
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the amount of principal declared due and payable by the holders
or the trustee; and
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the interest on any overdue principal, premium and interest.
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Indexed
Notes
We may, from time to time, issue indexed notes, or notes on
which the principal amount payable on the stated maturity
and/or on
which the amount of interest payable on an interest payment date
will be determined by reference to currencies, currency units,
commodity prices, financial or non-financial indices or other
factors, as indicated in the applicable pricing supplement.
Holders of indexed notes may receive a principal amount at
maturity that is greater than or less than the face amount of
those notes depending upon the fluctuation of the relative
value, rate or price of the specified index.
The applicable pricing supplement will describe specific
information pertaining to:
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the method for determining the principal amount payable at
maturity;
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a historical comparison of the relative value, rate or price of
the specified index and the face amount of the indexed
note; and
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certain additional U.S. federal tax considerations.
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Extension
of Maturity
The pricing supplement relating to each note (other than an
amortizing note) will indicate whether we have the option to
extend the maturity of the note for one or more periods, each of
which we refer to as an extension period, of one or
more whole years up to but not beyond the final maturity date.
If we have this option with respect to any note, which we refer
to as an extendible note, the following procedures
will apply, unless modified as set forth in the applicable
pricing supplement.
We may exercise this option for an extendible note by notifying
the paying agent of the exercise at least 45 but not more than
60 days prior to the maturity date originally in effect for
the note or, if the maturity date of such note has already been
extended, prior to the extended maturity date then in effect. No
later than 38 days prior to the original maturity date or
an extended maturity date, as the case may be, which we refer to
each as a maturity date, the paying agent will mail
to the holder of the applicable note a notice relating to the
extension period, by first class mail, postage prepaid, setting
forth:
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our election to extend the maturity of the note;
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the new extended maturity date;
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the interest rate applicable to the extension period which, in
the case of a floating rate note, will be calculated with
reference to a base rate and the spread
and/or
spread multiplier, if any; and
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the provisions, if any, for redemption during the extension
period, including the date or dates on which, the period or
periods during which and the price or prices at which redemption
may occur during the extension period.
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S-15
Upon the mailing by the paying agent of an extension notice to
the holder of an extendible note, the maturity of the note will
be extended automatically, and, except as modified by the
extension notice and as described in the next paragraph, the
note will have the same terms it had prior to the mailing of the
extension notice.
Notwithstanding the foregoing, not later than 10:00 a.m.,
New York City time, on the twentieth calendar day prior to the
maturity date then in effect for an extendible note or, if such
day is not a business day, not later than 10:00 a.m., New
York City time, on the immediately succeeding business day, we
may, at our option, revoke the interest rate provided for in the
extension notice and establish a higher interest rate (or, in
the case of a floating rate note, a higher spread
and/or
spread multiplier, if any) for the extension period by causing
the paying agent to send notice of the higher interest rate (or,
in the case of a floating rate note, a higher spread
and/or
spread multiplier, if any) to the holder of the note. The notice
must be sent by first class mail, postage prepaid, or by such
other means as agreed between us and the paying agent. The
notice will be irrevocable. All extendible notes subject to
notice of a higher interest rate will bear that higher interest
rate (or, in the case of a floating rate note, a higher spread
and/or
spread multiplier, if any) for the extension period, whether or
not tendered for repayment.
If we elect to extend the maturity of an extendible note, the
holder of the note will have the option to require us to repay
the note on the maturity date then in effect at a price equal to
the principal amount plus any accrued and unpaid interest to
such date. In order for an extendible note to be repaid on the
maturity date, the holder must follow the procedures set forth
below under Repayment at the Noteholders
Option; Repurchase for optional repayment, except that:
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the period for delivery of the note or notification to the
paying agent will be at least 25 but not more than 35 days
prior to the maturity date then in effect; and
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a holder who has tendered an extendible note for repayment
pursuant to an extension notice may, by written notice to the
paying agent, revoke any such tender for repayment until
3:00 p.m., New York City time, on the twentieth calendar
day prior to the maturity date then in effect or, if such day is
not a business day, until 3:00 p.m., New York City time, on
the immediately succeeding business day.
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Defeasance
The provisions of Article Thirteen of the Indenture
relating to defeasance and covenant defeasance, described in the
accompanying prospectus under Description of Debt
Securities Legal Defeasance and Covenant
Defeasance, are applicable to the notes.
Book-Entry
System
Upon issuance, all fixed rate global notes having the same issue
date, interest rate, if any, amortization schedule, if any,
maturity date and other terms, if any, will be represented by
one or more global securities. In addition, all floating rate
global notes having the same issue date, initial interest rate,
base rate, interest reset period, interest payment dates, index
maturity, spread
and/or
spread multiplier, if any, minimum interest rate, if any,
maximum interest rate, if any, maturity date and other terms, if
any, will be represented by one or more global securities. Each
global security representing global notes will be deposited
with, or on behalf of, the depositary, and registered in the
name of a nominee of the depositary. Global notes will not be
exchangeable for definitive notes, except under the
circumstances described in the accompanying prospectus under
Description of Debt Securities Global
Securities. Definitive notes will not be exchangeable for
global notes and will not otherwise be issuable as global notes.
A further description of the depositarys procedures with
respect to global securities representing global notes is set
forth in the accompanying prospectus under Description of
Debt Securities Global Securities. The
depositary has confirmed to us, the agent and the trustee that
it intends to follow such procedures.
Optional
Redemptions
The pricing supplement will either indicate that the notes
cannot be redeemed before maturity or will indicate the terms on
which the notes will be redeemable at our option. Notice of
redemption will be provided by mailing a notice of redemption to
each holder by first class mail, postage prepaid, at least
30 days and not more than 60 days prior to the date
fixed for redemption to the respective address of each holder as
that address appears upon the books
S-16
maintained by the paying agent. Unless otherwise provided in the
applicable pricing supplement, the notes, except for amortizing
notes, will not be subject to any sinking fund.
Repayment
at the Noteholders Option; Repurchase
If applicable, the pricing supplement relating to each note will
indicate that the note will be repayable at the option of the
holder on a date or dates specified prior to its maturity date
and, unless otherwise specified in the pricing supplement, at a
price equal to 100% of the principal amount, together with
accrued interest to the date of repayment, unless the note was
issued with original issue discount, in which case the pricing
supplement will specify the amount payable upon such repayment.
In order for a note to be repaid, the paying agent must receive
at least 30 days but not more than 60 days prior to
the repayment date,
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the note with the form entitled Option to Elect
Repayment on the reverse of the note duly
completed; or
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a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange, or the National
Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States setting forth:
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the name of the holder of the note;
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the principal amount of the note;
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the principal amount of the note to be repaid;
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the certificate number or a description of the tenor and terms
of the note;
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a statement that the option to elect repayment is being
exercised thereby; and
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a guarantee that the note to be repaid, together with the duly
completed form entitled Option to Elect Repayment on
the reverse of the note, will be received by the paying agent,
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in each case, not later than the fifth business day after the
date of that telegram, telex, facsimile transmission or letter.
In any event, the telegram, telex, facsimile transmission or
letter will only be effective if the note and form duly
completed are received by the paying agent by such fifth
business day.
Except in the case of renewable notes or extendible notes, and
unless otherwise specified in the applicable pricing supplement,
exercise of the repayment option by the holder of a note will be
irrevocable. The repayment option may be exercised by the holder
of a note for less than the entire principal amount of the note
but, in that event, the principal amount of the note remaining
outstanding after repayment must be an authorized denomination.
If a note is represented by a global security, the
depositarys nominee will be the holder of the note and
therefore will be the only entity that can exercise a right to
repayment. In order to ensure that the depositarys nominee
will timely exercise a right to repayment with respect to a
particular note, the beneficial owner of the note must instruct
the broker or other direct or indirect participant through which
it holds an interest in the note to notify the depositary of its
desire to exercise a right to repayment. Different firms have
different deadlines for accepting instructions from their
customers and, accordingly, each beneficial owner should consult
the broker or other direct or indirect participant through which
it holds an interest in a note in order to ascertain the
deadline by which such an instruction must be given in order for
timely notice to be delivered to the depositary.
We may purchase notes at any price in the open market or
otherwise. Any notes purchased by us may, at our discretion, be
held or resold or surrendered to the trustee for cancellation.
S-17
FOREIGN
CURRENCY RISKS
Exchange
Rates and Exchange Controls
Any investment in notes that are denominated in, or the payment
of which is related to the value of, a specified currency other
than U.S. dollars entails significant risks that are not
associated with a similar investment in a security denominated
in U.S. dollars. These risks include, but are not limited
to:
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the possibility of significant changes in rates of exchange
between the U.S. dollar and the various foreign or
composite currencies; and
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the possibility of the imposition or modification of exchange
controls by either the U.S. or a foreign government.
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These risks generally depend on economic and political events
and the supply of, and demand for, the relevant currencies over
which we have no control. In recent years, rates of exchange
between U.S. dollars and certain foreign
and/or
composite currencies have been highly volatile and such
volatility may be expected to continue in the future.
Fluctuations in any particular exchange rate that have occurred
in the past are not necessarily indicative, however, of
fluctuations in the rate that may occur during the term of any
note.
Depreciation against the U.S. dollar of the currency in
which a note is payable would result in a decrease in the
effective yield of such note below its coupon rate and, in
certain circumstances, could result in a loss to the investor on
a U.S. dollar basis. In addition, depending on the specific
terms of a currency linked note, changes in exchange rates
relating to any of the currencies involved may result in a
decrease in its effective yield and, in certain circumstances,
could result in a loss of all or a substantial portion of the
principal of a note to the investor.
Governments have imposed from time to time, and may in the
future impose, exchange controls which could affect exchange
rates as well as the availability of a specified foreign
currency at the time of payment of principal of, premium, if
any, or interest on, a note. Even if there are no actual
exchange controls, it is possible that the specified currency
for any particular note not denominated in U.S. dollars
would not be available when payments on such note are due. In
that event, we would make required payments in U.S. dollars
on the basis of the market exchange rate on the date of such
payment, or if such rate of exchange is not then available, on
the basis of the market exchange rate as of the most recent
practicable date. See Description of Notes
Payment Currency.
With respect to any note denominated in, or the payment of which
is related to the value of, a foreign currency or currency unit,
the applicable pricing supplement will include information with
respect to applicable current exchange controls, if any, and
historic exchange rate information on such currency or currency
unit. The information contained in the pricing supplement will
constitute a part of this prospectus supplement and will be
furnished as a matter of information only and should not be
regarded as indicative of the range of or trends in fluctuations
in currency exchange rates that may occur in the future.
This prospectus supplement, the accompanying prospectus and
any pricing supplement do not describe all the risks of an
investment in notes denominated in, or the payment of which is
related to the value of, a foreign currency. We disclaim any
responsibility to advise prospective purchasers of risks as they
exist at the date of this prospectus supplement or as risks may
change from time to time. Prospective investors should consult
their own financial and legal advisors as to the risks entailed
by an investment in notes denominated in, or the payment of
which is related to the value of, specified currencies other
than U.S. dollars. Such notes are not an appropriate
investment for investors who are unsophisticated with respect to
foreign currency transactions.
The information set forth in this prospectus supplement is
directed to prospective purchasers who are U.S. residents,
and we disclaim any responsibility to advise prospective
purchasers who are residents of countries other than the United
States with respect to any matters that may affect the purchase,
holding or receipt of payments of principal of, premium, if any,
and interest on, the notes. Such persons should consult their
own counsel with regard to such matters.
S-18
Governing
Law and Judgment
The notes will be governed by and construed in accordance with
the laws of the State of New York. In the event an action based
on notes denominated in a specified currency other than
U.S. dollars were commenced in a court in the United
States, it is likely that such court would grant judgment
relating to the notes only in U.S. dollars.
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Jones Day, our tax counsel, the following
summary describes the material U.S. federal income tax
consequences to Holders (as defined below) of the ownership and
disposition of notes. This summary is based on the Internal
Revenue Code of 1986, as amended (the Code),
administrative pronouncements, judicial decisions and existing
and proposed Treasury Regulations, changes to any of which
subsequent to the date of this prospectus supplement may affect
the tax consequences described herein. This summary discusses
only notes held as capital assets within the meaning of
Section 1221 of the Code and purchased from us (or from our
agents) pursuant to our offering of notes. It does not discuss
all of the U.S. federal income tax consequences that may be
relevant to a Holder in light of its particular circumstances or
to Holders subject to special rules, such as:
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financial institutions;
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regulated investment companies;
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insurance companies;
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tax-exempt organizations;
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brokers, dealers or traders in securities or foreign currencies;
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persons holding notes as part of a hedge, straddle or conversion
transaction;
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persons who are not Holders; or
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Holders whose functional currency (as defined in Code
Section 985) is not the U.S. dollar.
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This summary also does not discuss the effect of any foreign,
state, or local tax laws or any U.S. federal tax laws other
than income tax laws (e.g., estate tax). This summary
deals only with notes that are due to mature 30 years
or less from the date on which they are issued. The
U.S. federal income tax consequences of ownership of notes
that are due to mature more than 30 years from their date
of issue will be discussed in an applicable pricing supplement.
Persons considering the purchase of notes should consult their
tax advisors with regard to the application of the
U.S. federal income tax laws to their particular situations
as well as any tax consequences arising under the laws of any
state, local or foreign taxing jurisdiction.
As used herein, the term Holder means a beneficial
owner of a note that is, for U.S. federal income tax
purposes,
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an individual citizen or resident of the United States;
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a corporation created or organized under the laws of the United
States or of any political subdivision thereof;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source;
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a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one
or more U.S. persons have the authority to control all
substantial decisions of the trust (and a limited class of other
trusts that have elected to continue to be treated as
U.S. persons); or
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a partnership or other entity that is created or organized in or
under the laws of the United States or of any political
subdivision thereof and that is properly classified as a
U.S. entity under any applicable Treasury Regulations.
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If a partnership holds the notes, the U.S. federal income
tax treatment of a partner will generally depend on the status
of the partner and the tax treatment of the partnership. A
partner in a partnership holding the notes should consult its
tax advisor with regard to the U.S. federal income tax
treatment of an investment in the notes.
S-19
Tax
Consequences To Holders
Payments
of Interest
Interest paid on a note will generally be taxable to a Holder as
ordinary interest income at the time it accrues or is received
in accordance with the Holders method of accounting for
U.S. federal income tax purposes. Under Treasury
Regulations, all payments of interest on a note that matures one
year or less from its date of issuance will be included in the
stated redemption price at maturity of the notes and will be
taxed in the manner described below under Original Issue
Discount Notes Short-Term Original Issue Discount
Notes. Special rules governing the treatment of interest
paid with respect to original issue discount notes, foreign
currency notes, variable rate notes and certain indexed notes
are discussed below.
Original
Issue Discount Notes
A note the issue price of which is less than its stated
redemption price at maturity will generally be considered to
have been issued with original issue discount (OID).
The stated redemption price at maturity of a note will equal the
sum of all payments required under the note other than payments
of qualified stated interest. Qualified stated
interest generally means stated interest unconditionally
payable in cash or property (other than debt instruments of the
issuer) at least annually during the entire term of the note at
a single fixed rate (or at certain floating rates) that takes
appropriate account of the length of the interval between stated
interest payments. The issue price of a note for
this purpose means the first price at which a substantial amount
of the issue of notes has been sold (ignoring sales to
underwriters, brokers, or similar persons acting as agents or
wholesalers).
If the difference between a notes stated redemption price
at maturity and its issue price is less than a de minimis
amount, 1/4 of 1 percent of the notes stated
redemption price at maturity multiplied by the number of
complete years to maturity, then the note will not be considered
to have OID but will be considered to have de minimis
OID. Holders of notes with de minimis OID will
generally include such OID in income, as capital gain, on a pro
rata basis as principal payments are made on the note.
A Holder of original issue discount notes will be required to
include any qualified stated interest payments in income in
accordance with the Holders method of accounting for
U.S. federal income tax purposes. Holders of original issue
discount notes that mature more than one year from their date of
issuance will be required to include OID in income as it
accrues, in accordance with a constant yield method based on a
compounding of interest, before the receipt of cash payments
attributable to such income. Under this method, Holders of
original issue discount notes generally will be required to
include in income increasingly greater amounts of OID in
successive accrual periods.
The amount of OID includable in income by a Holder of an
original issue discount note is the sum of the daily portions of
OID with respect to the original issue discount note for each
day during the taxable year or portion of the taxable year on
which the Holder holds such original issue discount note
(accrued OID). The daily portion is determined by
allocating to each day in any accrual period a pro rata portion
of the OID allocable to that accrual period. Accrual periods
with respect to a note may be of any length selected by the
Holder and may vary in length over the term of the note as long
as (a) no accrual period is longer than one year and
(b) each scheduled payment of interest or principal on the
note occurs on either the final or first day of an accrual
period. Special rules may apply to initial short accrual periods
and final accrual periods. In general, the amount of OID
allocable to an accrual period equals the excess of (x) the
product of the original issue discount notes adjusted
issue price at the beginning of the accrual period and such
notes yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly
adjusted for the length of the accrual period) over (y) the
sum of the payments of qualified stated interest on the note
allocable to the accrual period. The adjusted issue
price of an original issue discount note at the beginning
of any accrual period is generally the issue price of the note
increased by the amount of accrued OID for each prior accrual
period and decreased by the amount of any payments previously
made on the note that were not qualified stated interest
payments.
Acquisition Premium. A Holder that purchases a
note for an amount less than or equal to the sum of all amounts
payable on the note after the purchase date other than payments
of qualified stated interest but in excess of its adjusted issue
price (any such excess being acquisition premium)
and that does not make the election described
S-20
below under Constant Yield Election is
permitted to reduce the daily portions of OID by a fraction, the
numerator of which is the excess of the Holders adjusted
basis in the note immediately after its purchase over the
adjusted issue price of the note, and the denominator of which
is the excess of the sum of all amounts payable on the note
after the purchase date, other than payments of qualified stated
interest, over the notes adjusted issue price.
Market Discount. A note, other than a
short-term original issue discount note (as defined below), will
be treated as purchased at a market discount (a market
discount note) if (a) the amount for which a Holder
purchased the note is less than the notes adjusted issue
price and (b) the notes stated redemption price at
maturity or, in the case of an original issue discount note, the
notes revised issue price, exceeds the amount
for which the Holder purchased the note by at least 1/4 of
1 percent of such notes stated redemption price at
maturity or revised issue price, respectively, multiplied by the
number of complete years to the notes maturity. If the
excess is not sufficient to cause the note to be a market
discount note, then the excess constitutes de minimis
market discount. The Code provides that, for these
purposes, the revised issue price of a note generally equals its
issue price, increased by the amount of any accrued OID on the
note.
Any gain recognized on the maturity or disposition of a market
discount note will be treated as ordinary income to the extent
that such gain does not exceed the accrued market discount on
such note. Alternatively, a Holder of market discount note may
elect to include market discount in income currently over the
life of the note. Such an election will apply to all debt
instruments with market discount acquired by the electing 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.
Market discount on a market discount note will accrue on a
straight-line basis unless the Holder elects to accrue the
market discount on a constant yield method. Such an election
will apply only to the note with respect to which it is made and
may generally not be revoked. A Holder of a market discount note
that does not elect to include market discount in income
currently will generally be required to defer deductions for a
portion of the interest on borrowings allocable to such note
until the maturity or disposition of such note.
Short-Term Original Issue Discount
Notes. Under Treasury Regulations, a note that
matures one year or less from its date of issuance will be
treated as a short-term original issue discount
note. In general, a cash method Holder of a short-term
original issue discount note is not required to include in
income accrued OID unless it elects to do so, but will include
any stated interest in income as the interest is received.
Holders who report income on the accrual method and certain
other persons, including certain pass-through entities, are
required to include OID in income on short-term original issue
discount notes as it accrues on a straight-line basis, unless an
election is made to accrue according to a constant yield method
based on daily compounding. In the case of a Holder who is not
required and who does not elect to include OID on a short-term
original issue discount note in income currently, any gain
realized on the sale, exchange or retirement of the short-term
original issue discount note will be ordinary income to the
extent of the OID accrued on a straight-line basis (unless an
election is made to accrue under a constant yield method)
through the date of sale, exchange or retirement. In addition,
such Holders will be required to defer deductions for any
interest paid on indebtedness incurred to purchase or carry
short-term original issue discount notes in an amount not
exceeding the deferred interest income, until such deferred
interest income is recognized.
For purposes of determining the amount of OID subject to these
rules, all interest payments on a short-term original issue
discount note, including stated interest, are included in the
short-term original issue discount notes stated redemption
price at maturity.
Constant Yield Election. A Holder may make an
election (the constant yield election) to include in
gross income all interest that accrues on a note (including
stated interest, OID, de minimis OID, market discount,
and de minimis market discount, as adjusted by any
amortizable bond premium or acquisition premium) in accordance
with the constant yield method described above under
Original Issue Discount Notes, with the
modifications described below.
In applying the constant yield method to a note with respect to
which the constant yield election has been made, the issue price
of the note will equal the electing Holders adjusted basis
in the note immediately after its acquisition, the issue date of
the note will be the date of its acquisition by the electing
Holder, and no payments on
S-21
the note will be treated as payments of qualified stated
interest. This election will generally apply only to the note
with respect to which it is made and may not be revoked without
the consent of the Internal Revenue Service. If this election is
made with respect to a note with amortizable bond premium, then
the electing Holder will be deemed to have elected to apply
amortizable bond premium against interest with respect to all
debt instruments with amortizable bond premium, other than debt
instruments the interest on which is excludible from gross
income, held by the electing Holder as of the beginning of the
taxable year in which the note with respect to which the
election is made is acquired or thereafter acquired. The deemed
election with respect to amortizable bond premium may not be
revoked without the consent of the Internal Revenue Service.
If the constant yield election is made with respect to a market
discount note, the electing Holder will be treated as having
made the election discussed above under Market
Discount to include market discount in income currently
over the life of all debt instruments held or thereafter
acquired by such Holder.
Notes Subject to Contingencies, Including Optional
Redemption. If a note provides for an alternative
payment schedule or schedules applicable upon the occurrence of
a contingency or contingencies (other than a remote or
incidental contingency), where such contingency relates to
payments of interest or of principal, if the timing and amount
of the payments that comprise each payment schedule are known as
of the issue date and if one of such schedules is significantly
more likely than not to occur, the yield and maturity of the
note are determined by assuming that the payments will be made
according to that payment schedule. If there is no single
payment schedule that is significantly more likely than not to
occur (other than because of a mandatory sinking fund), the note
will be subject to the general rules that govern contingent
payment obligations. These rules will be discussed in an
applicable pricing supplement.
Notwithstanding the general rules for determining yield and
maturity in the case of notes subject to contingencies, if we or
the Holder has an unconditional option or options that, if
exercised, would require payments to be made on the note under
an alternative payment schedule or schedules, then:
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in the case of our option or options, we will be deemed to
exercise or not exercise an option or combination of options in
the manner that minimizes the yield on the note; and
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in the case of an option or options of the Holder, the Holder
will be deemed to exercise or not exercise an option or
combination of options in the manner that maximizes the yield on
the note.
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If both we and the Holder have options described in the
preceding sentence, those rules apply to such options in the
order in which they may be exercised. For purposes of those
calculations, the yield on the note is determined by using any
date on which the note may be redeemed or repurchased as the
maturity date and the amount payable on such date in accordance
with the terms of the note as the principal amount payable at
maturity.
If a contingency (including the exercise of an option) actually
occurs or does not occur contrary to an assumption made
according to the above rules (a change in
circumstances) then, except to the extent that a portion
of the note is repaid as a result of the change in circumstances
and solely for purposes of determining the amount and accrual of
OID, the yield and maturity of the note are redetermined by
treating the note as having been retired and reissued on the
date of the change in circumstances for an amount equal to the
notes adjusted issue price on that date.
Aggregation. The Treasury Regulations contain
aggregation rules stating that in certain circumstances if more
than one debt instrument is issued in connection with the same
transaction or related transactions, some or all of such notes
may be treated together as a single debt instrument with a
single issue price, maturity date, yield to maturity and stated
redemption price at maturity for purposes of calculating and
accruing any OID. This rule ordinarily applies only to
instruments of a single issuer issued to a single holder. Unless
otherwise provided in the related pricing supplement, we do not
expect to treat any of the notes as being subject to the
aggregation rules for purposes of computing OID.
Amortizable
Bond Premium
If a Holder purchases a note for an amount that is greater than
the sum of all amounts payable on the note after the purchase
date other than qualified stated interest, the Holder will be
considered to have purchased the note with
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amortizable bond premium equal in amount to the
excess, and may elect (in accordance with applicable Code
provisions) to amortize the premium, using a constant yield
method, over the remaining term of the note (where the note is
not optionally redeemable prior to its maturity date). Where
this election is made for a note that is optionally redeemable
prior to its maturity date, the amount of amortizable bond
premium is determined by reference to the amount payable on an
earlier redemption date only if doing so results in a smaller
amount of amortizable bond premium. A Holder who elects to
amortize bond premium must reduce his tax basis in the note by
the amount of the premium amortized in any year. An election to
amortize bond premium applies to all taxable debt obligations
then owned and thereafter acquired by the Holder and may be
revoked only with the consent of the Internal Revenue Service.
Amortizable bond premium is generally treated as a reduction of
interest on the note, rather than as a deduction. The amount of
any bond premium allocable to an accrual period that exceeds the
amount of interest allocable to that period may not be deducted
but may be carried forward to future accrual periods.
Pre-Issuance
Accrued Interest
If (a) a portion of the initial purchase price of a note is
attributable to pre-issuance accrued interest, (b) the
first stated interest payment on the note is to be made within
one year of the notes issue date and (c) the payment
will equal or exceed the amount of pre-issuance accrued
interest, then the Holder may elect to decrease the issue price
of the note by the amount of pre-issuance accrued interest. In
that event, a portion of the first stated interest payment will
be treated as a return of the excluded pre-issuance accrued
interest and not as an amount payable on the note.
Sale,
Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a note, a Holder will
generally recognize taxable gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement
and such Holders adjusted tax basis in the note. For these
purposes, the amount realized does not include any amount
attributable to accrued interest on the note. Amounts
attributable to accrued interest are treated as interest as
described under Payments of Interest
above, in accordance with the Holders method of accounting
for U.S. federal income tax purposes. A Holders
adjusted tax basis in a note will equal the cost of the note to
such Holder, increased by the amount of any OID previously
included in income by the Holder with respect to such note and
reduced by any amortized bond premium and any principal payments
received by the Holder and, in the case of an original issue
discount note, by the amounts of any other payments that do not
constitute qualified stated interest.
Gain or loss recognized on the sale, exchange or retirement of a
note will generally be treated as capital gain or loss. Certain
exceptions to capital treatment are described above under
Original Issue Discount Notes
Short-Term Original Issue Discount Notes and
Original Issue Discount Notes
Market Discount and below under Foreign
Currency Notes and Certain Indexed
Notes. Capital gain or loss recognized on the taxable
disposition of a note will be long-term capital gain or loss,
respectively, if, at disposition, the Holders holding
period for the note is more than twelve months. The
deductibility of capital losses by Holders is subject to certain
limitations.
Foreign
Currency Notes
The following summary relates to notes that are denominated in a
currency or currency unit other than the U.S. dollar
(foreign currency notes).
A Holder who uses the cash method of accounting and who receives
a payment of qualified stated interest in a foreign currency
with respect to a foreign currency note will be required to
include in income the U.S. dollar value of the foreign
currency payment upon receipt (determined on the date of
receipt) regardless of whether the payment is in fact converted
to U.S. dollars, and such U.S. dollar value will be
the Holders tax basis in the foreign currency. A cash
method Holder who receives a payment in U.S. dollars
pursuant to an option available under a note will be required to
include the amount of such payment in income upon receipt.
In the case of accrual method taxpayers and Holders of original
issue discount notes, a Holder will be required to include in
income the U.S. dollar value of the amount of interest
income (including OID, but reduced by amortizable bond premium
to the extent applicable) that has accrued and is otherwise
required to be taken into account with respect to a foreign
currency note during an accrual period. The U.S. dollar
value of such accrued
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income will be determined by translating such income at the
average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the
average rate for the partial accrual period within the taxable
year. Such Holder may recognize exchange gain or loss (treated
as ordinary income or loss) with respect to accrued interest
income on the date such income is actually received. The amount
of ordinary income or loss recognized will equal the difference,
if any, between the U.S. dollar value of the foreign
currency payment received (determined on the date such payment
is received) in respect of such accrued interest (or, where a
Holder receives U.S. dollars, the amount of such payment)
and the U.S. dollar value of interest income that has
accrued (as determined above). A Holder may elect to translate
interest income (including OID) into U.S. dollars at the
spot rate on the last day of the interest accrual period (or, in
the case of a partial accrual period, the spot rate on the last
date of the taxable year) or, if the date of receipt is within
five business days of the last day of the interest accrual
period, the spot rate on the date of receipt. A Holder that
makes such an election must apply it consistently to all debt
instruments from year to year and cannot change the election
without the consent of the Internal Revenue Service.
OID and amortizable bond premium on a foreign currency note are
to be determined in the relevant foreign currency and then
converted into U.S. dollars in the same manner described
above for interest taken into income on an accrual basis. Thus,
a Holder may recognize exchange gain or loss upon receipt of an
amount attributable to accrued OID. Any loss realized on the
sale, exchange or retirement of a foreign currency note with
amortizable bond premium by a Holder who has not elected to
amortize such premium under Section 171 of the Code will be
a capital loss to the extent of such bond premium. If such an
election is made, amortizable bond premium taken into account on
a current basis will reduce interest income in units of the
relevant foreign currency. Exchange gain or loss is realized on
such amortized bond premium with respect to any period by
treating the bond premium amortized in such period as a return
of principal.
A Holders tax basis in a foreign currency note, and the
amount of any subsequent adjustment to such Holders tax
basis, will be the U.S. dollar value of the foreign
currency amount paid for such foreign currency note, or of the
foreign currency amount of the adjustment, determined on the
date of such purchase or adjustment. A Holder who purchases a
foreign currency note with previously owned foreign currency may
recognize ordinary income or loss in an amount equal to the
difference, if any, between such Holders tax basis in the
foreign currency and the U.S. dollar fair market value of
the foreign currency note on the date of purchase. A
Holders amount realized upon the sale, exchange or
retirement of a foreign currency note where foreign currency is
received therefor will be determined by the U.S. dollar
value of the foreign currency on the date payment is received or
the instrument is disposed of.
Gain or loss realized upon the sale, exchange or retirement of a
foreign currency note that is attributable to fluctuations in
currency exchange rates will be ordinary income or loss that
will not be treated as interest income or expense. Gain or loss
attributable to fluctuations in exchange rates will equal the
difference between (a) the U.S. dollar value of the
foreign currency principal amount of such note, and any payment
with respect to accrued interest, both determined on the date
such payment is received or the note is disposed of, and
(b) the U.S. dollar value of the foreign currency
principal amount of such note, determined on the date such
Holder acquired such note, and the U.S. dollar value of the
accrued interest received, determined by translating such
interest at the average exchange rate for the accrual period.
Such foreign currency gain or loss will be recognized only to
the extent of the total gain or loss realized by a Holder on the
sale, exchange or retirement of the foreign currency note. The
source of such foreign currency gain or loss will be determined
by reference to the residence of the Holder or the
qualified business unit of the Holder on whose books
the note is properly reflected. Any gain or loss realized by a
Holder in excess of such foreign currency gain or loss will be
capital gain or loss except in the case of a short-term original
issue discount note, to the extent of any OID not previously
included in the Holders income, or in the case of a market
discount note, to the extent of accrued market discount.
A Holder will have a tax basis in any foreign currency received
on the sale, exchange or retirement of a foreign currency note
equal to the U.S. dollar value of such foreign currency,
determined at the time of such sale, exchange or retirement.
With respect to purchases and sales of any publicly traded
foreign currency notes by a cash method taxpayer, however, the
units of foreign currency paid or received would be translated
into U.S. dollars at the spot rate on the settlement date
of the purchase or sale. Accordingly, no exchange gain or loss
would result from currency fluctuations between the trade date
and the settlement of such a purchase or sale. An accrual method
taxpayer may elect the same treatment required of cash-method
taxpayers with respect to the purchases and sale of any publicly
traded foreign currency notes provided the election is applied
consistently. Such election cannot be changed without
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the consent of the Internal Revenue Service. Any gain or loss
realized by a Holder on a sale or other disposition of foreign
currency (including its exchange for U.S. dollars or its
use to purchase foreign currency notes) will be ordinary income
or loss.
Foreign Currency Loss Transactions. Under
Treasury Regulations, a taxpayer that has participated in a
reportable transaction during the tax year must
attach a disclosure statement to its U.S. federal income
tax return describing such participation. A reportable
transaction includes a transaction generating a loss under Code
Section 165 in excess of certain specified amounts (which
amounts vary depending on several factors, including the status
of the taxpayer as an individual, trust, partnership or
corporation). Investment in foreign currency notes could be
treated as a reportable transaction that must be disclosed on a
Holders U.S. federal income tax return if the
investment results in the Holder claiming a foreign currency
loss on such tax return at least equal to the specified amount (
e.g., $50,000 in the case of a Holder that is an
individual or trust). Holders should consult their tax advisors
regarding the circumstances in which investment in foreign
currency notes may result in a reportable transaction that is
required to be disclosed to the Internal Revenue Service.
Variable
Rate Notes
Under Treasury Regulations, notes that qualify as variable rate
notes (as defined below) are subject to special rules. In
general, stated interest on notes that qualify as variable rate
notes is treated as qualified stated interest, and the amount of
OID, if any, on variable rate notes is determined under the
general OID rules (described above under
Original Issue Discount Notes) by
assigning a substituted value or fixed rate to the variable or
floating rate payable under the notes. Holders of variable rate
notes should refer to any discussion relating to
U.S. federal income taxation in the applicable pricing
supplement.
Certain notes paying variable or floating rates that do not
qualify as variable rate notes will instead be classified under
Treasury Regulations as contingent payment debt instruments. See
Certain Indexed Notes, below.
A variable rate note is a note that:
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has an issue price that does not exceed the total noncontingent
principal payments by more than the lesser of (a) the
product of (x) the total noncontingent principal payments,
(y) the number of complete years to maturity from the issue
date and (z) 0.015, or (b) 15 percent of the
total noncontingent principal payments; and
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does not provide for stated interest other than stated interest
compounded or paid at least annually at (a) one or more
qualified floating rates, (b) a single fixed rate and one
or more qualified floating rates, (c) a single objective
rate or (d) a single fixed rate and a single objective rate
that is a qualified inverse floating rate.
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A qualified floating rate or objective rate in effect at any
time during the term of the instrument must be set at a current
value of that rate. A current value of a rate is the
value of the rate on any day that is no earlier than three
months prior to the first day on which that value is in effect
and no later than one year following that first day.
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A variable rate is a qualified floating rate if:
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variations in the value of the rate can reasonably be expected
to measure contemporaneous variations in the cost of newly
borrowed funds in the currency in which the note is
denominated; or
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it is equal to the product of such a rate and either (a) a
fixed multiple that is greater than 0.65 but not more than 1.35,
or (b) a fixed multiple greater than 0.65 but not more than
1.35, increased or decreased by a fixed rate.
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If a note provides for two or more qualified floating rates that,
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are within 0.25 percentage points of each other on the
issue date; or
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can reasonably be expected to have approximately the same values
throughout the term of the note;
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the qualified floating rates together constitute a single
qualified floating rate. A rate is not a qualified floating
rate, however, if the rate is subject to certain restrictions
(including caps, floors, governors, or other similar
restrictions)
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unless such restrictions are fixed throughout the term of the
note or are not reasonably expected to significantly affect the
yield on the note.
An objective rate is a rate, other than a qualified
floating rate, that is determined using a single, fixed formula
and that is based on objective financial or economic information
that is not within the control of or unique to the circumstances
of the issuer or a related party. A variable rate is not an
objective rate, however, if it is reasonably expected that the
average value of the rate during the first half of the
notes term will be either significantly less than or
significantly greater than the average value of the rate during
the final half of the notes term. An objective rate is a
qualified inverse floating rate if (a) the rate
is equal to a fixed rate minus a qualified floating rate, and
(b) the variations in the rate can reasonably be expected
to inversely reflect contemporaneous variations in the cost of
newly borrowed funds.
If interest on a note is stated at a fixed rate for an initial
period of one year or less followed by either a qualified
floating rate or an objective rate for a subsequent period and
(a) the fixed rate and the qualified floating rate or
objective rate have values on the issue date of the note that do
not differ by more than 0.25 percentage points or
(b) the value of the qualified floating rate or objective
rate is intended to approximate the fixed rate, the fixed rate
and the qualified floating rate or the objective rate constitute
a single qualified floating rate or objective rate. Under these
rules, commercial paper rate notes, prime rate notes, LIBOR
notes, treasury rate notes, CD rate notes, CMT rate notes and
federal funds rate notes will generally be treated as variable
rate notes.
In general, if a variable rate note provides for stated interest
at a single qualified floating rate or objective rate, all
stated interest on the note is qualified stated interest and the
amount of OID, if any, is determined by using, in the case of a
qualified floating rate or qualified inverse floating rate, the
value as of the issue date of the qualified floating rate or
qualified inverse floating rate, or, in the case of an other
objective rate, a fixed rate that reflects the yield reasonably
expected for the note.
If a variable rate note does not provide for stated interest at
a single qualified floating rate or a single objective rate and
also does not provide for interest payable at a fixed rate
(other than at a single fixed rate for an initial period), the
amount of interest and OID accruals on the note are generally
determined by:
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determining a fixed rate substitute for each variable rate
provided under the variable rate note (generally, the value of
each variable rate as of the issue date or, in the case of an
objective rate that is not a qualified inverse floating rate, a
rate that reflects the reasonably expected yield on the note);
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constructing the equivalent fixed rate debt instrument (using
the fixed rate substitutes described above);
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determining the amount of qualified stated interest and OID with
respect to the equivalent fixed rate debt instrument; and
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making the appropriate adjustments for actual variable rates
during the applicable accrual period.
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If a variable rate note provides for stated interest either at
one or more qualified floating rates or at a qualified inverse
floating rate, and in addition provides for stated interest at a
single fixed rate (other than at a single fixed rate for an
initial period), the amount of interest and OID accruals are
determined as in the immediately preceding paragraph with the
modification that the variable rate note is treated, for
purposes of the first three steps of the determination, as if it
provided for a qualified floating rate (or a qualified inverse
floating rate, as the case may be) rather than the fixed rate.
The qualified floating rate (or qualified inverse floating rate)
replacing the fixed rate must be such that the fair market value
of the variable rate note as of the issue date would be
approximately the same as the fair market value of an otherwise
identical debt instrument that provides for the qualified
floating rate (or qualified inverse floating rate) rather than
the fixed rate.
Certain
Indexed Notes
Notes the principal or interest payments on which are linked to
commodity prices, equity indices, the relative performance of
currencies or other factors, if treated as debt for
U.S. federal income tax purposes, will generally be treated
as contingent payment debt instruments. Floating
rate notes that do not qualify as variable rate debt instruments
may be treated as contingent payment debt instruments for
U.S. federal income tax purposes.
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Under Treasury Regulations, the value of contingent payments on
a contingent payment debt instrument issued for money or
publicly traded property is estimated at issuance under the
noncontingent bond method. The yield of a note deemed to be a
contingent payment debt instrument that is issued for money or
publicly traded property is first determined by reference to
comparable yields at which the issuer would issue a fixed rate
debt instrument having similar terms and conditions, with the
payment schedule then set to fit the yield. Projected payments
are generally based on the forward price of payments where price
quotes are readily available for contingencies. Where price
quotes are not readily available for contingencies, projected
payments will be based on the expected amount of the payment as
of the issue date, set in some cases by reference to a yield
assumed to be the applicable federal rate. Interest income of a
Holder would be measured with reference to the projected yield,
which might be less than or greater than the stated interest
rate under the instrument. In the event that the actual amount
of a contingent payment differs from the projected amount of
that payment, the difference would generally increase or reduce
taxable income, or create a loss.
Because the proper treatment of notes with payments of principal
and interest that are linked to commodity prices, equity
indices, the relative performance of currencies or other factors
will depend on the exact terms of the notes, Holders should
consult with their tax advisors as to the U.S. federal
income tax consequences of the ownership and disposition of
notes containing any such features and should refer to any
discussion relating to U.S. federal income taxation in the
applicable pricing supplement.
Extension
of Maturity
In general, whether the extension of the maturity of a note not
occurring by operation of the original terms of the instrument
will result in a taxable exchange depends on the changes in the
yield, if any, in the timing and amounts of payments, and on any
changes in other relevant terms. Under Treasury Regulations, the
alteration of the terms of a debt instrument (a
modification) will, if significant, result in a
deemed exchange of the original debt instrument for a modified
debt instrument. In addition, certain changes that occur by
operation of the original terms of a debt instrument are,
nevertheless, considered modifications that, if significant,
will result in a deemed exchange of the original debt instrument
for a modified debt instrument.
The determination of whether a modification is significant is
made based on all relevant facts and circumstances. A
modification that changes the timing of payments due under a
debt instrument is a significant modification if it results in
the material deferral of scheduled payments.
However, deferral will not be material if a deferred payment is
unconditionally payable no later than the earlier of the
expiration of five years following the original due date of the
first deferred payment or 50 percent of the original term
of the instrument.
Even if the extension of the maturity of a note does not result
in an exchange under the principles discussed above, such
extension will result in a deemed exchange solely for the
purposes of accrual of OID if the extension results in the
deferral of a scheduled payment or payments. If the terms of a
debt instrument are modified to defer one or more payments, then
for OID purposes the note will be treated as retired and
reissued on the date of the modification for an amount equal to
the notes adjusted issue price on that date.
Amortizing
Notes
The applicable pricing supplement will contain a discussion of
any special U.S. federal income tax rules applicable to any
notes providing for the periodic payment of principal over the
life of the note.
Information
Reporting and Backup Withholding
In general, payments of principal, any premium and interest
(including OID) on a note and payments of proceeds from the sale
of a note before maturity may be subject to
U.S. information reporting and backup withholding. However,
backup withholding will generally apply only if a Holder:
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fails to furnish its Taxpayer Identification Number
(TIN) which, for an individual, would be his or her
Social Security number;
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furnishes an incorrect TIN; or
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is notified by the Internal Revenue Service that it has failed
to properly report payments of interest and dividends.
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Holders should consult their tax advisors regarding their
qualification for exemption from backup withholding and the
procedure for obtaining such an exemption if applicable. The
amount of any backup withholding tax withheld from a payment to
a Holder will be allowed as a credit against such Holders
U.S. federal income tax liability and may entitle such
Holder to a refund, provided that the required information is
furnished by the Holder to the Internal Revenue Service.
PLAN OF
DISTRIBUTION
We and the agents have entered into a distribution agreement
with respect to the notes. We are offering the notes on a
continuing basis through the agents, who have agreed to use
reasonable efforts to solicit offers to purchase notes. We will
have the sole right to accept offers to purchase notes and may
reject any offer to purchase notes in whole or in part. The
agent will have the right to reject any offer to purchase notes
solicited by it in whole or in part. Payment of the purchase
price of the notes will be required to be made in immediately
available funds. We will pay an agent, in connection with sales
of notes resulting from a solicitation made or an offer to
purchase received by the agent, a commission ranging from 0.125%
to 0.750%, depending upon the maturity of the notes, of the
principal amount of notes to be sold. However, commissions with
respect to notes maturing in thirty years or greater will be
negotiated.
We may also sell notes to an agent as principal for its own
account at discounts to be agreed upon at the time of sale. The
notes may be resold to investors and other purchasers at
prevailing market prices, or prices related thereto at the time
of the resale, as determined by the agent or, if so agreed, at a
fixed public offering price. In addition, the agent may offer
the notes they have purchased as principal to other dealers. The
agent may sell notes to any dealer at a discount and, unless
otherwise specified in the applicable pricing supplement, the
discount allowed to any dealer will not be in excess of the
discount to be received by the agent from us. After the initial
public offering of notes to be resold to investors and other
purchasers, the public offering price (in the case of notes to
be resold at a fixed public offering price), concession and
discount may be changed.
We have reserved the right to sell the notes directly to
investors, and may solicit and accept offers to purchase notes
directly from investors from time to time on our own behalf. We
may accept (but not solicit) offers to purchase notes through
additional agents and may appoint additional agents for the
purpose of soliciting offers to purchase notes, in either case
on terms substantially identical to the terms contained in the
distribution agreement. Any other agent will be named in the
applicable pricing supplement.
An agent may be deemed to be an underwriter within
the meaning of the Securities Act of 1933. We and the agents
have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act, or to contribute
to payments made in respect of those liabilities.
We do not intend to apply for the listing of the notes on a
national securities exchange. We have been advised by the agents
that the agents intend to make a market in the notes, as
permitted by applicable laws and regulations. The agents are not
obligated to do so, however, and the agents may discontinue
making a market at any time without notice. No assurance can be
given as to the liquidity of any trading market for the notes.
In order to facilitate the offering of the notes, the agents may
engage in transactions that stabilize, maintain or otherwise
affect the price of the notes. Specifically, the agents may
overallot in connection with the offering, creating a short
position in the notes for their own account. In addition, to
cover overallotments or to stabilize the price of the notes, the
agents may bid for, and purchase, the notes in the open market.
Finally, the agents may reclaim selling concessions allowed to a
dealer for distributing the notes in the offering, if the agents
repurchase previously distributed notes in transactions to cover
short positions, in stabilization transactions or otherwise. Any
of these activities may stabilize or maintain the market price
of the notes above independent market levels. The agents are not
required to engage in these activities, and may end any of these
activities at any time.
Concurrently with the offering of notes through the agents as
described herein, we may issue other senior debt securities
pursuant to the Indenture or another indenture we may enter into.
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The agents
and/or
certain of their affiliates have provided
and/or may
in the future provide investment banking, commercial banking and
other financial services for us and certain of our affiliates in
the ordinary course of business for which they have received and
will receive customary compensation.
VALIDITY
OF THE NOTES
The validity of the notes will be passed upon for us by Jones
Day, Cleveland, Ohio, and for the agents by Sullivan &
Cromwell LLP, New York, New York. On matters of Ohio law,
Sullivan & Cromwell LLP will rely on Jones Day. The
opinions of Jones Day and Sullivan & Cromwell LLP will
be conditioned upon and subject to assumptions regarding future
action required to be taken by us and the trustee in connection
with the issuance and sale of any particular note, the specific
terms of the notes and other matters which may affect the
validity of the notes but which cannot be ascertained on the
date of their opinions.
S-29
PROSPECTUS
PARKER-HANNIFIN
CORPORATION
Debt
Securities
Common Shares
Serial Preferred Stock
Depositary Shares
Warrants
Stock Purchase Contracts
Stock Purchase Units
We may offer from time to time, in one or more offerings, debt
securities, common shares, serial preferred stock, depositary
shares, warrants, stock purchase contracts and stock purchase
units. This prospectus describes the general terms of these
securities and the general manner in which we will offer them.
We will provide the specific terms of the securities in one or
more supplements to this prospectus. The prospectus supplements
will also describe the specific manner in which we will offer
these securities and may also supplement, update or amend
information contained in this prospectus. You should read this
prospectus and any related prospectus supplement carefully
before you invest in our securities. This prospectus may not be
used to offer and sell our securities unless accompanied by a
prospectus supplement describing the method and terms of the
offering of those offered securities.
We may sell the securities, on a continuous or delayed basis
directly, through underwriters, dealers or agents as designated
from time to time, or through a combination of these methods. We
reserve the sole right to accept, and together with any
underwriters, dealers and agents, reserve the right to reject,
in whole or in part, any proposed purchase of securities. The
names of any underwriters, dealers or agents will be included in
a prospectus supplement. If any underwriters, dealers or agents
are involved in the sale of any securities, the applicable
prospectus supplement will set forth any applicable commissions
or discounts. In addition, the underwriters may overallot a
portion of the securities.
Our common shares are listed on the New York Stock Exchange
under the symbol PH. None of our other securities
are listed on any national securities exchange.
Investing in our securities involves certain risks. You
should carefully review the risk factors under Item 1A of
our Annual Report on
Form 10-K
for the fiscal year ended June 30, 2006 as they may be
updated and modified periodically in our reports filed with the
Securities and Exchange Commission as described in the section
entitled Information We Incorporated by Reference in
this 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 May 24, 2007.
TABLE OF
CONTENTS
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ABOUT
THIS PROSPECTUS
This prospectus is part of a Registration Statement on
Form S-3
that we filed with the Securities and Exchange Commission under
the shelf registration process. Under this shelf
process, we may sell, at any time and from time to time, any
combination of the securities described in this prospectus in
one or more offerings. This prospectus provides you with a
general description of the securities we may offer. Each time we
sell securities, we will provide a prospectus supplement that
will contain specific information about the terms of that
offering, including a description of the risks relating to the
offering. This prospectus does not contain all of the
information included in the registration statement. For a more
complete understanding of the offering of the securities, you
should refer to the registration statement, including its
exhibits. The prospectus supplement may also add, update or
change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with
additional information under the heading Where You Can
Find More Information.
You should rely only on the information contained or
incorporated by reference in this prospectus and any prospectus
supplement. We have not authorized anyone to provide you with
different information. We are not making offers to sell the
securities in any jurisdiction in which an offer or solicitation
is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it
is unlawful to make an offer or solicitation.
The information in this prospectus and incorporated by reference
into this prospectus is accurate as of the date on the front
cover of this prospectus or the date of the document
incorporated by reference, respectively. You should not assume
that the information contained in or incorporated by reference
into this prospectus is accurate as of any other dates.
References in this prospectus to the terms we,
our, us or Parker or other
similar terms mean
Parker-Hannifin
Corporation, unless we state otherwise or the context indicates
otherwise.
PARKER-HANNIFIN
CORPORATION
Parker is a leading worldwide full-line diversified manufacturer
of motion control products, including fluid power systems,
electromechanical controls and related components. Fluid power
involves the transfer and control of power through the medium of
liquid, gas or air, in hydraulic, pneumatic and vacuum
applications. Fluid power systems move and position materials,
control machines, vehicles and equipment and improve industrial
efficiency and productivity. Components of a simple fluid power
system include one or more pumps which generate pressure, one or
more valves which control the fluids flow, one or more
actuators which translate the pressure from the fluid into
mechanical energy, one or more filters to insure proper fluid
condition and numerous hoses, couplings, fittings and seals.
Electromechanical control involves the use of electronic
components and systems to control motion and precisely locate or
vary speed in automation and aerospace applications. In addition
to motion control products, Parker also is a leading worldwide
producer of fluid purification, fluid and fuel control, process
instrumentation, air conditioning, refrigeration,
electromagnetic shielding and thermal management products and
systems.
Our manufacturing, service, distribution and administrative
facilities are located in 35 states and in 42 foreign
countries. Our motion control technology is used in products of
our three principal business segments: Industrial; Aerospace;
and Climate & Industrial Controls. The products are
sold as original and replacement equipment through product and
distribution centers worldwide. We market our products through
direct-sales employees, independent distributors, sales
representatives and builder/dealers. Our products are supplied
to approximately 417,000 customers in virtually every
significant manufacturing, transportation and processing
industry.
Parker was incorporated in Ohio in 1938. Its principal executive
offices are located at 6035 Parkland Boulevard, Cleveland, Ohio
44124-4141,
telephone
(216) 896-3000.
RISK
FACTORS
Before you purchase securities offered pursuant to this
prospectus, you should be aware of various risks, including but
not limited to those discussed under the caption Risk
Factors included in Part 1, Item 1A of our
Annual Report on
Form 10-K
for the year ended June 30, 2006 as they may be updated and
modified periodically in
our reports filed with the SEC. See Information We
Incorporated by Reference for more information on these
reports. You should carefully consider these risk factors
together with all other information in this prospectus and the
applicable prospectus supplement before you decide to invest in
the securities.
DISCLOSURE
ABOUT FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement, the documents
incorporated by reference into this prospectus and other written
reports and oral statements we may make from time to time may
contain statements that do not directly or exclusively relate to
historical facts. These types of statements are forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. You can typically identify
forward-looking statements by the use of forward-looking words,
such as may, will, could,
project, believe,
anticipate, expect,
estimate, continue,
potential, plan and
forecast. Those statements represent our intentions,
plans, expectations, assumptions and beliefs about future events
and are subject to risks, uncertainties and other factors. Many
of those factors are outside of our control and could cause
actual results to differ materially from the results expressed
or implied by the forward-looking statements. Those factors
include:
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changes in business relationships with and purchases by or from
major customers or suppliers, including delays or cancellations
in shipments or significant changes in financial condition;
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uncertainties surrounding timing, successful completion or
integration of acquisitions;
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threats associated with and efforts to combat terrorism;
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competitive market conditions and resulting effects on sales and
pricing;
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increases in raw material costs that cannot be recovered in
product pricing;
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our ability to manage costs related to insurance and employee
retirement and health care benefits; and
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global economic factors, including manufacturing activity, air
travel trends, currency exchange rates, difficulties entering
new markets and general economic conditions such as inflation
and interest rates.
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These and other factors are discussed in our reports filed with
the SEC. In light of these risks, uncertainties and assumptions,
the events described that involve forward-looking statements
might not occur. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required
by law.
WHERE YOU
CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. Our SEC filings are
available over the Internet at the SECs website at
www.sec.gov. You may also read and copy any document we file
with the SEC at the SECs Public Reference Room at 100 F
Street, NE, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for more information on the Public Reference Room and their copy
charges.
We also make available free of charge on our website at www.
phstock.com our Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K,
and, if applicable, amendments to those reports filed or
furnished pursuant to Section 13(a) of the Exchange Act as
soon as reasonably practicable after we electronically file such
material with, or furnish it to, the SEC. Our Companys
Code of Ethics, Guidelines on Corporate Governance Issues and
Independence Standards for Directors are available free of
charge on our website at www.phstock.com or in print by writing
to Parker-Hannifin Corporation, 6035 Parkland Boulevard,
Cleveland, Ohio
44124-4141,
Attention: Secretary, or by calling
(216) 896-3000.
We do not intend for information contained on or accessible
through our website to be part of this prospectus.
INFORMATION
WE INCORPORATE BY REFERENCE
The SEC allows us to incorporate by reference the information we
file with them, which means:
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incorporated documents are considered part of the prospectus;
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we can disclose important information to you by referring you to
those documents; and
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information that we file with the SEC will automatically update
this prospectus.
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We incorporate by reference the documents listed below which we
filed with the SEC under the Securities Exchange Act of 1934:
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Annual Report on
Form 10-K
for the year ended June 30, 2006;
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Quarterly Reports on
Form 10-Q
for the quarters ended September 30, 2006,
December 31, 2006 and March 31, 2007;
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Current Reports on
Form 8-K
filed August 22, 2006, October 26, 2006,
November 21, 2006, December 14, 2006, January 30,
2007, January 31, 2007, February 8, 2007 and
April 23, 2007;
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the description of our common shares contained in our
Registration Statement on
Form 8-A
filed with the SEC on September 8, 1967 and all amendments
and reports filed for the purpose of updating that
description; and
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the description of our common share purchase rights contained in
our Registration Statement on
Form 8-A
filed with the SEC on February 8, 2007.
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We also incorporate by reference each of the documents that we
file with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this prospectus until the
offering of the securities terminates.
You may request a copy of any of these filings (other than an
exhibit to those filings unless we have specifically
incorporated that exhibit by reference into the filing), at no
cost, by telephoning or writing us at the following address:
Secretary
Parker-Hannifin Corporation
6035 Parkland Blvd.
Cleveland, Ohio
44124-4141
Telephone Number:
(216) 896-3000
USE OF
PROCEEDS
Unless we inform you otherwise in the prospectus supplement, we
expect to use the net proceeds from the sale of securities for
general corporate purposes. These purposes may include, but are
not limited to:
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reduction or refinancing of outstanding indebtedness or other
corporate obligations;
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acquisitions;
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capital expenditures; and
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working capital.
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Pending any specific application, we may initially invest funds
in short-term marketable securities or apply them to the
reduction of short-term indebtedness.
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of consolidated
earnings to fixed charges for the periods presented:
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For the Fiscal Years Ended June 30,
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For the Nine Months Ended March 31, 2007
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2006
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2005
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2004
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2003
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2002
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11.78x
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10.12x
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9.64x
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6.22x
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3.97x
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3.29x
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The ratio has been computed by dividing earnings by fixed
charges. For purposes of computing the ratio:
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earnings consist of income from continuing operations before
income taxes, fixed charges (excluding capitalized interest) and
amortization of capitalized interest; and
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fixed charges consist of (i) interest on indebtedness,
whether expensed or capitalized, (ii) amortized expenses
related to indebtedness and (iii) that portion of rental
expense Parker believes is representative of interest.
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We did not have any serial preferred stock outstanding during
the periods presented above. There were no serial preferred
stock dividends paid or accrued during the periods presented
above.
DESCRIPTION
OF DEBT SECURITIES
This section describes the general terms and provisions of the
debt securities that we may issue separately, upon exercise of a
debt warrant, in connection with a stock purchase contract or as
part of a stock purchase unit from time to time in the form of
one or more series of debt securities. The applicable prospectus
supplement will describe the specific terms of the debt
securities offered through that prospectus supplement as well as
any general terms described in this section that will not apply
to those debt securities.
Our unsecured senior debt securities will be issued under an
indenture, dated May 3, 1996, between us and Wells Fargo
Bank, N.A. (as successor to National City Bank), as trustee, or
another indenture to be entered into by us and Wells Fargo Bank,
N.A. or another trustee. The unsecured subordinated debt
securities will be issued under a separate indenture to be
entered into by us and Wells Fargo Bank, N.A. or another trustee.
A copy of the May 3, 1996 senior debt indenture has been
previously filed with the SEC and is incorporated by reference
as an exhibit to the registration statement of which this
prospectus is a part, and is incorporated by reference into this
prospectus. Another form of senior debt indenture is filed as an
exhibit to the registration statement of which this prospectus
is a part and is incorporated by reference into this prospectus.
A form of the subordinated debt indenture is filed as an exhibit
to the registration statement of which this prospectus is a part
and is incorporated by reference into this prospectus. You
should refer to the applicable indenture for more specific
information. In addition, you should consult the applicable
prospectus supplement for particular terms of our debt
securities.
The indentures will not limit the amount of debt securities that
we may issue and will permit us to issue securities from time to
time in one or more series. The debt securities will be
unsecured obligations of Parker. We currently conduct a portion
of our operations through subsidiaries, and the holders of debt
securities (whether senior or subordinated debt securities) will
be effectively subordinated to the creditors of our
subsidiaries. This means that creditors of our subsidiaries will
have a claim to the assets of our subsidiaries that is superior
to the claim of our creditors, including holders of our debt
securities.
Generally, we will pay the principal of, premium, if any, and
interest on our registered debt securities either at an office
or agency that we maintain for that purpose or, if we elect, we
may pay interest by mailing a check to your address as it
appears on our register (or, at the election of the holder, by
wire transfer to an account designated by the holder). Except as
may be provided otherwise in the applicable prospectus
supplement, no payment on a bearer security will be made by mail
to an address in the United States or by wire transfer to an
account in the United States. Except as may be provided
otherwise in the applicable prospectus supplement, we will issue
our debt securities only in fully registered form without
coupons, generally in denominations of $1,000 or integral
multiples of $1,000. We will not apply a service charge for a
transfer or exchange of our debt securities, but we may require
that you pay the amount of any applicable tax or other
governmental charge.
The applicable prospectus supplement will describe the following
terms of any series of debt securities that we may offer:
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the title of the debt securities;
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whether they are senior debt securities or subordinated debt
securities;
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any limit on the aggregate principal amount of the debt
securities offered through that prospectus supplement;
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the identity of the person to whom we will pay interest if it is
anybody other than the person in whose name the security is
registered;
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when the principal of the debt securities will mature;
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the interest rate or the method for determining it, including
any procedures to vary or reset the interest rate;
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when interest will be payable, as well as the record dates for
determining to whom we will pay interest;
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where the principal of, premium, if any, and interest on the
debt securities will be paid;
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any obligation of ours to redeem, repurchase or repay the debt
securities under any mandatory or optional sinking funds or
similar arrangements and the terms of those arrangements;
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when the debt securities may be redeemed if they are redeemable,
as well as the redemption prices, and a description of the terms
of redemption;
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the denominations of the debt securities, if other than $1,000
or an integral multiple of $1,000;
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the amount that we will pay the holder if the maturity of the
debt securities is accelerated, if other than the entire
principal amount;
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the currency in which we will make payments to the holder and,
if a foreign currency, the manner of conversion from United
States dollars;
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any index or formula we may use to determine the amount of
payment of principal of, premium, if any, and interest on the
debt securities;
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whether the debt securities will be issued in electronic, global
or certificated form;
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if the debt securities will be issued only in the form of a
global note, the name of the depositary or its nominee and the
circumstances under which the global note may be transferred or
exchanged to someone other than the depositary or its nominee;
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the applicability of the legal defeasance and covenant
defeasance provisions in the applicable indenture;
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any additions or changes to events of default and, in the case
of subordinated debt securities, any additional events of
default that would result in acceleration of their maturity;
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any additions or changes to the covenants relating to permitted
consolidations, mergers or sales of assets or otherwise;
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the amount that will be deemed to be the principal amount of the
debt securities as of a particular date before maturity if the
principal amount payable at the stated maturity date will not be
able to be determined on that date;
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whether the debt securities will be convertible into or
exchangeable for any other securities and the terms and
conditions upon which a conversion or exchange may occur,
including the initial conversion or exchange price or rate, the
conversion or exchange period and any other additional
provisions; and
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any other terms of the debt securities not inconsistent with the
terms of the applicable indenture.
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Debt securities may bear interest at fixed or floating rates. We
may issue our debt securities at an original issue discount,
bearing no interest or bearing interest at a rate that, at the
time of issuance, is below market rate, to be sold at a
substantial discount below their stated principal amount.
Generally speaking, if our debt securities are issued at an
original issue discount and there is an event of default or
acceleration of their maturity, holders will receive an amount
less than their principal amount. Tax and other special
considerations applicable to any series of debt securities,
including original issue discount debt, will be described in the
prospectus supplement in which we offer those debt securities.
In addition, certain U.S. federal income tax or other
considerations, if any, applicable to any
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debt securities which are denominated in a currency or currency
unit other than U.S. dollars may be described in the
applicable prospectus supplement.
We will comply with Section 14(e) under the Exchange Act
and any other tender offer rules under the Exchange Act that may
then apply to any obligation we may have to purchase debt
securities at the option of the holders. Any such obligation
applicable to a series of debt securities will be described in
the related prospectus supplement.
Subordination
of Subordinated Debt Securities
Debt securities of a series may be subordinated to senior
indebtedness to the extent set forth in the prospectus
supplement relating to the subordinated debt securities. The
definition of senior indebtedness will include,
among other things, senior debt securities and will be
specifically set forth in that prospectus supplement.
Subordinated debt securities of a particular series and any
coupons relating to those debt securities will be subordinate in
right of payment, to the extent and in the manner set forth in
the subordinated debt indenture and the prospectus supplement
relating to those subordinated debt securities, to the prior
payment of all of our indebtedness that is designated as senior
indebtedness with respect to that series.
Upon any payment or distribution of our assets to creditors or
upon a total or partial liquidation or dissolution of Parker or
in a bankruptcy, receivership, or similar proceeding relating to
Parker or our property, holders of senior indebtedness will be
entitled to receive payment in full in cash before holders of
subordinated debt securities will be entitled to receive any
payment of principal, premium, if any, or interest with respect
to the subordinated debt securities and, until the senior
indebtedness is paid in full, any distribution to which holders
of subordinated debt securities would otherwise be entitled will
be made to the holders of senior indebtedness, except that
holders of subordinated debt securities may receive shares of
stock and any debt securities that are subordinated to senior
indebtedness to at least the same extent as the subordinated
debt securities, all as described in the applicable prospectus
supplement.
Unless otherwise provided in an applicable prospectus
supplement, we may not make any payments of principal, premium,
if any, or interest with respect to subordinated debt
securities, make any deposit for the purpose of defeasance of
the subordinated debt securities, or repurchase, redeem, or
otherwise retire, except, in the case of subordinated debt
securities that provide for a mandatory sinking fund, by our
delivery of subordinated debt securities to the trustee in
satisfaction of our sinking fund obligation, any subordinated
debt securities if:
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any principal, premium, if any, or interest with respect to
senior indebtedness is not paid within any applicable grace
period (including at maturity); or
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any other default on senior indebtedness occurs and the maturity
of that senior indebtedness is accelerated in accordance with
its terms, unless, in either case, the default has been cured or
waived and the acceleration has been rescinded, the senior
indebtedness has been paid in full in cash, or we and the
trustee receive written notice approving the payment from the
representatives of each issue of specified senior indebtedness
as described in the applicable prospectus supplement.
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Unless otherwise provided in an applicable prospectus
supplement, during the continuance of any default (other than a
default described in the preceding paragraph) with respect to
any senior indebtedness pursuant to which the maturity of that
senior indebtedness may be accelerated immediately without
further notice (except such notice as may be required to effect
the acceleration) or the expiration of any applicable grace
periods, we may not pay the subordinated debt securities for
such periods after notice of the default from the representative
of specified senior indebtedness as shall be specified in the
applicable prospectus supplement.
By reason of this subordination, in the event of insolvency, our
creditors who are holders of senior indebtedness or holders of
any indebtedness or serial preferred stock of our subsidiaries,
as well as certain of our general creditors, may recover more,
ratably, than the holders of the subordinated debt securities.
6
Events of
Default
Except as may be provided otherwise in a prospectus supplement,
any of the following events will constitute an event of default
for a series of debt securities under an indenture:
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failure to pay interest on our debt securities of that series
(or any payment with respect to the related coupons, if any) and
continuation of the default for thirty days past the applicable
due date;
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failure to pay principal of, or premium, if any, on our debt
securities of that series when due (whether at maturity, upon
redemption, declaration of acceleration, required repurchase or
otherwise);
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failure to make any sinking fund payment on our debt securities
of that series when due;
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failure to perform any other covenant or agreement in the
indenture, other than a covenant included in the indenture
solely for appropriate benefit of a different series of our debt
securities, which failure continues for 60 days after the
trustee or holders of 10% of the outstanding principal amount of
the debt securities of that series have given written notice of
the failure in the manner provided in the indenture;
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acceleration of more than $10,000,000 of our or our restricted
subsidiaries other indebtedness under the terms of the
applicable debt instrument if the acceleration is not rescinded
or the indebtedness is not paid within 10 days after the
trustee or holders of 10% of the outstanding principal amount of
the debt securities of that series have given written notice of
the default in the manner provided in the indenture;
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specified events relating to our bankruptcy, insolvency or
reorganization; and
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any other event of default provided with respect to debt
securities of that series.
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An event of default with respect to one series of debt
securities is not necessarily an event of default for another
series.
If there is an event of default with respect to a series of our
debt securities, which continues for the requisite amount of
time, either the trustee or holders of at least 25% of the
aggregate principal amount of that series may declare the
principal amount of all of the debt securities of that series to
be due and payable immediately. If the securities were issued at
an original issue discount, less than the stated principal
amount may become payable. After the declaration of acceleration
of the maturity of the debt securities of any series, but before
the trustee obtains a judgment or decree for payment of the
money due, the holders of at least a majority in aggregate
principal amount of the debt securities of that series may, on
behalf of the holders of all debt securities and any related
coupons of that series, rescind and annul the declaration of
acceleration if we take specific evincing steps to cure the
breach, as specified in the applicable indenture. In addition,
the holders of at least a majority in aggregate principal amount
of the debt securities of a series may, on behalf of the holders
of all debt securities and any related coupons of that series,
waive any past default with respect to the series and its
consequences, except defaults in the payment of principal,
premium, if any, or interest on the security or in respect of a
covenant that cannot be modified or amended without the consent
of the holder of each outstanding security of the affected
series. Such a waiver causes the event of default to cease to
exist and be deemed to have been cured.
We are required to file annually with the trustee an
officers certificate as to the absence of defaults under
the terms of the indenture. The indenture provides that if a
default occurs with respect to debt securities of any series,
the trustee will give the holders of the relevant series notice
of the default when, as and to the extent provided by the Trust
Indenture Act of 1939. However, in the case of any default under
any covenant with respect to the series, no notice of default to
holders will be given until at least thirty days after the
occurrence of the default.
Each indenture provides that the trustee will be under no
obligation, subject to the duty of the trustee during default to
act with the required standard of care, to exercise any of its
rights or powers under the indenture at the request or direction
of any of the holders, unless these holders shall have offered
to the trustee reasonable security or indemnity. Subject to
these provisions for indemnification of the trustee, the holders
of a majority of the amount of the outstanding debt securities
of any series will have the right to direct the time, manner and
place of conducting any proceeding for any remedy available to
the trustee, or exercising any trust or other power conferred on
the trustee, with respect to the debt securities of that series.
7
Satisfaction
and Discharge of the Indentures
An indenture will generally cease to be of any further effect
with respect to a series of debt securities if:
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we have delivered to the applicable trustee for cancellation all
debt securities of that series (with certain limited
exceptions); or
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all debt securities and coupons of that series not previously
delivered to the trustee for cancellation:
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have become due and payable;
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will become due and payable at their stated maturity within one
year; or
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are to be called for redemption within one year under
arrangements satisfactory to the trustee, and we have deposited
with the trustee as trust funds the entire amount sufficient to
pay at maturity or upon redemption all of those debt securities
and coupons.
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For the trustee to execute proper instruments acknowledging the
satisfaction and discharge of an indenture in either case
described above, we must also pay or cause to be paid all other
sums payable under the applicable indenture by us, and deliver
to the trustee an officers certificate and an opinion of
counsel stating that all indenture conditions have been met.
Legal
Defeasance And Covenant Defeasance
Any series of our debt securities may be subject to the
defeasance and discharge provisions of the applicable indenture
if so specified in the applicable prospectus supplement. If
those provisions are applicable, we may elect either:
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legal defeasance, which will permit us to defease and be
discharged from, subject to limitations, all of our obligations
with respect to those debt securities; or
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covenant defeasance, which will permit us to be released from
our obligations to comply with covenants relating to those debt
securities as described in the applicable prospectus supplement,
which may include obligations concerning subordination of our
subordinated debt securities.
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If we exercise our legal defeasance option with respect to a
series of debt securities, payment of those debt securities may
not be accelerated because of an event of default. If we
exercise our covenant defeasance option with respect to a series
of debt securities, payment of those debt securities may not be
accelerated because of an event of default related to the
specified covenants.
Unless otherwise provided in the applicable prospectus
supplement, we may invoke legal defeasance or covenant
defeasance with respect to any series of our debt securities
only if:
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we irrevocably deposit with the trustee, in trust:
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an amount in funds;
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U.S. government obligations which, through the scheduled
payment of principal and interest in accordance with their
terms, will provide, not later than one day before the due date
of any payment, an amount in funds; or
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any combination of funds or U.S. government obligations;
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sufficient to pay upon maturity or redemption, as the case may
be, the principal of, premium, if any, and interest on those
debt securities;
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we deliver to the trustee a certificate from a nationally
recognized independent registered public accounting firm
expressing their opinion that the combination of funds or
U.S. government obligations will provide cash at times and
in amounts as will be sufficient to pay the principal, premium,
if any, and interest when due with respect to all the debt
securities of that series to maturity or redemption, as the case
may be;
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90 days pass after the deposit described above is made and,
during the
90-day
period, no default relating to our bankruptcy, insolvency or
reorganization occurs that is continuing at the end of that
period;
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no event of default has occurred and is continuing on the date
of the deposit described above after giving effect to the
deposit;
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we deliver to the trustee an officers certificate to the
effect that no debt security will be delisted as a result of the
deposit described above;
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the deposit will not cause the trustee to have a conflict of
interest under the Trust Indenture Act;
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the legal defeasance or covenant defeasance will not result in a
breach of or default under any other agreement to which we are
party or to which we are bound;
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the legal defeasance or covenant defeasance will not result in
the trust arising from the deposit described above constituting
an investment company under the Investment Company Act of 1940
unless registered under the Investment Company Act or exempt;
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we deliver to the trustee an opinion of counsel addressing
certain federal income tax matters relating to the
defeasance; and
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we deliver to the trustee an officers certificate and an
opinion of counsel, each stating that all conditions precedent
to the defeasance and discharge of the debt securities of that
series as contemplated by the applicable indenture have been
complied with.
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Modification and Waiver
We may enter into supplemental indentures for the purpose of
modifying or amending an indenture with the consent of holders
of at least
662/3%
in aggregate principal amount of each series of our outstanding
debt securities affected. However, unless otherwise provided in
the applicable prospectus supplement, the consent of all of the
holders of our debt securities that are affected by any
modification or amendment is required for any of the following:
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to reduce the percentage in principal amount of debt securities
of any series whose holders must consent to an amendment or
waiver;
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to reduce the rate of or extend the time for payment of interest
on any debt security or coupon or reduce the amount of any
interest payment to be made with respect to any debt security or
coupon;
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to reduce the principal of or change the stated maturity of
principal of, or any installment of principal of, or interest
on, any debt security or reduce the amount of principal of any
original issue discount security that would be due and payable
upon declaration of acceleration of maturity;
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to reduce the premium payable upon the redemption of any debt
security or change the time at which any debt security may or
shall be redeemed;
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to modify the subordination provisions of our subordinated debt
securities in a manner adverse to holders;
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change the place or currency of payment of principal, or any
premium or interest on, any debt security;
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to impair the right to bring a lawsuit for the enforcement of
any payment on or after the stated maturity of any debt security
(or in the case of redemption, on or after the date fixed for
redemption); or
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to modify any of the above provisions of an indenture, except to
increase the percentage in principal amount of debt securities
of any series whose holders must consent to an amendment or to
provide that certain other provisions of an indenture cannot be
modified or waived without the consent of the holder of each
outstanding debt security affected by the modification or waiver.
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In addition, we and the trustee with respect to an indenture may
enter into supplemental indentures without the consent of the
holders of debt securities for one or more of the following
purposes (in addition to any other purposes specified in an
applicable prospectus supplement):
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to evidence that another person has become our successor under
the provisions of the indenture and that the successor assumes
our covenants, agreements and obligations in the indenture and
in the debt securities;
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to surrender any of our rights or powers under the indenture, to
add to our covenants further covenants, restrictions, conditions
or provisions for the protection of the holders of all or any
series of debt securities, and to make a default in any of these
additional covenants, restrictions, conditions or provisions a
default or an event of default under the indenture;
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to cure any ambiguity or to make corrections to the indenture,
any supplemental indenture, or any debt securities, or to make
such other provisions in regard to matters or questions arising
under the indenture that do not adversely affect the interests
of any holders of debt securities of any series;
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to add to or change any of the provisions of the indenture to
provide that bearer securities may be registrable as to
principal, to change or eliminate any restrictions on the
payment of principal or premium with respect to registered
securities or of principal, premium or interest with respect to
bearer securities, or to permit registered securities to be
exchanged for bearer securities, so long as none of these
actions adversely affects the interests of the holders of debt
securities or any coupons of any series in any material respect;
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to permit the issuance of debt securities of any series in
uncertificated form;
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to secure the debt securities, subject to specified restrictions;
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to add to, change or eliminate any of the provisions of the
indenture with respect to one or more series of debt securities
subject to certain limitations;
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to evidence and provide for the acceptance of appointment by a
successor or separate trustee with respect to the debt
securities of one or more series and to add to or change any of
the provisions of the indenture as necessary to provide for the
administration of the indenture by more than one
trustee; and
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to establish the form or terms of debt securities and coupons of
any series.
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Certain
Covenants
Except as may be provided otherwise in the applicable prospectus
supplement, we will be bound by certain restrictions in
connection with the issuance of debt securities. Unless
otherwise described in a prospectus supplement relating to any
debt securities, other than as described below under
Restrictions on Secured Debt,
Restrictions on Sales and Leasebacks,
and Consolidation, Merger and Sale of
Assets, the indentures do not contain any provisions that
would limit our ability to incur indebtedness or that would
afford holders of debt securities protection in the event of a
sudden and significant decline in our credit quality or a
takeover, recapitalization or highly leveraged or similar
transaction involving us. Accordingly, we could in the future
enter into transactions that could increase the amount of
indebtedness outstanding at that time or otherwise affect our
capital structure or credit rating. You should refer to the
prospectus supplement relating to a particular series of debt
securities for information about any deletions from,
modifications of or additions to, the events of default or
covenants of ours contained in an indenture, including any
addition of a covenant or other provision providing event risk
or similar protection.
Certain
Definitions
Unless otherwise provided in the applicable prospectus
supplement, the following terms will mean as follows for
purposes of covenants that may be applicable to any particular
series of debt securities.
Attributable Debt means the total net amount of rent
required to be paid during the remaining primary term of certain
leases, discounted from the due date at a rate per annum equal
to the weighted average yield to maturity of the debt securities
calculated in accordance with generally accepted financial
practices.
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Consolidated Net Tangible Assets means the aggregate
amount of assets, less applicable reserves and other properly
deductible items, after deducting (i) all liabilities other
than deferred income taxes, Funded Debt and shareholders
equity, and (ii) all goodwill and other intangibles of ours
and our consolidated Subsidiaries computed in accordance with
accounting principles generally accepted in the United States of
America.
Debt means loans and notes, bonds, debentures or
other similar evidences of indebtedness for money borrowed.
Funded Debt means (i) all indebtedness for
money borrowed having a maturity of more than 12 months
from the date as of which the determination is made or having a
maturity of 12 months or less but by its terms being
renewable or extendible beyond 12 months from such date at
the option of the borrower and (ii) rental obligations
payable more than 12 months from such date under leases
which are capitalized in accordance with accounting principles
generally accepted in the United States of America (such rental
obligations to be included as Funded Debt at the amount so
capitalized at the date of such computation and to be included
for the purposes of the definition of Consolidated Net Tangible
Assets both as an asset and as Funded Debt at the respective
amounts so capitalized).
Principal Property means any manufacturing or
processing plant or warehouse owned by us or any Restricted
Subsidiary which is located within the United States and the
gross book value of which (including related land, improvements,
machinery and equipment without deduction of any depreciation
reserves) on the date as of which the determination is being
made, exceeds 1% of Consolidated Net Tangible Assets, with
certain exceptions due to materiality to our business or to the
use or operation of this property as determined by our board of
directors.
Restricted Subsidiary means a Subsidiary of ours
where substantially all the property is located, or
substantially all of the business is carried on, within the
United States and which owns a Principal Property.
Subsidiary means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or
indirectly, by us
and/or one
or more of our Subsidiaries.
Restrictions
on Secured Debt
Unless otherwise provided in the applicable prospectus
supplement, we will not, and we will not permit any Restricted
Subsidiary to, incur, issue, assume or guarantee any Debt
secured by a pledge of, or mortgage or other lien on, any
Principal Property or any shares of capital stock of, or Debt
of, any Restricted Subsidiary (such pledges, mortgages and other
liens being hereinafter called Mortgage or
Mortgages), without providing that the debt
securities are secured equally and ratably with (or, at our
option, prior to) this secured Debt.
Unless otherwise provided in the applicable prospectus
supplement, this obligation will not apply if, after giving
effect to the secured Debt, the aggregate amount of all this
Debt so secured together with all Attributable Debt of our and
our Restricted Subsidiaries in respect of sale and leaseback
transactions (other than sale and leaseback transactions
described in Restrictions on Sales and
Leasebacks) involving Principal Properties, would not
exceed 10% of our Consolidated Net Tangible Assets.
Unless otherwise provided in the applicable prospectus
supplement, this obligation will not apply to, and there will be
excluded in computing secured Debt for the purpose of the
restriction, Debt secured by:
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Mortgages on property, stock or Debt of any corporation,
partnership, association or other entity existing at the time
that corporation, partnership, association or other entity
becomes a Restricted Subsidiary or obligor under the Indenture;
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Mortgages in favor of Parker or a Restricted Subsidiary;
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Mortgages in favor of a governmental body to secure progress,
advance or other payments pursuant to any contract or provision
of any statute;
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Mortgages on property, stock or Debt existing at the time of
acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of
the purchase price, construction cost or development cost
created or assumed within 180 days after the acquisition or
completion of construction or development of this property,
stock or Debt;
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Debt secured by Mortgages securing industrial revenue or
pollution control bonds; and
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any extension, renewal or refinancing (or successive extensions,
renewals or refinancings), as a whole or in part, of any of the
foregoing, except that this extension, renewal or refinancing
Mortgage will be limited to all or a part of the same property,
shares of stock or Debt that secured the Mortgage extended,
renewed or refinanced (plus improvements on the property).
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Restrictions
on Sales and Leasebacks
Unless otherwise provided in the applicable prospectus
supplement, neither we nor any of our Restricted Subsidiaries
may enter into any sale and leaseback transaction involving any
Principal Property, unless the aggregate amount of all
Attributable Debt of us and our Restricted Subsidiaries with
respect to this transaction plus all secured Debt would not
exceed 10% of Consolidated Net Tangible Assets.
Unless otherwise provided in the applicable prospectus
supplement, this obligation will not apply to, and there will be
excluded in computing Attributable Debt for purposes of this
restriction, any sale and leaseback transaction if:
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the sale or transfer of the Principal Property is made within
180 days after the later of its acquisition or completion
of construction;
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the lease secures or relates to industrial revenue or pollution
control bonds; or
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we or our Restricted Subsidiary, within 180 days after the
sale is completed, apply (i) to the retirement of the debt
securities, other Funded Debt of Parker ranking on parity with
or senior to the debt securities, or Funded Debt of a Restricted
Subsidiary, or (ii) to the purchase of other property which
will constitute a Principal Property having a value at least
equal to the value of the Principal Property leased, an amount
equal to the greater of (A) the net proceeds of the sale of
the Principal Property leased, or (B) the fair market value
of the Principal Property leased.
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In lieu of applying proceeds to the retirement of Funded Debt,
we may surrender debentures or notes, including the debt
securities to the trustee for retirement and cancellation, or we
or any Restricted Subsidiary may receive credit for the
principal amount of Funded Debt voluntarily retired within
180 days after this sale.
This restriction will not apply to any sale and leaseback
transaction between Parker and a Restricted Subsidiary or
between Restricted Subsidiaries or involving the taking back of
a lease for a period of three years or less.
Consolidation,
Merger and Sale of Assets
Unless otherwise provided in the applicable prospectus
supplement, our indentures prohibit us from consolidating with
or merging into another business entity, or transferring or
leasing substantially all of our assets, unless:
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the surviving or acquiring entity is a United States
corporation, partnership or trust and it expressly assumes our
obligations with respect to our debt securities by executing a
supplemental indenture;
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immediately after giving effect to the transaction, no default
or event of default would occur or be continuing; and
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we have delivered to the trustee an officers certificate
and an opinion of counsel, each stating that the consolidation,
merger, lease or sale complies with the indenture.
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The indenture further provides that no consolidation or merger
of us with or into any other corporation and no conveyance,
transfer or lease of our property substantially as an entirety
to another person may be made if, as a result thereof, any
Principal Property of ours or any of our Restricted Subsidiaries
or any shares of capital stock or Debt of a Restricted
Subsidiary would become subject to a Mortgage which is not
expressly excluded from the restrictions or permitted by the
indentures, unless the debt securities are secured equally and
ratably with, or prior to, all indebtedness secured thereby.
12
Conversion
or Exchange Rights
If debt securities of any series are convertible or
exchangeable, the applicable prospectus supplement will specify:
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the type of securities into which they may be converted or
exchanged;
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the conversion price or exchange ratio, or its method of
calculation;
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whether conversion or exchange is mandatory or at the
holders election;
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how and when the conversion price or exchange ratio may be
adjusted; and
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any other important terms concerning the conversion or exchange
rights.
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Global
Securities
Our debt securities may be issued in the form of one or more
global securities that will be deposited with a depositary or
its nominee identified in the applicable prospectus supplement.
If so, each global security will be issued in the denomination
of the aggregate principal amount of securities that it
represents. Unless and until it is exchanged in whole or in part
for debt securities that are in definitive registered form, a
global security may not be transferred or exchanged except as a
whole to the depositary, another nominee of the depositary, or a
successor of the depositary or its nominee.
The specific material terms of the depositary arrangement with
respect to any portion of a series of our debt securities that
will be represented by a global security will be described in
the applicable prospectus supplement. We anticipate that the
following provisions will apply to our depositary arrangements.
Upon the issuance of any global security and its deposit with or
on behalf of the depositary, the depositary will credit, on its
book-entry registration and transfer system, the principal
amounts of our debt securities represented by the global
security to the accounts of participating institutions that have
accounts with the depositary or its nominee. The underwriters or
agents engaging in the distribution of our debt securities, or
we, if we are offering and selling our debt securities directly,
will designate the accounts to be credited. Ownership of
beneficial interests in a global security will be limited to
participating institutions or their clients. The depositary or
its nominee will keep records of the ownership and transfer of
beneficial interests in a global security by participating
institutions. Participating institutions will keep records of
the ownership and transfer of beneficial interests by their
clients. The laws of some jurisdictions may require that
purchasers of our securities receive physical certificates,
which may impair a holders ability to transfer its
beneficial interests in global securities.
While the depositary or its nominee is the registered owner of a
global security, the depositary or its nominee will be
considered the sole owner of all of our debt securities
represented by the global security for all purposes under the
indentures. Generally, if a holder owns beneficial interests in
a global security, that holder will not be entitled to have our
debt securities registered in that holders own name, and
that holder will not be entitled to receive a certificate
representing that holders ownership. Accordingly, if a
holder owns a beneficial interest in a global security, the
holder must rely on the depositary and, if applicable, the
participating institution of which that holder is a client to
exercise the rights of that holder under the applicable
indenture.
The depositary may grant proxies and otherwise authorize
participating institutions to take any action that a holder is
entitled to take under an indenture. We understand that,
according to existing industry practices, if we request any
action of holders, or any owner of a beneficial interest in a
global security wishes to give any notice or take any action,
the depositary would authorize the participating institutions to
give the notice or take the action, and the participating
institutions would in turn authorize their clients to give the
notice or take the action.
Generally, we will make payments on our debt securities
represented by a global security directly to the depositary or
its nominee. It is our understanding that the depositary will
then credit the accounts of participating institutions, which
will then distribute funds to their clients. We also expect that
payments by participating institutions to their clients will be
governed by standing instructions and customary practices, as is
now the case with securities held for the accounts of clients
registered in street names, and will be the
responsibility of the participating institutions. Neither we nor
the trustee, nor our respective agents, will have any
responsibility, or bear
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any liability, for any aspects of the records relating to or
payments made on account of beneficial interests in a global
security, or for maintaining, supervising or reviewing records
relating to beneficial interests.
Generally, a global security may be exchanged for certificated
debt securities only in the following instances:
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the depositary notifies us that it is unwilling or unable to
continue as depositary for the relevant global security, or it
has ceased to be a registered clearing agency, if required to be
registered by law;
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there shall have occurred and be continuing an event of default
with respect to the global security; or
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another event, described in the relevant prospectus supplement,
has occurred.
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The following is based on information furnished to us:
Unless otherwise specified in the applicable prospectus
supplement, The Depository Trust Company (DTC) will
act as depositary for securities issued in the form of global
securities. Global securities will be issued only as
fully-registered securities registered in the name of
Cede & Co., which is DTCs nominee, or such other
name as may be requested by an authorized representative of DTC.
One or more fully-registered global securities will be issued
for these securities representing in the aggregate the total
number of these securities, and will be deposited with or on
behalf of DTC.
DTC is a limited-purpose trust company organized under the New
York Banking Law, a banking organization within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a clearing corporation within the
meaning of the New York Uniform Commercial Code, and a
clearing agency registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants deposit with it. DTC also
facilitates the settlement among its participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
participants accounts, thereby eliminating the need for
physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks,
trust companies, clearing corporations and other organizations.
DTC is a wholly-owned subsidiary of The Depository
Trust & Clearing Corporation (DTCC), which
in turn, is owned by a number of DTCs direct participants,
certain subsidiaries of DTCC and by the New York Stock Exchange,
Inc., the American Stock Exchange LLC and the National
Association of Securities Dealers, Inc. Access to the DTC system
is also available to others, known as indirect participants,
such as securities brokers and dealers, banks, trust companies
and clearing corporations that clear through or maintain
custodial relationships with direct participants, either
directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of securities within the DTC system must be made by or
through direct participants, which will receive a credit for the
securities on DTCs records. The ownership interest of each
actual purchaser of each security, commonly referred to as the
beneficial owner, is in turn to be recorded on the direct and
indirect participants records. Beneficial owners will not
receive written confirmation from DTC of their purchases, but
beneficial owners are expected to receive written confirmations
providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect
participants through which the beneficial owners entered into
the transactions. Transfers of ownership interests in securities
issued in the form of global securities are accomplished by
entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive
certificates representing their ownership interests in these
securities, except if use of the book-entry system for these
securities is discontinued.
To facilitate subsequent transfers, all global securities
deposited by direct participants with DTC are registered in the
name of Cede & Co. The deposit of securities with DTC
and their registration in the name of Cede & Co. or
such other nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners
of the securities issued in the form of global securities.
DTCs records reflect only the identity of the direct
participants to whose accounts these securities are credited,
which may or may not be the beneficial owners. The participants
will remain responsible for keeping accounts of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants,
and by direct participants and indirect participants to
beneficial owners, will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect from time to time.
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Any redemption notices need to be sent to DTC. If less than all
of the securities of a series or class are being redeemed,
DTCs practice is to determine by lot the amount to be
redeemed from each participant.
Although voting with respect to securities issued in the form of
global securities is limited to the holders of record, when a
vote is required, neither DTC nor Cede & Co. will
itself consent or vote with respect to these securities. Under
its usual procedures, DTC mails an omnibus proxy to the issuer
of the securities as soon as possible after the record date. The
omnibus proxy assigns Cede & Co.s consenting or
voting rights to those direct participants to whose accounts
these securities are credited on the record date, identified in
a listing attached to the omnibus proxy.
Payments in respect of securities issued in the form of global
securities will be made by the issuer of these securities to
Cede & Co., or such other nominee as may be requested
by an authorized representative of DTC. DTCs practice is
to credit direct participants accounts, upon DTCs
receipt of funds and corresponding detail information from the
issuer or its agent on the relevant payment date in accordance
with their respective holdings shown on DTCs records.
Payments by participants to beneficial owners will be governed
by standing instructions and customary practices and will be the
responsibility of the participant and not of DTC or us, subject
to any statutory or regulatory requirements as may be in effect
from time to time. Payments to Cede & Co. (or such
other nominee as may be requested by an authorized
representative of DTC) are the responsibility of the issuer of
the applicable securities, disbursement of these payments to
direct participants is the responsibility of DTC, and
disbursements of these payments to the beneficial owners is the
responsibility of direct and indirect participants.
DTC may discontinue providing its services as depositary with
respect to any securities at any time by giving reasonable
notice to the issuer of these securities. If a successor
depositary is not obtained, individual security certificates
representing these securities are required to be printed and
delivered. We, at our option, may decide to discontinue use of
the system of book-entry transfers through DTC or a successor
depositary. In that event, security certificates will be printed
and delivered to DTC.
The information in this section concerning DTC and its
book-entry system has been obtained from sources that we believe
to be accurate and reliable, but we assume no responsibility for
its accuracy. We have no responsibility for the performance by
DTC or its participants of their obligations as described in
this prospectus or under the rules and procedures governing
their operations.
Debt securities may be issued as registered securities, which
will be registered as to principal and interest in the register
maintained by the registrar for those debt securities, or bearer
securities, which will be transferable only by delivery. If debt
securities are issuable as bearer securities, certain special
limitations and considerations will apply, as set forth in the
applicable prospectus supplement.
Our
Senior Debt Trustee
The current trustee for our senior debt securities is Wells
Fargo Bank, N.A., which performs services for us in the ordinary
course of business. Wells Fargo Bank, N.A. acts as a depositary
for funds of, performs certain other services for, and transacts
other banking business with us and certain of our subsidiaries
in the normal course of its business. Wells Fargo Bank, N.A. is
a participating lender under our U.S. current credit
facility. We may engage additional or substitute trustees with
respect to particular series of our debt securities.
Governing
Law
The indentures and the debt securities will be governed by the
laws of the State of New York.
DESCRIPTION
OF CAPITAL STOCK
Our authorized capital stock consists of 603,000,000 shares
of stock, including:
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600,000,000,000 common shares, $0.50 par value per share,
of which 115,923,964 shares were issued and outstanding and
15,220,166 shares were reserved for issuance under our
employee-benefit plans as of April 30, 2007; and
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3,000,000 shares of serial preferred stock, $0.50 par
value per share, of which no shares were issued or outstanding
as of the date of this prospectus.
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Common
Shares
This section describes the general terms of our common shares.
For more detailed information, you should refer to our amended
articles of incorporation and amended code of regulations,
copies of which have been filed with the SEC. These documents
are also incorporated by reference into this prospectus.
Holders of our common shares are entitled to one vote per share
with respect to each matter submitted to a vote of our
shareholders, subject to voting rights of shares of our serial
preferred stock, if any. Except as provided in connection with
our serial preferred stock or as otherwise may be required by
law or our amended articles of incorporation, our common shares
are the only capital stock entitled to vote in the election of
directors.
Shareholders of Parker have cumulative voting rights in the
election of directors if any shareholder gives notice in writing
to the president or a vice president or the secretary of Parker
not less than 48 hours before the time fixed for holding
the meeting that cumulative voting at this election is desired
and an announcement of the giving of this notice is made upon
the convening of the meeting by the chairman or the secretary or
by or on behalf of the shareholder giving the notice. In this
event, each shareholder has the right to cumulate votes and give
one nominee the number of votes equal to the number of directors
to be elected multiplied by the number of votes to which the
shareholder is entitled, or to distribute votes on the same
principle among two or more nominees, as the shareholder sees
fit.
Subject to the rights of holders of our serial preferred stock,
if any, holders of our common shares are entitled to receive
dividends and distributions lawfully declared by our board of
directors. If we liquidate, dissolve or wind up our business,
whether voluntarily or involuntarily, holders of our common
shares will be entitled to receive any assets available for
distribution to our shareholders after we have paid or set apart
for payment the amounts necessary to satisfy any preferential or
participating rights to which the holders of each outstanding
series of serial preferred stock are entitled by the express
terms of that series of serial preferred stock.
Our outstanding common shares are fully paid and nonassessable.
Our common shares do not have any preemptive, subscription or
conversion rights. We may issue additional authorized common
shares as it is authorized by our board of directors from time
to time, without shareholder approval, except as may be required
by applicable stock exchange requirements. In addition, attached
to each of our common shares is one common share purchase right.
See Rights Agreement below for a summary
discussion of these rights.
Serial
Preferred Stock
This section describes the general terms and provisions of our
serial preferred stock. The applicable prospectus supplement
will describe the specific terms of the shares of serial
preferred stock offered through that prospectus supplement, as
well as any general terms described in this section that will
not apply to those shares of serial preferred stock. We will
file a copy of the amendment to our articles of incorporation
that contains the terms of each new series of serial preferred
stock with the SEC each time we issue a new series of serial
preferred stock. This amendment will establish the number of
shares included in a designated series and fix the designation,
powers, privileges, preferences and rights of the shares of each
series as well as any applicable qualifications, limitations or
restrictions. You should refer to the applicable amended
articles of incorporation before deciding to buy shares of our
serial preferred stock as described in the applicable prospectus
supplement.
Our board of directors has been authorized to provide for the
issuance of shares of our serial preferred stock in multiple
series without the approval of shareholders. With respect to
each series of our serial preferred stock, our board of
directors has the authority, consistent with our amended
articles of incorporation, to fix the following terms:
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the designation of the series distinguished by number,
letter or title;
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the number of shares within the series, which the board of
directors may increase or decrease;
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the dividend rate of the series;
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the dates of payment of dividends, and the dates from which
dividends are cumulative;
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the liquidation price for each share you own if we dissolve or
liquidate;
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whether the shares are redeemable, the redemption price and the
terms of redemption;
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the terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series;
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whether the shares are convertible, the price or rate of
conversion, and the applicable terms and conditions; and
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any restrictions on issuance of shares in the same series or any
other series.
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Dividends in respect of the serial preferred stock will be
cumulative and payable quarterly in cash. Holders of serial
preferred stock are entitled to one vote for each share of
serial preferred stock on all matters presented to shareholders
and vote, in general, together with common shares as one class.
In the event of a default in the payment of dividends (whether
or not declared) in an aggregate amount equivalent to six
quarterly dividends (whether or not consecutive), the holders of
serial preferred stock, voting as a separate class, have the
right to elect two additional directors on Parkers board
of directors. In addition, the holders of serial preferred stock
have supermajority voting rights in regard to changes to our
amended articles of incorporation or amended code of regulations
adversely affecting the voting powers, rights or preferences of
this serial preferred stock.
Your rights with respect to your shares of the serial preferred
stock will be subordinate to the rights of our general
creditors. Shares of our serial preferred stock that we issue
will be fully paid and nonassessable, and will not be entitled
to preemptive rights unless specified in the applicable
prospectus supplement.
The description of our board of directors powers with
respect to serial preferred stock and your rights as a serial
preferred stock shareholder in this section does not describe
every aspect of these powers and rights. A copy of our amended
articles of incorporation has been incorporated by reference in
the registration statement of which this prospectus is a part.
See Where You Can Find More Information for
information on how to obtain a copy.
Rights
Agreement
Attached to each of our common shares is one common share
purchase right. Each right entitles the registered holder to
purchase from us one common share, par value $.50, at a price of
$240.00 per common share, subject to adjustment. The rights
expire on February 17, 2017, unless the final expiration
date is extended or unless the rights are earlier redeemed or
exchanged by us.
The rights are represented by the certificates for our common
shares (or, if the common shares shall be uncertificated, by the
registration of the associated common shares on our stock
transfer books and our confirmation thereof), are not
exercisable, and are not separately transferable from the common
shares, until the earlier of:
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ten business days or any earlier or later date (this date, the
flip-in date) (not to exceed 30 days)
determined by the board of directors, after our public
announcement that a person or group, called an acquiring
person, has become the beneficial owner of 15% or more of
our outstanding common shares; or
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ten business days, or a later date determined by the board of
directors, after the commencement of a tender or exchange offer
that would result in a person or group becoming an acquiring
person.
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Generally, in the event that a person or group becomes an
acquiring person, each right, other than the rights owned by the
acquiring person, will entitle the holder to receive, upon
exercise of the right, common shares having a value equal to two
times the exercise price of the right. In the event that we are
acquired in a merger, consolidation or other business
combination transaction or more than 50% of our assets, cash
flow or earning power is sold or transferred, each right, other
than the rights owned by an acquiring person, will entitle the
holder to receive, upon the exercise of the right, common shares
of the surviving corporation having a value equal to two times
the exercise price of the right.
At any time on or after the flip-in date, the board of directors
may exchange the rights, other than rights owned by the
acquiring person, which would have become void, in whole or in
part, at an exchange ratio of one common share per right,
subject to adjustment.
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The rights are redeemable in whole, but not in part, at
$0.01 per right until a flip-in date occurs. The ability to
exercise the rights terminates at the time that the board of
directors elects to redeem or exchange the rights. At no time
will the rights have any voting rights.
The number of outstanding rights, the exercise price payable,
and the number of common shares issuable upon exercise of the
rights are subject to customary adjustments from time to time to
prevent dilution.
The rights have certain anti-takeover effects. The rights may
cause substantial dilution to a person or group that attempts to
acquire beneficial ownership of more than 15% of our outstanding
shares on terms not approved by our board of directors. The
rights should not interfere with any merger or other business
combination that our board of directors approves.
The description of the rights contained in this section does not
describe every aspect of the rights. The rights agreement dated
as of February 8, 2007, as it may be amended from time to
time, between us and the rights agent, contains the full legal
text of the matters described in this section. A copy of the
rights agreement has been incorporated by reference in the
registration statement of which this prospectus forms a part.
See Where You Can Find More Information for
information on how to obtain a copy.
Limitation
on Directors Liability
Under Section 1701.59(D) of the Ohio Revised Code, unless
the articles or the regulations of a corporation state by
specific reference that this provision of Ohio law does not
apply, a director is liable for monetary damages for any action
or omission as a director only if it is proven by clear and
convincing evidence that this act or omission was undertaken
either with deliberate intent to cause injury to the corporation
or with reckless disregard for the best interests of the
corporation. This provision, however, does not affect the
liability of directors under Section 1701.95 of the Ohio
Revised Code, which relates to:
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the payment of dividends or distributions, the making of
distributions of assets to shareholders or the purchase or
redemption of the corporations shares, contrary to the law
or our articles; the distribution of assets to shareholders
during the winding up of our affairs by dissolution or
otherwise, if creditors are not adequately provided for; and
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the making of certain loans to officers, directors or
shareholders, other than in the usual course of business,
without approval by a majority of the disinterested directors of
the corporation.
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Section 1701.59(D) applies to our board of directors
because our articles and regulations do not specifically exclude
its applicability. This may have the effect of reducing the
likelihood of derivative litigation against directors, and may
discourage or deter shareholders or management from bringing a
lawsuit against directors based on their actions or omissions,
even though such a lawsuit, if successful, might otherwise have
benefited us and our shareholders.
Ohio
Antitakeover Law
Several provisions of Ohio Revised Code may make it more
difficult to acquire us by means of a tender offer, open market
purchase, proxy fight or otherwise. These provisions include
Section 1701.831 (Control Share Acquisitions) and
Chapter 1704 (Business Combinations).
These statutory provisions are designed to encourage persons
seeking to acquire control of us to negotiate with our board of
directors. We believe that, as a general rule, our interests and
the interests of our shareholders would be served best if any
change in control results from negotiations with our board of
directors based upon careful consideration of the proposed
terms, such as the price to be paid to shareholders, the form of
consideration to be paid and the anticipated tax effects of the
transaction, among other factors.
These statutory provisions could have the effect of discouraging
a prospective acquirer from making a tender offer for our shares
or otherwise attempting to obtain control of us. To the extent
that these provisions discourage takeover attempts, they could
deprive shareholders of opportunities to realize takeover
premiums for their shares. Moreover, these provisions could
discourage accumulations of large blocks of common shares, thus
depriving
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shareholders of any advantages which large accumulations of
stock might provide. Finally, these provisions could limit the
ability of shareholders to approve a transaction that they may
deem to be in their best interests.
The Ohio Revised Codes Control Share Acquisition and
Business Combination provisions are set forth in summary below.
This summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all sections
of the Ohio Revised Code.
Control
Share Acquisitions
Section 1701.831 of the Ohio Revised Code provides that
certain notice and informational filings and special shareholder
meeting and voting procedures must be followed prior to
consummation of a proposed control share
acquisition. The Ohio Revised Code defines a control
share acquisition as any acquisition of an issuers
shares which would entitle the acquirer, immediately after that
acquisition, directly or indirectly, to exercise or direct the
exercise of voting power of the issuer in the election of
directors within any one of the following ranges of that voting
power:
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one-fifth or more but less than one-third of that voting power;
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one-third or more but less than a majority of that voting
power; or
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a majority or more of that voting power.
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Assuming compliance with the notice and information filings
prescribed by the statute, the proposed control share
acquisition may be made only if, at a special meeting of
shareholders, the acquisition is approved by at least a majority
of the voting power of the issuer represented at the meeting and
at least a majority of the voting power remaining after
excluding the combined voting power of the interested
shares. Interested shares are the shares held
by the intended acquirer and the
employee-directors
and officers of the issuer, as well as certain shares that were
acquired after the date of the first public disclosure of the
acquisition but before the record date for the meeting of
shareholders and shares that were transferred, together with the
voting power thereof, after the record date for the meeting of
shareholders.
Business
Combinations
We are subject to Chapter 1704 of the Ohio Revised Code,
which prohibits certain business combinations and transactions
between an issuing public corporation and an
interested shareholder for at least three years
after the interested shareholder attains 10% ownership of the
issuing public corporation, unless the board of directors of the
issuing public corporation approves the transaction prior to the
interested shareholder attaining such 10% ownership. An
issuing public corporation is an Ohio corporation
with 50 or more shareholders that has its principal place of
business, principal executive offices, or substantial assets
within the State of Ohio, and as to which no close corporation
agreement exists. An interested shareholder is a
beneficial owner of 10% or more of the shares of a corporation.
Examples of transactions regulated by Chapter 1704 include
the disposition of assets, mergers and consolidations, voluntary
dissolutions and the transfer of shares.
Subsequent to the three-year period, a transaction subject to
Chapter 1704 may take place provided that certain
conditions are satisfied, including:
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prior to the interested shareholders share acquisition
date, the board of directors of the issuing public corporation
approved the purchase of shares by the interested shareholder;
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the transaction is approved by the holders of shares with at
least
662/3%
of the voting power of the corporation (or a different
proportion set forth in the articles of incorporation),
including at least a majority of the outstanding shares after
excluding shares controlled by the interested
shareholder; or
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the business combination results in shareholders, other than the
interested shareholder, receiving a fair price plus interest for
their shares.
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Special
Charter and Regulations Provisions
Our amended articles of incorporation contain a fair
price provision that applies to certain business
combination transactions involving any person or group that
beneficially owns at least 20% of the aggregate voting power of
our outstanding capital stock, referred to as an
interested party. The provision requires the
affirmative vote of the holders of at least 80% of our voting
stock to approve certain business combination transactions
between the interested party and us or our subsidiaries,
including:
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any merger or consolidation;
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any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of our assets or the assets of a subsidiary having a
fair market value of at least $20,000,000;
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the adoption of any plan or proposal for our liquidation or
dissolution proposed by or on behalf of the interested party;
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the issuance or transfer by us or a subsidiary to an interested
party of any of our securities or the securities of a subsidiary
having a fair market value of $20,000,000 or more; or
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any recapitalization, reclassification, merger or consolidation
involving us that would have the effect of increasing the
interested partys voting power in us or a subsidiary.
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The 80% voting requirement will not apply if:
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the business combination is approved by our continuing directors
(as defined in the amended articles of incorporation); or
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the business combination is a merger or consolidation and the
consideration to be received by the holders of each class of
capital stock is the highest of:
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the highest per share price paid by the interested party for the
capital stock during the prior two years; or
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the highest sales price reported on a national securities
exchange during the prior two years; or
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in the case of serial preferred stock, the amount of the
liquidation preference plus annual compound interest from the
date the interested party became an interested party less the
aggregate amount of any cash dividends paid during the interest
period.
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This provision could have the effect of delaying or preventing a
change in control in a transaction or series of transactions not
satisfying the fair price criteria.
The fair price provision may be amended only by the
affirmative vote of the holders of at least 80% of the aggregate
voting power of our outstanding capital stock, unless two-thirds
of the continuing directors recommends such a change.
The foregoing provisions of the amended articles of
incorporation and the code of regulations, together with the
rights agreement and the provisions of the Ohio antitakeover
laws (Section 1701.831 and Chapter 1704 of the Ohio
Revised Code) could have the effect of delaying, deferring or
preventing a change in control or the removal of existing
management, of deterring potential acquirors from making an
offer to our shareholders and of limiting any opportunity to
realize premiums over prevailing market prices for our common
shares in connection therewith. This could be the case
notwithstanding that a majority of our shareholders might
benefit from this change in control or offer.
Transfer
Agent and Registrar
National City Bank serves as the registrar and transfer agent
for our common shares.
Stock
Exchange Listing
Our common shares are listed on the New York Stock Exchange. The
trading symbol for our common shares on this exchange is
PH.
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DESCRIPTION
OF DEPOSITARY SHARES
General
We may offer fractional shares of serial preferred stock, rather
than full shares of serial preferred stock. If we do so, we may
issue receipts for depositary shares that each represent a
fraction of a share of a particular series of serial preferred
stock. The prospectus supplement will indicate that fraction.
The shares of serial preferred stock represented by depositary
shares will be deposited under a depositary agreement between us
and a bank or trust company that meets certain requirements and
is selected by us (the Bank Depositary). Each owner
of a depositary share will be entitled to all the rights and
preferences of the serial preferred stock represented by the
depositary share. The depositary shares will be evidenced by
depositary receipts issued pursuant to the depositary agreement.
Depositary receipts will be distributed to those persons
purchasing the fractional shares of serial preferred stock in
accordance with the terms of the offering.
We have summarized some common provisions of a depositary
agreement and the related depositary receipts. The forms of the
depositary agreement and the depositary receipts relating to any
particular issue of depositary shares will be filed with the SEC
each time we issue depositary shares, and you should read those
documents for provisions that may be important to you.
Dividends
and Other Distributions
If we pay a cash distribution or dividend on a series of serial
preferred stock represented by depositary shares, the Bank
Depositary will distribute these dividends to the record holders
of these depositary shares. If the distributions are in property
other than cash, the Bank Depositary will distribute the
property to the record holders of the depositary shares.
However, if the Bank Depositary determines that it is not
feasible to make the distribution of property, the Bank
Depositary may, with our approval, sell this property and
distribute the net proceeds from this sale to the record holders
of the depositary shares.
Redemption
of Depositary Shares
If we redeem a series of serial preferred stock represented by
depositary shares, the Bank Depositary will redeem the
depositary shares from the proceeds received by the Bank
Depositary in connection with the redemption. The redemption
price per depositary share will equal the applicable fraction of
the redemption price per share of the serial preferred stock. If
fewer than all the depositary shares are redeemed, the
depositary shares to be redeemed will be selected by lot or pro
rata as the Bank Depositary may determine.
Voting
the Serial Preferred Stock
Upon receipt of notice of any meeting at which the holders of
the serial preferred stock represented by depositary shares are
entitled to vote, the Bank Depositary will mail the notice to
the record holders of the depositary shares relating to this
serial preferred stock. Each record holder of these depositary
shares on the record date (which will be the same date as the
record date for the serial preferred stock) may instruct the
Bank Depositary as to how to vote the serial preferred stock
represented by this holders depositary shares. The Bank
Depositary will endeavor, insofar as practicable, to vote the
amount of the serial preferred stock represented by such
depositary shares in accordance with these instructions, and we
will take all action which the Bank Depositary deems necessary
in order to enable the Bank Depositary to do so. The Bank
Depositary will abstain from voting shares of the serial
preferred stock to the extent it does not receive specific
instructions from the holders of depositary shares representing
this serial preferred stock.
Amendment
and Termination of the Depositary Agreement
The form of depositary receipt evidencing the depositary shares
and any provision of the depositary agreement may be amended by
agreement between the Bank Depositary and us. However, any
amendment that materially and adversely alters the rights of the
holders of depositary shares will not be effective unless this
amendment has been
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approved by the holders of at least a majority of the depositary
shares then outstanding. The depositary agreement may be
terminated by the Bank Depositary or us only if:
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all outstanding depositary shares have been redeemed; or
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there has been a final distribution in respect of the serial
preferred stock in connection with any liquidation, dissolution
or winding up of Parker and this distribution has been
distributed to the holders of depositary receipts.
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Charges
of Bank Depositary
We will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary
arrangements. We will pay charges of the Bank Depositary in
connection with the initial deposit of the serial preferred
stock and any redemption of the serial preferred stock. Holders
of depositary receipts will pay other transfer and other taxes
and governmental charges and any other charges, including a fee
for the withdrawal of shares of serial preferred stock upon
surrender of depositary receipts, as are expressly provided in
the depositary agreement to be for their accounts.
Withdrawal
of Serial Preferred Stock
Except as may be provided otherwise in the applicable prospectus
supplement, upon surrender of depositary receipts at the
principal office of the Bank Depositary, subject to the terms of
the depositary agreement, the owner of the depositary shares may
demand delivery of the number of whole shares of serial
preferred stock and all money and other property, if any,
represented by those depositary shares. Fractional shares of
serial preferred stock will not be issued. If the depositary
receipts delivered by the holder evidence a number of depositary
shares in excess of the number of depositary shares representing
the number of whole shares of serial preferred stock to be
withdrawn, the Bank Depositary will deliver to this holder at
the same time a new depositary receipt evidencing the excess
number of depositary shares. Holders of serial preferred stock
thus withdrawn may not thereafter deposit those shares under the
depositary agreement or receive depositary receipts evidencing
depositary shares therefor.
Miscellaneous
The Bank Depositary will forward to holders of depositary
receipts all reports and communications from us that are
delivered to the Bank Depositary and that we are required to
furnish to the holders of serial preferred stock.
Neither the Bank Depositary nor we will be liable if we are
prevented or delayed by law or any circumstance beyond our
control in performing our obligations under the depositary
agreement. The obligations of the Bank Depositary and us under
the depositary agreement will be limited to performance in good
faith of our duties thereunder, and we will not be obligated to
prosecute or defend any legal proceeding in respect of any
depositary shares or serial preferred stock unless satisfactory
indemnity is furnished. We may rely upon written advice of
counsel or accountants, or upon information provided by persons
presenting serial preferred stock for deposit, holders of
depositary receipts or other persons believed to be competent
and on documents believed to be genuine.
Resignation
and Removal of Bank Depositary
The Bank Depositary may resign at any time by delivering to us
notice of its election to do so, and we may at any time remove
the Bank Depositary. Any such resignation or removal will take
effect upon the appointment of a successor Bank Depositary and
the successors acceptance of this appointment. The
successor Bank Depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must
be a bank or trust company meeting the requirements of the
depositary agreement.
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DESCRIPTION
OF WARRANTS
General
Description of Warrants
We may issue warrants for the purchase of debt securities,
serial preferred stock or common shares. Warrants may be issued
independently or together with other securities and may be
attached to or separate from any offered securities. Each series
of warrants will be issued under a separate warrant agreement to
be entered into between us and a bank or trust company, as
warrant agent. The warrant agent will act solely as our agent in
connection with the warrants and will not have any obligation or
relationship of agency or trust for or with any holders or
beneficial owners of warrants. A copy of the warrant agreement
will be filed with the SEC in connection with the offering of
warrants.
Debt
Warrants
The prospectus supplement relating to a particular issue of
warrants to issue debt securities will describe the terms of
those warrants, including the following:
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the title of the warrants;
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the offering price for the warrants, if any;
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the aggregate number of the warrants;
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the designation and terms of the debt securities purchasable
upon exercise of the warrants;
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if applicable, the designation and terms of the debt securities
that the warrants are issued with and the number of warrants
issued with each debt security;
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if applicable, the date from and after which the warrants and
any debt securities issued with them will be separately
transferable;
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the principal amount of debt securities that may be purchased
upon exercise of a warrant and the price at which the debt
securities may be purchased upon exercise;
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the dates on which the right to exercise the warrants will
commence and expire;
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if applicable, the minimum or maximum amount of the warrants
that may be exercised at any one time;
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whether the warrants represented by the warrant certificates or
debt securities that may be issued upon exercise of the warrants
will be issued in registered or bearer form;
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information relating to book-entry procedures, if any;
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the currency or currency units in which the offering price, if
any, and the exercise price are payable;
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if applicable, a discussion of material United States federal
income tax considerations;
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anti-dilution provisions of the warrants, if any;
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redemption or call provisions, if any, applicable to the
warrants;
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any additional terms of the warrants, including terms,
procedures and limitations relating to the exchange and exercise
of the warrants; and
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any other information we think is important about the warrants.
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Stock
Warrants
The prospectus supplement relating to a particular issue of
warrants to issue common shares or serial preferred stock will
describe the terms of the common share warrants and serial
preferred stock warrants, including the following:
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the title of the warrants;
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the offering price for the warrants, if any;
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the aggregate number of the warrants;
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the designation and terms of the common shares or serial
preferred stock that may be purchased upon exercise of the
warrants;
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if applicable, the designation and terms of the securities that
the warrants are issued with and the number of warrants issued
with each security;
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if applicable, the date from and after which the warrants and
any securities issued with the warrants will be separately
transferable;
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the number of common shares or serial preferred stock that may
be purchased upon exercise of a warrant and the price at which
the shares may be purchased upon exercise;
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the dates on which the right to exercise the warrants commence;
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if applicable, the minimum or maximum amount of the warrants
that may be exercised at any one time;
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the currency or currency units in which the offering price, if
any, and the exercise price are payable;
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if applicable, a discussion of material United States federal
income tax considerations;
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anti-dilution provisions of the warrants, if any;
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redemption or call provisions, if any, applicable to the
warrants;
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any additional terms of the warrants, including terms,
procedures and limitations relating to the exchange and exercise
of the warrants; and
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any other information we think is important about the warrants.
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Exercise
of Warrants
Each warrant will entitle the holder of the warrant to purchase
at the exercise price set forth in the applicable prospectus
supplement the principal amount of debt securities or common
shares or shares of serial preferred stock being offered.
Holders may exercise warrants at any time up to the close of
business on the expiration date set forth in the applicable
prospectus supplement. After the close of business on the
expiration date, unexercised warrants are void. Holders may
exercise warrants as set forth in the prospectus supplement
relating to the warrants being offered.
Until a holder exercises the warrants to purchase our debt
securities, serial preferred stock or common shares, the holder
will not have any rights as a holder of our debt securities,
serial preferred stock or common shares, as the case may be, by
virtue of ownership of warrants.
DESCRIPTION
OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts
obligating holders to purchase from us, and obligating us to
sell to the holders, a specified number of common shares or
other securities at a future date or dates, which we refer to in
this prospectus as stock purchase contracts. The
price per share of the securities and the number of shares of
the securities may be fixed at the time the stock purchase
contracts are issued or may be determined by reference to a
specific formula set forth in the stock purchase contracts. The
stock purchase contracts may be issued separately or as part of
units consisting of a stock purchase contract and debt
securities, preferred securities, warrants or debt obligations
of third parties, including United States treasury securities,
securing the holders obligations to purchase the
securities under the stock purchase contracts, which we refer to
herein as stock purchase units. The stock purchase
contracts may require holders to secure their obligations under
the stock purchase contracts in a specified manner. The stock
purchase contracts also may require us to make periodic payments
to the holders of the stock purchase units or vice versa, and
those payments may be unsecured or refunded on some basis.
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The applicable prospectus supplement will describe the terms of
the stock purchase contracts or stock purchase units. The
description in the prospectus supplement will not necessarily be
complete, and reference will be made to the stock purchase
contracts, and, if applicable, collateral or depositary
arrangements, relating to the stock purchase contracts or stock
purchase units, which will be filed with the SEC each time we
issue stock purchase contracts or stock purchase units. United
States federal income tax considerations applicable to the stock
purchase units and the stock purchase contracts will also be
discussed in the applicable prospectus supplement.
PLAN OF
DISTRIBUTION
We may sell the offered securities in and outside the United
States:
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through underwriters or dealers;
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directly to purchasers, including our affiliates and
shareholders, in a rights offering;
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through agents; or
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through a combination of any of these methods.
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We may sell the securities from time to time:
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in one or more transactions at a fixed price or prices which may
be changed from time to time;
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at market prices prevailing at the times of sale;
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at prices related to such prevailing market prices; or
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at negotiated prices.
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The prospectus supplement will include the following information:
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the terms of the offering;
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the names of any underwriters or agents;
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the name or names of any managing underwriter or underwriters;
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the purchase price or initial public offering price of the
securities;
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the net proceeds from the sale of the securities;
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any delayed delivery arrangements;
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any underwriting discounts, commissions and other items
constituting underwriters compensation;
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any discounts or concessions allowed or reallowed or paid to
dealers; and
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any commissions paid to agents.
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Sale
through Underwriters or Dealers
If underwriters are used in the sale, the underwriters will
acquire the securities for their own account. The underwriters
may resell the securities from time to time in one or more
transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the
time of sale. Underwriters may offer securities to the public
either through underwriting syndicates represented by one or
more managing underwriters or directly by one or more firms
acting as underwriters. Unless we inform you otherwise in the
prospectus supplement, the obligations of the underwriters to
purchase the securities will be subject to certain conditions,
and the underwriters will be obligated to purchase all the
offered securities if they purchase any of them. The
underwriters may change from time to time any initial public
offering price and any discounts or concessions allowed or
reallowed or paid to dealers.
During and after an offering through underwriters, the
underwriters may purchase and sell the securities in the open
market. These transactions may include overallotment and
stabilizing transactions and purchases to cover
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syndicate short positions created in connection with the
offering. The underwriters may also impose a penalty bid, which
means that selling concessions allowed to syndicate members or
other broker-dealers for the offered securities sold for their
account may be reclaimed by the syndicate if the offered
securities are repurchased by the syndicate in stabilizing or
covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the offered securities,
which may be higher than the price that might otherwise prevail
in the open market. If commenced, the underwriters may
discontinue these activities at any time.
Some or all of the securities that we offer though this
prospectus may be new issues of securities with no established
trading market. Any underwriters to whom we sell our securities
for public offering and sale may make a market in those
securities, but they will not be obligated to do so and they may
discontinue any market making at any time without notice.
Accordingly, we cannot assure you of the liquidity of, or
continued trading markets for, any securities that we offer.
If dealers are used in the sale of securities, we will sell the
securities to them as principals. They may then resell those
securities to the public at varying prices determined by the
dealers at the time of resale. We will include in the prospectus
supplement the names of the dealers and the terms of the
transaction.
Direct
Sales and Sales through Agents
We may sell the securities directly. In this case, no
underwriters or agents would be involved. We may also sell the
securities through agents designated from time to time. In the
prospectus supplement, we will name any agent involved in the
offer or sale of the offered securities, and we will describe
any commissions payable to the agent. Unless we inform you
otherwise in the prospectus supplement, any agent will agree to
use its reasonable best efforts to solicit purchases for the
period of its appointment.
We may sell the securities directly to institutional investors
or others who may be deemed to be underwriters within the
meaning of the Securities Act of 1933 with respect to any sale
of those securities. We will describe the terms of any sales of
these securities in the prospectus supplement.
Remarketing
Arrangements
Offered securities may also be offered and sold, if so indicated
in the applicable prospectus supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption
or repayment pursuant to their terms, or otherwise, by one or
more remarketing firms, acting as principals for their own
accounts or as agents for us. Any remarketing firm will be
identified and the terms of its agreements, if any, with us and
its compensation will be described in the applicable prospectus
supplement.
Delayed
Delivery Contracts
If we so indicate in the prospectus supplement, we may authorize
agents, underwriters or dealers to solicit offers from certain
types of institutions to purchase securities from us or the
trusts at the public offering price under delayed delivery
contracts. These contracts would provide for payment and
delivery on a specified date in the future. The contracts would
be subject only to those conditions described in the prospectus
supplement. The prospectus supplement will describe the
commission payable for solicitation of those contracts.
General
Information
We may have agreements with the agents, dealers, underwriters
and remarketing firms to indemnify them against certain civil
liabilities, including liabilities under the Securities Act of
1933, or to contribute with respect to payments that the agents,
dealers, underwriters or remarketing firms may be required to
make. Agents, dealers, underwriters and remarketing firms may be
customers of, engage in transactions with or perform services
for us in the ordinary course of their businesses.
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LEGAL
MATTERS
Except as set forth in the applicable prospectus supplement,
Jones Day, Cleveland, Ohio, will pass upon the validity of our
debt securities, common shares, serial preferred stock,
depositary shares, warrants, stock purchase contracts and stock
purchase units. Any underwriters may also be advised about the
validity of the securities and other legal matters by their own
counsel, which will be named in the prospectus supplement.
EXPERTS
The consolidated financial statements and managements
assessment of the effectiveness of internal control over
financial reporting (which is included in Managements
Report on Internal Control over Financial Reporting)
incorporated in this prospectus by reference to the Annual
Report on
Form 10-K
of Parker for the year ended June 30, 2006 have been so
incorporated in reliance on the report (which contains an
explanatory paragraph on managements assessment of
internal control over financial reporting due to the exclusion
of 13 entities from the assessment of internal control over
financial reporting as of June 30, 2006 because they were
acquired by Parker in purchase business combinations during the
year ended June 30, 2006) of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
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$3,000,000,000
PARKER-HANNIFIN
CORPORATION
Medium-Term Notes,
Series A
Due Nine Months or More from
Date of Issue
PROSPECTUS SUPPLEMENT
May 28, 2008
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BANC OF AMERICA SECURITIES
LLC
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KEYBANC CAPITAL MARKETS
INC.
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