Philip Morris International Inc S-3ASR, filed Feb 10, 2023
Philip Morris International Inc. (PM)
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As filed with the Securities and Exchange Commission on February 10, 2023
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PHILIP MORRIS INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
| Virginia | 13-3435103 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
677 Washington Blvd, Suite 1100
Stamford, Connecticut 06901
(203) 905-2410
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Darlene Quashie Henry
Vice President, Associate General Counsel and Corporate Secretary
Avenue de Rhodanie 50
1001 Lausanne, Switzerland
+41 58 242 4793
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Stasia D. Kelly
Sanjay M. Shirodkar
Anna K. Spence
DLA Piper LLP (US)
1251 Avenue of the Americas
New York, New York 10020
(212) 335-4500
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: ☐
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☒
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
| Emerging growth company | ☐ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ☐
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PROSPECTUS
Philip Morris International Inc.
Debt Securities
Warrants to Purchase Debt Securities
Philip Morris International Inc. may offer from time-to-time debt securities or warrants to purchase debt securities. We will provide the specific terms of the securities in one or more supplements to this prospectus. This prospectus may not be used to offer and sell the securities unless accompanied by a prospectus supplement. A prospectus supplement may add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement, as well as the documents incorporated by reference in this prospectus and in any accompanying prospectus supplement, carefully before you invest.
Investing in the securities involves risks. See “Risk Factors” on page 3 of 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 February 10, 2023
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You should rely only on the information contained or incorporated by reference in this prospectus and in any accompanying prospectus supplement or in any related free writing prospectus. We have not authorized anyone to provide you with different information. This document may only be used where it is legal to sell these securities. You should only assume that the information contained or incorporated by reference in this prospectus or in any accompanying prospectus supplement or any related free writing prospectus is accurate as of the respective date on the front of those documents. Our business, financial condition, results of operations and prospects may have changed since that date. We are not making an offer of these securities in any state where the offer is not permitted.
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This prospectus is part of an “automatic shelf” registration statement that we filed with the Securities and Exchange Commission, or the SEC, as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act. By using an automatic shelf registration statement, we may, at any time and from time to time, sell debt securities and warrants to purchase debt securities under this prospectus in one or more offerings in an unlimited amount. As allowed by the SEC rules, this prospectus does not contain all of the information included in the registration statement. For further information, we refer to the registration statement, including its exhibits. Statements contained in this prospectus about the provisions or contents of any agreement or other document are not necessarily complete. If the SEC’s rules and regulations require that an agreement or document be filed as an exhibit to the registration statement, please see that agreement or document for a complete description of these matters.
This prospectus provides you with a general description of the securities we may offer. Each time we use this prospectus to offer securities, we will provide you with a prospectus supplement that will describe the specific amounts, prices and terms of the securities being offered. The prospectus supplement may also add, update or change information contained in this prospectus. Therefore, if there is any inconsistency between the information in this prospectus and the prospectus supplement, you should rely on the information in the prospectus supplement.
To understand the terms of our securities, you should carefully read this document and the applicable prospectus supplement. Together, they provide the specific terms of the securities we are offering. You should also read the documents we have referred you to under “Where You Can Find More Information” below for information on our company, the risks we face and our financial statements. The registration statement and exhibits can be read at the SEC’s website or at the SEC as described under “Where You Can Find More Information.”
Unless otherwise indicated, all references in this prospectus to “us,” “our” or “we” refer to Philip Morris International Inc. and its subsidiaries.
References herein to “$,” “dollars” and “U.S. dollars” are to United States dollars, and all financial data included or incorporated by reference herein have been presented in accordance with accounting principles generally accepted in the United States of America.
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WHERE YOU CAN FIND MORE INFORMATION
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at www.sec.gov or at our website at www.pmi.com (as noted below, the information contained in, or that can be accessed through, our website is not a part of this prospectus or part of any prospectus supplement). In addition, you can inspect reports and other information we file at the office of the New York Stock Exchange, Inc., 11 Wall Street, New York, New York 10005. For further information on obtaining copies of our public filings at the New York Stock Exchange, you should call (212) 656-3000.
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DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to “incorporate by reference” into this prospectus information that we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede any inconsistent information in this prospectus and in our other filings with the SEC.
We incorporate by reference the following documents that we previously filed with the SEC (other than information in such documents that is deemed not to be filed), all of which are filed under SEC File No. 001-33708:
| • | our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 10, 2023; |
| • | the portions of our Definitive Proxy Statement on Schedule 14A filed with the SEC on March 24, 2022 that are incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2021; and |
| • | our Current Reports on Form 8-K filed with the SEC on January 11, 2023 (with respect to Item 5.02 only) and January 30, 2023 (with respect to Item 1.01 only). |
These documents contain important information about our business and our financial performance.
We also incorporate by reference any future filings we make with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, on or after the date of the filing of the registration statement and prior to the termination of the offering, all of which will be filed under SEC File No. 001-33708. Our future filings with the SEC will automatically update and supersede any inconsistent information in this prospectus.
You may obtain a free copy of these filings from us by telephoning or writing to us at the following address and telephone number:
Philip Morris International Inc.
677 Washington Blvd, Suite 1100
Stamford, Connecticut 06901
Attention: Office of the Corporate Secretary
Telephone: (203) 905 - 2410
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FORWARD-LOOKING AND CAUTIONARY STATEMENTS
We may from time to time make written or oral forward-looking statements, including in information included or incorporated by reference in this prospectus and the applicable prospectus supplement. You can identify these forward-looking statements by use of words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “will,” “aspires,” “estimates,” “intends,” “projects,” “aims,” “goals,” “targets, “forecasts” and other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Our reduced-risk products (“RRPs”) constitute a new product category that is less predictable than our mature cigarette business. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements and whether to invest in or remain invested in our securities. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we have identified important factors in the documents incorporated by reference that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by us; any such statement is qualified by reference to these cautionary statements. We elaborate on these and other risks we face in the documents incorporated by reference. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider risks discussed in the documents incorporated by reference to be a complete discussion of all potential risks or uncertainties. We do not undertake to update any forward-looking statement that we may make from time to time, except in the normal course of our public disclosure obligations.
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General
We are a leading international tobacco company working to deliver a smoke-free future and to evolve our portfolio for the long term to include products outside of the tobacco and nicotine sector. Our current product portfolio primarily consists of cigarettes and smoke-free products, which include heat-not-burn, vapor, and oral nicotine products. Since 2008, we have invested more than $10.5 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This investment includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies.
In 2021, we laid the foundation for our long-term growth ambitions beyond nicotine in wellness and healthcare, including the milestone acquisitions of Vectura Group plc and Fertin Pharma A/S, which provide essential capabilities for future product development. Now, through our Vectura Fertin Pharma subsidiary, with a strong foundation and significant expertise in life sciences, we aim to expand into wellness and healthcare areas.
In November 2022, we acquired Swedish Match AB (“Swedish Match”) – a leader in oral nicotine delivery – creating a global smoke-free combination led by the companies’ IQOS and ZYN brands. The U.S. Food and Drug Administration has authorized versions of our IQOS Platform 1 devices and consumables, and Swedish Match’s General snus as Modified Risk Tobacco Products.
The Swedish Match acquisition is a key milestone in our transformation to becoming a smoke-free company. Swedish Match already has a leading nicotine pouch franchise in the United States under the ZYN brand name. The Swedish Match product portfolio is complementary to our existing portfolio, permitting us to bring together a leading oral nicotine product with the leading heat-not-burn product. By joining forces with Swedish Match, we expect to accelerate the achievement of our joint smoke-free ambitions, switching more adults who would otherwise continue to smoke to better alternatives faster than either company could achieve separately.
As of December 31, 2022, we managed our business in six geographical segments, a Swedish Match segment and a Wellness and Healthcare segment:
| • | European Union; |
| • | Eastern Europe; |
| • | Middle East & Africa, which includes our international duty free business; |
| • | South & Southeast Asia; |
| • | East Asia & Australia; |
| • | Americas; |
| • | Swedish Match, which reflects our fourth quarter 2022 acquisition of the company; and |
| • | Wellness and Healthcare, which includes the operating results of our new Wellness and Healthcare business, Vectura Fertin Pharma. In the third quarter of 2021, we acquired Fertin Pharma A/S, Vectura Group plc. (also known as Vectura Group Ltd.) and OtiTopic, Inc. On March 31, 2022, we launched a new Wellness and Healthcare business consolidating these entities, Vectura Fertin Pharma. |
To further support the growth of our smoke-free business, reinforce consumer centricity, and increase the speed of innovation and deployment, in January 2023, we rearranged our operations in four geographical segments, down from the current six and as follows:
| • | Europe Region is headquartered in Lausanne, Switzerland, and covers all the European Union countries, Switzerland, the United Kingdom, and also Ukraine, Moldova and Southeast Europe; |
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| • | South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region is headquartered in Dubai, United Arab Emirates. It covers South and Southeast Asia, the African continent, the Middle East, Turkey, as well as Israel, Central Asia, Caucasus and Russia; |
| • | East Asia, Australia, and PMI Duty Free Region is headquartered in Hong Kong and includes the consolidation of our international duty free business with East Asia & Australia; and |
| • | Americas Region is headquartered in Stamford, Connecticut and covers the United States, Canada and Latin America. |
The operations of Swedish Match and our Wellness and Healthcare segment remain unchanged.
Our cigarettes are sold in approximately 175 markets, and in many of these markets they hold the number one or number two market share position. We have a wide range of premium, mid-price and low-price brands. Our portfolio comprises both international and local brands.
In addition to the manufacture and sale of cigarettes, we are engaged in the development and commercialization of RRPs. RRPs is the term we use to refer to products that present, are likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continuing smoking. We have a range of RRPs in various stages of development, scientific assessment and commercialization. Our RRPs are smoke-free products that contain and/or generate far lower quantities of harmful and potentially harmful constituents than found in cigarette smoke. Smoke-free products is the term we primarily use to refer to all of our products that are not combustible tobacco products, such as heat-not-burn, e-vapor, and oral nicotine. In addition, smoke-free products include wellness and healthcare products, as well as consumer accessories such as lighters and matches. IQOS is the leading brand in our smoke-free product portfolio. As of December 31, 2022, our smoke-free products were available for sale in 73 markets.
Our principal executive offices are located at Philip Morris International Inc., 677 Washington Blvd, Suite 1100, Stamford, Connecticut 06901, our telephone number is +1 (203) 905 - 2410 and our website is www.pmi.com. The information contained in, or that can be accessed through, our website is not a part of this prospectus or any prospectus supplement.
Other
Philip Morris International Inc. is a legal entity separate and distinct from our direct and indirect subsidiaries. Accordingly, our right, and thus the right of our creditors and stockholders, to participate in any distribution of the assets or earnings of any subsidiary is subject to the prior rights of creditors of such subsidiary, except to the extent that claims of our company itself as a creditor may be recognized. As a holding company, our principal sources of funds, including funds to make payment on our debt securities, are from the receipt of dividends and repayment of debt from our subsidiaries. Our principal wholly owned and majority-owned subsidiaries currently are not limited by long-term debt or other agreements in their ability to pay cash dividends or to make other distributions that are otherwise compliant with law.
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Our business is subject to uncertainties and risks. You should carefully consider and evaluate all of the information included and incorporated by reference in this prospectus, including the risk factors incorporated by reference to our Annual Report on Form 10-K for the year ended December 31, 2022, as well as any risk factors we may describe in any subsequent periodic reports or information we file with the SEC. It is possible that our business, financial condition, liquidity or results of operations could be materially adversely affected by any of these risks.
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Unless we otherwise state in the applicable prospectus supplement, we intend to use the net proceeds from the sale of the debt securities and debt warrants and the net proceeds, if any, from the exercise of debt warrants, for general corporate purposes. General corporate purposes may include repayment of debt, additions to working capital, capital expenditures, investments in our subsidiaries, possible acquisitions and the repurchase, redemption or retirement of securities, including shares of our common stock. The net proceeds may be temporarily invested or applied to repay short-term or revolving debt prior to use.
We expect to issue long-term and short-term debt from time to time. The nature and amount of our long-term and short-term debt and the proportionate amount of each can be expected to vary from time to time as a result of business requirements, market conditions and other factors.
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DESCRIPTION OF DEBT SECURITIES
The debt securities covered by this prospectus will be our direct unsecured obligations. The debt securities will be issued in one or more series under an indenture dated as of April 25, 2008 between us and HSBC Bank USA, National Association, as trustee.
This prospectus briefly describes the material indenture provisions. Those descriptions are qualified in all respects by reference to the actual text of the indenture. For your reference, in the summary that follows, we have included references to section numbers of the indenture so that you can more easily locate these provisions. In cases where portions of the summary are taken from more than one section of the indenture, we have referred only to the section of the indenture that is principally applicable to that part of the summary. A copy of the indenture is listed as an exhibit to the registration statement of which this prospectus is a part and is incorporated herein by reference. See “Where You Can Find More Information” for information on how to obtain a copy. You should also refer to the Trust Indenture Act of 1939, or the Trust Indenture Act, certain terms of which are made part of the indenture by reference.
The material financial, legal and other terms particular to debt securities of each series will be described in the prospectus supplement relating to the debt securities of that series. The prospectus supplement relating to the debt securities of the series will be attached to the front of this prospectus. The following briefly summarizes the material provisions of the indenture and the debt securities, other than pricing and related terms that will be disclosed in an accompanying prospectus supplement. The prospectus supplement will also state whether any of the terms summarized below do not apply to the series of debt securities being offered. You should read the more detailed provisions of the indenture, including the defined terms, for provisions that may be important to you. You should also read the particular terms of a series of debt securities, which will be described in more detail in the applicable prospectus supplement.
Prospective purchasers of debt securities should be aware that special United States federal income tax, accounting and other considerations not addressed in this prospectus may be applicable to instruments such as the debt securities. The prospectus supplement relating to an issue of debt securities will describe these considerations, if they apply.
Capitalized terms used below are defined under “Defined Terms.” In this “Description of Debt Securities” section, references to “we,” “us” and “our” are only to Philip Morris International Inc. and not its subsidiaries.
General
The debt securities will rank equally with all of our other unsecured and unsubordinated debt. The indenture does not limit the amount of debt we may issue under the indenture and provides that additional debt securities may be issued up to the aggregate principal amount authorized by a board resolution. We may issue the debt securities from time to time in one or more series with the same or various maturities, at par, at a discount or at a premium. The prospectus supplement relating to any debt securities being offered will include specific terms relating to the offering, including the particular amount, price and other terms of those debt securities. These terms will include some or all of the following:
| • | the title of the debt securities; |
| • | any limit upon the aggregate principal amount of the debt securities; |
| • | the date or dates on which the principal of the debt securities will be payable or their manner of determination; |
| • | if the debt securities will bear interest: |
| • | the interest rate or rates; |
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| • | the date or dates from which any interest will accrue; |
| • | the interest payment dates for the debt securities; and |
| • | the regular record date for any interest payable; |
or, in each case, their method of determination;
| • | the place or places where the principal of, and any premium and interest on, the debt securities will be payable; |
| • | the period or periods within which, the price or prices at which, the currency or currency unit in which and the terms on which any of the debt securities may be redeemed, in whole or in part at our option, and any remarketing arrangements; |
| • | the terms on which we would be required to redeem, repay or purchase debt securities required by any sinking fund, mandatory redemption or similar provision; and the period or periods within which, the price or prices at which, the currency or currency unit in which and the terms and conditions on which the debt securities will be so redeemed or purchased in whole or in part; |
| • | if denominations other than $1,000 or any integral multiple of $1,000, the denominations in which the debt securities will be issued; |
| • | the portion of the principal amount of the debt securities that is payable on the declaration of acceleration of the maturity, if other than their entire principal amount; these debt securities could include original issue discount, or OID, debt securities or indexed debt securities, which are each described below; |
| • | any trustees, paying agents, transfer agents, registrars, depositaries or similar agents with respect to the debt securities; |
| • | currency or currency units in which the debt securities will be denominated and payable, if other than U.S. dollars; |
| • | whether the amounts of payments of principal of, and any premium and interest on, the debt securities are to be determined with reference to an index, formula or other method, and if so, the manner in which such amounts will be determined; |
| • | whether the debt securities will be issued in whole or in part in the form of global securities and, if so, the depositary, if any, for the global securities, whether permanent or temporary (including the circumstances under which any temporary global debt securities may be exchanged for definitive debt securities); |
| • | whether the debt securities will be convertible or exchangeable into other of our or another company’s securities and the terms and conditions of any such conversion or exchange; |
| • | any special tax implications of the debt securities, including whether and under what circumstances, if any, we will pay additional amounts under any debt securities held by a person who is not a United States person for tax payments, assessments or other governmental charges and whether we have the option to redeem the debt securities which are affected by the additional amounts instead of paying the additional amounts; |
| • | the form of the debt securities; |
| • | whether and to what extent the debt securities are subject to defeasance on terms different from those described under the heading “Defeasance”; |
| • | if the debt securities bear no interest, any dates on which lists of holders of these debt securities must be provided to the trustee; |
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| • | any addition to, or modification or deletion of, any event of default or any covenant specified in the indenture; and |
| • | any other specific terms of the debt securities. |
(Section 301)
We may issue debt securities as OID debt securities. OID debt securities bear no interest or bear interest at below-market rates and are sold at a discount below their stated principal amount. If we issue OID debt securities, the prospectus supplement will contain the issue price of the securities and the rate at which and the date from which discount will accrete.
We may also issue indexed debt securities. Payments of principal of, and any premium and interest on, indexed debt securities are determined with reference to the rate of exchange between the currency or currency unit in which the debt security is denominated and any other currency or currency unit specified by us, to the relationship between two or more currencies or currency units, to the price of one or more specified securities or commodities, to one or more securities or commodities exchange indices or other indices or by other similar methods or formulas, all as specified in the prospectus supplement. (Section 301)
We may issue debt securities other than the debt securities described in this prospectus. There is no requirement that any other debt securities that we issue be issued under the indenture. Thus, any other debt securities that we issue may be issued under other indentures or documentation containing provisions different from those included in the indenture or applicable to one or more issues of the debt securities described in this prospectus.
Consolidation, Merger or Sale
Under the indenture, we may not consolidate with or merge into any other corporation or convey or transfer our properties and assets substantially as an entirety to any person unless:
| • | the corporation formed by such consolidation or into which we are merged or the person which acquires by conveyance or transfer our properties and assets substantially as an entirety is a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia and expressly assumes, by a supplemental indenture, payment of the principal of and any premium and interest (including any additional amounts payable) on all the debt securities and the performance of every covenant of the indenture; |
| • | after giving effect to the transaction, no Event of Default with respect to any series of debt securities, and no event which, after notice or lapse of time or both, would become an Event of Default, will have happened and be continuing; |
| • | the successor corporation assuming the debt securities agrees, by supplemental indenture, to indemnify the individuals liable therefor for the amount of United States federal estate tax paid solely as a result of such assumption in respect of debt securities held by individuals who are not citizens or residents of the United States at the time of their death; and |
| • | we deliver to the trustee an officers’ certificate and an opinion of counsel, each stating that the consolidation, merger, conveyance or transfer and the supplemental indenture comply with these provisions. |
(Section 801)
The successor corporation will assume all of our obligations under the indenture as if it were an original party to the indenture. After assuming such obligations, the successor corporation will have all of our rights and powers under the indenture. (Section 802)
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Waivers Under the Indenture
Under the indenture, the holders of not less than a majority in aggregate principal amount of all affected series of the outstanding debt securities (voting as a single class), may on behalf of all holders of such affected series:
| • | waive our compliance with certain covenants of the indenture; and (Section 1009) |
| • | waive any past default under the indenture, except: |
| • | a default in the payment of the principal of, or any premium or interest on, any debt securities; and |
| • | a default with respect to a covenant or provision of the indenture which itself cannot be modified or amended without the consent of the holder of each affected debt security. |
(Section 513)
Events of Default
When we use the term “Event of Default” in the indenture with respect to a particular series of debt securities, we mean any of the following:
| • | we fail to pay any installment of interest on any debt security of that series for 30 days after payment was due; |
| • | we fail to make payment of the principal of, or any premium on, any debt security of that series when due; |
| • | we fail to make any sinking fund payment when due with respect to debt securities of that series; |
| • | we fail to perform, or breach, any other covenant or warranty in respect of any debt security of that series contained in the indenture or in such debt securities or in the applicable board resolution under which such series is issued and this failure or breach continues for 90 days after we receive written notice of it from the trustee or holders of 25% in aggregate principal amount of all outstanding series of the debt securities or, with respect to any such covenant or agreement which is not applicable to all series of debt securities, by the holders of at least 25% in aggregate principal amount of the affected series (in each case voting as a single class); |
| • | we or a court take certain actions relating to bankruptcy, insolvency or reorganization of our company; or |
| • | any other event of default that may be specified for the debt securities of the series or in the board resolution with respect to the debt securities of that series. |
(Section 501)
The supplemental indenture or the form of security for a particular series of debt securities may include additional Events of Default or changes to the Events of Default described above. The Events of Default applicable to a particular series of debt securities will be described in the prospectus supplement relating to such series.
A default with respect to a single series of debt securities under the indenture will not necessarily constitute a default with respect to any other series of debt securities issued under the indenture. A default under our other indebtedness will not be a default under the indenture. The trustee may withhold notice to the holders of debt securities of any default, except for defaults that involve our failure to pay principal or any premium or interest, if it determines in good faith that the withholding of notice is in the interest of the holders. (Section 602)
If an Event of Default for any series of debt securities occurs and continues (other than an Event of Default involving our bankruptcy, insolvency or reorganization), either the trustee or the holders of at least 25% in
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aggregate principal amount of all outstanding series of the debt securities to which it is applicable or, if such default is not applicable to all series of the debt securities, the holders of at least 25% in principal amount of all series to which it is applicable (in each case voting as a single class) may require us upon notice in writing to us, to immediately repay the entire principal (or, in the case of (a) OID debt securities, a lesser amount as may be provided in those OID debt securities or (b) indexed debt securities, an amount determined by the terms of those indexed debt securities), of all the debt securities of such series together with accrued interest on the debt securities.
If an Event of Default occurs which involves our bankruptcy, insolvency or reorganization, then all unpaid principal amounts (or, if the debt securities are (a) OID debt securities, a lesser amount as may be provided in those OID debt securities or (b) indexed debt securities, an amount determined by the terms of those indexed debt securities), of all the debt securities of such series together with accrued interest on the debt securities and accrued interest on all debt securities of each series then outstanding will immediately become due and payable, without any action by the trustee or any holder of debt securities. (Section 502)
Subject to certain conditions, the holders of a majority in principal amount of the outstanding debt securities of a series may rescind a declaration of acceleration if all Events of Default, other than the failure to pay principal or interest due solely because of the declaration of acceleration, have been cured or waived. (Section 502)
Other than its duties in case of an Event of Default, the trustee is not obligated to exercise any of its rights or powers under the indenture at the request, order or direction of any holders, unless the holders offer the trustee reasonable indemnity. (Section 507) The holders of a majority in principal amount outstanding of any series of debt securities may, subject to certain limitations, direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any power conferred upon the trustee, for any series of debt securities. (Section 512)
The indenture requires us to file each year with the trustee, an officer’s certificate that states that:
| • | the signing officer has supervised a review of our activities during such year and performance under the indenture; and |
| • | to the best of his or her knowledge, based on the review, we comply with all conditions and covenants of the indenture. (Section 1005) |
A judgment for money damages by courts in the United States, including a money judgment based on an obligation expressed in a foreign currency, will ordinarily be rendered only in U.S. dollars. New York statutory law provides that a court shall render a judgment or decree in the foreign currency of the underlying obligation and that the judgment or decree shall be converted into U.S. dollars at the exchange rate prevailing on the date of entry of the judgment or decree. If a court requires a conversion to be made on a date other than a judgment date, the indenture requires us to pay additional amounts necessary to ensure that the amount paid in U.S. dollars to a holder is equal to the amount due in such foreign currency or currency unit. (Section 515)
Payment and Transfer
We will pay the principal of, and any premium and interest on, debt securities at the place or places that we will designate for such purposes. We will make payment to the persons in whose names the debt securities are registered on the close of business on the day or days that we will specify in accordance with the indenture. We will pay the principal of, and any premium on, debt securities only against surrender of those debt securities. Any other payments will be made as set forth in the applicable prospectus supplement. Holders may transfer or exchange debt securities at the corporate trust office of the trustee or at any other office or agency, maintained for such purposes, without the payment of any service charge except for any tax or governmental charge. (Section 307)
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Restrictive Covenants
The indenture includes the following restrictive covenants:
Limitations on Liens
The indenture limits the amount of liens that we or our Subsidiaries may incur or otherwise create, in order to secure indebtedness for borrowed money, upon any Principal Facility or any shares of capital stock that any of our Subsidiaries owning any Principal Facility has issued to us or any of our Subsidiaries. If we or any of our Subsidiaries incur such liens, then we will secure the debt securities to the same extent and in the same proportion as the debt that is secured by such liens. This covenant does not apply, however, to any of the following:
| • | in the case of a Principal Facility, liens incurred in connection with the issuance by a state or political subdivision thereof of any securities the interest on which is exempt from federal income taxes by virtue of Section 103 of the Internal Revenue Code of 1986, as amended, or any other laws or regulations in effect at the time of such issuance; |
| • | liens existing on the date of the indenture; |
| • | liens on property or shares of capital stock existing at the time we or any of our Subsidiaries acquire such property or shares of stock (including acquisition through merger, share exchange or consolidation) or securing the payment of all or part of the purchase price, construction or improvement thereof incurred prior to, at the time of, or within 180 days after the later of the acquisition, completion of construction or improvement or commencement of full operation of such property for the purpose of financing all or a portion of such purchase or construction or improvement; or |
| • | liens for the sole purpose of extending, renewing or replacing in whole or in part the indebtedness secured by any lien referred to in the foregoing three bullet points or in this bullet point; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the property which secured the lien so extended, renewed or replaced (plus improvements on such property). |
Notwithstanding the foregoing, we and/or any of our Subsidiaries may create, assume or incur liens that would otherwise be subject to the restriction described above, without securing debt securities issued under the indenture equally and ratably, if the aggregate value of all outstanding indebtedness secured by the liens plus the value of Sale and Leaseback Transactions does not at the time exceed 15% of Consolidated Net Tangible Assets. (Section 1007)
At December 31, 2022, our Consolidated Net Tangible Assets were $5.3 billion.
Sale and Leaseback Transactions
A Sale and Leaseback Transaction by us or any of our Subsidiaries of any Principal Facility is prohibited, unless within 90 days of the effective date of the arrangement, an amount equal to the greater of the net proceeds of the sale of the property leased pursuant to the Sale and Leaseback Transaction or the fair value of the property at the time of entering into the Sale and Leaseback Transaction as determined by our board of directors (“value”) is applied by us to the retirement of non-subordinated indebtedness for money borrowed with more than one year stated maturity, including our debt securities, except that such sales and leasebacks are permitted to the extent that the “value” thereof plus the other secured debt referred to in the penultimate paragraph above in the subsection entitled “Restrictive Covenants—Limitations on Liens” does not at the time exceed 15% of our Consolidated Net Tangible Assets. (Section 1008)
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There are no other restrictive covenants in the indenture. The indenture does not require us to maintain any financial ratios, minimum levels of net worth or liquidity or restrict the incurrence of indebtedness, the makeup of asset sales, the payment of dividends, the making of other distributions on our capital stock or the redemption or purchase of our capital stock. Moreover, the indenture does not contain any provision requiring us to repurchase or redeem any debt securities or debt warrants or modify the terms thereof or afford the holders thereof any other protection in the event of our change of control, any highly leveraged transaction or any other event involving us that may materially adversely affect our creditworthiness or the value of the debt securities or debt warrants.
Defined Terms
We define Subsidiaries as any corporation of which at least a majority of all outstanding stock or other interests having ordinary voting power in the election of directors, managers or trustees of such corporation is at the time, directly or indirectly, owned or controlled by us or by one or more Subsidiaries or by us and one or more Subsidiaries. (Section 101)
We define Principal Facility as all real property constituting part of any manufacturing plant or distribution facility owned and operated by us or any Subsidiary, together with such manufacturing plant or distribution facility, including all attached plumbing, electrical, ventilating, heating, cooling, lighting and other utility systems, ducts and pipes, but excluding trade fixtures, business machinery, equipment, motorized vehicles, tools, supplies and materials, security systems, cameras, inventory and other personal property and materials. The term Principal Facility shall not include any particular manufacturing plant or distribution facility as of any particular date unless its net book value exceeds 0.75% of Consolidated Net Tangible Assets. (Section 1007)
We define a Sale and Leaseback Transaction as the sale or transfer of a Principal Facility with the intention of taking back a lease of the property, except a lease for a temporary period of less than three years, including renewals, with the intent that the use by us or any Subsidiary will be discontinued on or before the expiration of such period. (Section 1008)
We define Consolidated Net Tangible Assets as the excess over current liabilities of all assets appearing on our most recent quarterly or annual consolidated balance sheet, less goodwill and other intangible assets and the minority interests of others in Subsidiaries. (Section 101)
Global Securities
We may issue the debt securities in whole or in part in the form of one or more global securities that will be deposited with, or on behalf of, a depositary identified in the applicable prospectus supplement.
We may issue the global securities in either temporary or permanent form. We will describe the specific terms of the depositary arrangement with respect to a series of debt securities in the applicable prospectus supplement. We anticipate that the following provisions will apply to all depositary arrangements.
Once a global security is issued, the depositary will credit on its book-entry system the respective principal amounts of the individual debt securities represented by that global security to the accounts of institutions that have accounts with the depositary. These institutions are known as participants.
The underwriters for the debt securities will designate the accounts to be credited. However, if we have offered or sold the securities either directly or through agents, we or the agents will designate the appropriate accounts to be credited.
Ownership of beneficial interests in a global security will be limited to participants or persons that may hold beneficial interests through participants. Ownership of beneficial interests in a global security will be shown on,
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and the transfer of that ownership will be effected only through, records maintained by the depositary’s participants or persons that may hold through participants. The laws of some states require that certain purchasers of debt securities take physical delivery of securities. Those laws may limit the market for beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the registered owner of a global security, the depositary or nominee will be considered the sole owner or holder of the debt securities represented by the global security for all purposes under the indenture. Except as provided in the applicable prospectus supplement, owners of beneficial interests in a global security:
| • | will not be entitled to have debt securities represented by global securities registered in their names; |
| • | will not receive or be entitled to receive physical delivery of debt securities in definitive form; and |
| • | will not be considered owners or holders of these debt securities under the indenture. |
Payments of principal of, and any premium and interest on, the individual debt securities registered in the name of the depositary or its nominee will be made to the depositary or its nominee as the registered owner of that global security.
Neither we nor the trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests of a global security, or for maintaining, supervising or reviewing any records relating to beneficial ownership interests and each of us and the trustee may act or refrain from acting without liability on any information provided by the depositary. (Section 308)
We expect that the depositary, after receiving any payment of principal of, and any premium and interest on, a global security, will immediately credit the accounts of the participants with payments in amounts proportionate to their respective holdings in principal amount of beneficial interest in a global security as shown on the records of the depositary. We also expect that payments by participants to owners of beneficial interests in a global security will be governed by standing customer instructions and customary practices, as is now the case with debt securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such participants.
Debt securities represented by a global security will be exchangeable for debt securities in definitive form of like tenor in authorized denominations only if:
| • | the depositary notifies us that it is unwilling or unable to continue as the depositary and a successor depositary is not appointed by us within 90 days; |
| • | we deliver to the trustee for securities of such series in registered form a company order stating that the debt securities of such series shall be exchangeable; or |
| • | an Event of Default has occurred and is continuing with respect to debt securities of such series. |
Unless and until a global security is exchanged in whole or in part for debt securities in definitive certificated form, it may not be transferred or exchanged except as a whole by the depositary.
You may transfer or exchange certificated securities at any office that we maintain for this purpose in accordance with the terms of the indenture. We will not charge a service fee for any transfer or exchange of certificated securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge that we are required to pay in connection with a transfer or exchange. (Section 305)
Registration of Transfer
You may effect the transfer of certificated securities and the right to receive the principal of, and any premium and interest on, certificated securities only by surrendering the certificate representing those certificated
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securities and either reissuance by us or the trustee of the certificate to the new holder or the issuance by us or the trustee of a new certificate to the new holder.
We are not required to:
| • | issue, register the transfer of or exchange securities of any series during a period beginning at the opening of business 15 days before the day we transmit a notice of redemption of the securities of the series selected for redemption and ending at the close of business on the day of the transmission; or |
| • | register the transfer of or exchange any security so selected for redemption in whole or in part, except the unredeemed portion of any security being redeemed in part. |
(Section 305)
Exchange
At your option, you may exchange your debt securities of any series, except a global security, for an equal principal amount of other debt securities of the same series having authorized denominations upon surrender to our designated agent.
We may at any time exchange debt securities issued as one or more global securities for an equal principal amount of debt securities of the same series in definitive form. In this case, we will deliver to the holders new debt securities in definitive registered form in the same aggregate principal amount as the global securities being exchanged.
The depositary of the global securities may also decide at any time to surrender one or more global securities in exchange for debt securities of the same series in definitive form, in which case we will deliver the new debt securities in definitive form to the persons specified by the depositary, in an aggregate principal amount equal to, and in exchange for, each person’s beneficial interest in the global securities.
Notwithstanding the above, we will not be required to exchange any debt securities if, as a result of the exchange, we would suffer adverse consequences under any United States law or regulation. (Section 305)
Defeasance
Legal Defeasance
Unless otherwise specified in the prospectus supplement, we can legally release ourselves from all of our obligations, with certain limited exceptions, on any series of debt securities. This is called legal defeasance. In order to achieve legal defeasance:
| • | we must deposit, or cause to be deposited, in trust for the benefit of all holders of that series of debt securities an amount of cash in the currency or currency unit in which that series of debt securities is payable, direct obligations of the government that issued the currency in which that series of debt securities is payable or a combination thereof that will generate sufficient cash to make interest, principal, premium and any other payments on that series of debt securities on their due date or redemption date; |
| • | we have delivered to the trustee an opinion of counsel confirming that (1) we have received from, or there has been published by, the U.S. Internal Revenue Service a ruling or (2) since the issuance date of the debt securities, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that holders of the debt securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the legal defeasance had not occurred; |
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| • | no Event of Default or event that with the giving of notice or passage of time, or both, would become an Event of Default shall have occurred and be continuing at the time of the deposit described above and no Event of Default described in the fifth bullet point under “Events of Default” shall have occurred and be continuing on the 123rd day after the date of such deposit; |
| • | such defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument to which we are a party or by which we are bound; and |
| • | we have delivered to the trustee an officers’ certificate and an opinion of counsel in each stating that all conditions precedent provided for or relating to the legal defeasance have been complied with. |
Covenant Defeasance
Unless specified in the prospectus supplement, we can make the same type of deposit described above under “Defeasance—Legal Defeasance” and be released from the restrictive covenants on any series of debt securities. This is called covenant defeasance. In order to achieve covenant defeasance:
| • | we must deposit, or cause to be deposited, in trust for the benefit of all holders of that series of debt securities an amount of cash in the currency or currency unit in which that series of debt securities is payable, direct obligations of the government that issued the currency in which that series of debt securities is payable or a combination thereof that will generate sufficient cash to make interest, principal, premium and any other payments on that series of debt securities on their due date or redemption date; |
| • | we have delivered to the trustee an opinion of counsel confirming that holders of the debt securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the covenant defeasance had not occurred; |
| • | no Event of Default or event that with the giving of notice or passage of time, or both, would become an Event of Default shall have occurred and be continuing at the time of the deposit described above and no Event of Default described in the fifth bullet point under “Events of Default” shall have occurred and be continuing on the 123rd day after the date of such deposit; |
| • | such defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument to which we are a party or by which we are bound; and |
| • | we have delivered to the trustee an officers’ certificate and an opinion of counsel in each stating that all conditions precedent provided for or relating to the covenant defeasance have been complied with. |
If we accomplish covenant defeasance, the following provisions, among others, of the indenture and the debt securities would no longer apply:
| • | our promises previously described under “Restrictive Covenants—Limitation on Liens;” |
| • | our promises previously described under “Restrictive Covenants—Sale and Leaseback Transactions;” |
| • | the events of default relating to breach of such covenants, described under “Events of Default;” and |
| • | certain other covenants applicable to the series of debt securities and described in the prospectus supplement. |
(Sections 402-404)
Payments of Unclaimed Moneys
Moneys deposited with the trustee or any paying agent for the payment of principal of, or any premium and interest on, any debt securities that remain unclaimed for two years will be repaid to us at our request, unless the law requires otherwise. If this happens and you want to claim these moneys, you must look to us and not to the trustee or paying agent. (Section 409)
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Supplemental Indentures Not Requiring Consent of Holders
Without the consent of any holders of debt securities, we and the trustee may supplement the indenture, among other things, to:
| • | pledge property to the trustee as security for the debt securities; |
| • | reflect that another entity has succeeded us and assumed the covenants and obligations of us under the debt securities and the indenture; |
| • | cure any ambiguity or inconsistency in the indenture or in the debt securities or make any other provisions necessary or desirable, as long as the interests of the holders of the debt securities are not adversely affected in any material respect; |
| • | establish the form and terms of any series of debt securities as provided in the indenture; |
| • | add to our covenants further covenants for the benefit of the holders of debt securities, and if the covenants are for the benefit of less than all series of debt securities, stating which series are entitled to benefit; |
| • | add any additional event of default and if the new event of default applies to fewer than all series of debt securities, stating to which series it applies; |
| • | change the trustee or provide for an additional trustee; or |
| • | modify the indenture in order to continue its qualification under the Trust Indenture Act or as may be necessary or desirable in accordance with amendments to that Act. |
(Section 901)
Supplemental Indentures Requiring Consent of Holders
With the consent of the holders of not less than a majority in principal amount of all series of the debt securities that would be affected by a modification of the indenture (voting as a single class), the indenture permits us and the trustee to supplement the indenture or modify in any way the terms of the indenture or the rights of the holders of the debt securities of such series. However, without the consent of each holder of all of the debt securities affected by that modification, we and the trustee may not:
| • | modify the maturity date of, or any installment of principal or interest on, any debt security, or reduce the principal of, or premium on, or change the stated final maturity of, any debt security; |
| • | reduce the rate of payment of interest on any debt security or, in the case of OID debt securities, reduce the rate of accretion of the OID; |
| • | change any of our obligations to pay additional amounts under the indenture; |
| • | reduce or alter the method of computation of any amount payable upon redemption, repayment or purchase of any debt security by us, or the time when the redemption, repayment or purchase may be made; |
| • | make the principal or interest on any debt security payable in a currency other than that stated in the debt security or change the place of payment; |
| • | reduce the amount of principal due on an OID debt security upon acceleration of maturity or provable in bankruptcy or reduce the amount payable under the terms of an indexed debt security upon acceleration of maturity or provable in bankruptcy; |
| • | impair any right of repayment or purchase at the option of any holder of debt securities; |
| • | reduce the right of any holder of debt securities to receive or sue for payment of the principal or interest on a debt security that would be due and payable at the maturity thereof or upon redemption; or |
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| • | reduce the percentage in principal amount of the outstanding debt securities required to supplement the indenture or to waive any of its provisions. |
(Section 902)
A supplemental indenture that modifies or eliminates a provision that has been included solely for the benefit of the holders of one or more series of debt securities will not affect the rights under the indenture of holders of other series of debt securities.
As described in the first paragraph of this subsection, as well as above under “Waivers Under the Indenture” and “Events of Default” above, the indenture provides for a voting mechanism whereby all series of debt securities that may be affected (voting as a single class) will be permitted to approve certain waivers or amendments that affect all such series of debt securities. Therefore, series of debt securities in the aggregate (voting as a single class) may, in certain circumstances, approve waivers or amendments applicable to a class of debt securities that is also affected by such waiver or amendment and that did not vote in favor of such waiver or amendment.
Redemption
The specific terms of any redemption of a series of debt securities will be contained in the prospectus supplement for that series. We must send notice of redemption to the holders at least 30 days but not more than 60 days prior to the redemption date. The notice will specify:
| • | the redemption date; |
| • | the redemption price; |
| • | the place or places of payment; |
| • | the CUSIP or ISIN number of the debt securities being redeemed; |
| • | in the case of partial redemption, the principal amount being redeemed; |
| • | whether the redemption is pursuant to a sinking fund; and |
| • | that on the redemption date, interest, or, in the case of OID debt securities, original issue discount, will cease to accrue. |
(Section 1104)
On or before any redemption date, we will deposit an amount of money with the trustee or with a paying agent sufficient to pay the redemption price. (Section 1105)
If less than all the debt securities are being redeemed, we may select the particular series to be redeemed; if less than all the debt securities of a series are being redeemed, the trustee shall select the debt securities to be redeemed using a method it considers fair and appropriate. (Section 1103) After the redemption date, holders of debt securities which were redeemed will have no rights with respect to the debt securities except the right to receive the redemption price and any unpaid interest to the redemption date. (Section 1106)
Concerning the Trustee
HSBC Bank USA, National Association is the trustee under the indenture. HSBC Bank USA, National Association or its affiliates make loans to and perform certain other services for us and certain of our subsidiaries and affiliates. Among other services, HSBC Bank USA, National Association or its affiliates provide us and our affiliates with investment banking and cash management services, foreign exchange and investment custody account services, and participate in our credit facilities and those of our affiliates.
Governing Law
The laws of the State of New York govern the indenture and will govern the debt securities. (Section 112)
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We may issue debt warrants in registered certificated form for the purchase of debt securities. We may issue debt warrants separately or together with any debt securities offered by any prospectus supplement. If issued together with any debt securities, debt warrants may be attached to or separate from such debt securities. Debt warrants will be issued under debt warrant agreements to be entered into between us and a bank or trust company, as debt warrant agent, all as set forth in the prospectus supplement relating to the particular issue of debt warrants. The debt warrant agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants. A form of debt warrant agreement, including a form of debt warrant certificate, reflecting the particular terms and provisions of a particular issue of debt warrants, will be filed with the SEC in connection with the offering and 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 copies of any form of debt warrant agreement that has been filed. Summaries of certain provisions of the debt warrant agreements and debt warrant certificates follow. You should read the more detailed provisions of the forms of debt warrant agreement and debt warrant certificate and any additional terms relating to the particular issue of debt warrants, which will be described in detail in the applicable prospectus supplement, for additional information before you buy any debt warrants.
General
The prospectus supplement will describe the terms of the debt warrants offered thereby, the debt warrant agreements relating to such debt warrants and the debt warrant certificates representing such debt warrants, including the following:
| • | the offering price; |
| • | the designation, aggregate principal amount and terms of the debt securities purchasable upon exercise of the debt warrants; |
| • | if applicable, the designation and terms of the debt securities with which the debt warrants are issued and the number of debt warrants issued with each such debt security; |
| • | if applicable, the date on and after which the debt warrants and the related debt securities will be separately transferable; |
| • | the principal amount of debt securities purchasable upon exercise of one debt warrant and the price at which such principal amount of debt securities may be purchased upon such exercise, and any provisions for changes to or adjustments in the exercise price; |
| • | the date on which the right to exercise the debt warrants will commence and the date on which such right will expire; |
| • | the maximum or minimum number of warrants which may be exercised at any time; |
| • | United States federal income tax consequences; |
| • | the identity of the debt warrant agent; and |
| • | any other terms of the debt warrants. |
Debt warrant certificates may be exercised, and those that have been issued separately or, if issued together with debt securities, once detachable, may be exchanged for new debt warrant certificates of different denominations and may be presented for registration of transfer at the corporate trust office of the debt warrant agent or any other office indicated in the applicable prospectus supplement. A debt warrant certificate that is not immediately detachable from a debt security may be exchanged or transferred only with the debt securities to which it was initially attached, and only in connection with the exchange or transfer of such debt securities. Debt warrants for the purchase of debt securities will be in registered form only.
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Exercise of Debt Warrants
Each debt warrant will entitle its holder to purchase for cash such principal amount of debt securities at such exercise price as will in each case be set forth in, or calculable from, the applicable prospectus supplement relating to the debt warrants. Each holder of a debt warrant may exercise it at any time up to 5:00 p.m., New York City time, on the debt warrant expiration date set forth in the applicable prospectus supplement. After such time, or such later date to which such debt warrant expiration date may be extended by us, unexercised debt warrants will be void.
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We may sell the securities offered pursuant to this prospectus in any of the following ways:
| • | directly to one or more purchasers; |
| • | through agents; |
| • | through underwriters, brokers or dealers; or |
| • | through a combination of any of these methods of sale. |
We will identify the specific plan of distribution, including any underwriters, brokers, dealers, agents or direct purchasers and their compensation in a prospectus supplement.
The validity of the securities offered by this prospectus and any prospectus supplement will be passed upon for us by DLA Piper LLP (US), New York, New York. Eversheds Sutherland (US) LLP, Washington, D.C. is also representing us with respect to United States federal tax laws.
The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in the Report of Management on Internal Control Over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2022 have been so incorporated in reliance on the report of PricewaterhouseCoopers SA, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
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PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
| ITEM 14. | OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION |
| SEC registration fee |
(1) | |||
| Accounting fees and expenses |
(2) | |||
| Legal fees and expenses |
(2) | |||
| Printing expenses |
(2) | |||
| Trustee fees and expenses |
(2) | |||
| Rating agency fees |
(2) | |||
| Miscellaneous |
(2) | |||
| Total |
(2) |
| (1) | In accordance with Rules 456(b) and 457(r) of the Securities Act, Philip Morris International Inc. (the “Registrant”) is deferring payment of all of the registration fee. |
| (2) | An estimate of the aggregate amount of these fees and expenses will be reflected in the applicable prospectus supplement. |
| ITEM 15. | INDEMNIFICATION OF DIRECTORS AND OFFICERS |
The Virginia Stock Corporation Act (the “VSCA”) permits the Registrant to indemnify its officers and directors in connection with certain actions, suits and proceedings brought against them if they acted in good faith and believed their conduct to be in the best interests of the Registrant and, in the case of criminal actions, had no reasonable cause to believe that the conduct was unlawful. The VSCA requires such indemnification when an officer or director entirely prevails in the defense of any proceeding to which he was a party because he is or was an officer or director of the Registrant. The VSCA further provides that the Registrant may make any other or further indemnity (including indemnity with respect to a proceeding by or in the right of the Registrant), and may make additional provision for advances and reimbursement of expenses, if authorized by its articles of incorporation or shareholder approved by-laws, except an indemnity against willful misconduct or a knowing violation of the criminal law.
The VSCA establishes a statutory limit on liability of officers and directors of the Registrant for damages assessed against them in a suit brought by or in the right of the Registrant or brought by or on behalf of shareholders of the Registrant and authorizes the Registrant to specify a lower monetary limit on liability in the Registrant’s articles of incorporation or shareholder approved by-laws; however, the liability of an officer or director shall not be limited if such officer or director engaged in willful misconduct or a knowing violation of the criminal law or of any federal or state securities law, including, without limitation, any claim of unlawful insider trading or manipulation of the market for any security.
The Registrant’s Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) provide that an officer or director, or former officer or director, of the Registrant shall be indemnified to the full extent permitted by the VSCA as currently in effect or as hereafter amended in connection with any action, suit or proceeding brought by or in the right of the Registrant or brought by or on behalf of shareholders of the Registrant. The Articles of Incorporation further provide for the limitation or elimination of the liability of an officer or director or former officer or director of the Registrant for monetary damages to the Registrant or its shareholders in any action, suit or proceeding, to the full extent permitted by the VSCA as currently in effect or as hereafter amended. The Registrant carries insurance on behalf of its directors and officers.
The Registrant has entered into an indemnity agreement with each of the members of its Board of Directors (the “Board”) and each of its executive officers. The agreement provides for the mandatory indemnification against
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liabilities as well as mandatory advancement and reimbursement of all reasonable expenses (in each case subject to limited exceptions) that may be incurred by members of the Board and executive officers in various legal proceedings arising out of their service as directors and executive officers, as permitted by Virginia law and the Articles of Incorporation.
| ITEM 16. | EXHIBITS |
| ITEM 17. | UNDERTAKINGS |
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement (notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum
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offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement);
(iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser:
(i) each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5) That, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
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Table of Contents
(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(iv) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(b) The undersigned Registrant hereby undertakes that, for the purpose of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant, pursuant to the provisions described under Item 15 or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification by it is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the SEC under Section 305(b)(2) of the Trust Indenture Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut on the 10th day of February, 2023.
| PHILIP MORRIS INTERNATIONAL INC. | ||
| By: | /S/ EMMANUEL BABEAU | |
| Emmanuel Babeau | ||
| Chief Financial Officer | ||
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated below on the 10th day of February, 2023.
| Signature | Title | |||
| By: |
/s/ JACEK OLCZAK Jacek Olczak |
Director and Chief Executive Officer (Principal Executive Officer) | ||
| By: |
/S/ EMMANUEL BABEAU Emmanuel Babeau |
Chief Financial Officer (Principal Financial Officer) | ||
II-4
Table of Contents
| Signature | Title | |||
| By: |
/S/ REGINALDO DOBROWOLSKI Reginaldo Dobrowolski |
Vice President and Controller (Principal Accounting Officer) | ||
| * André Calantzopoulos |
Executive Chairman | |||
| * Bonin Bough |
Director | |||
| * Michel Combes |
Director | |||
| * Juan José Daboub |
Director | |||
| * Werner Geissler |
Director | |||
| * Lisa A. Hook |
Director | |||
| * Jun Makihara |
Director | |||
| * Kalpana Morparia |
Director | |||
| * Lucio A. Noto |
Director | |||
| * Frederik Paulsen |
Director | |||
| * Robert B. Polet |
Director | |||
| * Dessislava Temperley |
Director | |||
| * Shlomo Yanai |
Director | |||
| *By: | /S/ JACEK OLCZAK | |
| Jacek Olczak | ||
| Attorney-in-fact |
II-5
Exhibit 5.1
|
DLA Piper LLP (US) 1251 Avenue of the Americas, 27th Floor New York, New York 10020-1104 www.dlapiper.com
T 212.335.4500 F 212.335.4501 | |||
| February 10, 2023 |
||||
Board of Directors
Philip Morris International Inc.
677 Washington Boulevard
Stamford, CT 06901
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to Philip Morris International Inc., a Virginia corporation (the “Company”), in connection with the registration by the Company of an indeterminate amount of its debt securities (the “Debt Securities”) and warrants to purchase Debt Securities (the “Debt Warrants”), as set forth in the Registration Statement on Form S-3 (the “Registration Statement”) filed by the Company on the date hereof with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Act”). The Debt Securities will be offered pursuant to an indenture (the “Indenture”), dated as of April 25, 2008, between the Company and HSBC Bank USA, National Association, as trustee. The Debt Warrants will be issued under one or more debt warrant agreements (each, a “Debt Warrant Agreement”) to be entered into between the Company and a bank or trust company, as debt warrant agent, as set forth in the applicable prospectus supplement relating to the particular issuance of Debt Warrants. The Debt Securities and Debt Warrants are to be issued in one or more series and will be offered on a continuous or delayed basis pursuant to Rule 415 of the Act, from time to time as set forth in the Registration Statement, the prospectus contained therein (the “Prospectus”) and any amendments or supplements thereto.
This opinion is being furnished in accordance with the requirements of Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
We have examined originals or reproductions or certified copies of such records of the Company, certificates of officers of the Company and of public officials and such other documents as we have deemed necessary for the purpose of rendering this opinion, including, among other things:
| (i) | the Amended and Restated Articles of Incorporation of the Company, as amended through the date hereof (the “Articles of Incorporation”); |
| (ii) | the Amended and Restated By-laws of the Company, as amended through the date hereof (the “Bylaws”); |
| (iii) | the resolutions of the Board of Directors of the Company (the “Board”) authorizing the registration of the Debt Securities and the Debt Warrants; |
| (iv) | the Registration Statement, the Prospectus contained therein and the documents incorporated therein by reference; |
| (v) | an executed copy of the Indenture; |
| (vi) | the form of Debt Securities; and |
| (vii) | the form of Debt Warrant Agreement. |
For purposes of the opinions expressed below, we have assumed, without independent investigation: (a) the authenticity of all documents submitted to us as originals; (b) the conformity to the originals of all documents submitted to us as certified, photostatic or electronic copies and the authenticity of the originals of such documents; (c) the legal capacity of natural persons; (d) the genuineness of all signatures; and (e) the due authorization, execution and delivery of all documents by all parties and the validity, binding effect and enforceability thereof (other than the due authorization, execution and delivery of the documents identified in (v) through (vii) above by the Company except as set forth below and the validity, binding effect and enforceability thereof upon the Company).
We have assumed that at any time any Debt Securities or Debt Warrants are sold pursuant to the Registration Statement, (a) a prospectus supplement will have been prepared and filed in accordance with the Act describing the Debt Securities or the Debt Warrants offered thereby and all related documentation and will comply with all applicable laws; (b) all of the Debt Securities or the Debt Warrants will be issued and sold in a manner stated in the Registration Statement and the applicable prospectus supplement; (c) all corporate and other action required to be taken by the Company to duly authorize each proposed issuance of the Debt Securities or the Debt Warrants and any related documentation, and the execution, delivery and performance of the Debt Securities or the Debt Warrants will have been taken; and (d) a Debt Warrant Agreement, underwriting or similar agreement and any other necessary agreement with respect to any Debt Securities or Debt Warrants offered or issued will have been duly authorized by all necessary corporate or other action of the Company and duly executed and delivered by the Company and the other parties thereto.
We have not made an independent review of the laws of any state or jurisdiction other than the laws of the Commonwealth of Virginia, the State of New York and the federal laws of the United States. Accordingly, we express no opinion as to the laws of any state or jurisdiction other than the Commonwealth of Virginia, the State of New York and the federal laws of the United States of America to the extent specifically referred to herein. Moreover, our opinion is based upon the current interpretation of applicable law and facts existing on the date hereof. We disclaim any obligation to advise you of any developments or changes in either the applicable law or facts that may occur after the date of this opinion.
We further assume the following:
(a) The issuance, sale, amount and terms of the Debt Securities and Debt Warrants to be offered from time to time by the Company will be authorized and determined by proper action of the Board (or where permitted, a committee of the Board) (each, a “Board Action”) in accordance with the Articles of Incorporation, the Bylaws and applicable law, in each case so as not to result in a default under or breach of any instrument, document or agreement binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental or regulatory body having jurisdiction over the Company.
(b) The Company will not issue any Debt Securities and Debt Warrants in excess of the number or amount authorized by a Board Action.
(c) Any Debt Securities will be issued under a valid and legally Indenture, as it may be supplemented by a valid and legally binding supplemental indenture (each a “Supplemental Indenture”), and in each case duly authorized, executed and delivered by the Company, and, if required by the Indenture, accompanied by an officer’s certificate, that conforms to the description thereof stated in the Prospectus and the applicable prospectus supplement.
(d) To the extent that the obligations of the Company under any Indenture or Supplemental Indenture may be dependent upon such matters, the financial institution to be identified in such Indenture or Supplemental Indenture as trustee or in any other specified capacity (the “Financial Institution”) will be duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization; the Financial Institution will be duly qualified to engage in the activities contemplated by such agreement; such agreement will have been duly authorized, executed, and delivered by the Financial Institution and will constitute the legally valid and binding obligation of the Financial Institution enforceable against the Financial Institution in accordance with its terms; the Financial Institution will be in compliance, generally, with respect to acting under such agreement, with applicable laws and regulations; and the Financial Institution will have the requisite organizational and legal power and authority to perform its obligations under such agreement.
(e) Appropriate debentures, notes, bonds and/or other evidences of indebtedness evidencing the Debt Securities will be executed and authenticated in accordance with the Indenture, as it may be supplemented by a Supplemental Indenture, and, if required by the Indenture, accompanied by an officer’s certificate delivered upon the issuance and sale of the Debt Securities and will comply with the Indenture, any Supplemental Indenture and any accompanying officer’s certificate, the Certificate of Incorporation, the Bylaws and applicable law.
(m) Any underwriting or other agreements for offerings of the Debt Securities and Debt Warrants (each, an “Underwriting Agreement,” and collectively, the “Underwriting Agreements”) will be valid and legally binding contracts that conform to the description thereof provided in the Prospectus and the applicable Prospectus Supplement.
Based upon the foregoing and subject to the qualifications set forth below, we are of the opinion that:
1. The Company is a corporation validly existing and in good standing under the laws of the Commonwealth of Virginia, with corporate power and authority to issue the Debt Securities and Debt Warrants.
2. The Debt Securities, when (a) the terms and conditions of the Debt Securities have been duly established by an officer’s certificate in accordance with the Indenture, (b) any such officer’s certificate has been duly executed and delivered by the Company and (c) executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the purchasers thereof, will be the valid and binding obligations of the Company, enforceable in accordance with their final terms and the terms of the Indenture.
3. The Debt Warrants, when (a) the applicable Debt Warrant Agreement has been duly executed and delivered by the Company and each other party thereto, (b) the terms of the Debt Warrants have been established in accordance with the applicable Debt Warrant Agreement and (c) issued in accordance with the terms thereof, will be the valid, binding and enforceable obligations of the Company.
The opinions set forth above are subject to the qualification that the validity, binding effect and enforceability of the Company’s obligations under the Indenture, the Debt Securities, any Debt Warrant Agreement and the Debt Warrants may be subject to (i) bankruptcy, insolvency, reorganization, arrangement, moratorium, and other similar laws relating to or affecting the rights of creditors generally, including without limitation, fraudulent conveyance or transfer laws (including but not limited to the common law trust fund doctrine and Section 548 of the United States
Bankruptcy Code), and preference and equitable subordination laws and principles; (ii) general principles of equity (whether considered in a proceeding at law or in equity) and (iii) concepts of materiality, unconscionability, reasonableness, impracticability or impossibility of performance, good faith and fair dealing.
We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement and to the reference to this firm under the heading “Legal Matters” in the Prospectus that forms a part of the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission promulgated thereunder.
This opinion is limited to the matters stated herein, and no opinions may be implied or inferred beyond the matters expressly stated in this letter. This opinion letter is given as of the date hereof and we expressly disclaim any obligation to advise you of any changes in facts or in law, including judicial or administrative interpretations thereof, that occur which could affect the opinions contained herein.
| Very truly yours, |
| /s/ DLA Piper LLP (US) |
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of Philip Morris International Inc. of our report dated February 10, 2023 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in Philip Morris International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
PricewaterhouseCoopers SA
| /s/ PRICEWATERHOUSECOOPERS SA |
||||
| PricewaterhouseCoopers SA |
Lausanne, Switzerland
February 10, 2023
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ ANDRÉ CALANTZOPOULOS |
| André Calantzopoulos |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ BONIN BOUGH |
| Bonin Bough |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ MICHEL COMBES |
| Michel Combes |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ JUAN JOSÉ DABOUB |
| Juan José Daboub |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ WERNER GEISSLER |
| Werner Geissler |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ LISA A. HOOK |
| Lisa A. Hook |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ JUN MAKIHARA |
| Jun Makihara |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ KALPANA MORPARIA |
| Kalpana Morparia |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ LUCIO A. NOTO |
| Lucio A. Noto |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ FREDERIK PAULSEN |
| Frederik Paulsen |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ ROBERT B. POLET |
| Robert B. Polet |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ DESSISLAVA TEMPERLEY |
| Dessislava Temperley |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS THAT the undersigned, a Director of Philip Morris International Inc., a Virginia corporation (the “Company”), does hereby constitute and appoint Jacek Olczak, Emmanuel Babeau and Darlene Quashie Henry or any one or more of them, his or her true and lawful attorney, for him or her and in his or her name, place and stead, (i) to execute, by manual or facsimile signature, electronic transmission or otherwise, the Company’s Registration Statement on Form S-3 under the Securities Act of 1933, as amended, and any or all amendments to said Registration Statement (including post-effective amendments) and supplements thereto for the registration from time to time of debt securities to be issued by the Company, and (ii) to file the same and any and all amendments and supplements thereto, with any exhibits thereto, financial statements and prospectuses included or to be incorporated by reference therein, and any other document or instrument deemed necessary or appropriate by any of them in connection with such Registration Statement or amendment, with the Securities and Exchange Commission, in each case, in such forms as they or any one of them may approve, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite or desirable to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things which said attorneys may do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as of the 8th day of February, 2023.
| /S/ SHLOMO YANAI |
| Shlomo Yanai |
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
| ☐ | CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |
HSBC Bank USA, National Association
(Exact name of trustee as specified in its charter)
| N/A | 20-1177241 | |
| (Jurisdiction of incorporation or organization if not a U.S. national bank) |
(I.R.S. Employer Identification No.) | |
| 452 Fifth Ave | ||
| New York, New York | 10018-2706 | |
| (Address of principal executive offices) | (Zip Code) | |
Jamie Pratt, Managing Director
HSBC Bank USA, National Association
452 Fifth Avenue
New York, New York 10018-2706
Tel: (212) 525-6039
(Name, address and telephone number of agent for service)
PHILIP MORRIS INTERNATIONAL INC.
(Exact name of obligor as specified in its charter)
| Virginia | 13-3435103 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 677 Washington Blvd., Suite 1100 | ||
| Stamford, Connecticut | 06901 | |
| (Address of principal executive offices) | (Zip Code) | |
Debt Securities
(Title of Indenture Securities)
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to which it is subject.
Comptroller of the Currency, New York, NY.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affiliation.
None
Items 3-15. Not Applicable
Item 16. List of Exhibits
Exhibit
| T1A(i) | Copy of the Amended and Restated Articles of Association of HSBC Bank USA, National Association and as amended and restated as of November 7, 2022. | |
| T1A(ii) | (2) Certificate of the Comptroller of the Currency dated July 1, 2004 as to the authority of HSBC Bank USA, National Association to commence business. | |
| T1A(iii) | (1) OCC Certification of Fiduciary Powers dated February 20, 2019 for HSBC Bank USA, National Association | |
| T1A(iv) | Copy of the existing By-Laws of HSBC Bank USA, National Association. | |
| T1A(v) | Not applicable. | |
| T1A(vi) | (3) Consent of HSBC Bank USA, National Association required by Section 321(b) of the Trust Indenture Act of 1939. | |
| T1A(vii) | Copy of the latest report of condition of the trustee (September 30, 2022), published pursuant to law or the requirement of its supervisory or examining authority. | |
| T1A(viii) | Not applicable. | |
| T1A(ix) | Not applicable. | |
| (1) | Exhibit previously filed with the Securities and Exchange Commission with Registration No. 333-236366 and incorporated herein by reference thereto. |
| (2) | Exhibit previously filed with the Securities and Exchange Commission with Registration No. 333-118523 and incorporated herein by reference thereto. |
| (3) | Exhibit previously filed with the Securities and Exchange Commission with Registration No. 333-243528 and incorporated herein by reference thereto. |
[Signature Page Follows]
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, HSBC Bank USA, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York on the 23rd day of January, 2023.
| HSBC BANK USA, NATIONAL ASSOCIATION | ||
| By: | /s/ Fernando Acebedo | |
| Fernando Acebedo | ||
| Vice President | ||
EXHIBIT 1
HSBC Bank USA, National Association
Amended and Restated Articles of Association
For the purpose of maintaining an association authorized to perform any lawful activities of national banks, the sole shareholder has approved the following Articles of Association, as amended and restated effective November 7, 2022:
FIRST. The title of this association is HSBC Bank USA, National Association.
SECOND. The main office of the association shall be located in Tysons (formerly known as McLean). County of Fairfax, State of Virginia.
The general business of the association shall be conducted at its main office and its branches.
THIRD. The board of directors of this association shall consist of not less than five nor more than twenty-five persons, the exact number to be fixed and determined from time to time by resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special meeting thereof. Each director shall own common or preferred stock of the association or of a holding company owning the association, with either an aggregate par, fair market, or equity value of $1,000. Determination of these values may be based as of either (i) the date of purchase, or (ii) the date the person became a director, whichever value is greater. Any combination of common or preferred stock of the association or holding company may be used.
Any vacancy in the board of directors may be filled by action of a majority of the remaining directors between meetings of shareholders. The board of directors may not increase the number of directors between meetings of shareholders to a number which: (1) exceeds by more than two the number of directors last elected by shareholders when the number was 15 or less; or (2) exceeds by more than four the number of directors last elected by shareholders where the number was 16 or more, but in no event shall the number of directors exceed 25.
Directors, including directors selected to fill vacancies, shall be elected for terms of one or three years, as specified in the Bylaws, and shall serve until their successors are elected and qualified. Terms of directors, including terms of directors selected to fill vacancies, shall expire at the next regular meeting of shareholders at which directors are elected, unless they resign, are removed from office, or the terms of the directors are staggered. If directors’ terms are staggered, a director’s term shall expire at the next applicable annual shareholders’ meeting as specified in the Bylaws, unless the director resigns or is removed from office.
Despite the expiration of a director’s term, the director shall continue to serve until his or her successor is elected and qualifies or until there is a decrease in the number of directors and his or her position is eliminated.
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FOURTH. There shall be an annual meeting of the shareholders to elect directors and transact whatever other business may be brought before the meeting. It shall be held at the main office or any other convenient place the board of directors may designate, on the day of each year specified therefore in the Bylaws. If no election is held on the day fixed, or in the event of a legal holiday on the following banking day, an election may be held on any subsequent day within 60 days of the day fixed, to be designated by the board of directors, or, if the directors fail to fix the day, by shareholders representing two-thirds of the shares issued and outstanding. In all cases at least 10 days advance notice of the meeting shall be given to the shareholders by first class mail.
A director may resign at any time by delivering written notice to the board of directors, its chairman, or to the association, which resignation shall be effective when the notice is delivered unless the notice specifies a later effective date.
A director may be removed by shareholders at a meeting called to remove him or her, when notice of the meeting states that the purpose or one of the purposes is to remove him or her, if there is a failure to fulfill one of the affirmative requirements for qualification, or for cause, provided that, however, a director may not be removed if the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal.
FIFTH. The authorized amount of capital stock of this association shall be 50,000 shares of common stock of the par value of one hundred dollars ($100) and 250 shares of preferred stock of the par value of one cent ($0.01); but said capital stock may be increased or decreased from time to time, according to the provisions of the laws of the United States.
Unless otherwise specified in the Articles of Association or required by law, (1) all matters requiring shareholder action, including amendments to the Articles of Association must be approved by shareholders owning a majority voting interest in the outstanding voting stock, and (2) each shareholder shall be entitled to one vote per share.
Unless otherwise specified in the Articles of Association or required by law, all shares of voting stock shall be voted together as a class, on any matters requiring shareholder approval. If a proposed amendment would affect two or more classes or series in the same or a substantially similar way, all the classes or series so affected, must vote together as a single voting group on the proposed amendment.
The two hundred fifty (250) shares of Series A preferred stock, par value one cent ($0.01) per share, shall be subject to the following dividend, liquidation, retirement, voting, preemptive, sinking fund, conversion, and other rights:
Section 1. Designation and Amount.
The shares of preferred stock shall be designated as the “Series A Preferred Stock” (“Series A Preferred Stock”) and the number of shares constituting such series shall be 250, which number may be decreased by the board of directors (the “Board”) of this association without a vote of shareholders; provided, however, that such number may not be decreased below the number of then currently outstanding shares of Series A Preferred Stock.
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Section 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred Stock, in preference to the holders of shares of this association’s common stock, par value $100 per share (the “Common Stock”), and to any other capital stock of this association ranking junior to Series A Preferred Stock as to payment of dividends, shall be entitled to receive when, as and if declared by the Board out of net income or retained earnings provided such funds are legally available for the payment of dividends, noncumulative dividends at the Applicable Rate (as defined in Section 10) for each Dividend Period (as defined below) applied to the Redemption Price (as defined in Section 4(a)) per share, and no more. Dividends payable in respect of the outstanding shares of Series A Preferred Stock shall be payable with respect to each Dividend Period in quarterly payments on the 15th day of January, April, July and October (or, if any such day is not a Business Day (as defined in Section 10), the Business Day preceding such day) in each year commencing July 15, 2015 in the case of clause (i) of the definition of Applicable Rate and commencing July 15, 2020 in the case of clause (ii) of the definition of Applicable Date (each such date being referred to herein as a “Quarterly Dividend Payment Date”) but only when, as and if declared by the Board. The “Dividend Period” with respect to each Quarterly Dividend Payment Date shall be the three-month period ending on the March 31, June 30, September 30 or December 31 immediately preceding such Quarterly Dividend Payment Date, except that the first initial Dividend Period will be the period from and including the date of original issue (March 27, 2015) to but excluding June 30, 2015 and the second initial Dividend Period will be the period from and including March 31, 2020 to but excluding June 30, 2020. The rate at which dividends will be payable for each full dividend period will be determined by dividing the annual rate by four. With respect to any dividend period ending prior to March 31, 2020. the association will calculate any dividends on the Preferred Stock on the basis of a 360-day year of twelve 30-day months. With respect to any dividend period beginning on or after March 31, 2020, the association will calculate any dividends on the Preferred Stock on the basis of a 360-day year and the actual number of days elapsed. Dividends payable for any period longer or shorter than a full Dividend Period will be computed on the basis of 30-day months, a 360 day year and the actual number of days elapsed in the period. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.
(b) If the Board does not declare a dividend on the Series A Preferred Stock for any Dividend Period prior to the related Quarterly Dividend Payment Date, that dividend will not accrue, and this association will have no obligation to pay, and the holders shall have no right to receive, a dividend for that Dividend Period on the related Quarterly Dividend Payment Date or at any future time, whether or not dividends on the Series A Preferred Stock or any other series of preferred stock or common stock are declared for any subsequent period. References herein to the “accrual” of dividends refer only to the determination of the amount of such dividend and do not imply that any right to a dividend arises prior to the date on which a dividend is declared.
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(c) The Board may fix a record date (a “Regular Record Date”) for the determination of holders (the “Registered Holders”) of shares of Series A Preferred Stock entitled to receive payment of a dividend declared thereon, which record date shall be no more than 60 days nor less than ten days prior to the date fixed for the payment thereof. Any dividend declared by the Board as payable and punctually paid on a Quarterly Dividend Payment Date will be paid to Registered Holders. All cash payments shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
(d) The holders of shares of Series A Preferred Stock shall not be entitled to receive any dividends or other distributions in respect of such shares of Series A Preferred Stock except as provided for hereby.
Section 3. Restrictive Covenants: Voting Rights.
(a) So long as any shares of Series A Preferred Stock shall be outstanding, and unless the consent or approval of a greater number of shares shall then be required by law, without first obtaining the consent or approval of the holders of at least sixty-six and two-thirds percent (662⁄3%) of the number of then-outstanding shares of Series A Preferred Stock, given in person or by proxy at a meeting at which the holders of such shares shall be entitled to vote separately as a class, or by written consent, this association shall not;
(i) (A) authorize or create any class or series, or any shares of any class or series, of capital stock of this association having any preference or priority (either as to dividends or upon redemption, liquidation, dissolution, or winding up) over Series A Preferred Stock (“Senior Stock”) or (B) issue shares of Senior Stock; provided, however, that no such vote shall be required with respect to the authorization or creation by this association of one or more classes and/or series of Senior Stock if the proceeds of this association’s issuance of such Senior Stock are sufficient, and are used, to redeem all outstanding shares of Series A Preferred Stock concurrently with the issuance of such Senior Stock;
(ii) (A) authorize or create any class or series, or any shares of any class or series, of capital stock of this association ranking on a parity (either as to dividends or upon redemption, liquidation, dissolution or winding up) with the Series A Preferred Stock (“Parity Stock”) or (B) issue shares of Parity Stock unless, in either case, this association’s Amended and Restated Articles of Association creating or authorizing such class, series or shares shall provide that if in any case the stated dividends or amounts payable on liquidation, dissolution or winding up of this association are not paid in full on all outstanding shares of Parity Stock (including the Series A Preferred Stock), the shares of all such Parity Stock shall share ratably (x) in the payment of dividends and (y) on any distribution of assets upon liquidation, dissolution or winding up of this association in accordance with the sums that would be payable in respect of all shares of such Parity Stock if all sums payable were discharged in full; provided, however, that no such vote shall be required with respect to the authorization, creation or issuance by this association of one or more classes and/or series of Parity Stock if the proceeds of this association’s issuance of such Parity Stock are sufficient, and are used to redeem all outstanding shares of Series A Preferred Stock concurrently with the issuance of such Parity Stock;
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(iii) reclassify, convert or exchange any shares of any capital stock of this association into shares of Senior Stock or Parity Stock;
(iv) authorize any security exchangeable for, convertible into, or evidencing the right to purchase any shares of Senior Stock or Parity Stock; or
(v) except as provided in Section 9 below, amend, alter or repeal this association’s Amended and Restated Articles of Association, as it may be amended from time to time, or this association’s By Laws, as they may be amended from time to time, to alter or change the powers, designations, preferences, rights and qualifications, limitations or restrictions of Series A Preferred Stock, or any Senior Stock or Parity Stock so as to affect Series A Preferred Stock, in any material adverse respect.
(b) If and whenever an amount equal to six (6) full quarterly dividends, whether or not consecutive, payable on the Series A Preferred Stock are not paid or otherwise declared and set aside for payment, the holders of the Series A Preferred Stock, voting as a single class, shall be entitled to increase the authorized number of directors on the Board by two and elect such two additional directors to the Board at the next annual meeting or special meeting. Not later than 40 days after the entitlement arises, the Board will convene a special meeting of the holders of the Series A Preferred Stock for the purpose of electing the additional two directors. If the Board fails to convene such meeting within such 40-day period, then holders of 10% of the outstanding shares of the Series A Preferred Stock may call the meeting. If and whenever an amount equal to four (4) full quarterly dividends, whether or not consecutive, on the Series A Preferred Stock have been subsequently paid in full or declared and set apart for payment, the holders of the Series A Preferred Stock will no longer have the right to vote on directors and the term of office of each director so elected by such holders will terminate immediately and the authorized number of this association’s directors will, without further action, be reduced accordingly.
(c) Except as otherwise expressly provided hereby, or as required by law, the holders of shares of Series A Preferred Stock shall have no voting rights and their consent shall not be required for the taking of any corporate action.
Section 4. Redemption.
(a) This association may at its option redeem, in whole or in part, the shares of Series A Preferred Stock on or after March 31, 2020 (the “First Call Date”), but only out of funds legally available therefor, by paying therefor in cash $10,000,000 per share (the “Redemption Price”) plus an amount equal to any declared and unpaid dividends thereon, without accumulation of any undeclared dividends, to the date of redemption, but only after receipt of written approval from the Office of the Comptroller of the Currency for such redemption, and only to the extent this association may lawfully do so. If less than all outstanding shares of Series A Preferred Stock are to be redeemed, this association shall redeem shares pro rata among the holders thereof in accordance with the respective numbers of shares of Series A Preferred Stock held by each of them. Prior to exercising this optional redemption, or immediately thereafter, this association will, as a condition to receiving approval of the Office of the Comptroller of the Currency, replace the Series A Preferred Stock redeemed or to be redeemed with an equal amount of instruments that will qualify as additional tier I capital or common equity tier 1 capital under regulations of the Office of the Comptroller of the Currency, or will demonstrate to the satisfaction of the Office of the Comptroller of the Currency that, following redemption, this association will continue to hold capital commensurate with its risk.
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(b) This association may at its option redeem, in whole but not in part, the shares of Series A Preferred Stock at any time after it receives notice from the Office of the Comptroller of the Currency that the Series A Preferred Stock will no longer be included in the regulatory capital of this association, as calculated in accordance with the regulations issued by the Office of the Comptroller of the Currency and other provisions of applicable law in effect on any date of calculation, as amended for any subsequent changes in applicable laws, rules or regulations, by paying therefor in cash the Redemption Price plus an amount equal to any declared and unpaid dividends thereon, without accumulation of any undeclared dividends, to the date of redemption, but only after receipt of written approval from the Office of the Comptroller of the Currency for such redemption and only to the extent this association may lawfully do so.
(c) In order to facilitate the redemption of shares of Series A Preferred Stock pursuant to Section 4(a) or (b), the Board may fix a record date for the determination of the holders of shares of Series A Preferred Stock to be redeemed not more than 60 days or less than 10 days prior to the date fixed for such redemption. Notice of any redemption of shares of Series A Preferred Stock pursuant to Section 4(a) or (b) shall specify a date and procedures for such redemption and shall be mailed not less than 10 nor more than 60 days prior to such date fixed for redemption to each Registered Holder at such Registered Holder’s address as it appears on the transfer books of this association.
(d) From and after the date of any redemption effected by this association pursuant to sections 4(a) or (b), all dividends on shares of Series A Preferred Stock thereby called for redemption shall cease to accrue and all rights of the holders thereof as holders of Series A Preferred Stock shall, with respect to shares thereby called for redemption, cease and terminate. Any interest allowed on moneys that have been Set Apart for Payment (as defined in Section 10) prior to the date of redemption for the payment of the Redemption Price (or any declared and unpaid dividends thereon, without accumulation of any undeclared dividends) shall be paid to this association. Any moneys so deposited that remain unclaimed by the holders of such Series A Preferred Stock at the end of two years after the redemption date shall to the fullest extent permitted by law become the property of, and be paid by such bank or trust company to, this association.
(e) Any shares of Series A Preferred Stock redeemed pursuant to this Section 4 shall be cancelled.
Section 5. Conversion.
(a) The holders of the Series A Preferred Stock shall have no conversion rights.
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Section 6. Reacquired Shares.
Any shares of Series A Preferred Stock redeemed, purchased or otherwise acquired by this association or any Subsidiary (as defined in Section 10) of this association in any manner whatsoever shall become authorized but unissued shares of Preferred Stock, par value $0.01 per share, of this association and may be reissued as part of another class or series of Preferred Stock, subject to the conditions or restrictions on authorizing or creating any class or series, or any shares of any class or series, set forth in Section 3(a).
Section 7. Liquidation, Dissolution or Winding Up.
(a) If this association shall liquidate, dissolve or wind up, whether pursuant to federal bankruptcy laws, state laws or otherwise, no distribution shall be made (i) to the holders of shares of Common Stock or any other class of stock ranking junior to the Series A Preferred Stock, unless prior thereto the holders of shares of Series A Preferred Stock shall have received $10,000,000 per share (as adjusted for any stock dividends, combinations, recapitalizations or splits with respect to such shares of Series A Preferred Stock) (the “Liquidation Preference”), plus an amount equal to any declared and unpaid dividends thereon to the date of such payment or (ii) to the holders of shares of Parity Stock, except distributions made ratably on Series A Preferred Stock and all such Parity Stock in proportion to the total amounts which the holders of, all such shares are entitled upon such liquidation, dissolution or winding up of this association.
(b) Neither the consolidation, merger or other business combination of this association with or into any other Person (as defined in Section 10) or Persons, nor the sale, lease, exchange or conveyance of all or any part of the property, assets or business of this association to a Person or Persons shall be deemed to be a liquidation, dissolution or winding up of this association for purposes of this Section 7.
Section 8. Rank.
(a) For purposes of this Amended and Restated Articles of Association, Series A Preferred Stock will rank, with respect to dividends and upon distribution of assets in liquidation, dissolution or winding up, prior to the Common Stock.
(b) Series A Preferred Stock may be fully subordinated to interests held by the U.S. government in the event of a receivership, insolvency or similar proceeding, including, without limitation, a proceeding under the “orderly liquidation authority” provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 as implemented by U.S. banking regulators whilst this association is an advanced approach institution.
(c) Series A Preferred Stock is not and shall not be secured or covered by any guarantee of this association. Series A Preferred Stock is not and shall not be subject to any other arrangement that legally or economically enhances the seniority of the Series A Preferred Stock.
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(d) Series A Preferred Stock is and would be subordinated to depositors, general creditors, and subordinated debt holders of this association in a receivership, insolvency, liquidation, or similar proceeding.
Section 9. Amendment.
In furtherance and not in limitation of the powers conferred by statute, in the event that the Series A Preferred Stock will no longer qualify as regulatory capital for this association under the rules and regulations of the Office of the Comptroller of the Currency due to the adoption of, or any change in, any law, rule or regulation, or in the interpretation or application thereof or compliance by this association therewith subsequent to the date hereof, this association is expressly authorized, without the consent of the holders of the Series A Preferred Stock, to amend or alter this Amended and Restated Articles of Association to alter or change the powers, designations, preferences, rights and qualifications, limitations or restrictions of the Series A Preferred Stock, but only after receipt of written approval from the Office of the Comptroller of the Currency for such amendment or alteration; provided, however, that no such amendment shall change the number of shares of Series A Preferred Stock, liquidation preference. Redemption Price, dividend rate, dividend payment dates, maturity, First Call Date, priority, voting rights or protective provisions without the consent of the holders of the Series A Preferred Stock.
Section 10. Definitions.
As used herein, the following terms shall have the meanings indicated.
The “Applicable Rate” for any Dividend Period will be (i) from the date of issuance of the Preferred Stock to, but excluding, March 31, 2020, equal to the Fixed Rate specified in Addendum A to the Amended and Restated Articles of Association, which shall be a market rate on the day of pricing of the Series A Preferred Stock and (ii) from, and including, March 31, 2020, equal to three-month USD LIBOR (the initial “Benchmark” (as defined in Addendum B)) plus the Floating Rate specified in Addendum A to the Amended and Restated Articles of Association, which shall be a market rate on the day of pricing of the Series A Preferred Stock, and which shall be reset quarterly, subject to Addendum B, which governs the discontinuation of USD LIBOR and the Benchmark Replacement Setting (as defined in Addendum B), with respect to the Preferred Stock. The association shall notify the holders of the Series A Preferred Stock of the Applicable Rate for each Dividend Period two London Business Days prior to the first day of such Dividend Period.
“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173).
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“USD LIBOR,” means, with respect to a Dividend Period, the rate (expressed as a percentage per annum) for offerings of three-month deposits in U.S. dollars administered by ICE Benchmark Administration Limited (or any other Person which takes over administration of such rate) appearing on the Designated LIBOR Page on or about 11:00 a.m. London time on the second London Business Day immediately preceding the first day of such Dividend Period. “London Business Day” means any Business Day on which dealings in deposits in dollars are transacted, or with respect to any future date are expected to be transacted, in the London interbank market.
“Person” means any individual, partnership, corporation, limited liability company, unincorporated organization trust or joint venture, or a governmental agency or political subdivision thereof.
“Set Apart for Payment” means, when used with respect to funds of this association to be used to effect any redemption of shares of Series A Preferred Stock, that funds of this association sufficient to satisfy such payment of redemption shall have been irrevocably deposited with a bank or trust company doing business in the Borough of Manhattan in the City of New York and having a capital and surplus of at least $50 million in trust for the exclusive benefit of the holders of the shares of Series A Preferred Stock to be redeemed and that such funds will be payable from and after the date of redemption to holders of Series A Preferred Stock who surrender their certificates representing such stock in accordance with the notice of redemption provided pursuant to Section 4(c).
“Subsidiary” means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Voting Stock (as defined below) is at the time owned or controlled directly or indirectly by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (A) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (B) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof).
“Voting Stock” of any Person as of any date means the capital stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person.”
The association, at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval of the shareholders. Obligations classified as debt, whether or not subordinated, which may be issued by the association without the approval of shareholders, do not carry voting rights on any issue, including an increase or decrease in the aggregate number of the securities, or the exchange or reclassification of all or part of securities into securities of another class or series.
SIXTH. The board of directors shall appoint one of its members president of the association, and one of its members chairperson of the board and shall have the power to appoint one or more vice chairpersons, a chief executive officer, and one or more senior executive vice presidents, senior vice presidents, vice presidents, a secretary who shall keep minutes of the directors’ and shareholders’ meetings and be responsible for authenticating the records of the association, and such other officers and employees as may be required to transact the business of this association. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the board of directors according to the Bylaws.
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The board of directors shall have the power to:
(1) Define the duties of the officers, employees, and agents of the association.
(2) Delegate the performance of its duties, but not the responsibility for its duties, to the officers, employees, and agents of the association.
(3) Fix the compensation and enter into employment contracts with its officers and employees upon reasonable terms and conditions consistent with applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and to fix the penalty thereof.
(6) Ratify written policies authorized by the association’s management or committees of the board.
(7) Regulate the manner in which any increase or decrease of the capital of the association shall be made, provided that nothing herein shall restrict the power of shareholders to increase or decrease the capital of the association according to law, and nothing shall raise or lower from two-thirds the percentage required for shareholder approval to increase or reduce the capital.
(8) Manage and administer the business and affairs of the association.
(9) Adopt initial Bylaws, not inconsistent with law or the Articles of Association, for managing the business and regulating the affairs of the association.
(10) Amend or repeal the Bylaws, except to the extent that the Articles of Association reserve this power in whole or in part to shareholders.
(11) Make contracts.
(12) Generally perform all acts that are legal for a board of directors to perform.
SEVENTH. The board of directors shall have the power to change the location of the main office to (1) any authorized branch within the limits of Tysons, Virginia, without the approval of the shareholders, or with a vote of shareholders owning two-thirds of the stock of such association, (2) a location outside such limits and upon receipt of a certificate of approval from the Comptroller of the Currency, to any other location within or outside the limits of Tysons. Virginia, but not more than 30 miles beyond such limits. The board of directors shall have the power to establish or change the location of any branch or branches of the association to any other location permitted under applicable law, without approval of shareholders, subject to approval by the Comptroller of the Currency.
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EIGHTH. The corporate existence of this association shall continue until termination according to the laws of the United States.
NINTH. The board of directors of the association, or the shareholders owning a majority of the capital stock of this association, may call a special meeting of shareholders at any time. Unless otherwise provided by the Bylaws or the laws of the United States, or waived by shareholders, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least 10, and no more than 60, days prior to the date of the meeting to each shareholder of record at his/her address as shown upon the books of this association. Unless otherwise provided by the Bylaws, any action requiring approval of shareholders must be affected at a duly called annual or special meeting.
TENTH. The association may make or agree to make indemnification payments to an institution-affiliated party, as defined by 12 USC § 1813(u), for an administrative proceeding or civil action initiated by any federal banking agency, that are reasonable and consistent with the requirements of 12 USC § 1828(k) and the implementing regulations thereunder.
The association may indemnify an institution-affiliated party, as defined by 12 USC § 1813(u), for damages and expenses, including the advancement of expenses and legal fees, in cases involving an administrative proceeding or civil action not initiated by a federal banking agency, in accordance with the law of the State of Delaware, provided such payments are consistent with safe and sound banking practices.
The association may purchase insurance for the purpose of indemnifying its directors, officers and other employees to the extent that such insurance coverage is permitted by applicable state and federal law. Such insurance may, but need not, be for the benefit of all directors, officers or employees.
ELEVENTH. These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of the association, unless the vote of the holders of a greater amount of stock is required by law, and in that case by the vote of the holders of such greater amount. The association’s board of directors may propose one or more amendments to the Articles of Association for submission to the shareholders.
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I, Michele Chebli, certify that: (1) I am a duly constituted Senior Assistant Corporate Secretary of HSBC Bank USA, National Association, and as such officer am an official custodian of its records; and (2) the foregoing Articles of Association were duly adopted by the sole shareholder of the association.
| I have hereunto affixed my official signature and the seal of the association, in the city of New York, New York, on this 7th day of November, 2022. |
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| Senior Assistant Corporate Secretary |
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Addendum A
| Dividend Rate | Fixed Rate: | |
| 5.4375% per annum | ||
| Floating Rate: | ||
| 382.75 basis points above three-month USD | ||
| LIBOR | ||
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Addendum B: Benchmark Replacement Setting
| (a) | Benchmark Replacement. Notwithstanding anything to the contrary in the terms of the Preferred Stock, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, in connection with a Benchmark Transition Event, such Benchmark Replacement will replace such Benchmark for all purposes under these Articles in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to these Articles, or further action or consent of any other party. |
| (b) | Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, HSBC Bank USA, National Association (the “Bank”) will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary in the terms of the Preferred Stock, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of the Registered Holders. |
| (c) | Standards for Decisions and Determinations. Any determination, decision or election that may be made by the Bank pursuant to this Addendum titled “Benchmark Replacement Setting,” including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from the Registered Holders, except, in each case, as expressly required pursuant to this Addendum titled “Benchmark Replacement Setting.” |
| (d) | Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary in these Articles, at any time (including in connection with the implementation of a Benchmark Replacement): |
(i) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Bank in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Bank may modify the definition of “Dividend Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor; and
(ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Bank may modify the definition of “Dividend Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
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| (e) | Certain Defined Terms. As used in this Addendum titled “Benchmark Replacement Setting”: |
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to the terms of the Preferred Stock, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (d) of this Addendum titled “Benchmark Replacement Setting.”
“Benchmark” means, initially, USD LIBOR; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to USD LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) of this Addendum titled “Benchmark Replacement Setting.”
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Lender for the applicable Benchmark Replacement Date:
(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;
(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(3) the sum of: (a) the alternate benchmark rate that has been selected by the Bank as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated or bilateral credit facilities at such time and (b) the related Benchmark Replacement Adjustment:
provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Bank in its reasonable discretion.
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“Benchmark Replacement Adjustment” means, with respect to any replacement of the then current Benchmark with an Unadjusted Benchmark Replacement for any applicable Dividend Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement.” the first alternative set forth in the order below that can be determined by the Bank:
(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Dividend Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;
(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
(2) for purposes of clause (3) of the definition of “Benchmark Replacement.” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Bank for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated or bilateral credit facilities;
provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Bank in its reasonable discretion.
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“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day.” the definition of “Dividend Period,” timing and frequency of determining rates and making payments of interest, timing of prepayment and other technical, administrative or operational matters) that the Bank decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Bank in a manner substantially consistent with market practice (or, if the Bank decides that adoption of any portion of such market practice is not administratively feasible or if the Bank determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Bank decides is reasonably necessary in connection with the administration of the Preferred Stock).
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
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“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes under the terms of the Preferred Stock in accordance with this Addendum titled “Benchmark Replacement Setting” and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes under any term of the Preferred Stock in accordance with this Addendum titled “Benchmark Replacement Setting.”
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“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Bank in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Bank decides that any such convention is not administratively feasible for the Bank, then the Bank may establish another convention in its reasonable discretion.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is USD LIBOR, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR, the time determined by the Bank in its reasonable discretion.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
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“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
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EXHIBIT 4
HSBC Bank USA, National Association
Bylaws
(As amended and restated effective July 20, 2022)
Article I
Meetings of Stockholders
Section 1.1. Annual Meeting. The regular annual meeting of the stockholders to elect directors and transact whatever other business may properly come before the meeting, shall be held at the main office of HSBC Bank USA, National Association (the “Association”), 1800 Tysons Boulevard, Tysons (formerly known as McLean), Fairfax County, Virginia, or such other place as the Board may designate, on such date and at such time as is fixed by the Board of Directors (the “Board”); provided, however, that so long as HSBC Holdings plc (“Group”) and any of its subsidiaries own 100 percent of the outstanding common stock of the Association, action to elect directors may be taken by written consent in lieu of an annual meeting and the Board will not be required to fix a date and time for an annual meeting of the Association’s stockholders. Notice of the meeting shall be mailed by first class mail, postage prepaid, at least 10 days and no more than 60 days prior to the date thereof, addressed to each stockholder at his/her address appearing on the books of the Association. If, for any cause, an election of directors is not made on that date, an election may be held on any subsequent day within 60 days of the date fixed, to be designated by the Board, or, if the directors fail to fix the date, by stockholders representing two-thirds of the shares.
Section 1.2. Special Meetings. Except as otherwise specifically provided by statute, special meetings of the stockholders may be called for any purpose at any time by the President, Chief Executive Officer or a majority of the Association’s Board by vote at a meeting or in writing (addressed to the Secretary of the Association) with or without a meeting or by the stockholders owning a majority of the capital stock of the Association. Every such special meeting, unless otherwise provided by law, shall be called by mailing by first class mail, postage prepaid, not less than 10 days nor more than 60 days prior to the date fixed for the meeting, to each stockholder at the address appearing on the books of the Association such notice to state the purpose of the meeting.
The Board may fix a record date for determining stockholders entitled to notice and to vote at any meeting, in reasonable proximity to the date of giving notice to the stockholders of such meeting. The record date for determining stockholders entitled to demand a special meeting is the date the first stockholder signs a demand for the meeting describing the purpose or purposes for which it is to be held.
A special meeting may be called by stockholders or the Board to amend the Articles of Association or Bylaws, whether or not such Bylaws may be amended by the Board in the absence of stockholder approval.
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If an annual or special stockholders’ meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time or place, if the new date, time or place is announced at the meeting before adjournment, unless any additional items of business are to be considered, or the Association becomes aware of an intervening event materially affecting any matter to be voted on more than 10 days prior to the date to which the meeting is adjourned. If a new record date for the adjourned meeting is fixed, however, notice of the adjourned meeting must be given to persons who are stockholders as of the new record date.
Section 1.3. Nominations of Directors. Nominations for election to the Board may be made by the Board or by any stockholder of any outstanding class of capital stock of the Association entitled to vote for the election of directors. Nominations, other than those made by or on behalf of the existing management of the Association, shall be made in writing and shall be delivered or mailed to the President of the Association not less than 14 days nor more than 50 days prior to any meeting of stockholders called for the election of directors, provided that, however, if less than 21 days’ notice of the meeting is given to stockholders, such nomination shall be mailed or delivered to the President of the Association no later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying stockholder:
| (1) | The name and address of each proposed nominee. |
| (2) | The principal occupation of each proposed nominee. |
| (3) | The total number of shares of capital stock of the Association that will be voted for each proposed nominee. |
| (4) | The name and residence address of the notifying stockholder. |
| (5) | The number of shares of capital stock of the Association owned by the notifying stockholder. |
Nominations not made in accordance herewith may, in his/her discretion, be disregarded by the chairman of the meeting, and upon his/her instructions, the vote tellers may disregard all votes cast for each such nominee.
Section 1.4. Proxies. Stockholders may vote at any meeting of the shareholders by proxies duly authorized in writing, but no officer or employee of this Association shall act as proxy. Proxies shall be valid only for one meeting, to be specified therein, and any adjournments of such meeting. Proxies shall be dated and filed with the records of the meeting. Proxies with facsimile signatures may be used and unexecuted proxies may be counted upon receipt of a written confirmation from the shareholder. Proxies meeting the above requirements submitted at any time during a meeting shall be accepted. Any action required to be taken at an annual or special meeting of shareholders may be taken without a meeting by written consent setting forth the action and signed by the holders of outstanding shares having not less than the minimum number of shares necessary to authorize or to take such action at a meeting at which all shares entitled to vote thereon were present and voted.
Section 1.5. Quorum. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of stockholders, unless otherwise provided by law, or by the stockholders or directors pursuant to section 10.2, but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. A majority of the votes cast shall decide every question or matter submitted to the stockholders at any meeting, unless otherwise provided by law or by the Articles of Association, or by the stockholders or directors pursuant to section 10.2.
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Article II
Directors
Section 2.1. Board. The Board shall have the power to manage and administer the business and affairs of the Association. Except as expressly limited by law, all corporate powers of the Association shall be vested in and may be exercised by the Board.
Section 2.2. Number. The Board shall consist of no less than five nor more than 25 persons, the exact number within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board or by resolution of a majority of the stockholders at any meeting thereof. A minimum of two directors shall be independent non-executive directors.
Section 2.3. Tenure. The directors shall be elected at the annual meeting of stockholders, except as provided in Section 2.8 of this Article II, and each director elected shall hold office until his successor is elected and qualified or until his earlier resignation or removal. In accordance with guidance on bylaws from the Office of the Comptroller of the Currency, provision shall be made for the election of approximately one-third of the board each year, as appropriate.
Each non-executive director will be appointed for an initial three-year term. Upon completion of the initial three-year term, non-executive directors may serve one additional three-year term subject to (i) election by the stockholders, (ii) rigorous review by the Board of whether there are relationships or circumstances that may affect, or could appear to affect, the director’s exercise of independent judgment, and (iii) the Board taking into account the need for progressive refreshing of the Board. Any extension of a non-executive director’s tenure beyond two three-year terms will require prior endorsement by Group. Notwithstanding the foregoing, non-executive directors should not serve on the Board beyond nine years from the date of their first appointment to any HSBC company. Any exception is subject to the prior endorsement of Group. Executive directors will serve one-year terms.
Appointments of non-executive directors shall expire at the first annual meeting of the shareholders which falls either on or following the third anniversary from the appointment date.
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Section 2.4. Organization Meeting. The Secretary, upon receiving the result of any election, shall notify the directors-elect of their election and of the time and place at which they are required to meet to organize the new Board and elect and appoint officers of the Association for the succeeding year. Such meeting shall be held on the day of the election or as soon thereafter as practicable, and, in any event, within 30 days thereof. If, at the time fixed for such meeting, there shall not be a quorum, the directors present may adjourn the meeting, from time to time, until a quorum is obtained.
Section 2.5. Regular Meetings. The regular meetings of the Board shall be held at the time and location designated by the Board. No notice of a regular meeting shall be required if the meeting is held according to a schedule of regular meetings approved by the Board. Members of the Board may participate in regular or special meetings by means of conference telephone or similar communications equipment by which all persons participating can hear each other. Such participation shall constitute presence in person.
Section 2.6. Special Meetings. Special meetings of the Board may be called by the Chairman of the Board, President, Chief Executive Officer or Secretary of the Association, or at the request of three or more directors. Each member of the Board shall be given notice of each special meeting stating the time and place by telegram, telephone, or similar electronic means or in person at least one day prior to such meeting, or by mail at least three days prior.
Section 2.7. Quorum. A majority of the director positions on the Board shall constitute a quorum if the total number is odd or one-half thereof if the total number is even at any meeting, except when otherwise provided by law, or the Bylaws, but a lesser number may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. If the number of directors is reduced below the number that would constitute a quorum, no business may be transacted, except selecting directors to fill vacancies in conformance with Section 2.8.
If a quorum is present, the Board may take action through the vote of a majority of the directors who are in attendance.
Section 2.8. Vacancies. When any vacancy occurs among the directors, a majority of the remaining members of the Board, according to the laws of the United States, may appoint a director to fill such vacancy at any regular meeting of the Board, or at a special meeting called for that purpose at which a quorum is present, or if the directors remaining in office constitute fewer than a quorum of the Board, by the affirmative vote of a majority of all the directors remaining in office, or by stockholders at a special meeting called for that purpose, in conformance with Section 1.2. A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date) may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. A director elected to fill a vacancy shall serve for the unexpired portion of the term of his predecessor in office.
Section 2.9. Removal of Directors. Any director may be removed either with or without cause, at any time, by a vote of the holders of a majority of the shares of the Association at any meeting of stockholders called for that purpose. A director may be removed for cause by vote of a majority of the full Board.
4
Section 2.10. Action by the Board. Except as otherwise provided by law, corporate action to be taken by the Board shall mean such action at a meeting of the Board or the Executive Committee of the Board. Any action required or permitted to be taken by the Board, the Executive Committee or any other committee of the Board may be taken without a meeting if all members of the Board or the committee consent in writing to a resolution authorizing the action. The resolution and the written consents thereto shall be filed with the minutes of the proceedings of the Board or committee. Any one or more members of the Board or any committee may participate in a meeting of the Board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.
Section 2.11. Advisory and Regional Boards. The Board, the Chairman of the Board, the President, the Chief Executive Officer, or any Regional President, may establish Advisory Boards or Regional Boards and committees thereof for any one or more of the Association’s regions, offices, or departments, and make or authorize appointments to be made thereto. Appointees to such boards and committees need not be stockholders, directors, or officers of the Association, and they shall have and perform only such functions as may be assigned to them; shall serve at the pleasure of and shall be compensated by fees fixed by the Board, the Chairman of the Board, the President, the Chief Executive Officer or the Regional President making the appointment.
Article III
Committees of the Board
Section 3.1. Audit Committee. There shall be an Audit Committee composed of no less than two directors, exclusive of any active officers, appointed by the Board annually or more often. The duty of the Audit Committee shall be to examine at least once during each calendar year and within 15 months of the last examination the affairs of the Association or cause suitable examinations to be made by auditors responsible only to the Board and to report the result of such examination in writing to the Board at the next regular meeting thereafter. Such report shall state whether the Association is in a sound condition, and whether adequate internal controls and procedures are being maintained and shall recommend to the Board such changes in the manner of conducting the affairs of the Association as shall be deemed advisable.
Section 3.2. Executive Committee. The Board may appoint from among its members an Executive Committee composed of not less than three directors, appointed by the Board annually or more often. The Executive Committee shall have power to review, set, and make changes to salaries annually or more often, approve capital expenditures, and to exercise, when the Board is not in session, all other powers of the Board that may be lawfully delegated. The Executive Committee shall keep minutes of its meetings, and such minutes shall be submitted at the next regular meeting of the Board at which a quorum is present, and any action taken by the Board with respect thereto shall be entered in the minutes of the Board.
Section 3.3. Other Committees. The Board may appoint, from time to time, from its own members, risk, compensation, special litigation and other committees of one or more persons, for such purposes and with such powers as the Board may determine.
5
However, a committee may not:
| (1) | Authorize distributions of assets or dividends. |
| (2) | Approve action required to be approved by stockholders. |
| (3) | Fill vacancies on the Board or any of its committees. |
| (4) | Amend the Articles of Association. |
| (5) | Adopt, amend, or repeal the Bylaws. |
| (6) | Authorize or approve the issuance or sale, or contract for sale, of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares. |
Article IV
Officers and Employees
Section 4.1. Appointment of Officers. At its annual meeting following the annual meeting of stockholders, the Board shall appoint from among its members a Chairman of the Board. The Board may also appoint one of its members to be the Vice Chairman of the Board. The Board shall also make “Senior Executive Appointments” including (i) appointments to the positions of Chairman (if an executive), the Policy Making Officers of the Association which include the President, Chief Executive Officer, Chief Financial Officer, Chief Risk Officer, Chief Compliance Officer, Chief Operating Officer, Head of Human Resources, Chief Audit Officer, General Counsel, Corporate Secretary, the heads of the principal business lines and heads of certain other functions as may be determined by the Board; and (ii) other appointments as required by law or regulation. The Chairman of the Board or the President may also be appointed as the Chief Executive Officer. The Board of Directors may also appoint General Officers to manage the day-to-day business functions of the Association.
The Chief Executive Officer and the Head of Human Resources shall each have the authority to appoint General Officers not otherwise reserved to the Board up to and including the level of Executive Vice President. Policy Making Officers shall have the authority to appoint General Officers not otherwise reserved to the Board up to and including the level of Senior Vice President.
The Policy Making Officers and any Executive Vice President or above shall also have the authority to appoint general agents, counsel and attorneys at law or in fact as such officer shall deem desirable for such periods and on such terms as it may deem advisable, and to revoke such appointments as may be necessary or desirable. Any Senior Vice President or above shall have the authority to appoint agents, counsel and attorneys at law or in fact as such officer shall deem desirable for such periods and on such terms as it may deem advisable with specific limited authority to assist in the ministerial aspects of their area of responsibilities, and to revoke such appointments as may be necessary or desirable. Any Vice President or above shall have the authority to appoint agents, counsel and attorneys at law or in fact as such officer shall deem desirable for such periods and on such terms as it may deem advisable, and to revoke such appointments as may be necessary or desirable, with specific limited authority to assist in the ministerial aspects of their areas of responsibilities pursuant to specific routine, repetitive delegations of authority. Any delegation of authority to appoint agents, counsel and attorneys at law or in fact authorized above shall be subject to review and approval by internal legal counsel for the Association.
6
The Board may from time to time designate, employ, or appoint such other officers and assistant officers, agents, employees, counsel, and attorneys at law or in fact as it shall deem desirable for such periods and on such terms as it may deem advisable, and such persons shall have such titles, only such power and authority, and perform such duties as the Board may determine. The Board may also authorize a committee of the Board to appoint such officers as are not required to be appointed by the Board at a meeting.
Section 4.2 Duties of the Chairman of the Board. The Chairman of the Board shall serve at the Board’s pleasure. Such person shall preside at all meetings of the Board. The Chairman of the Board shall supervise the carrying out of the policies adopted or approved by the Board; shall have general executive powers, as well as the specific powers conferred by these Bylaws; and shall have and may exercise such further powers and duties as from time to time may be conferred upon, or assigned by the Board. The Vice Chairman, if one is appointed, shall assume the duties of Chairman in the absence of the Chairman.
Section 4.3 Duties of the President. In the absence of the Chairman, or Vice Chairman if one is appointed, the President shall preside at any meeting of the Board. The President shall have general executive powers, and shall have and may exercise any and all other powers and duties pertaining by law, regulation, or practice, to the office of President, or imposed by these Bylaws. The President shall also have and may exercise such further powers and duties as from time-to-time may be conferred, or assigned by the Board.
Section 4.4 Duties of Chief Executive Officer. At the next meeting of the Board following the annual meeting of stockholders, or other meeting at which Policy Making Officers are or may be elected, the Board shall appoint the Chief Executive Officer of the Association. The Chief Executive Officer shall have general authority over all matters relating to the business and affairs of the Association subject to the control and direction of the Board. Except as otherwise provided by these Bylaws, the Chief Executive Officer shall have the power to determine the duties of other officers of the Association and to employ and discharge officers and employees. Except as otherwise provided by the Bylaws or the Board, the Chief Executive Officer shall be a member ex officio of all committees authorized by these Bylaws or created by the Board. In the absence of the Chairman of the Board and the President, the Chief Executive Officer shall preside at all meetings of the Board and of the stockholders.
Section 4.5. Duties of Senior Executive Vice Presidents, Executive Vice Presidents and Senior Vice Presidents. Each Senior Executive Vice President, Executive Vice President and Senior Vice President shall have such powers and perform such duties as may be prescribed by the Chief Executive Officer of the Association or the Board. In the absence or inability of the Chief Executive Officer to act, the most senior of the Senior Executive Vice Presidents, Executive Vice Presidents and Senior Vice Presidents shall, unless another officer of the Association is so designated by the Chief Executive Officer, perform the duties of the Chief Executive Officer for such time period as required.
7
Section 4.6. Duties of Treasurer. The Treasurer shall have custody of all funds, securities, evidences of indebtedness, and other similar property of the Association, and shall, in general, perform all duties incident to the office of Treasurer and such other duties as may be prescribed by the Board. In the absence of an appointment of a Treasurer, the Chief Financial Officer shall have the responsibilities of and perform the duties of the Treasurer.
Section 4.7. Secretary. The Board shall appoint a Secretary or other designated officer who shall be secretary of the Board and of the Association, and shall keep accurate minutes of all meetings. The Secretary shall attend to the giving of all notices required by these Bylaws; shall be custodian of the corporate seal, records, documents, and papers of the Association; shall provide for the keeping of proper records of all transactions of the Association; shall have and may exercise any and all other powers and duties pertaining by law, regulation, or practice, to the office of Secretary, or imposed by these Bylaws; and shall also perform such other duties as may be assigned from time-to-time, by the Board.
Section 4.8. Tenure of Office. The President and all other officers appointed by the Board shall hold office until the next annual meeting of the Board, unless they shall resign, become disqualified, or be removed. All other officers shall hold office until their successors have been appointed and qualify unless they shall resign, become disqualified or be removed. The Board shall have the power to remove the Chairman of the Board, the President and the Chief Executive Officer. The Board or the President or the Chief Executive Officer or his designee shall have the power to remove all other officers and employees. Any vacancy occurring in the office of President shall be filled promptly by the Board.
Section 4.9. Resignation. An officer may resign at any time by delivering notice to the Association. A resignation is effective when the notice is given unless the notice specifies a later effective date.
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Article V
Fiduciary Activities
Section 5.1. Trust Officer. The Board shall appoint a Trust Officer or Officers or Committee or Committees of the Association whose duties shall be to manage, supervise, and direct all fiduciary activities. Such persons or Committees shall do or cause to be done all things necessary or proper in carrying on the fiduciary business of the Association according to provisions of law and applicable regulations; and shall act pursuant to opinion of counsel when such opinion is deemed necessary. Opinions of counsel shall be retained on file in connection with all important matters pertaining to fiduciary activities. The Trust Officer or Officers or Committee or Committees shall be responsible for all assets and documents held by the Association in connection with fiduciary matters.
The Board may appoint other Trust Officers as it may deem necessary, with such duties as may be assigned. In accordance with Section 4.1 of these Bylaws, any Policy Making Officer may appoint Trust Officers up to and including the level of Senior Vice President.
Section 5.2. Trust Audit Committee. The Association’s Audit Committee described in Section 3.1 of these Bylaws shall fulfil the responsibilities of the Trust Audit Committee for the Association and shall ensure that a suitable audit (by internal or external auditors) of all significant fiduciary activities conducted by the Association is completed at least once during each calendar. The results of the audit (including significant actions taken as a result of the audit) shall be presented to the Audit Committee on behalf of the Board. In lieu of annual audits, the Association may adopt a continuous audit system in accordance with 12 CFR 9.9(b).
Section 5.3. Fiduciary Files. There shall be maintained by the Association all fiduciary records necessary to assure that its fiduciary responsibilities have been properly undertaken and discharged.
Section 5.4. Trust Investments. Funds held in a fiduciary capacity shall be invested according to the instrument establishing the fiduciary relationship and local law. Where such instrument does not specify the character and class of investments to be made and does not vest in the Association a discretion in the matter, funds held pursuant to such instrument shall be invested in investments in which corporate fiduciaries may invest under local law.
Article VI
Stock and Stock Certificates
Section 6.1. Transfers. Shares of stock shall be transferable on the books of the Association, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a stockholder by such transfer shall, in proportion to his or her shares, succeed to all rights of the prior holder of such shares. The Board may impose conditions upon the transfer of the stock reasonably calculated to simplify the work of the Association for stock transfers, voting at stockholder meetings, and related matters, and to protect it against fraudulent transfers.
9
Section 6.2. Stock Certificates. Certificates of stock shall bear the signature of the President or a Vice President (which may be engraved, printed, or impressed), and shall be signed manually or by facsimile process by the Secretary or an Assistant Secretary, or any other officer appointed by the Board for that purpose, to be known as an authorized officer, and the seal of the Association shall be impressed or engraved thereon. Each certificate shall recite on its face that the stock represented thereby is transferable only upon the books of the Association properly endorsed.
The Board may adopt or use procedures for replacing lost, stolen, or destroyed stock certificates as permitted by law.
Article VII
Corporate Seal
The President, the Secretary, or any Assistant Secretary, or other officer thereunto designated by the Board, shall have authority to affix the corporate seal to any document requiring such seal and to attest the same. Such seal shall have included thereon the name of the Association and the words “Corporate Seal” and the year it received its charter. The seal may be used by causing it or a facsimile thereof to be impressed or affixed in any manner reproduced.
Article VIII
Miscellaneous Provisions
Section 8.1. Fiscal Year. The fiscal year of the Association shall be the calendar year.
Section 8.2.(a) Execution of Instruments. All agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents may be signed, executed, acknowledged, verified, delivered or accepted on behalf of the Association by the Chairman of the Board or any Policy Making Officer, or any Vice President, Assistant Officer, agent or attorney at law or in fact authorized pursuant to Section 4.1 of these Bylaws or pursuant to the Association’s Signing Authority procedures, or, if in connection with the exercise of fiduciary powers of the Association, by any of those officers or by any trust officer. Any such instruments may also be executed, acknowledged, verified, delivered or accepted on behalf of the Association in such other manner and by such other officers as the Board may from time to time direct. The provisions of this Section 8.2 are supplementary to any other provision of these Bylaws.
(b) When required, the Secretary or any officer or agent designated by the Board or the Chief Executive Officer or his designee shall countersign and certify all bonds or certificates issued by the Association as trustee, transfer agent, registrar or depository. The Chief Executive Officer or any officer designated by the Board or the Chief Executive Officer or his or her designee or any duly appointed Trust Officer shall have the power to accept in behalf of the Association any guardianship, receivership, executorship or other special or general trust permitted by law. Each of the foregoing authorizations shall be at the pleasure of the Board, and each such authorization by the Chief Executive Officer or his or her designee also shall be at the pleasure of the Chief Executive Officer.
10
Section 8.3. Records. The Articles of Association, the Bylaws, and the proceedings of all meetings of the stockholders, the Board, and standing committees of the Board, shall be recorded in appropriate minute books provided for that purpose. The minutes of each meeting of the stockholders or the Board shall be signed by the Secretary or other officer appointed to act as secretary of the meeting. The minutes of each meeting of a committee of the Board shall be signed by the chairperson of such committee or other director or officer appointed to act as secretary of the meeting.
Section 8.4. (a) Indemnification. The Association may make or agree to make indemnification payments to an institution-affiliated party, as defined by 12 USC § 1813(u), for an administrative proceeding or civil action initiated by any federal banking agency, that are reasonable and consistent with the requirements of 12 USC § 1828(k) and its implementing regulations. The Association may indemnify an institution-affiliated party, as defined by 12 USC § 1813(u), for damages and expenses, including the advancement of expenses and legal fees, in cases involving an administrative proceeding or civil action not initiated by a federal banking agency, in accordance with the law of the State of Delaware, provided such payments are consistent with safe and sound banking practices.
(b) Insurance. The Association may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Association or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Association would have the power to indemnify such person against such expense, liability or loss under this Article VIII, as the same exists or may hereafter be amended.
Section 8.5. Corporate Governance Procedures. To the extent not inconsistent with federal banking statutes or regulations or bank safety and soundness, the corporate governance procedures of the Delaware General Corporation Law, Del. Code Ann. Tit. 8 (1991, as amended 1994, and as amended thereafter) will be followed.
Article IX
Bylaws
Section 9.1. Inspection. A copy of the Bylaws, and all amendments shall at all times be kept in a convenient place at the main office or a principal office of the Association, and may be inspected by all stockholders during banking hours.
Section 9.2. Amendments. The Bylaws may be amended, altered, or repealed, at any regular meeting of the Board, by a vote of a majority of the total number of the directors or at a meeting of stockholders, duly called and held, by a majority of the stock represented at such meeting.
Article X
Emergency Bylaws
Section 10.1. When Operative. Notwithstanding any different provision these bylaws or in the Articles of Association, the emergency bylaws provided in this Article X shall be operative during any emergency resulting from an attack on the United States or on a locality in which the Association conducts its business or customarily holds meetings of its Board or its stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board or a standing committee thereof cannot readily be convened for action.
11
Section 10.2. Board Meetings. During any such emergency, a meeting of the Board may be called by any director or, if necessary, by any appropriate officer who is not a director. The meeting shall be held at such time and place, within or without Tysons, Virginia, specified by the person calling the meeting and in the notice of the meeting which shall be given to such of the directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publication or radio. Such advance notice shall be given as, in the judgment of the person calling the meeting, circumstances permit. Two directors shall constitute a quorum for the transaction of business. To the extent required to constitute a quorum at the meeting, the officers present shall be deemed, in order of rank and within the same rank in order of seniority, directors for the meeting.
Section 10.3. Amendments to Emergency Bylaws. These emergency bylaws may be amended, either before or during any emergency, to make any further or different provision that may be practical and necessary for the circumstances of the emergency.
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EXHIBIT 7
Consolidated Report of Condition of
HSBC Bank USA, National Association
of Tysons, VA 22102
and Foreign and Domestic Offices,
at the close of business September 30, 2022, filed in accordance with 12 U.S.C. §161 for National Banks.
| Dollar Amounts In Thousands |
||||
| ASSETS |
||||
| Cash and balances due from depository institutions: |
||||
| Noninterest-bearing balances and currency and coin |
$ | 943,696 | ||
| Interest-bearing balances |
$ | 13,719,810 | ||
| Securities: |
||||
| Held-to-maturity securities |
$ | 6,654,873 | ||
| Available-for-sale debt securities |
$ | 28,081,811 | ||
| Equity securities with readily determinable fair value not held for trading |
$ | 119,614 | ||
| Federal funds sold and securities purchased under agreements to resell: |
||||
| Federal funds sold in domestic offices |
$ | 0 | ||
| Securities purchased under agreements to resell |
$ | 29,825,381 | ||
| Loans and lease financing receivables: |
||||
| Loans and leases held for sale |
$ | 576,123 | ||
| Loans and leases, held for investment |
$ | 59,424,748 | ||
| LESS: Allowance for loan and lease losses |
$ | 543,271 | ||
| Loans and leases held for investment, net of allowance |
$ | 58,881,477 | ||
| Trading assets |
$ | 21,096,612 | ||
| Premises and fixed assets (including capitalized leases) |
$ | 203,941 | ||
| Other real estate owned |
$ | 2,395 | ||
| Investments in unconsolidated subsidiaries and associated companies |
$ | 10,295 | ||
| Direct and indirect investments in real estate ventures |
$ | 0 | ||
| Intangible assets |
$ | 480,647 | ||
| Other assets |
$ | 6,168,263 | ||
|
|
|
|||
| Total assets |
$ | 166,764,938 | ||
|
|
|
|||
| LIABILITIES |
||||
| Deposits: |
||||
| In domestic offices |
$ | 129,256,285 | ||
| Noninterest-bearing |
$ | 39,405,123 | ||
| Interest-bearing |
$ | 89,851,162 | ||
| In foreign offices, Edge and Agreement subsidiaries, and IBFs |
$ | 7,196,198 | ||
| Noninterest-bearing |
$ | 0 | ||
| Interest-bearing |
$ | 7,196,198 | ||
| Federal funds purchased and securities sold under agreements to repurchase: |
||||
| Federal funds purchased in domestic offices |
$ | 460,000 | ||
| Securities sold under agreements to repurchase |
$ | 0 | ||
| Dollar Amounts In Thousands |
||||
| Trading liabilities |
$ | 4,835,258 | ||
| Other borrowed money |
||||
| (includes mortgage indebtedness and obligations under capitalized leases) |
$ | 2,739,654 | ||
| Subordinated notes and debentures |
$ | 1,377,827 | ||
| Other liabilities |
$ | 3,210,319 | ||
|
|
|
|||
| Total liabilities |
$ | 149,075,541 | ||
| EQUITY CAPITAL |
||||
| Perpetual preferred stock and related surplus |
$ | 2,500,000 | ||
| Common stock |
$ | 2,001 | ||
| Surplus (exclude all surplus related to preferred stock) |
$ | 14,034,245 | ||
| Retained earnings |
$ | 3,774,154 | ||
| Accumulated other comprehensive income |
-$ | 2,621,071 | ||
| Other equity capital components |
$ | 0 | ||
|
|
|
|||
| Total bank equity capital |
$ | 17,689,329 | ||
| Noncontrolling (minority) interests in consolidated subsidiaries |
$ | 68 | ||
|
|
|
|||
| Total equity capital |
$ | 17,689,397 | ||
|
|
|
|||
| Total liabilities, and equity capital |
$ | 166,764,938 | ||
|
|
|
|||