CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which we refer to as a “plan,” should consider the fiduciary standards of ERISA in the context of the plan’s particular circumstances
before authorizing an investment in these debt securities.
Accordingly, among other factors, the fiduciary should consider whether the investment would satisfy the prudence and diversification requirements of ERISA and would be consistent with the documents and instruments governing the plan.
In addition, we and certain of our
subsidiaries and affiliates and other issuers may be considered a
“party in interest” within the meaning of ERISA, or a
“disqualified person” within the meaning of the Code, with respect to many plans, as well as many individual
retirement accounts and Keogh plans (also
“plans”). Prohibited transactions within the meaning of ERISA or the Code would likely arise, for example, if these debt securities are acquired by or with the assets of a plan with respect to which such entities or their respective affiliates is a service provider or other party in interest, unless the debt securities are acquired pursuant to an exemption from the
“prohibited transaction” rules. A violation of these
“prohibited transaction” rules could result in an excise tax or other liabilities under ERISA and/or Section 4975 of the Code for those persons, unless exemptive relief is available under an applicable statutory or administrative exemption.
The U.S. Department of Labor has issued five prohibited transaction class exemptions (“PTCEs”)
that may provide exemptive relief for direct or indirect prohibited transactions resulting from the purchase or holding of these debt securities. Those class exemptions are PTCE 96-23 (for certain transactions determined by in-house asset managers), PTCE 95-60 (for certain transactions involving insurance company general accounts), PTCE 91-38 (for certain transactions involving bank collective investment funds), PTCE 90-1 (for certain transactions involving insurance company separate accounts) and PTCE 84-14 (for certain transactions determined by independent qualified professional asset managers). In addition, ERISA Section 408(b)(17) and Section 4975(d)(20) of the Code may provide an exemption for the purchase and sale of debt securities and the related lending transactions, provided that neither we or the issuer of the debt securities nor any of our or the issuer’s affiliates has or exercises any discretionary authority or control or renders any investment advice
with respect to the assets of any plan involved in the transaction, and provided further that the plan pays no more, and receives no less, than “adequate consideration” in connection with the transaction (the so-called “service provider” exemption). There can be no assurance that any of these class or statutory exemptions will be available with respect to transactions involving these debt securities.
Employee benefit plans that are governmental plans, as defined in Section 3(32) of ERISA, certain church plans, as defined in Section 3(33) of ERISA, and foreign plans, as described in Section 4(b)(4) of ERISA (collectively, “non- ERISA arrangements”), are not subject to the requirements of ERISA, or Section 4975 of the Code, but may be subject to similar rules under other applicable laws or
regulations.
Under regulations promulgated by the U.S. Department of Labor (
“DOL”) set forth at 29 C.F.R Section 2510.3-101 as modified by Section 3(42) of ERISA (the
“Plan Asset Regulations”), unless an applicable exception applies, if the debt securities were determined to be
“equity interests” in us or another issuer, non- exempt prohibited transactions and other violations of ERISA or the Code could occur with respect to our management and investment activities or those of other issuers if our or another issuer’s assets were deemed to be the
“plan assets” of plans investing in us or another issuer. Under the Plan Asset Regulations, generally a class of debt securities will not be characterized as an equity interest if such debt securities are treated as (i) indebtedness under local
law and do not have any
“substantial equity features”, or (ii) although equity interests, represent interests in an
“operating company” within the meaning of the Plan Asset Regulations. We should be considered an
“operating company” although other issuers may not be considered operating companies. In addition, to the extent an investor holds a
contract right, this may be considered neither indebtedness nor equity but should not cause our assets or those of another issuer to be considered
“plan assets.” The applicable pricing supplement will specify whether the debt securities are considered indebtedness without substantial equity features, equity interests in issuers (and whether such issuers should be considered operating companies within the meaning of the Plan Asset Regulations) or
contract
rights, and whether or not the debt securities are eligible to be purchased by plans or non-ERISA arrangements.