REGISTRATION NO. 333-74012
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VERIZON GLOBAL FUNDING CORP. VERIZON COMMUNICATIONS INC.
(Exact Name of Registrants as Specified in Their Charters)
Delaware Delaware
(State or other Jurisdiction of (State or other Jurisdiction of
incorporation or organization) incorporation or organization)
4813 4813
(Primary Standard Industrial Classification Code Number)
51-0272912 23-2259884
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
3900 Washington Street, 2nd Floor 1095 Avenue of the Americas
Wilmington, Delaware 19802 New York, New York 10036
(302) 761-4200 (212) 395-2121
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
Please address a copy of all communications to:
Janet M. Garrity David S. Kauffman
President and Treasurer Vice President and Associate General Counsel
VERIZON GLOBAL FUNDING CORP. VERIZON COMMUNICATIONS INC.
3900 Washington Street, 2nd Floor 1095 Avenue of the Americas
Wilmington, Delaware 19802 New York, New York 10036
(302) 761-4200 (212) 395-6174
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after expiration of the exchange offer described herein.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, 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, 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(d) 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.
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of each Class of Amount to be Offering Aggregate Amount of
Securities to be Registered Registered Price per Unit (1) Offering Price (1) Registration Fee
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Floating Rate Notes due 2002 $2,000,000,000 $2,000,000,000 $500,000
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Support Agreement between $2,000,000,000 (2) (2) (3)
Verizon Communications Inc.
and Verizon Global Funding
Corp.
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(1) Determined pursuant to Rule 457(f) under the Securities Act of 1933, solely
for the purpose of calculating the registration fee.
(2) No separate consideration will be received for the Support Agreement.
(3) Pursuant to Rule 457(n) under the Securities Act of 1933, no registration
fee is payable with respect to the Support Agreement.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
$2,000,000,000 OF NOTES OF
VERIZON GLOBAL FUNDING CORP. [LOGO]
SUPPORTED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
VERIZON COMMUNICATIONS INC.
OFFER TO EXCHANGE
$2,000,000,000 FLOATING RATE NOTES DUE 2002 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") FOR ANY AND ALL OUTSTANDING
FLOATING RATE NOTES DUE 2002
SUMMARY OF THE EXCHANGE OFFER
This prospectus and the accompanying Letter of Transmittal relate to the
proposed offer by Verizon Global Funding Corp. (the "Company" or "Verizon
Global Funding") to exchange up to $2,000,000,000 Floating Rate Notes due 2002
that have been registered under the Securities Act for any and all outstanding
Floating Rate Notes due 2002.
The new notes, which are referred to as the "exchange notes," will be
freely transferable. The outstanding notes, which are referred to as the
"restricted notes," have certain transfer restrictions.
The restricted notes are, and the exchange notes will be, unsecured and
unsubordinated obligations of the Company that are supported as to payment of
principal and interest on an unsecured and unsubordinated basis by Verizon
Communications Inc. ("Verizon Communications"), Verizon Global Funding's
corporate parent.
o The exchange offer expires at 5:00 p.m. New York City time on
February 5, 2002, unless extended.
o All restricted notes that are tendered and not withdrawn will be
exchanged promptly upon consummation of the exchange offer.
o There should be no United States federal income tax consequences to
holders of restricted notes who exchange restricted notes for exchange
notes pursuant to the exchange offer.
o Holders of restricted notes do not have any appraisal or dissenters'
rights in connection with the exchange offer.
o Restricted notes not exchanged in the exchange offer will remain
outstanding and be entitled to the benefits of the indenture under
which they were issued, but except under limited circumstances will not
have further exchange or registration rights.
o The Company does not intend to apply for listing of the exchange notes
on any securities exchange or to arrange for them to be quoted on any
quotation system.
o Each holder of restricted notes wishing to accept the exchange offer
must deliver the restricted notes to be exchanged, together with the
Letter of Transmittal that accompanies this prospectus and any other
required documentation, to the exchange agent identified in this
prospectus. Alternatively, a holder may effect a tender of restricted
notes by book-entry transfer into the exchange agent's account at the
Depository Trust Company ("DTC"). All deliveries are at the risk of
the holder. You will find detailed instructions concerning delivery
in the "Exchange Offer" section of this prospectus and in the
accompanying Letter of Transmittal.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE EXCHANGE NOTES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
YOU SHOULD READ THIS ENTIRE PROSPECTUS AND THE ACCOMPANYING LETTER OF
TRANSMITTAL AND RELATED DOCUMENTS AND ANY AMENDMENTS OR SUPPLEMENTS CAREFULLY
BEFORE MAKING YOUR DECISION TO PARTICIPATE IN THE EXCHANGE OFFER.
The date of this prospectus is January 4, 2002.
[Inside Front Cover]
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. NEITHER THE COMPANY NOR VERIZON COMMUNICATIONS
HAS AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS. NEITHER THE DELIVERY
OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE
MADE PURSUANT TO THIS PROSPECTUS SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF
ANY SUBSEQUENT DATE.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS OF RESTRICTED
NOTES BE ACCEPTED FROM, HOLDERS OF RESTRICTED NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR ITS ACCEPTANCE IS UNLAWFUL.
EACH BROKER-DEALER THAT RECEIVES EXCHANGE NOTES FOR ITS OWN ACCOUNT
PURSUANT TO THE EXCHANGE OFFER MUST ACKNOWLEDGE THAT IT WILL DELIVER A
PROSPECTUS IN CONNECTION WITH ANY RESALE OF SUCH EXCHANGE NOTES. THE LETTER OF
TRANSMITTAL STATES THAT BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, A
BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN
THE MEANING OF THE SECURITIES ACT. THIS PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A BROKER-DEALER IN CONNECTION
WITH RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR RESTRICTED NOTES WHERE
SUCH RESTRICTED NOTES WERE ACQUIRED BY SUCH BROKER-DEALER AS A RESULT OF
MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES. THE COMPANY HAS AGREED
THAT, FOR A PERIOD OF 90 DAYS AFTER THE EXPIRATION DATE (AS DEFINED BELOW), IT
WILL MAKE THIS PROSPECTUS AVAILABLE TO ANY BROKER-DEALER FOR USE IN CONNECTION
WITH ANY SUCH RESALE. SEE "PLAN OF DISTRIBUTION" BELOW.
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TABLE OF CONTENTS
Page
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Where You Can Find More Information .......................................................
Summary
Verizon Communications ...........................................................
Verizon Global Funding ...........................................................
The Exchange Offer ...............................................................
Ratios of Earnings to Fixed Charges of Verizon Communications .............................
Use of Proceeds ...........................................................................
Exchange Offer ............................................................................
Description of the Notes and the Support Agreement ........................................
Book-Entry, Delivery and Form .............................................................
U.S. Federal Income Tax Consequences ......................................................
Plan of Distribution ......................................................................
Legal Matters .............................................................................
Experts ...................................................................................
WHERE YOU CAN FIND MORE INFORMATION
Verizon Communications files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any of
these documents at the SEC's public reference room in Washington, D.C. Please
call the SEC at 1-800-SEC-0330 for further information. Verizon Communications'
SEC filings are also available to the public on the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information Verizon
Communications files with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that Verizon Communications files later with the SEC will
automatically update and supersede this information. We incorporate by
reference the following documents filed with the SEC by Verizon Communications
and the future filings made by Verizon Communications with the SEC under
Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") until all of the notes have been exchanged:
o Verizon Communications' Annual Report on Form 10-K for the year ended
December 31, 2000;
o Verizon Communications' Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2001, June 30, 2001 and September 30, 2001; and
o Verizon Communications' Current Reports on Form 8-K filed March 28,
2001, April 25, 2001, May 9, 2001, June 5, 2001, July 31, 2001, August
2, 2001, October 4, 2001 (as amended by Current Report on Form 8-K/A
filed October 5, 2001) and October 30, 2001.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address or phone number:
Investor Relations
Verizon Communications Inc.
1095 Avenue of the Americas, 36th Floor
New York, New York 10036
Telephone: (212) 395-1525
ii
SUMMARY
The following summary contains basic information about Verizon Global
Funding, its parent, Verizon Communications, and this exchange offer. It may
not contain all the information that is important to you in making your
investment decision and the information contained in this summary is qualified
in its entirety by the more detailed information appearing elsewhere in this
prospectus or incorporated by reference in this prospectus. "The Exchange
Offer" and the "Description of the Notes and the Support Agreement" sections of
this prospectus contain more detailed information regarding the terms and
conditions of the exchange offer and the exchange notes. Certain capitalized
terms used in this prospectus summary are defined elsewhere in this prospectus.
Verizon Communications
Verizon Communications is one of the world's leading providers of
communications services. We are a Fortune 10 company with nearly 256,000
employees and approximately $65 billion of annual revenues. In this section of
the prospectus, references to "we," "us" and "our" refer to Verizon
Communications and its consolidated subsidiaries.
Our subsidiaries are, collectively, the largest providers of wireline and
wireless communications in the United States, with 128.5 million access line
equivalents and approximately 28.7 million wireless customers. Our global
presence extends to more than 40 countries in the Americas, Europe, Asia and
the Pacific. We are the world's largest publisher of telephone directories.
Our directory publishing and electronic commerce operations consist of
domestic and international publishing businesses, including print directories
and Internet-based shopping guides, as well as website creation and other
electronic commerce services.
Our principal executive offices are located at 1095 Avenue of the Americas,
New York, New York 10036, and our telephone number is (212) 395-2121.
Verizon Global Funding
Verizon Global Funding was established to provide financing to Verizon
Communications and some of its subsidiaries, other than Verizon Communications'
domestic telephone company subsidiaries. Verizon Global Funding does not engage
in any separate business activities.
Verizon Global Funding is a wholly owned, indirect subsidiary of Verizon
Communications and was incorporated in Delaware in November 1983. The principal
executive offices of Verizon Global Funding are located at 3900 Washington
Street, 2nd floor, Wilmington, Delaware 19802, and its telephone number is
(302) 761-4200.
The Exchange Offer
Exchange Notes $2,000,000,000 Floating Rate Notes due 2002 which
have been registered under the Securities Act. For
more details, see "Exchange Offer--Terms of the
Exchange Offer."
2
The Exchange Offer We are offering to issue the exchange notes in
exchange for a like principal amount of
outstanding restricted notes of the same series
that we issued on May 2, 2001. We are offering to
issue the exchange notes to satisfy our
obligations contained in the registration rights
agreement we entered into when we sold the
outstanding restricted notes in transactions
pursuant to Rule 144A and Regulation S under the
Securities Act. The outstanding restricted notes
were subject to transfer restrictions that will
not apply to the exchange notes so long as you are
acquiring the exchange notes in the ordinary
course of your business, you are not participating
in a distribution of the exchange notes and you
are not an affiliate of ours.
Maturity Date Each exchange note will mature on November 4, 2002,
the same date as the restricted note for which it is
being exchanged.
Interest Payment Dates Each exchange note will bear interest accruing at
the same rates and payable at the same times as the
restricted note for which it is being exchanged.
Support Agreement The exchange notes are supported as to payment of
principal and interest by Verizon Communications
under a Support Agreement which is more fully
described under the heading "Description of the
Notes and the Support Agreement."
Ranking The notes will be the senior unsecured obligations
of Verizon Global Funding and will rank equally
with all of Verizon Global Funding's other
unsecured and unsubordinated debt. Except as
described in this prospectus under the heading
"Description of the Notes and the Support
Agreement," Verizon Communications' support
obligations will rank equally with all of its
other unsecured and unsubordinated debt.
Optional Redemption The Company has no right to redeem the notes prior
to their maturity.
Certain Covenants The indenture governing the exchange notes contains
covenants that, among other things, limit Verizon
Global Funding's ability to create liens on its
assets and limits the ability of each of Verizon
Global Funding and
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Verizon Communications to merge or consolidate with
another company or to transfer substantially all of
its assets. For more details, see "Description of
the Notes and the Support Agreement--Restrictions on
Verizon Global Funding" below.
Use of Proceeds Neither the Company nor Verizon Communications will
receive any proceeds from the issuance of the
exchange notes.
Denominations and Issuance
of Exchange Notes The exchange notes will be issued in book-entry
form and will be represented by global
certificates deposited with a custodian for, and
registered in the name of a nominee of, DTC.
Beneficial ownership of the exchange notes will be
shown on, and transfers will be effected only
through, records maintained by DTC and its direct
and indirect participants and any such interest
may not be exchanged for certificated exchange
notes except in limited circumstances. See
"Book-Entry, Delivery and Form" below.
Tenders, Expiration Date,
Withdrawal The exchange offer will expire at 5:00 P.M., New
York City time, on February 5, 2002, unless it is
extended. To tender your outstanding restricted
notes you must follow the detailed procedures
described under the heading "Exchange
Offer--Procedures for Tendering" including special
procedures for certain beneficial owners and
broker-dealers. If you decide to exchange your
outstanding restricted notes for exchange notes, you
must acknowledge that you do not intend to engage
in, and have no arrangement with any person to
participate in, a distribution of the exchange
notes. If you decide to tender your outstanding
notes pursuant to the exchange offer, you may
withdraw them at any time prior to 5:00 p.m., New
York City time, on the expiration date.
Federal Income Tax Your exchange of outstanding restricted notes for
exchange notes pursuant to the exchange offer will
not be a taxable event for U.S. federal income tax
purposes. See "U.S. Federal Income Tax
Consequences--Consequences of the Exchange."
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Exchange Agent First Union National Bank is the exchange agent for
the exchange offer.
Failure to Exchange Your
Outstanding Restricted
Notes and Trading Market If you fail to exchange your outstanding
restricted notes for exchange notes in the
exchange offer, your outstanding restricted notes
will continue to be subject to transfer
restrictions and you will not have any further
rights under the Registration Rights Agreement,
including any right to require us to register your
outstanding restricted notes or to pay any
additional interest relating to a registration
default. To the extent that outstanding restricted
notes are tendered and accepted in the exchange
offer, your ability to sell untendered, and
tendered but unaccepted, outstanding restricted
notes could be adversely affected. There may be no
trading market for the outstanding restricted
notes. There can be no assurance that an active
public market for the exchange notes will develop
or as to the liquidity of any market that may
develop for the exchange notes, the ability of
holders to sell the exchange notes, or the price
at which holders would be able to sell the
exchange notes. For more details, see the sections
"Consequences of a Failure to Exchange Restricted
Notes" and "Absence of a Public Market" under the
heading "Exchange Offer."
5
RATIOS OF EARNINGS TO FIXED CHARGES
The following table shows Verizon Communications' ratio of earnings to
fixed charges for the periods indicated:
Nine Months
Ended September 30, Years Ended December 31,
2001 2000 1999 1998 1997
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2.38 4.47 4.98 3.81 3.74
For all periods, the ratios reflect the merger of Bell Atlantic and GTE as
if it occurred as of the beginning of the earliest period presented, in
accordance with pooling-of-interests accounting rules.
For these ratios, "earnings" have been calculated by adding fixed charges
to income before income taxes and extraordinary charges, and "fixed charges"
include interest expense, preferred stock dividend requirements, capitalized
interest and the portion of rent expense representing interest.
The ratio for the nine months ended September 30, 2001 includes special
items that resulted in a net pretax loss of $(4,776) million, and the ratios
for the years ended December 31, 2000, 1999, 1998 and 1997 include net pretax
gains (losses) of $6,116 million, $981 million, $(2,552) million and $(1,803)
million, respectively. Excluding those special items, the ratio for the nine
months ended September 30, 2001 would have been 3.85, and the ratios for the
years ended December 31, 2000, 1999, 1998 and 1997 would have been 3.68, 4.68,
4.43 and 4.29, respectively. The 2001 special items relate to the writedown of
marketable securities, Bell Atlantic/GTE merger-related charges and a change in
accounting for derivatives, creating mark-to-market adjustments. The 2000 and
1999 special items pertain to gains on sales of assets, net of asset
impairments and other charges, Bell Atlantic/GTE merger-related charges,
pension settlements and the gain on the mark-to-market of exchangeable notes.
The 1998 and 1997 special items pertain to asset impairments and other charges,
net of gains on sales of assets, Bell Atlantic/NYNEX Corporation merger-related
charges, pension settlements and retirement incentive program costs. Sales of
assets included wireline and wireless properties, GTE Government Systems and
the gain associated with the merger of BC TELECOM Inc. and TELUS Corporation.
Asset impairments included costs associated with exiting businesses.
USE OF PROCEEDS
Neither the Company nor Verizon Communications will receive any cash
proceeds from the issuance of the exchange notes. As consideration for the
exchange notes, the Company will receive in exchange an equivalent principal
amount of outstanding restricted notes, the terms of which are identical to the
terms of
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the exchange notes, except that the exchange notes will be registered under the
Securities Act, freely transferable and issued free of any covenants regarding
exchange and registration rights.
The Company will retire and cancel the restricted notes surrendered in
exchange for the exchange notes. Accordingly, the issuance of the exchange
notes under the exchange offer will not result in any change in the outstanding
aggregate indebtedness of the Company.
EXCHANGE OFFER
REASON FOR THE EXCHANGE OFFER
The Company initially sold the restricted notes in a private offering. The
Notes were sold on May 2, 2001 to Lehman Brothers Inc. (the "Initial
Purchaser"). These sales were all effected pursuant to an agreement among the
Company, Verizon Communications as support provider, and the Initial Purchaser.
The Initial Purchaser subsequently resold or was permitted to resell the
restricted notes:
- to qualified institutional buyers in accordance with the provisions
of Rule 144A under the Securities Act, and
- outside the United States in accordance with the provisions of
Regulation S under the Securities Act.
In connection with the private offering of the restricted notes, the
Company, Verizon Communications as support provider, and the Initial Purchaser
entered into a Registration Rights Agreement (the "Registration Rights
Agreement"), in which the Company agreed, among other things:
- to file a registration statement relating to an exchange offer for the
restricted notes, with the SEC, on or before November 28, 2001;
- use its reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the Securities
Act on or before February 11, 2002;
- upon the effectiveness of the exchange offer registration statement,
to offer the holders of the restricted notes the opportunity to
exchange their restricted notes in the exchange offer for a like
principal amount of exchange notes;
- to keep the exchange offer open for not less than 30 days, or longer,
if required by applicable law, after notice of the exchange offer is
mailed to holders of restricted notes; and
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- to use its reasonable best efforts to consummate the exchange offer on
or before March 13, 2002.
The Company also agreed, under certain circumstances:
- to use its reasonable best efforts to file a shelf registration
statement relating to the offer and sale of the restricted notes by
the holders of the restricted notes;
- to use its reasonable best efforts to cause such shelf registration
statement to be declared effective; and
- to use its reasonable best efforts to keep such shelf registration
statement effective for two years after the shelf registration
statement becomes effective or until the restricted notes covered by
the shelf registration statement have been sold or cease to be
outstanding.
The exchange offer being made by this prospectus is intended to satisfy the
Company's exchange and registration obligations under the Registration Rights
Agreement discussed above. If the Company fails to fulfill such obligations,
holders of outstanding restricted notes are entitled to receive additional
interest at the rate of 0.25% per annum for so long as the Company fails to
fulfill such obligations. The rate for additional interest will not exceed
0.25% per annum. After the Company has cured all defaults of its registration
and exchange obligations, the accrual of additional interest on the restricted
notes will cease, and the interest rate for the restricted notes will revert to
its original rate.
For a more complete understanding of your exchange and registration rights,
please refer to the Registration Rights Agreement, which is included as an
exhibit to the registration statement relating to the exchange notes.
TRANSFERABILITY OF THE EXCHANGE NOTES
Based on certain no-action letters issued by the staff of the SEC to others
in unrelated transactions, the Company believes that a noteholder may offer for
resale, resell or otherwise transfer any exchange notes without compliance with
the registration and prospectus delivery requirements of the Securities Act,
unless the noteholder
- is acquiring the exchange notes other than in the ordinary course of
business;
- is participating, intends to participate or has an arrangement or
understanding with any person to participate, in a distribution of
the exchange notes;
8
- is an "affiliate" of the Company, as defined in Rule 405 under the
Securities Act; or
- is an Initial Purchaser who acquired restricted notes directly from
the Company in the initial offering to resell pursuant to Rule 144A,
Regulation S or any other available exemption under the Securities
Act.
In any of the foregoing circumstances, a noteholder
- will not be able to rely on the interpretations of the staff of the
SEC, in connection with any offer for resale, resale or other transfer
of exchange notes; and
- must comply with the registration and prospectus delivery requirements
of the Securities Act, or have an exemption available, in connection
with any offer for resale, resale or other transfer of the exchange
notes.
The Company is not making this exchange offer to, nor will it accept
surrenders of restricted notes from, holders of restricted notes in any state
in which this exchange offer would not comply with the applicable securities
laws or "blue sky" laws of such state.
Each broker-dealer that receives exchange notes for its own account in
exchange for restricted notes, where such restricted notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
The restricted notes were issued in a single series. As of the date of this
prospectus, the aggregate principal amount of the notes has not been reduced.
In the exchange offer, restricted notes will be exchanged for exchange notes
with terms which are otherwise identical to the terms of the restricted notes
for which they are being exchanged, except that the exchange notes will be
registered under the Securities Act, freely transferable and issued free of any
covenants regarding exchange and registration rights.
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying Letter of Transmittal, the Company will accept all
restricted notes validly tendered and not withdrawn prior to 5:00 p.m. New York
City time on February 5, 2002, the date that the exchange offer expires. This
date and time may be extended. See "Expiration Date; Extensions; Amendments"
below. After authentication of the exchange notes by the trustee under the
indenture governing the notes or an authenticating agent, the Company will
issue and deliver $1,000 principal amount of exchange notes in exchange for
each $1,000 principal amount of outstanding restricted notes accepted in the
9
exchange offer. Holders may tender some or all of their restricted notes
pursuant to the exchange offer in denominations of $1,000 and integral
multiples thereof.
The form and terms of the exchange notes are identical in all material
respects to the form and terms of the outstanding restricted notes, except
that:
- the offering of the exchange notes has been registered under the
Securities Act;
- the exchange notes will not be subject to transfer restrictions; and
- the exchange notes will be issued free of any covenants regarding
exchange and registration rights.
The exchange notes will be issued under and entitled to the benefits of the
indenture that governs the restricted notes.
In connection with the issuance of the restricted notes, the Company
arranged for the restricted notes to be issued and transferable in book-entry
form through the facilities of DTC, acting as a depositary. The exchange notes
will also be issuable and transferable in book-entry form through DTC.
This prospectus, together with the accompanying Letter of Transmittal, is
initially being sent to all registered holders of restricted notes as of the
close of business on January 3, 2002. The exchange offer for restricted notes
is not conditioned upon any minimum aggregate principal amount being tendered.
However, the exchange offer is subject to certain customary conditions which
may be waived by the Company, and to the terms and provisions of the
Registration Rights Agreement. See "Conditions to the Exchange Offer" below.
The exchange agent is First Union National Bank, which also serves as
trustee under the indenture that governs the notes. The Company will be deemed
to have accepted validly tendered restricted notes when, as and if the Company
has given oral or written notice thereof to the exchange agent. The exchange
agent will act as agent of the tendering holders for the purpose of receiving
exchange notes from the Company and as agent of the Company for the purpose of
delivering exchange notes to such holders. See "Exchange Agent" below.
If any tendered restricted notes are not accepted for exchange because of
an invalid tender or the occurrence of certain other events set forth in this
prospectus, such unaccepted restricted notes will be returned, at the Company's
cost, to the tendering holder as promptly as practicable after the expiration
of the exchange offer.
Holders who tender restricted notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
restricted notes pursuant to the
10
exchange offer. The Company will pay all charges and expenses, other than
certain applicable taxes, in connection with the exchange offer. See
"Solicitation of Tenders; Fees and Expenses" below.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m. New York City time on
February 5, 2002, unless the Company, in its sole discretion, extends the
exchange offer. The Company may extend the exchange offer at any time and from
time to time by giving oral or written notice to the exchange agent and by
timely public announcement.
The Company reserves the right, in its sole discretion, to amend the terms
of the exchange offer in any manner. If any of the conditions set forth below
under "Conditions to the Exchange Offer" has occurred and has not been waived
by the Company, the Company expressly reserves the right, in its sole
discretion, by giving oral or written notice to the exchange agent, to:
- delay acceptance of, or refuse to accept, any restricted notes not
previously accepted;
- extend the exchange offer;
- terminate the exchange offer; or
- amend the exchange offer.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof by the
Company to the registered holders of the restricted notes. If the exchange
offer is amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment in a manner
reasonably calculated to inform the holders of such restricted notes, and the
Company will extend the exchange offer to the extent required by law. If the
exchange offer is terminated, federal law requires that the Company promptly
either exchange or return all restricted notes that have been tendered.
The Company will have no obligation to publish, advise, or otherwise
communicate any delay in acceptance, extension, termination or amendment of the
exchange offer other than by making a timely press release. The Company may
also publicly communicate these matters in any other appropriate manner of its
choosing.
INTEREST ON THE EXCHANGE NOTES
Interest on the exchange notes will accrue from the last interest payment
date on which interest was paid on the restricted notes surrendered in exchange
therefor. The exchange notes will bear interest at the same rates, and such
interest will be payable on the same dates, as the rates and interest payment
dates relating to the restricted notes
11
surrendered in exchange therefor. Assuming that the exchange offer is
consummated prior to February 10, 2002, as anticipated, interest on the
exchange notes will first become payable beginning on May 4, 2002.
PROCEDURES FOR TENDERING
Only a holder of record of restricted notes or a DTC participant listed on
a DTC securities position listing with respect to the restricted notes may
tender its restricted notes in the exchange offer.
To tender restricted notes in the exchange offer, registered holders of
certificated restricted notes must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in accordance with the instructions
contained in this prospectus and in the Letter of Transmittal. The holder
should then mail or otherwise deliver the Letter of Transmittal, or such
facsimile, together with the restricted notes to be exchanged and any other
required documentation, to the exchange agent, at the address set forth in this
prospectus and in the Letter of Transmittal. Holders of restricted notes that
are DTC participants may follow the procedures for book-entry transfer as
provided for below under "Book-Entry Transfer" and in the Letter of
Transmittal.
To be effective, a tender must be made prior to the expiration of the
exchange offer.
Any beneficial owner whose restricted notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender restricted notes in the exchange offer should contact such registered
holder promptly and instruct such registered holder to tender on such
beneficial owner's behalf. If a beneficial owner wishes to tender on its own
behalf, such beneficial owner must, prior to completing and executing the
Letter of Transmittal and delivering its restricted notes, either make
appropriate arrangements to register ownership of the restricted notes in its
own name or obtain a properly completed bond power from the registered holder
of such restricted notes. This transfer of record ownership may take
considerable time. Delivery of documents to DTC in accordance with DTC's
procedures will NOT constitute delivery to the exchange agent.
The tender by a holder of restricted notes will constitute an agreement
between such holder, the Company and the exchange agent in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal. If less than all the restricted notes held by a holder of
restricted notes are tendered, a tendering holder should fill in the amount and
series of restricted notes being tendered in the specified box in the Letter of
Transmittal. The entire amount of restricted notes delivered to the exchange
agent will be deemed to have been tendered unless otherwise indicated.
The Letter of Transmittal includes representations by the tendering holder
to the Company that, among other things:
12
- any exchange notes received by the tendering holder will be acquired
in the ordinary course of its business;
- the tendering holder has no arrangement or understanding with any
person to participate in the distribution of the exchange notes; and
- the tendering holder is not an "affiliate," as defined in Rule 405
under the Securities Act, of the Company, or, if it is an affiliate,
that it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
A Letter of Transmittal of a broker-dealer that receives exchange notes for
its own account in exchange for restricted notes that were acquired by it as a
result of market-making or other trading activities must also include an
acknowledgment that the broker-dealer will deliver a copy of this prospectus in
connection with the resale of such exchange notes. By so acknowledging and by
delivering a prospectus, such broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. See "Plan of
Distribution."
The method of delivery of restricted notes and Letters of Transmittal and
all other required documents or transmittal of an Agent's Message, as described
below under "Book-Entry Transfer," to the exchange agent is at the election and
risk of the holders of restricted notes. Instead of delivery by mail, it is
recommended that holders of restricted notes use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to ensure delivery to
the exchange agent prior to the expiration of the exchange offer. No Letters of
Transmittal or restricted notes should be sent to the Company.
Signatures on a Letter of Transmittal or a notice of withdrawal described
in "Withdrawal of Tenders" below must be guaranteed by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"), unless such Letter of Transmittal or notice is being submitted
- by a registered holder who has not completed the box entitled "Special
Registration Instructions" or the box entitled "Special Delivery
Instructions" in the Letter of Transmittal; or
- for the account of an Eligible Institution.
If a Letter of Transmittal is signed by a person other than the registered
holder, it must be accompanied by appropriate bond powers which authorize such
person to tender the restricted notes on behalf of the registered holder, in
either case signed as the name of the registered holder or holders appears on
the restricted notes. If a Letter of Transmittal or any restricted notes or
bond powers are signed or endorsed by trustees, executors,
13
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and unless waived by the Company, submit evidence
satisfactory to the Company of their authority to so act with such Letter of
Transmittal.
All questions as to the validity, form, eligibility, acceptance and
withdrawal of the tendered restricted notes will be determined by the Company
in its sole discretion, which determination will be final and binding. The
Company reserves the absolute right to reject restricted notes not properly
tendered or any restricted notes the Company's acceptance of which would, in
the opinion of counsel for the Company, be unlawful. The Company also reserves
the absolute right to waive any irregularities or conditions of tender as to
particular restricted notes. The Company's interpretation of the terms and
conditions of the Exchange Offer, including the instructions in the Letter of
Transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of restricted notes must
be cured within such time as the Company shall determine.
Although the Company intends to notify tendering holders of defects or
irregularities with respect to tenders of restricted notes, neither the
Company, the exchange agent nor any other person will be under any duty or
obligation to do so, and no person will incur any liability for failure to give
such notification. Restricted notes will not be validly tendered until such
irregularities have been cured or waived. Any restricted notes received by the
exchange agent that the Company determines are not properly tendered or the
tender of which is otherwise rejected by the Company will be returned by the
exchange agent to the tendering holder or other person specified in the
appropriate Letter of Transmittal as soon as practicable following the
expiration of the exchange offer.
The Company reserves the right in its sole discretion:
- to purchase or make offers for any restricted notes that remain
outstanding subsequent to the expiration of the exchange offer;
- to terminate the exchange offer, as set forth in "Conditions to the
Exchange Offer" below; and
- to the extent permitted by applicable law, to purchase restricted
notes during the pendency of the exchange offer in the open market, in
privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
14
BOOK-ENTRY TRANSFER
The Company understands that the exchange agent will make a request
promptly after the date of this prospectus to establish accounts with respect
to the restricted notes at DTC for the purpose of facilitating the exchange
offer. Any financial institution that is a participant in DTC's system may make
book-entry delivery of restricted notes by causing DTC to transfer such
restricted notes into the Exchange Agent's DTC account in accordance with DTC's
Automated Tender Offer Program procedures for such transfer. The exchange for
tendered restricted notes will only be made after a timely confirmation of a
book-entry transfer of the restricted notes into the exchange agent's account,
and timely receipt by the exchange agent of an Agent's Message.
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Exchange Agent and forming part of the confirmation of a
book-entry transfer, which states that DTC has received an express
acknowledgment from a participant tendering restricted notes and that such
participant has received a Letter of Transmittal and agrees to be bound by the
terms of the Letter of Transmittal and the Company may enforce such agreement
against the participant. Delivery of an Agent's Message will also constitute an
acknowledgement from the tendering DTC participant that the representations
contained in the Letter of Transmittal and described under "Procedures for
Tendering" above are true and correct.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their restricted notes and:
- whose restricted notes are not immediately available,
- who cannot deliver their restricted notes, the Letter of Transmittal
or any other required documents to the exchange agent prior to the
expiration of the exchange offer, or
- who cannot complete the procedure for book-entry transfer on a
timely basis,
may effect a tender if:
1. the tender is made through an Eligible Institution;
2. prior to the expiration of the exchange offer the exchange agent
receives from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery by facsimile transmittal,
overnight courier, mail or hand delivery; and
3. certificate(s) representing all tendered restricted notes in proper
form for transfer, together with a properly completed and executed
Letter of Transmittal, or a facsimile thereof and all other documents
required by the Letter of Transmittal, or confirmation of a book-entry
transfer into the
15
exchange agent's account at DTC of restricted notes delivered
electronically, are received by the exchange agent within three
business days after the expiration of the exchange offer.
A Notice of Guaranteed Delivery must state:
- the name and address of the holder;
- if the restricted notes will be tendered by their registered holder,
the certificate number or numbers of such restricted notes;
- the principal amount of such restricted notes tendered;
- that the tender is being made thereby; and
- that the holder guarantees that, within three business days after the
expiration of the exchange offer, a Letter of Transmittal or facsimile
thereof, together with the certificate(s) representing the restricted
notes to be tendered in proper form for transfer and any other
documents required by the Letter of Transmittal, or confirmation of a
book-entry transfer into the exchange agent's account at DTC of
restricted notes delivered electronically, will be deposited by the
Eligible Institution with the exchange agent.
Forms of the Notice of Guaranteed Delivery will be available from the
exchange agent upon request.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of restricted notes may be
withdrawn at any time prior to the expiration of the exchange offer by delivery
of a written or facsimile transmission notice of withdrawal to the exchange
agent at its address set forth in this prospectus.
Any such notice of withdrawal must:
- specify the name of the person having deposited the restricted notes
to be withdrawn;
- identify the restricted notes to be withdrawn, including the series,
the principal amount of such restricted notes, and the certificate
number or numbers or, in the case of restricted notes transferred by
book-entry transfer, the name and number of the account at DTC to be
credited;
- be signed by the depositor of the restricted notes in the same manner
as the original signature on the Letter of Transmittal by which such
restricted
16
notes were tendered, including any required signature guarantee, or be
accompanied by documents of transfer sufficient to permit the
registrar to register the transfer of such restricted notes into the
name of the party withdrawing the tender or, in the case of restricted
notes transferred by book-entry transfer, be transmitted by DTC and
received by the exchange agent in the same manner as the Agent's
Message transferring the notes; and
- specify the name in which any such restricted notes are to be
registered, if different from that of the depositor of the restricted
notes.
All questions as to the validity, form and eligibility of such withdrawal
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any restricted notes so withdrawn will be deemed
not to have been validly tendered for purposes of the exchange offer, and no
exchange notes will be issued with respect thereto unless the restricted notes
so withdrawn are validly retendered. Any restricted notes that have been
tendered but are not accepted for exchange will be returned to the holder
thereof without cost to such holder, or removed from the Exchange Agent's
account at DTC and returned to the accounts at DTC from which they were
tendered, as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn restricted notes may be
retendered by following one of the procedures described above under "Procedures
for Tendering" at any time prior to the expiration of the exchange offer.
CONDITIONS TO THE EXCHANGE OFFER
The Company will not be required to accept for exchange, or to issue
exchange notes for, any restricted notes, and may terminate or amend the
exchange offer before the acceptance of such restricted notes if, in the
Company's judgment, any of the following conditions has occurred:
- the exchange offer, or the making of any exchange by a holder of
restricted notes, violates applicable law or the applicable
interpretations of the SEC staff;
- any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with respect
to the exchange offer; or
- there has been adopted or enacted any law, statute, rule or regulation
that can reasonably be expected to impair the ability of the Company
to proceed with the exchange offer.
See "Expiration Date; Extensions; Amendments" above for a discussion of
possible Company actions if any of the foregoing conditions occur.
17
The foregoing conditions are for the sole benefit of the Company. They may
be asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The failure by the Company at any
time to exercise any of the foregoing rights will not be deemed a waiver of any
such right, and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time.
EXCHANGE AGENT
First Union National Bank has been appointed as exchange agent for the
exchange offer. Requests for assistance and requests for additional copies of
this prospectus or of the Letter of Transmittal should be directed to the
exchange agent addressed as follows:
BY MAIL, OVERNIGHT DELIVERY OR HAND DELIVERY:
First Union National Bank
Corporate Trust Reorganization Department
1525 West W.T. Harris Boulevard
Charlotte, North Carolina 28288-1153
Attention: Marsha Rice
BY FACSIMILE TRANSMISSION:
(704) 590-7628
INFORMATION OR CONFIRMATION BY TELEPHONE:
(704) 590-7413
SOLICITATION OF TENDERS; FEES AND EXPENSES
The principal solicitation pursuant to the exchange offer is being made by
the Company by mail and through the facilities of DTC. Additional solicitations
may be made by officers and regular employees of the Company and its affiliates
in person or by telephone, facsimile transmission, electronic communication or
similar methods.
The Company has not retained any dealer-manager in connection with the
exchange offer and will not make any payments to brokers, dealers or other
persons soliciting acceptances of the exchange offer. The Company will,
however, pay the exchange agent reasonable and customary fees for its services
and will reimburse the exchange agent for its reasonable out-of-pocket costs
and expenses incurred in connection with the exchange offer. The Company will
indemnify the exchange agent for all losses and claims incurred by it as a
result of the exchange offer. The Company may also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket
expenses incurred by them in forwarding copies of this prospectus, the
18
Letter of Transmittal and related documents to the beneficial owners of the
restricted notes and in handling or forwarding tenders for exchange.
The Company will pay all expenses incurred in connection with the exchange
offer, including fees and expenses of the trustee, accounting and legal fees,
including the expense of one counsel for the holders of the restricted notes,
and printing costs.
The Company will pay any transfer taxes applicable to the exchange of
restricted notes pursuant to the exchange offer. If, however, a transfer tax is
imposed for any reason other than the exchange of restricted notes pursuant to
the exchange offer, then the amount of any such transfer tax, whether imposed
on the registered holder thereof or any other person, will be payable by the
tendering holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
restricted notes, as reflected in the Company's accounting records on the date
of the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company as a result of the consummation of the exchange
offer. The expense of the exchange offer will be amortized by the Company over
the term of the exchange notes.
CONSEQUENCES OF A FAILURE TO EXCHANGE RESTRICTED NOTES
Following consummation of the exchange offer, assuming the Company has
accepted for exchange all validly tendered restricted notes, the Company will
have fulfilled its exchange and registration obligations under the Registration
Rights Agreement.
All untendered restricted notes outstanding after consummation of the
exchange offer will continue to be valid and enforceable debt obligations of
the Company, entitled to the benefit of the support agreement of V erizon
Communications, subject to the restrictions on transfer set forth in the
indenture governing the notes.
Holders of such restricted notes will only be able to offer for sale, sell
or otherwise transfer untendered restricted notes as follows:
- to the Company, although the Company has no obligation to purchase
untendered restricted notes except if they are called for redemption
in accordance with the provisions of the indenture governing the
notes;
- pursuant to a registration statement that has been declared effective
under the Securities Act, although the Company will have no
obligation, and does not intend, to file any such registration
statement;
- for so long as the restricted notes are eligible for resale pursuant
to Rule 144A under the Securities Act, to a person reasonably believed
to be
19
a qualified institutional buyer, or QIB, within the meaning of Rule
144A, that purchases for its own account or for the account of a QIB
to whom notice is given that the transfer is being made in reliance on
the exemption from the registration requirements of the Securities Act
provided by Rule 144A;
- pursuant to offers and sales that occur outside the United States to
non-U.S. persons in transactions complying with the provisions of
Regulation S under the Securities Act; or
- pursuant to any other available exemption from the registration
requirements of the Securities Act.
To the extent that restricted notes are tendered and accepted in the
exchange offer, the liquidity of the trading market for untendered restricted
notes could be adversely affected.
ABSENCE OF A PUBLIC MARKET
Although holders of exchange notes who are not "affiliates" of the Company
within the meaning of the Securities Act may resell or otherwise transfer their
exchange notes without compliance with the registration requirements of the
Securities Act, there is no existing market for the exchange notes, and there
can be no assurance as to the liquidity of any markets that may develop for the
exchange notes, the ability of holders of exchange notes to sell their exchange
notes or the prices at which holders would be able to sell their exchange
notes. Future trading prices of the exchange notes will depend on many factors,
including, among other things, prevailing interest rates, Verizon
Communications' operating results and the market for similar securities.
DESCRIPTION OF THE NOTES AND THE SUPPORT AGREEMENT
Verizon Global Funding previously issued the restricted notes, and will
issue the exchange notes, under an indenture among Verizon Global Funding,
Verizon Communications and First Union National Bank, as trustee. The indenture
provides for the issuance from time to time of debt securities in an unlimited
dollar amount and an unlimited number of series. As used in this "Description
of the Notes and the Support Agreement," the term "notes" refers to and
includes the restricted notes and the exchange notes. The terms of the
restricted notes and the exchange notes are identical, except that the exchange
notes will be registered under the Securities Act, freely transferable and
issued free of any covenants regarding exchange and registration rights.
Verizon Communications has agreed to make all payments required under the
notes if Verizon Global Funding defaults with respect to those payments under
the indenture, as described under "Description of the Support Agreement."
20
We have summarized selected provisions of the indenture, the support
agreement and the notes below. This is a summary and it is not complete. It
does not describe all exceptions and qualifications contained in the indenture
and the support agreement or all of the terms of the notes. You should read the
indenture, the support agreement and the notes for provisions that may be
important to you. In the summary below, we have included references to articles
and section numbers of the indenture so that you can easily locate these
provisions. Copies of the indenture are available for review at the corporate
trust office of the trustee and may also be obtained from us upon request.
GENERAL
The Notes
o Verizon Global Funding has previously issued $2,000,000,000 of
Floating Rate Notes due 2002.
o Verizon Global Funding may create and issue additional notes with the
same terms as the notes so that the additional notes will form a
single series with the previously issued notes.
o The notes will mature on November 4, 2002.
o The restricted notes were, and the exchange notes will be, denominated
in United States dollars; and Verizon Global Funding will make
payments of principal, interest and any premium on the notes in United
States dollars.
o The restricted notes were, and the exchange notes will be, issued in
increments of $1,000.
o Verizon Global Funding cannot redeem the notes prior to their stated
maturity.
o The restricted notes were, and the exchange notes will be, initially
issued in the form of one or more registered global notes and will be
deposited with, or on behalf of, DTC, as depositary, and registered in
the name of DTC's nominee. In each case, the notes will be without
coupons. A description of DTC's procedures with respect to the global
notes is set forth under "Book-Entry, Delivery and Form" below.
Interest
Interest on each exchange note will accrue from, and including, the
immediately preceding interest payment date to which interest has been paid or
duly provided for with respect to such note or the restricted note to which it
relates, to, but excluding, the next interest payment date or the maturity
date, as the case may be. We will refer to each of these periods as an
"interest period."
21
Verizon Global Funding has paid, or will pay, interest quarterly in arrears
on August 4, 2001, November 4, 2001, February 4, 2002, May 4, 2002, August 4,
2002, each an interest payment date, and on the maturity date. If any of the
quarterly interest payment dates listed above falls on a day that is not a
business day Verizon Global Funding will postpone the interest payment date to
the next succeeding business day unless that business day is in the next
succeeding calendar month, in which case the interest payment date will be the
immediately preceding business day. Interest on the notes will be computed on
the basis of a 360 day year for the actual number of days elapsed.
Interest on the notes will accrue from, and including, the immediately
preceding interest payment date to which interest has been paid or duly
provided for to, but excluding, the next interest payment date or the maturity
date, as the case may be. We will refer to each of these periods as an
"interest period." The amount of accrued interest that we will pay for any
interest period can be calculated by multiplying the face amount of the notes
by an accrued interest factor. This accrued interest factor is computed by
adding the interest factor calculated for each day from the last date Verizon
Global Funding paid interest to you, to the date for which accrued interest is
being calculated. The interest factor for each day is computed by dividing the
interest rate applicable to that day by 360.
If the maturity date of the notes falls on a day that is not a business
day, we will pay principal and interest on the next succeeding business day,
but we will consider that payment as being made on the date that the payment
was due to you. Accordingly no interest will accrue on the payment for the
period from and after the maturity date to the date we make the payment to you
on the next succeeding business day.
The interest payable by us on a note on any interest payment date, subject
to certain exceptions, will be paid to the person in whose name the note is
registered at the close of business on the fifteenth calendar day, whether or
not a business day, immediately preceding the interest payment date. However,
interest that we pay on the maturity date will be payable to the person to whom
the principal will be payable.
When we use the term "business day" we mean any day except a Saturday, a
Sunday or a legal holiday in The City of New York on which banking institutions
are authorized or required by law, regulation or executive order to close;
provided, that the day is also a London business day. "London business day"
means any day on which dealings in United States dollars are transacted in the
London interbank market.
The interest rate on the notes will be calculated by the calculation agent
appointed by us and will be equal to LIBOR plus .05%. The calculation agent
will reset the interest rate on each interest payment date, each of which we
will refer to as an "interest reset date." The second London business day
preceding an interest reset date will be the "interest determination date" for
that interest reset date. The interest rate in effect on each day that is not
an interest reset date will be the interest rate determined as of the interest
determination date pertaining to the immediately preceding interest reset date.
The interest rate in effect
22
on any day that is an interest reset date will be the interest rate determined
as of the interest determination date pertaining to that interest reset date.
"LIBOR" will be determined by the calculation agent in accordance with the
following provisions:
(i) With respect to any interest determination date, LIBOR will be the
rate for deposits in United States dollars having a maturity of three
months commencing on the first day of the applicable interest period that
appears on Telerate Page 3750 as of 11:00 A.M., London time, on that
interest determination date. If no rate appears, LIBOR, in respect to that
interest determination date, will be determined in accordance with the
provisions described in (ii) below.
(ii) With respect to an interest determination date on which no rate
appears on Telerate Page 3750, as specified in (i) above, the calculation
agent will request the principal London offices of each of four major
reference banks in the London interbank market, as selected by the
calculation agent, to provide the calculation agent with its offered
quotation for deposits in United States dollars for the period of three
months, commencing on the first day of the applicable interest period, to
prime banks in the London interbank market at approximately 11:00 A.M.,
London time, on that interest determination date and in a principal amount
that is representative for a single transaction in United States dollars in
that market at that time. If at least two quotations are provided, then
LIBOR on that interest determination date will be the arithmetic mean of
those quotations. If fewer than two quotations are provided, then LIBOR on
the interest determination date will be the arithmetic mean of the rates
quoted at approximately 11:00 A.M., in The City of New York, on the
interest determination date by three major banks in The City of New York
selected by the calculation agent for loans in United States dollars to
leading European banks, having a three-month maturity and in a principal
amount that is representative for a single transaction in United States
dollars in that market at that time; provided, however, that if the banks
selected by the calculation agent are not providing quotations in the
manner described by this sentence, LIBOR determined as of that interest
determination date will be LIBOR in effect on that interest determination
date.
"Telerate Page 3750" means the display designated as "Page 3750" on
Telerate, Inc., or any successor service, for the purpose of displaying the
London interbank rates of major banks for United States dollars.
Paying Agent and Registrar
The trustee will initially act as paying agent and registrar. Verizon
Global Funding may change the paying agent or registrar without prior notice to
the holders of the notes, and Verizon Global Funding may act as paying agent or
registrar.
23
Sinking Fund
The notes will not be subject to any sinking fund.
RANKING
The notes will be unsecured and unsubordinated obligations of Verizon
Global Funding and will rank equally with all of its other unsecured and
unsubordinated debt. Except as described below under "Description of the
Support Agreement," the obligations under the support agreement will be
unsecured and unsubordinated obligations of Verizon Communications and will
rank equally with all of its other unsecured and unsubordinated debt.
RESTRICTIONS ON VERIZON GLOBAL FUNDING
Liens on assets
The notes are not secured. However, if Verizon Global Funding at any time
incurs other debt or obligations secured by a mortgage or pledge on any of its
property, the indenture requires it to secure the notes equally with the other
debt or obligations for as long as the other debt or obligations remain
secured. Exceptions to this requirement include the following:
o purchase-money mortgages or liens;
o liens on any property or asset that existed at the time when Verizon Global Funding acquired
that property or asset;
o any deposit or pledge to secure public or statutory obligations;
o any deposit or pledge with any governmental agency required to
qualify Verizon Global Funding to conduct its business, or any
part of its business, or to entitle Verizon Global Funding to
maintain self-insurance or to obtain the benefits of any law
relating to workmen's compensation, unemployment insurance,
old age pensions or other social security;
o any deposit or pledge with any court, board, commission or governmental agency as security
related to the proper conduct of any proceeding before it; or
24
o any mortgage, pledge or lien on any property or asset of any
of Verizon Global Funding's affiliates, including, without
limitation, Verizon Communications, even if the affiliate may
have acquired that property or asset from Verizon Global
Funding.
(section 1004)
Consolidation, Merger or Sale
Neither we nor Verizon Communications may merge with another company or
sell, transfer or lease all or substantially all of our properties to another
company unless:
o either we or Verizon Communications is the continuing corporation;
o the successor corporation expressly assumes:
payment of principal, interest and any premium on the debt securities;
performance and observance of all covenants and conditions in the indenture and the
performance of the support agreement;
o after giving effect to the transaction, there is no default under the indenture; or
o if as a result of the transaction, our properties would become
subject to a lien that would not be permitted by the asset
lien restriction, we secure the debt securities equally and
ratably with, or prior to, all indebtedness secured by those
liens.
(Article VIII)
REGISTRATION OF TRANSFER AND EXCHANGE
Notes in book-entry form may be transferred or exchanged only through a
participating member of DTC. See "Book-Entry, Delivery and Form." Registration
of transfer of notes in certificated form will be made at Verizon Global
Funding's office or agency maintained for that purpose, which will initially be
the corporate trust office of the trustee in the Borough of Manhattan, The City
of New York. Notes are exchangeable without charge, except reimbursement of
taxes, if any.
Registration of transfer
Holders of notes may present their securities for registration of
transfer at the office of one or more security registrars designated and
maintained by Verizon Global Funding. (section 305)
The registrar and the trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents, and Verizon Global
Funding may require a holder to pay any taxes and fees required by law or
permitted by the indenture.
Verizon Global Funding will not be required to register the transfer of, or
exchange, notes under the following conditions:
o Verizon Global Funding will not be required to register the
transfer of, or exchange, any notes during a period beginning
at the opening of business 15 days before the day of the
mailing of a notice of redemption of notes selected for
redemption and ending at the close of business on the day of
mailing of the relevant notice of redemption.
25
o Verizon Global Funding will not be required to register the
transfer of, or exchange, any notes selected for redemption,
in whole or in part, except the unredeemed portion of any
notes being redeemed in part.
(section 305)
Exchange
Verizon Global Funding may at any time exchange notes issued as one or more
global notes for an equal principal amount of notes of the same series in
certificated form. In this case Verizon Global Funding will deliver to the
holders new notes in certificated form in the same aggregate principal amount
as the global securities being exchanged. (section 305)
Notwithstanding the above, Verizon Global Funding will not be required to
exchange any note if, as a result of the exchange, it would or would reasonably
be likely to suffer adverse consequences under any United States law or
regulation. (section 305)
GLOBAL NOTES
Verizon Global Funding will register the global notes in the name of the
depositary for the global notes or the nominee of the depositary, and the
global notes will be delivered by the trustee to the depositary for credit to
the accounts of the holders of beneficial interests in the notes.
Neither Verizon Global Funding nor the trustee, any paying agent or the
security registrar will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in a global note or for maintaining, supervising or reviewing any
records relating to these beneficial ownership interests. See "Book-Entry,
Delivery and Form."
DEFEASANCE
The indenture permits us to discharge or "defease" certain of our
obligations on any series of notes at any time. Provided that we satisfy the
requirements contained in the indenture regarding defeasance, we may defease
the notes of any series by depositing with the trustee sufficient cash or
government securities to pay all sums due on that series. (sections 402-404)
26
EVENTS OF DEFAULT, NOTICES, AND WAIVER
Events of default
An "event of default" for the notes of a series is any one of the
following events:
o failure to pay interest on a note of a series, including any
additional interest required to be paid as described above under
"Exchange Offer--Reason for the Exchange Offer," for 90 days
after payment is due;
o failure to pay principal or any premium on any note of a series
when due;
o failure to perform any other covenant in the notes of a series
for 90 days after notice to Verizon Global Funding and Verizon
Communications; and
o certain events of bankruptcy, insolvency and reorganization of
Verizon Global Funding or Verizon Communications.
An event of default for a particular series of debt securities does not
necessarily impact any other series of debt securities issued under the
indenture.
(section 501)
If an event of default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% of the principal amount
of the debt securities of the series may declare the entire principal of all
the debt securities of that series to be due and payable immediately. If this
happens, subject to certain conditions, the holders of a majority of the
principal amount of the debt securities of that series can rescind the
declaration if we or Verizon Communications has deposited with the trustee a
sum sufficient to pay all matured installments of interest, principal and any
premium. (section 502)
The holders of more than 50% of the principal amount of any series of the
debt securities, may, on behalf of the holders of all of the debt securities of
that series, control any proceedings resulting from an event of default or
waive any past default except a default in the payment of principal, interest
or any premium. (section 512) We are required to file an annual certificate
with the trustee stating whether we are in compliance with all of the
conditions and covenants under the indenture. (section 704)
27
CHANGES TO THE INDENTURE
The indenture may be changed with the consent of holders owning more than
50% of the principal amount of the outstanding debt securities of each series
affected by the change. However, we may not change your principal or interest
payment terms, modify certain provisions of the support agreement or the
percentage required to change other terms of the indenture, without your
consent, as well as the consent of others similarly affected. (section 902)
We may enter into supplemental indentures for other specified purposes,
including the creation of any new series of debt securities without the consent
of any holder of debt securities. (section 901)
CONCERNING THE TRUSTEE
Within 90 days after a default occurs, the trustee must notify the holders
of the debt securities of the series of all defaults known to the trustee if we
have not remedied them (default is defined for this purpose to include the
events of default specified above absent any grace periods or notice). If a
default described in the third bullet point under "Events of Default" occurs,
the trustee will not give notice to the holders of the series until at least 60
days after the occurrence of that default. The trustee may withhold notice to
the holders of the debt securities of any default (except in the payment of
principal, interest or any premium) if it in good faith believes that
withholding this notice is in the interest of the holders. (section 602)
28
Prior to an event of default, the trustee is required to perform only the
specific duties stated in the indenture, and after an event of default, must
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (section 601) The trustee is not required to
take any action permitted by the indenture at the request of holders of the
debt securities, unless those holders protect the trustee against costs,
expense and liabilities. (section 603) The trustee is not required to spend its
own funds or become financially liable when performing its duties if it
reasonably believes that it will not be adequately protected financially.
(section 601)
First Union National Bank, the trustee, and its affiliates have commercial
banking relationships with and serve as trustee or paying agent under
indentures relating to debt securities issued by Verizon Communications, our
indirect parent, and some of its affiliates.
DESCRIPTION OF THE SUPPORT AGREEMENT
Under a support agreement, dated as of October 31, 2000, Verizon
Communications has agreed to:
o own directly or indirectly all of Verizon Global Funding's voting
capital stock issued and outstanding at any time;
o make sure that Verizon Global Funding maintains at all times a
positive tangible net worth, as determined in accordance with
generally accepted accounting principles;
o provide Verizon Global Funding with any funds it needs to make
any timely payment of principal, interest or any premium on the
notes, if it cannot obtain funds from other sources on
commercially reasonable terms.
Verizon Global Funding and Verizon Communications cannot terminate the
support agreement until all of the debt supported by the support agreement
(including the notes) has been paid in full. Verizon Global Funding and Verizon
Communications cannot amend the support agreement in any way that adversely
affects your rights unless you consent in writing.
If Verizon Global Funding fails or refuses to take timely action to enforce
Verizon Global Funding's rights under the support agreement or if Verizon
Global Funding defaults in the timely payment of principal, interest or any
premium, you have the right to proceed directly against Verizon Communications
to enforce the rights under the support agreement or to obtain payment of the
defaulted principal, interest or premium owed to you. However, in no event will
you have recourse to or against the stock or assets of Verizon Services Corp.,
Telecom Corporation of New Zealand Limited or any operating telephone company
which may from time to time be owned directly or indirectly by Verizon
Communications. Except for the exclusion of this stock and assets from
recourse, Verizon Communications'
29
obligations under the support agreement rank equally with its other unsecured
and unsubordinated debt.
As of September 30, 2001, Verizon Communications' net assets not subject to
the exclusion described in the preceding paragraph had a book value of
approximately $67.1 billion. Verizon Communications is a holding company, and
therefore, its right and the right of its creditors (including the holders of
the notes), to realize upon the assets of any subsidiary of Verizon
Communications, whether following any liquidation or reorganization of that
subsidiary, or otherwise, is subject to prior claims of creditors of each such
subsidiary, except to the extent that claims of Verizon Communications itself
as a creditor of a subsidiary may be recognized.
BOOK-ENTRY, DELIVERY AND FORM
THE GLOBAL NOTES
The restricted notes are represented by one or more permanent global
certificates in definitive, fully registered form without interest coupons.
Except as described under "Certificated Notes," the exchange notes initially
will be represented by one or more permanent global certificates in definitive,
fully registered form and
- will be deposited with, or on behalf of, DTC, and registered in the
name of Cede & Co., as DTC's nominee, or
- will remain in the custody of the trustee pursuant to a FAST Balance
Certificate Agreement between DTC and the trustee.
DEPOSITARY PROCEDURES
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream described below are provided solely as a matter of convenience.
These operations and procedures are solely within the control of these
respective settlement systems and are subject to change by them from time to
time. Neither Verizon Global Funding nor Verizon Communications take any
responsibility for these operations or procedures, and investors are urged to
contact the relevant system or its participants directly to discuss these
matters.
30
DTC has advised Verizon Global Funding that it is:
o a limited purpose trust company organized under the laws of the
State of New York;
o a "banking organization" within the meaning of the New York
Banking Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended; and
o a "clearing agency" registered under Section 17A of the Exchange
Act.
DTC has advised Verizon Global Funding that it was created to hold
securities for its participants and to facilitate the clearance and settlement
of securities transactions between its participants through electronic
book-entry changes to the accounts of its participants, which eliminates the
need for physical transfer and delivery of certificates. DTC's participants
include securities brokers and dealers, banks and trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system
is also available to other entities such as banks, brokers, dealers and trust
companies; these indirect participants clear through or maintain a custodial
relationship with a participant in DTC, either directly or indirectly.
Investors who are not DTC participants may beneficially own securities held by
or on behalf of DTC only through participants or indirect participants in DTC.
DTC has also advised Verizon Global Funding that pursuant to procedures
established by DTC:
o upon deposit of each global note representing exchange notes, DTC
will credit the accounts of participants in DTC with an interest
in such global note; and
o ownership of the exchange notes will be shown on, and the
transfer of ownership of the exchange notes will be effected only
through, records maintained by DTC, with respect to the interests
of participants in DTC, and the records of participants and
indirect participants in DTC, with respect to the interests of
persons other than participants in DTC.
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of the securities in definitive form.
Accordingly, the ability to transfer interests in the exchange notes
represented by a global note to these persons may be limited. In addition,
because DTC can act only on behalf of its participants, who in turn act on
behalf of persons who hold interests through participants, the ability of a
person having
31
an interest in exchange notes represented by a global note to pledge or
transfer that interest to persons or entities that do not participate in DTC's
system, or to otherwise take actions in respect of that interest, may be
affected by the lack of a physical definitive security in respect of the
interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or the nominee, as the case may be, will be considered the sole owner or holder
of the notes represented by the global note for all purposes under the
indenture. Except as provided below, owners of beneficial interests in a global
note:
o will not be entitled to have exchange notes represented by the
global note registered in their names;
o will not receive or be entitled to receive physical delivery of
certificated exchange notes; and
o will not be considered the owners or holders of exchange notes
under the indenture for any purpose, including with respect to
the giving of any direction, instruction or approval to the
trustee under the indenture.
Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedures of DTC and, if the holder is not a participant or an
indirect participant in DTC, on the procedures of the DTC participant through
which the holder owns its interest, to exercise any rights of a holder of
exchange notes under the indenture or the global note. Verizon Global Funding
understands that under existing industry practice, if it requests any action of
holders of exchange notes, or a holder that is an owner of a beneficial
interest in a global note desires to take any action that DTC, as the holder of
the global note, is entitled to take, then DTC would authorize its participants
to take the action and the participants would authorize holders owning through
participants to take the action or would otherwise act upon the instruction of
such holders. Neither Verizon Global Funding nor the trustee will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, exchange notes by DTC, or for maintaining,
supervising or reviewing any records of DTC relating to the exchange notes.
Payments with respect to the principal of, and premium, if any, additional
interest, if any, and interest on, any exchange notes represented by a global
note registered in the name of DTC or its nominee on the applicable record date
will be payable by the trustee to or at the direction of DTC or its nominee in
its capacity as the registered holder of the global note representing those
exchange notes under the indenture. Under the terms of the indenture, Verizon
Global Funding and the trustee may treat the persons in whose names the
exchange notes, including the global notes, are registered as the owners of the
exchange notes for the purpose of receiving payment on the exchange notes and
for any and all other purposes whatsoever. Accordingly, none of Verizon Global
Funding, Verizon Communications nor the trustee has or will have any
responsibility or liability for any aspect of DTC's records or any records of
any participant or indirect participant in DTC relating to, or payments
(including principal, premium, if any, additional interest, if any,
32
and interest) made on account of, any beneficial interest in a global note, or
for maintaining, supervising or reviewing any of DTC's records or the records
of any participant or indirect participant in DTC relating to the ownership of
any such beneficial interest. Payments by the participants and the indirect
participants in DTC to the owners of beneficial interests in a global note will
be governed by standing instructions and customary industry practice and will
be the responsibility of the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way
in accordance with their respective rules and operating procedures.
Subject to compliance with any transfer restrictions that may be applicable
to any of the notes, cross-market transfers between the participants in DTC, on
the one hand, and Euroclear or Clearstream participants, on the other hand,
will be effected through DTC in accordance with DTC's rules on behalf of
Euroclear or Clearstream, as the case may be, by its respective depositary.
These cross-market transactions, however, will require delivery of instructions
to Euroclear or Clearstream, as the case may be, by the counterparty in that
system in accordance with the rules and procedures and within the established
deadlines, Brussels time, of that system. If the transaction meets its
settlement requirements, Euroclear or Clearstream, as the case may be, will
deliver instructions to its respective depositary to take action to effect
final settlement on its behalf by delivering or receiving interests in the
relevant global notes in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Euroclear participants and Clearstream participants may not deliver
instructions directly to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a global note from a
participant in DTC will be credited, and any crediting will be reported to the
relevant Euroclear or Clearstream participant, during the securities settlement
processing day, which must be a business day for Euroclear and Clearstream,
immediately following the settlement date of DTC. Cash received in Euroclear or
Clearstream as a result of sales of interest in a global note by or through a
Euroclear or Clearstream participant to a participant in DTC will be received
with value on the settlement date of DTC but will be available in the relevant
Euroclear or Clearstream cash account only as of the business day for Euroclear
or Clearstream following DTC's settlement date.
Although DTC, Euroclear and Clearstream have agreed to the above procedures
to facilitate transfers of interests in the global notes among participants in
DTC, Euroclear and Clearstream, they are under no obligation to perform or to
continue to perform the procedures, and the procedures may be discontinued at
any time. None of Verizon Global Funding, Verizon Communications nor the
trustee will have any responsibility for the performance by DTC, Euroclear or
Clearstream or their respective participants or indirect
33
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Notes
If:
o DTC notifies Verizon Global Funding that it is at any time
unwilling or unable to continue as a depositary or DTC ceases
to be registered as a clearing agency under the Exchange Act
and a successor depositary is not appointed within 90 days; or
o Verizon Global Funding executes and delivers to the trustee a
company order to the effect that the global notes will be
exchangeable,
the global notes will be exchangeable for notes in certificated form with the
same terms and of an equal aggregate principal amount, in increments of $1,000.
The certificated notes will be registered in such names as DTC instructs the
trustee. Verizon Global Funding expects that instructions may be based upon
directions received by DTC from participants with respect to ownership of
beneficial interests in global notes. Upon the issuance of certificated notes,
the trustee is required to register the certificated notes in the names
instructed by DTC and cause the certificated notes to be delivered to the
registered holders.
None of Verizon Global Funding, Verizon Communications nor the trustee will
be liable for any delay by DTC or any participant or indirect participant in
DTC in identifying the beneficial owners of the related notes, and each of
those persons may conclusively rely on, and will be protected in relying on,
instructions from DTC for all purposes, including with respect to the
registration and delivery, and the respective principal amounts, of the notes
to be issued.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain U.S. federal income tax consequences
of the acquisition, ownership and disposition of exchange notes as of the date
hereof. Except where noted, this summary deals only with exchange notes that
are acquired in connection with this exchange offer and held as capital assets
and does not deal with special situations. In addition, it does not represent a
detailed description of the U.S. federal income tax consequences applicable to
you if you are subject to special treatment under the U.S. federal income tax
laws, including if you are one of the following:
o a dealer in securities or currencies,
o a financial institution,
o an insurance company,
34
o a tax exempt organization,
o a person holding the exchange notes as part of a hedging,
integrated or conversion transaction, constructive sale or
straddle,
o a trader in securities that has elected the mark-to-market
method of accounting for your securities,
o a person liable for alternative minimum tax,
o or a U.S. person whose "functional currency" is not the U.S.
dollar.
If a partnership holds the exchange notes, the tax treatment of a partner
will generally depend upon the status of the partner and the activities of the
partnership. If you are a partner of a partnership holding the exchange notes,
you should consult your tax advisors.
The discussion below is based upon the provisions of .the Internal Revenue
Code of 1986, as amended, and regulations, rulings and judicial decisions as of
the date of this prospectus. Those authorities may be changed, perhaps
retroactively, so as to result in U.S. federal income tax consequences
different from those discussed below.
IF YOU ARE CONSIDERING THE ACQUISITION OF EXCHANGE NOTES, YOU SHOULD
CONSULT YOUR OWN TAX ADVISOR CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCSE TO YOU AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTION.
CONSEQUENCES OF THE EXCHANGE
The exchange of restricted notes for exchange notes pursuant to the
exchange offer will not constitute a taxable event to holders. Consequently, no
gain or loss will be recognized by a holder upon receipt of an exchange note,
the holding period of the exchange note will include the holding period of the
restricted note and the basis of the exchange note will be the same as the
basis of the restricted note immediately before the exchange.
IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF RESTRICTED NOTES FOR
EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S.
FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL
AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
35
CONSEQUENCES TO U.S. HOLDERS
The following is a summary of certain U.S. federal tax consequences that
will apply to you if you are a U.S. holder of exchange notes.
Certain consequences to "non- U.S. holders" of exchange notes, who are
beneficial owners of exchange notes and who are not U.S. holders, are described
under "Consequences to Non- U.S. Holders" below.
"U.S. holder" means a beneficial owner of an exchange note that is:
o a citizen or resident of the United States,
o a corporation or partnership created or organized in or under the
laws of the United States or of any political subdivision of the
U.S.,
o an estate the income of which is subject to U.S. federal income
taxation regardless of its source, or
o a trust that (1) is subject to the supervision of a court within
the United States and the control of one or more U.S. persons or
(2) has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.
Payments of Interest
Except as set forth below, interest on an exchange note generally will be
taxable to you as ordinary income from domestic sources at the time it is paid
or accrued in accordance with your method of accounting for tax purposes.
Amortizable Bond Premium
If you purchased a restricted note for an amount in excess of the sum of
all amounts payable on the note after the purchase date other than stated
interest, you will be considered to have purchased the note at a "premium." You
generally may elect to amortize the premium over the remaining term of the
exchange note on a constant yield method as an offset to interest when
includible in income under your regular accounting method. If you do not elect
to amortize bond premium, that premium will decrease the gain or increase the
loss you would otherwise recognize on disposition of the exchange note. Your
election to amortize bond premium on a constant yield method will also apply to
all debt obligations held or subsequently acquired by you on or after the first
day of the first taxable year to which the election applies. You may not revoke
the election without the consent of the Internal Revenue Service. You should
consult your own tax advisor before making this election.
36
Market Discount
If you purchased a restricted note for an amount that is less than its
stated redemption price at maturity, the amount will be treated as "market
discount" for U.S. federal income tax purposes, unless that difference is less
than a specified de minimus amount. Under the market discount rules, you will
be required to treat any payment, other than stated interest, on, or any gain
on the sale, exchange, retirement or other disposition of an exchange note as
ordinary income to the extent of the market discount that you have not
previously included in income and are treated as having accrued on the exchange
note at the time of its payment or disposition. In addition, you may be
required to defer, until the maturity of the exchange note or its earlier
disposition in a taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness attributable to the exchange note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the exchange note, unless
you elect to accrue on a constant yield interest method. You may elect to
include market discount in income currently as it accrues, on either a ratable
or constant yield interest method, in which case the rule described above
regarding deferral of interest deductions will not apply. Your election to
include market discount in income currently, once made, applies to all market
discount obligations acquired by you on or after the first taxable year to
which your election applies and may not be revoked without the consent of the
Internal Revenue Service. You should consult your own tax advisor before making
this election.
Sale, Exchange and Retirement of Exchange Notes
Upon the sale, exchange, retirement or other disposition of an exchange
note, you will recognize gain or loss equal to the difference between the
amount you realize upon the sale, exchange, retirement or other disposition
(less an amount equal to any accrued stated interest that you did not
previously include in income, which will be taxable as such) and the adjusted
tax basis of the exchange note. Except as described above with respect to
market discount, that gain or loss will be capital gain or loss. Capital gains
of individuals derived in respect of capital assets held for more than one year
are eligible for reduced rates of taxation. The deductibility of capital losses
is subject to limitations.
CONSEQUENCES TO NON-U.S. HOLDERS
The following is a summary of certain U.S. federal income tax consequences
that will apply to you if you are a non-U.S. holder of exchange notes. This
summary does not represent a detailed description of the federal income tax
consequences to you in light of your particular circumstances. In addition, it
does not deal with non-U.S. holders that are subject to special treatment under
the U.S. federal income tax laws (including if you are a controlled foreign
corporation, passive foreign investment company or foreign personal holding
company or a corporation that accumulates earnings to avoid federal income tax
or, in certain circumstances, a U.S. expatriate).
37
U.S. Federal Withholding Tax
The 30% U.S. federal withholding tax will not apply to any payment of
principal or interest on the exchange notes, provided that:
o you do not actually, or constructively, own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Internal Revenue Code and applicable
U.S. Treasury regulations,
o you are not a controlled foreign corporation that is related to
us through stock ownership,
o you are not a bank whose receipt of interest on the exchange
notes is described in section 881(c)(3)(A) of the Internal
Revenue Code, and,
o (a) you provide your name and address on an Internal Revenue
Service Form W-8BEN (or other applicable form), and certify,
under penalty of perjury, that you are not a U.S. person or (b)
you hold the exchange notes through certain foreign
intermediaries or certain foreign partnerships, and you satisfy
the certification requirements of applicable U.S. Treasury
regulations. Special certification rules apply to certain
non-U.S. holders that are entities rather than individuals.
If you cannot satisfy the requirements described above, payments of
interest made to you will be subject to the 30% U.S. federal withholding tax,
unless you provide us with a properly executed (1) Internal Revenue Service
Form W-8BEN (or other applicable form) claiming an exemption from, or reduction
in, withholding under the benefit of an applicable tax treaty or (2) Internal
Revenue Service Form W-8ECI (or other applicable form) stating that interest
paid on an exchange note is not subject to withholding tax because it is
effectively connected with your conduct of a trade or business in the United
States.
The 30% U.S. federal withholding tax will not generally apply to any gain
that you realize on the sale, exchange, retirement or other disposition of the
exchange notes.
U.S. Federal Estate Tax
Your estate will not be subject to U.S. federal estate tax on exchange
notes beneficially owned by you at the time of your death, provided that you
are not a U.S. citizen or resident (as specially defined for U.S. federal
estate tax purposes) and (1) you do not own 10% or more of the total combined
voting power of all classes of our voting stock (within the meaning of the
Internal Revenue Code and the U.S. Treasury regulations) and (2) interest on
the exchange note would not have been, if received at the time of your death,
effectively connected with the conduct by you of a trade or business in the
United States.
38
U.S. Federal Income Tax
If you are engaged in a trade or business in the United States and interest
on the exchange notes is effectively connected with the conduct of that trade
or business, you will be subject to U.S. federal income tax on that interest on
a net income basis in the same manner as if you were a U.S. person as defined
under the Internal Revenue Code, although that interest income will be exempt
from the 30% U.S. federal withholding tax. In addition, if you are a foreign
corporation, you will be subject to a branch profits tax equal to 30% (or lower
applicable treaty rate) of your earnings and profits for the taxable year,
subject to certain adjustments.
Any gain realized on the disposition of an exchange note generally will
not be subject to U.S. federal income tax unless
o the gain is effectively connected with the conduct of a trade or
business in the United States by you, or
o you are an individual who is present in the United States for 183
days or more in the taxable year of that disposition, and other
conditions are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders
In general, information reporting requirements will apply to certain
payments of principal, interest and premium paid on exchange notes and to the
proceeds of sale of an exchange note made to you, unless you are an exempt
recipient, such as a corporation. A backup withholding tax may apply to those
payments if you fail to provide a taxpayer identification number, a
certification of exempt status, or fail to report in full dividend and interest
income.
Non-U.S. Holders
In general, you will not be subject to backup withholding and information
reporting with respect to payments that we make to you provided that we do not
have actual knowledge that you are a U.S. person and we have received from you
the statement described above under "Consequences to Non-U.S.
Holders--U.S. Federal Withholding Tax."
In addition, you will not be subject to backup withholding or information
reporting with respect to the proceeds of the sale of an exchange note within
the United States or conducted through U.S.-related financial intermediaries,
if the payor receives the statement described above and does not have actual
knowledge that you are a U.S. person, as defined under the Internal Revenue
Code, or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your U.S. federal income tax liability provided
the required information is furnished to the Internal Revenue Service.
39
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes or
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
The Company will not receive any proceeds from any sale of exchange notes
by broker-dealers. Exchange notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of exchange notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this prospectus, and any amendment or
supplement to this prospectus, to any broker-dealer that requests such
documents in the Letter of Transmittal.
The Company has agreed to pay all expenses incident to the exchange offer,
including the expense of one counsel for the holders of the restricted notes,
other than commissions or concessions of any broker-dealers and will indemnify
the holders of the restricted notes, including any broker-dealers, against
certain liabilities, including liabilities under the Securities Act.
40
LEGAL MATTERS
The validity of the notes as supported by the support agreement have been
passed upon for Verizon Global Funding and Verizon Communications by William P.
Barr, Executive Vice President and General Counsel of Verizon Communications.
As of September 30, 2001, Mr. Barr beneficially owned approximately 12,006
shares of Verizon Communications common stock and had options to purchase an
aggregate of 994,800 shares of Verizon Communications common stock.
EXPERTS
The consolidated financial statements and financial statement schedule of
Verizon Communications as of December 31, 2000 and for the year then ended,
included in Verizon Communications' Annual Report on Form 10-K filed on March
23, 2001, and incorporated by reference in this prospectus, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report which
is also included therein and incorporated by reference herein. Such
consolidated financial statements are incorporated by reference herein in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements and financial statement schedule of
Verizon Communications as of December 31, 1999 and for the two years in the
period ended December 31, 1999, included in Verizon Communications' Annual
Report on Form 10-K filed on March 23, 2001, and incorporated by reference in
this prospectus, have been audited by PricewaterhouseCoopers LLP, independent
accountants, other than the financial statements of GTE Corporation (a wholly
owned subsidiary of Verizon Communications) which were audited by Arthur
Andersen LLP, independent public accountants, as set forth in their reports
which are also included therein and incorporated by reference herein. Such
consolidated financial statements are incorporated by reference herein in
reliance on such reports given on the authority of such firms as experts in
accounting and auditing.
41
$2,000,000,000 OF NOTES OF
VERIZON GLOBAL FUNDING CORP.
SUPPORTED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
VERIZON COMMUNICATIONS INC.
OFFER TO EXCHANGE
$2,000,000,000 FLOATING RATE NOTES DUE 2002 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR ANY AND ALL OUTSTANDING FLOATING RATE NOTES DUE 2002
[GRAPHIC OMITTED]
---------------------
PROSPECTUS
---------------------
January 4, 2002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") permits a
corporation to indemnify any of its directors or officers who was or is a party
or is threatened to be made a party to any third party proceeding by reason of
the fact that such person is or was a director or officer of the corporation,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with such action or proceeding, if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reason to believe that such person's conduct was unlawful.
In a derivative action, i.e., one by or in the right of the corporation, the
corporation is permitted to indemnify directors and officers against expenses
(including attorney's fees) actually and reasonably incurred by them in
connection with the defense or settlement of an action or suit if they acted in
good faith and in a manner that they reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable to
the corporation, unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the defendant
directors or officers are fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Article 7 of the Verizon Communications Restated Certificate of
Incorporation and Article 8 of the Verizon Global Funding Restated Certificate
of Incorporation make mandatory the indemnification expressly authorized under
the DGCL, except that the Verizon Communications Certificate of Incorporation
only provides for indemnification in derivative actions, suits or proceedings
initiated by a director or officer if the initiation of such action, suit or
proceeding was authorized by the Board of Directors.
Pursuant to Section 7.8 of the Amended and Restated Agreement and Plan of
Merger dated as of April 21, 1996 by and between NYNEX Corporation ("NYNEX")
and Bell Atlantic Corporation ("Bell Atlantic"), Bell Atlantic agreed for a
period of six years following the effective time of the merger to (a) cause
NYNEX to maintain in effect the provisions regarding indemnification of
officers and directors contained in the NYNEX Certificate of Incorporation and
Bylaws and the certificates of incorporation and bylaws of each of its
subsidiaries or in director, officer or employee indemnification agreements of
NYNEX and its subsidiaries, (b) maintain in effect and cause NYNEX to maintain
in effect current policies of directors' and officers' liability insurance and
fiduciary liability insurance with respect to claims arising prior to the
effective time of the merger, and (c) indemnify, and cause NYNEX to indemnify,
the directors and officers of Bell Atlantic and NYNEX, respectively, to the
fullest extent permitted under their respective certificates of incorporation
and bylaws and applicable law. In addition, Bell Atlantic agreed to
unconditionally and irrevocably guarantee for the benefit of such directors,
officers and employees the obligations of NYNEX under its indemnification
arrangements.
II-1
Pursuant to Section 7.8 of the Amended and Restated Agreement and Plan of
Merger dated as of July 27, 1998, by and among GTE Corporation ("GTE"), Bell
Atlantic, and a wholly owned subsidiary of Bell Atlantic, Bell Atlantic agreed
for a period of six years following the effective time of the merger to (a)
cause GTE to maintain in effect the provisions regarding indemnification of
officers and directors contained in the GTE charter and bylaws and the charters
and bylaws of each of its subsidiaries or in director, officer or employee
indemnification agreements of GTE and its subsidiaries, (b) maintain in effect
and cause GTE to maintain in effect current policies of directors' and
officers' liability insurance and fiduciary liability insurance with respect to
claims arising prior to the effective time of the merger, and (c) indemnify,
and cause GTE to indemnify, the directors and officers of Bell Atlantic and
GTE, respectively, to the fullest extent permitted under their respective
charters and bylaws and applicable law. In addition, Bell Atlantic agreed to
unconditionally and irrevocably guarantee for the benefit of such directors,
officers and employees the obligations of GTE under its indemnification
arrangements.
The Certificate of Incorporation of each of Verizon Communications and
Verizon Global Funding limits the personal liability of directors to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permitted by the DGCL.
The directors and officers of Verizon Communications and Verizon Global
Funding are insured against certain liabilities, including certain liabilities
arising under the Securities Act of 1933, which might be incurred by them in
such capacities and against which they cannot be indemnified by Verizon.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See Exhibit Index on Page E-1
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
(a) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of
this form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request;
(b) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration
statement when it became effective; and
(c) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 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.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Verizon
Communications Inc. has duly caused this Amendment No. 1 to the Registration
Statement on Form S-4 (333-74012) to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
2nd day January, 2002.
VERIZON COMMUNICATIONS INC.
By: /s/ Frederic V. Salerno
-----------------------
Frederic V. Salerno
(Senior Executive Vice President and
Chief Financial Officer/Strategy and
Business Development) (principal
financial officer)
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement on Form S-4 (333-74012) has been
signed by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
*
------------------------------------ Director January 2, 2002
James R. Barker
*
------------------------------------ Director January 2, 2002
Edward H. Budd
*
------------------------------------ Director January 2, 2002
Richard L. Carrion
*
------------------------------------ Director January 2, 2002
Robert F. Daniell
*
------------------------------------ Director January 2, 2002
Helene L. Kaplan
* Director, Chairman and
------------------------------------ Co-Chief Executive Officer January 2, 2002
Charles R. Lee (co-principal executive
officer)
*
------------------------------------ Director January 2, 2002
Sandra O. Moose
*
------------------------------------ Director January 2, 2002
Joseph Neubauer
*
------------------------------------ Director January 2, 2002
Thomas H. O'Brien
*
------------------------------------ Director January 2, 2002
Russell E. Palmer
II-3
*
------------------------------------ Director January 2, 2002
Hugh B. Price
*
------------------------------------ Director, President and Co-Chief January 2, 2002
Ivan G. Seidenberg Executive Officer (co-principal
executive officer)
*
------------------------------------ Director January 2, 2002
Walter V. Shipley
*
------------------------------------ Director January 2, 2002
John W. Snow
*
------------------------------------ Director January 2, 2002
John R. Stafford
*
------------------------------------ Director January 2, 2002
Robert D. Storey
*
------------------------------------ Senior Vice President January 2, 2002
Lawrence R. Whitman and Controller
(principal accounting officer)
* By /s/ Frederic V. Salerno
------------------------------------
Frederic V. Salerno
Individually and as attorney-in-fact
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Verizon
Global Funding Corp. has duly caused this Amendment No. 1 to the Registration
Statement on Form S-4 (333-74012) to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wilmington, State of Delaware, on the
2nd day of January, 2002.
VERIZON GLOBAL FUNDING CORP.
By: /s/ Janet M. Garrity
--------------------
Janet M. Garrity
(President and Treasurer)
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement on Form S-4 (333-74012) has been
signed by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
*
------------------------------------ Chief Financial Officer January 2, 2002
Robert S. Fitzmire (principal financial officer and
principal accounting officer)
*
------------------------------------ Director, President and January 2, 2002
Janet M. Garrity Treasurer (principal executive
officer)
*
------------------------------------ Director January 2, 2002
William F. Heitmann
*
------------------------------------ Director January 2, 2002
David S. Kauffman
* By /s/ Janet M. Garrity
--------------------
Janet M. Garrity
Individually and as attorney-in-fact
II-5
EXHIBIT
NO. DESCRIPTION
------- ---------------------------------------------------------------------------------------------
3.1 Certificate of Incorporation of Verizon Global Funding Corp. (incorporated by
reference to Verizon Global Funding Corp.'s Registration Statement on Form S-4
Registration No. 333-64792, Exhibit 3.1)
3.2 Certificate of Incorporation of Verizon Communications Inc., as amended (incorporated
by reference to Verizon Communications Inc.'s Annual Report on Form 10-K for the year
ended December 31, 2000, Exhibit 3(a))
3.3 By-laws of Verizon Global Funding Corp. (incorporated by reference to Verizon Global
Funding Corp.'s Registration Statement on Form S-4 Registration No. 333-64792, Exhibit
3.3)
3.4 By-laws of Verizon Communications Inc. (incorporated by reference to Verizon
Communications Inc.'s Annual Report on Form 10-K for the year ended December 31, 2000,
Exhibit 3(b))
4.1 Form of Indenture among Verizon Global Funding Corp., Verizon Communications Inc. and First
Union National Bank, as Trustee, dated as of December 1, 2000 (incorporated by reference to
Verizon Global Funding Corp.'s Registration Statement on Form S-4 Registration No. 333-64792,
Exhibit 4.1)
4.2 Form of Floating Rate Notes due 2002 (including Support Agreement between Verizon
Communications Inc. and Verizon Global Funding Corp. dated as of October 31, 2000)*
4.3 Exchange and Registration Rights Agreement, dated May 2, 2001 by and among Verizon Global
Funding Corp., Verizon Communications Inc. and Lehman Brothers Inc.*
5 Opinion and Consent of William P. Barr, Esq.*
12 Statement of Verizon Communications Inc. Consolidated Computation of Ratio of Earnings to
Fixed Charges (incorporated by reference to Verizon Communications Inc.'s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2001, Exhibit 12)
23.1 Consent of Ernst & Young LLP (filed herewith)
23.2 Consent of PricewaterhouseCoopers LLP (filed herewith)
23.3 Consent of Arthur Andersen LLP (filed herewith)
23.4 Consent of William P. Barr, Esq. (contained in opinion filed as Exhibit 5)
24.1 Powers of Attorney of Verizon Global Funding Corp.*
24.2 Powers of Attorney of Verizon Communications Inc.*
25 Statement of Eligibility of Trustee on Form T-1*
99.1 Form of Letter of Transmittal (filed herewith)
99.2 Form of Notice of Guaranteed Delivery (filed herewith)
* Previously filed
E-1