<PAGE> 1
Filed pursuant to Rule 424(b)(3)
Registration No. 33-58144
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 2, 1993)
$200,000,000
THE CHASE MANHATTAN CORPORATION
SENIOR MEDIUM-TERM NOTES, SERIES C AND
SUBORDINATED MEDIUM-TERM NOTES, SERIES C
DUE FROM NINE MONTHS FROM DATE OF ISSUE
------------------------
The Chase Manhattan Corporation, a Delaware corporation (the "Company"),
may offer from time to time up to $200,000,000 aggregate initial public offering
price of its Senior Medium-Term Notes, Series C (the "Senior Notes") and
Subordinated Medium-Term Notes, Series C (the "Subordinated Notes") Due From
Nine Months From Date of Issue (collectively, the "Notes"). Each Note will
mature nine months or longer from its date of issue, as selected by the
purchaser and agreed to by the Company. The Subordinated Notes will be
subordinated to all Senior Indebtedness of the Company (see "THE SUBORDINATED
SECURITIES--Subordination" in the accompanying Prospectus). At June 30, 1994,
the outstanding Senior Indebtedness of the Company, exclusive of guarantees and
other contingent obligations, was approximately $2.7 billion. Unless otherwise
indicated in the applicable Pricing Supplement to this Prospectus Supplement (a
"Pricing Supplement"), a Note may not be redeemed at the option of the Company
or be repaid at the option of the registered holder thereof prior to its stated
maturity. Unless otherwise specified in the applicable Pricing Supplement, the
Notes will be issued in denominations of $1,000 or integral multiples thereof
(see "DESCRIPTION OF NOTES--General" in this Prospectus Supplement).
Unless otherwise indicated in the applicable Pricing Supplement, interest
on the Notes will be payable monthly on the 15th day of each month and at the
Maturity Date. Payment of principal of the Subordinated Notes may be accelerated
only in case of the bankruptcy, insolvency or reorganization of the Company.
There is no right of acceleration of the payment of principal of the
Subordinated Notes upon a default in the payment of principal of or interest on
such Notes or in the performance of any covenant of the Company contained in the
Subordinated Indenture. See "THE SUBORDINATED SECURITIES--Events of Default and
Waiver Thereof" in the accompanying Prospectus.
(continued on next page)
------------------------
THE NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR
NON-BANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT, THE PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
PRICE TO AGENTS' DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note............ 100% 0.20% - 3.00% 99.80% - 97.00%
- --------------------------------------------------------------------------------------------------------
Total............... $200,000,000 $400,000 - $6,000,000 $199,600,000 - $194,000,000
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
<FN>
(1) Unless otherwise specified in the applicable Pricing Supplement, each Note
will be issued at 100% of its principal amount.
(2) The Company will pay Smith Barney Inc., as agent, and such other agents as
may be named from time to time (the "Agents"), a commission (or grant a
discount) ranging from 0.20% to 3.00% of the principal amount of any Note,
depending on its maturity, sold through any such Agent (or sold to any such
Agent as principal in circumstances in which no other discount is agreed).
The Company also may sell Notes to any Agent, as principal, for resale to
one or more investors and other purchasers at varying prices relating to
prevailing market prices at the time of resale, as determined by such Agent,
or if so agreed, at a fixed public offering price.
(3) Before deducting expenses payable by the Company estimated at $100,000.
</TABLE>
------------------------
SMITH BARNEY INC.
------------------------
The date of this Prospectus Supplement is August 11, 1994.
<PAGE> 2
(continued from previous page)
The interest rate or interest rate formula for each Note will be
established by the Company at the time of issuance of such Note (the "Original
Issue Date") and will be set forth therein and specified in a Pricing
Supplement. Interest rates and interest rate formulas are subject to change by
the Company, but no change will affect any Note already issued or as to which an
offer to purchase has been accepted by the Company. Unless otherwise indicated
in the applicable Pricing Supplement, each Note will bear interest at a fixed
rate ("Fixed Rate Notes"), or at a floating rate ("Floating Rate Notes"). See
"DESCRIPTION OF NOTES" in this Prospectus Supplement and "DESCRIPTION OF DEBT
SECURITIES" in the accompanying Prospectus.
The Notes will be issued in fully registered form and will be represented
by a global security registered in the name of a nominee of The Depository Trust
Company ("DTC"). Beneficial interests in Notes in book-entry form will be shown
on, and transfers thereof will be effected only through, records maintained by
DTC. Except as described in "DESCRIPTION OF NOTES--Book-Entry Notes" in this
Prospectus Supplement, owners of beneficial interests in Notes issued in
book-entry form will not be entitled to physical delivery of Notes in
certificated form and will not be considered the holders thereof.
In addition to the offering of the Notes made hereby, the Company may offer
other series of its Medium-Term Notes, and the sale of such Medium-Term Notes
may reduce the amount of Notes that may be sold hereunder.
The Notes are being offered on a continuous basis by the Company through
the Agents. The Company may also sell Notes directly to investors and other
purchasers on its own behalf in those jurisdictions where it is authorized to do
so. The Notes will not be listed on any securities exchange, and there can be no
assurance that the Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Notes. The Company reserves the
right to withdraw, cancel or modify any offer to sell Notes without notice and
may reject orders in whole or in part whether placed directly with the Company
or through an Agent. Each Agent will have the right, in its discretion
reasonably exercised, to reject, in whole or in part, any offer to purchase
Notes received by it on an agency basis. See "PLAN OF DISTRIBUTION OF NOTES" in
this Prospectus Supplement. The Agents, whether acting as agent or principal,
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended.
This Prospectus Supplement and the accompanying Prospectus may be used by
Chase Securities, Inc., a wholly-owned subsidiary of the Company, in connection
with offers and sales related to market-making transactions in the Notes. Chase
Securities, Inc. may act as principal or agent in such transactions. Such sales
will be made at prices related to prevailing market prices at the time of sale.
<PAGE> 3
SUMMARY FINANCIAL DATA
The following table sets forth, in summary form, certain financial data for
the Company and its consolidated subsidiaries (collectively, the "Corporation")
for each of the years in the three-year period ended December 31, 1993. This
summary is qualified in its entirety by the detailed information and financial
statements included in the documents incorporated herein by reference; this
summary is not covered by the Report of Independent Accountants incorporated
herein by reference. See "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
-------- ------- -------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Statement of Income Information:
Net interest revenue..................................... $ 3,863 $ 3,564 $ 3,345
Less: Provision for possible credit losses............... 995 1,220 1,085
Less: Provision for loans held for accelerated
disposition............................................ 566 -- --
-------- ------- -------
Net interest revenue after provisions for possible credit
losses and loans held for accelerated disposition...... 2,302 2,344 2,260
Total other operating revenue............................ 2,949 2,349 2,167
Less: Provision for ORE held for accelerated
disposition............................................ 318 -- --
Less: Other operating expenses........................... 4,202 3,868 3,783
-------- ------- -------
Income (loss) before taxes............................... 731 825 644
Applicable income taxes (benefits)....................... 265 186 124
-------- ------- -------
Net income (loss) before cumulative effect of change in
accounting principle................................... 466 639 520
Cumulative effect of change in accounting
principle -- adoption of SFAS No. 109.................. 500 -- --
-------- ------- -------
Net income.......................................... $ 966 $ 639 $ 520
======== ======= =======
Net income applicable to common stock............... $ 826 $ 515 $ 420
======== ======= =======
Average common shares outstanding (in millions)............... 172.3 148.7 134.8
Per common share:
Earnings (loss) before cumulative effect of change in
accounting principle*.................................. $ 1.89 $ 3.46 $ 3.12
Cumulative effect of change in accounting
principle -- adoption of SFAS No. 109*................. 2.90 -- --
-------- ------- -------
Earnings based on average shares outstanding............. $ 4.79 $ 3.46 $ 3.12
======== ======= =======
Cash dividends declared....................................... $ 1.20 $ 1.20 $ 1.20
Statement of Condition Information:
Total assets............................................. $102,103 $95,862 $98,197
Total loans, net......................................... 59,068 60,645 65,825
Total deposits........................................... 71,509 67,224 71,517
Intermediate-and long-term debt.......................... 5,641 6,913 6,612
Common stockholders' equity.............................. 6,723 5,034 4,282
Total stockholders' equity............................... 8,122 6,511 5,324
Profitability Ratios:
Return on average common stockholders' equity............ 14.6% 11.1% 10.5%
Return on average assets................................. 0.94% 0.64% 0.52%
Capital (period-end):
Common stockholders' equity as a % of total assets....... 6.58% 5.25% 4.36%
Total stockholders' equity as a % of total assets........ 7.95% 6.79% 5.42%
Tier 1 capital as a % of net risk-weighted assets........ 8.44% 6.76% 5.32%
Total capital as a % of net risk-weighted assets......... 13.22% 11.12% 9.74%
- ---------------
<FN>
* Based on average common shares outstanding
</TABLE>
S-3
<PAGE> 4
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
the Corporation for the six-month period ended June 30, 1994 and for each of the
years in the five-year period ended December 31, 1993:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------- ----------------------------------------
1994 1993 1992 1991 1990 1989
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Excluding Interest on Deposits................ 1.8x 1.3 x 1.4 x 1.3 x * *
Including Interest on Deposits................ 1.4 1.1 1.2 1.1 * *
- ---------------
<FN>
* For the years ended December 31, 1990 and 1989, earnings did not cover fixed
charges by $91 million and $449 million, respectively, primarily as a result
of large additions to the reserve for possible credit losses and special
charges.
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income (loss) plus applicable income taxes and fixed charges, less cumulative
effect of change in accounting principle (for the year ended December 31, 1993)
and equity in undistributed earnings (losses) of unconsolidated subsidiaries and
associated companies. Fixed charges represent interest expense (exclusive of
interest on deposits in one case and inclusive of such interest in the other),
amortization of debt discount and issuance costs and one-third (the amount
deemed to represent an interest factor) of net rental expense under all lease
commitments.
CERTAIN REGULATORY MATTERS
Additional rules and regulations have been promulgated under the Federal
Deposit Insurance Corporation Improvement Act of 1991. These relate to final
risk-based deposit insurance premium assessments and auditing and reporting
requirements. The Company expects that these rules and regulations will result
in increased costs to the Company, The Chase Manhattan Bank, N.A. (the "Bank"),
the Company's principal banking subsidiary, and their affiliates; however, based
upon its assessment of the overall impact of these rules and regulations, the
Corporation does not expect them to have a material effect on its operations. At
June 30, 1994, the capital ratios of the Bank exceeded the minimum capital
ratios required of a "well capitalized" institution as defined in the prompt
corrective action rule described in the "REGULATORY DEVELOPMENTS" section of the
accompanying Prospectus.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of the Debt Securities (as defined in the
accompanying Prospectus) set forth under the heading "DESCRIPTION OF DEBT
SECURITIES" in the accompanying Prospectus, to which description reference is
hereby made. The following description will apply to each Note unless otherwise
specified in the applicable Pricing Supplement. Certain terms not defined in
this Prospectus Supplement are defined in the accompanying Prospectus.
GENERAL
The Notes will be either Senior Notes or Subordinated Notes (referred to in
the accompanying Prospectus as "Senior Securities" and "Subordinated
Securities," respectively). The Senior Notes will constitute a single series to
be issued under an Indenture dated as of July 1, 1986, as supplemented by a
First Supplemental Indenture, dated as of November 1, 1990, and a Second
Supplemental Indenture, dated as of May 1, 1991 (as supplemented, the "Senior
Indenture"), between the Company and Bankers Trust Company (the "Senior
Trustee"). The Subordinated Notes will constitute a single series to be issued
under an Amended and Restated Indenture dated as of September 1, 1993 (the
"Subordinated Indenture"), between the Company and Chemical Bank (the
"Subordinated Trustee"). All references herein and in the accompanying
Prospectus to the "Subordinated Indenture" shall be deemed to refer to such
Amended and
S-4
<PAGE> 5
Restated Indenture. The Senior Indenture and the Subordinated Indenture are
collectively referred to herein and in the accompanying Prospectus as the
"Indentures." The Senior Trustee and the Subordinated Trustee are collectively
referred to herein as the "Trustees." At the date hereof, the maximum aggregate
amount of Notes authorized for issuance is $200,000,000. This Prospectus
Supplement, together with the accompanying Prospectus and any Pricing
Supplement, may be used in connection with the offer and sale of Notes in an
aggregate initial public offering price of up to $200,000,000, subject to
reduction as a result of future sales of the Company's other Securities.
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provide that Debt Securities may be
issued in one or more series up to the aggregate principal amount that may be
authorized from time to time by the Company. Debt Securities of any series need
not all be issued at the same time, and a series may be reopened either for
issuances of additional Debt Securities of such series or to establish
additional terms of such series. The Company may concurrently offer other series
of its Medium-Term Notes having different interest rates and variable terms and
such offers may depend upon the aggregate principal amount subject to purchase
in any single transaction.
The Senior Notes will be unsecured and unsubordinated obligations and will
rank pari passu with all other unsecured and unsubordinated indebtedness of the
Company. The Subordinated Notes will be subordinate and junior in right of
payment to the Company's obligations to the holders of Senior Indebtedness of
the Company (as defined in the Subordinated Indenture), including general
creditors, as described under "THE SUBORDINATED SECURITIES--Subordination" in
the accompanying Prospectus. At June 30, 1994, the outstanding Senior
Indebtedness of the Company, exclusive of guarantees and other contingent
obligations of the Company, was approximately $2.7 billion.
Except as may be set forth in a supplement to this Prospectus Supplement,
the Subordinated Notes are not convertible into any other securities and are not
Securities for which Capital Securities are exchangeable, and the Company will
not designate funds with regard to the Subordinated Notes as Available Funds or
Optional Available Funds (as such terms are defined in the Subordinated
Indenture). See "THE SUBORDINATED SECURITIES -- Exchangeability" in the
accompanying Prospectus.
Payment of principal of the Subordinated Notes may be accelerated only in
case of the bankruptcy, insolvency or reorganization of the Company. There is no
right of acceleration of the payment of principal of the Subordinated Notes upon
a default in the payment of principal of or interest on such Notes or in the
performance of any covenant of the Company contained in the Subordinated
Indenture. See "THE SUBORDINATED SECURITIES -- Events of Default and Waiver
Thereof" in the accompanying Prospectus.
The Notes will be offered on a continuous basis and will mature on any
Business Day (as hereinafter defined) nine months or longer from the date of
issue, as selected by the purchaser and agreed to by the Company. Floating Rate
Notes will mature on an Interest Payment Date (as hereinafter defined).
Unless otherwise indicated in the Pricing Supplement, the Notes will bear
interest at a fixed rate, or at floating rates determined by reference to an
interest rate index or formula which will be set forth in the applicable Pricing
Supplement, or any combination of fixed and floating rates until the principal
thereof is paid or made available for payment. See "Fixed Rate Notes" and
"Floating Rate Notes" below. Notes may be issued as discounted securities
(bearing no interest or interest at rates which at the time of issuance are
below market rates), at prices below their stated principal amounts, which
securities will provide that upon redemption or acceleration of the maturity
thereof amounts less than the principal amounts thereof shall become due and
payable, or as other Notes which for United States Federal income tax purposes
would be considered to have original issue discount ("Original Issue Discount
Notes"). See "UNITED STATES TAXATION" in this Prospectus Supplement.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described in the accompanying Prospectus under "THE SENIOR
SECURITIES -- Events of Default and Waiver Thereof" or "THE SUBORDINATED
SECURITIES -- Events of Default and Waiver Thereof," the amount of principal due
and payable with respect to such Note shall be its Amortized Face Amount (as
hereinafter defined). See "Optional Redemption and Optional Repayment" below.
S-5
<PAGE> 6
Interest, if any, will be payable as specified under "Fixed Rate Notes" and
"Floating Rate Notes" below. Interest payable and punctually paid or duly
provided for on any date on which interest is payable (an "Interest Payment
Date") and on the stated maturity date or upon earlier redemption or repayment
(such stated maturity date or date of redemption or repayment, as the case may
be, being collectively hereinafter referred to as the "Maturity Date"), or on a
later date on which payment may be made hereunder in respect of such Interest
Payment Date, will be paid to the person in whose name a Note is registered at
the close of business on the Regular Record Date (as hereinafter defined) next
preceding such Interest Payment Date; provided, however, that the first payment
of interest on any Note with an Original Issue Date (as set forth in the Pricing
Supplement) between a Regular Record Date and an Interest Payment Date or on an
Interest Payment Date will be made on an Interest Payment Date following the
next succeeding Regular Record Date to the registered holder on such next
succeeding Regular Record Date; provided, further, that interest payable at
maturity or upon earlier redemption or repayment will be payable to the person
to whom principal shall be payable.
The Notes will be issued in denominations of $1,000 or integral multiples
thereof. The minimum denomination of each Note will be $1,000.
The Company will pay any administrative costs imposed by banks in
connection with making payments of principal, interest or premium, by wire
transfer, but any tax, assessment or governmental charge imposed upon payments
will be borne by owners of beneficial interests in Notes issued in book-entry
form in respect of which payments are made.
All references herein to "registered holders" or "holders" will be to DTC
or its nominee and not to owners of beneficial interests in such Notes, except
as otherwise provided. See "Book-Entry Notes" below.
BOOK-ENTRY NOTES
THE DEPOSITORY TRUST COMPANY. The Notes will be issued in whole or in part
in the form of one or more fully registered global Notes (each, a "Global
Book-Entry Note") deposited with the Bank, as custodian (the "Custodian") for
DTC, and registered in the name of Cede & Co., as nominee of DTC.
Ownership of beneficial interests in a Global Book-Entry Note will be shown
on, and the transfer of such interests will be effected only through, records
maintained by DTC. The laws of some states of the United States may require that
certain purchasers of securities take physical delivery of such securities in
certificated form. Such transfer restrictions and such laws may impair the
ability to own, transfer or pledge beneficial interests in a Global Book-Entry
Note.
So long as DTC or its nominee is the registered holder of a Global
Book-Entry Note, DTC or its nominee will be considered the sole owner or holder
of the Notes represented by such Global Book-Entry Note for all purposes under
the applicable Indenture. Except as provided below, owners of beneficial
interests in a Global Book-Entry Note will not be entitled to have Notes
represented by such Global Book-Entry Note registered in their names, will not
receive or be entitled to receive physical delivery of such Notes in
certificated form and will not be considered the owners or holders thereof under
the applicable Indenture. Except as otherwise provided herein, the holder of the
relevant Global Book-Entry Note shall be the only person entitled to receive
payments with respect to Notes represented by such Global Book-Entry Note. The
Company will in every case be discharged by payment to, or to the order of, the
holder of such Global Book-Entry Note in the amount so paid. Each of the persons
shown in the records of a holder of a Global Book-Entry Note as an owner of a
beneficial interest therein must look solely to the holder of such Global
Book-Entry Note for its share of any such payment so made by the Company.
Transfers between owners of beneficial interests in a Global Book-Entry
Note through DTC ("DTC Holders") will occur in accordance with DTC rules. DTC
Holders may not deliver instructions directly to the Bank as Custodian for DTC.
DTC has advised the Company and the Agents that it is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
S-6
<PAGE> 7
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities for its participating organizations ("DTC
Participants") and facilitate the clearance and settlement of securities
transactions between DTC Participants through electronic book-entry changes in
accounts of such DTC Participants, thereby eliminating the need for physical
movement of certificates. DTC Participants include securities brokers and
dealers (including the Agents), banks, trust companies and clearing corporations
and may include certain other organizations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a DTC Participant,
either directly or indirectly ("Indirect DTC Participants").
DTC can act only on behalf of DTC Participants. Owners of beneficial
interests in a DTC Global Note that are not DTC Participants or Indirect DTC
Participants but desire to purchase, sell or otherwise transfer ownership of
such interests may do so only through DTC Participants and Indirect DTC
Participants. In addition, principal, premium (if any) and interest payments (if
any) on Notes represented by a Global Book-Entry Note will be made by the
Company to DTC or its nominee, as the case may be, as the registered owner of
such Global Book-Entry Note. The Company expects that DTC or its nominee, upon
any receipt of any payment of principal, premium or interest in respect of a
Global Book-Entry Note, will credit immediately the accounts of the DTC
Participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interest in such Global Book-Entry Note as
shown on the records of DTC. Neither the Company nor any Trustee nor any Paying
Agent (as hereinafter defined) will have any responsibility or liability for any
aspect of the records relating to or payments made on account of owners of
beneficial interests in a Global Book-Entry Note, or for maintaining,
supervising or reviewing any records relating to such beneficial interests. The
Company also expects that payments by DTC Participants to owners of beneficial
interests in a Global Book-Entry Note held through such DTC Participants will be
governed by standing customer instructions and customary practices, as is now
the case with securities registered in "street name." Such instructions will be
the responsibility of such DTC Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among DTC
Participants on whose behalf it acts with respect to a Global Book-Entry Note
and is required to receive and transmit distributions of principal of, and
premium (if any) and interest (if any) on, such Global Book-Entry Note. DTC
Participants and Indirect DTC Participants with which owners of beneficial
interests in a Global Book-Entry Note have accounts similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
such owners.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect DTC Participants and certain banks, the ability of owners of
beneficial interests in a Global Book-Entry Note to pledge such interests to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be limited due to the lack of physical
certificates for the Notes. Currently, DTC may only transmit and receive
payments in U.S. dollars.
ALTERNATE PROCEDURES. Although DTC has agreed to the foregoing procedures
in order to facilitate transfers of beneficial interests in Global Book-Entry
Notes among its participants, it is under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any time.
If DTC is at any time unwilling, unable or ineligible to continue as a
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue registered Notes in certificated form in exchange
for beneficial interests in each Global Book-Entry Note. In addition, the
Company may at any time determine not to have Notes represented by Global
Book-Entry Notes, and, in such event, will issue registered Notes in
certificated form in exchange for Global Book-Entry Notes. In any such instance,
an owner of a beneficial interest in a Global Book-Entry Note will be entitled
to physical delivery in certificated form of Notes equal in principal amount to
such beneficial interest and to have such Notes registered in its name. Unless
otherwise indicated in the applicable Pricing Supplement, Notes so issued in
certificated form will be issued in denominations of $1,000 or any amount in
excess thereof that is an integral multiple of $1,000 and will be issued in
registered form only, without coupons.
Notes issued in certificated form may be transferred or exchanged in the
offices described in the immediately following paragraph. Notes issued in
book-entry form through the facilities of DTC may be
S-7
<PAGE> 8
transferred or exchanged through a participating member of DTC. No service
charge will be made for any registration of transfer or exchange of Notes issued
in certificated form, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
In the case of Notes issued in certificated form, principal, premium (if
any) and interest (if any) will be payable, the transfer of such Notes will be
registrable, and such Notes will be exchangeable for registered Notes bearing
identical terms and provisions and in the same minimum denominations, at the
office or agency of the Company in The City of New York designated for such
purpose; provided, however, that payment of interest, other than interest
payable on the Maturity Date, may be made at the option of the Company by check
mailed to the address of the person in whose name the applicable Note is
registered at the close of business on the relevant Regular Record Date.
PAYING AGENT, REGISTRAR AND TRANSFER AGENT
The initial Paying Agent, Registrar and Transfer Agent is the Bank, acting
through its principal corporate trust offices in The City of New York. The
Company reserves the right at any time to vary or terminate the appointment of
the Paying Agent, Registrar and the Transfer Agent and to appoint additional
Paying Agents, Registrars and Transfer Agents and to approve any change in the
office through which the Paying Agent, Registrar or Transfer Agent acts,
provided that, so long as any Notes remain outstanding, there will at all times
be a Paying Agent in The City of New York and the Company will maintain in The
City of New York one or more offices or agencies where Notes may be presented
for registration of transfer and exchange.
OPTIONAL REDEMPTION AND OPTIONAL REPAYMENT
If set forth in the applicable Pricing Supplement, the Notes will be
subject to redemption by the Company on and after the initial redemption date
fixed at the time of sale (the "Initial Redemption Date"). If no Initial
Redemption Date is indicated with respect to a Note, such Note will not be
redeemable prior to the stated maturity date. On and after the Initial
Redemption Date with respect to any Note, such Note will be redeemable in whole
or in part in increments of $1,000 (provided that any remaining principal amount
of such Note shall be at least $1,000) at the option of the Company at a
redemption price (the "Redemption Price") determined in accordance with the
following paragraph, together with interest thereon payable to the date of
redemption, on notice given to a holder of a Note no more than 60 nor less than
30 days prior to the date of redemption.
The Redemption Price for each Note subject to redemption may initially be
equal to a certain premium (the "Initial Redemption Percentage") in excess of
100% of the principal amount of such Note to be redeemed, which may decline at
each anniversary of the Initial Redemption Date with respect to such Note by a
percentage (the "Annual Redemption Percentage Reduction") of the principal
amount to be redeemed until the Redemption Price equals 100% of such principal
amount. Any Initial Redemption Percentage and any Annual Redemption Percentage
Reduction with respect to each Note subject to redemption prior to the stated
maturity date will be fixed at the time of sale and set forth in the applicable
Pricing Supplement and in the applicable Note.
If set forth in the applicable Pricing Supplement, the Notes will be
subject to repayment at the option of the holders thereof in accordance with the
terms of the Notes on their respective optional repayment dates fixed at the
time of sale (each, an "Optional Repayment Date"). If no Optional Repayment Date
is indicated with respect to a Note, such Note will not be repayable at the
option of the holder thereof prior to the stated maturity date. On any Optional
Repayment Date with respect to any Note, such Note will be repayable in whole or
in part in increments of $1,000 (provided that any remaining principal amount of
such Note shall be at least $1,000) at the option of such holder at a price
equal to 100% of the principal amount to be repaid, together with interest
thereon accrued to the date of repayment, on notice to the Paying Agent, given
not more than 60 nor less than 30 days prior to the Optional Repayment Date.
Notwithstanding anything in this Prospectus Supplement to the contrary, if
a Note is an Original Issue Discount Note, the amount payable on such Note in
the event of redemption or repayment prior to the stated
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maturity date shall be the Amortized Face Amount of such Note as of the date of
redemption or the date of repayment, as the case may be. The "Amortized Face
Amount" of an Original Issue Discount Note shall be the amount equal to (i) the
issue price set forth in the applicable Pricing Supplement plus (ii) that
portion of the difference between the issue price and the principal amount of
such Note that has accrued at the yield to maturity (computed in accordance with
generally accepted United States bond yield computation principles) by such date
of redemption or repayment, as calculated by the Calculation Agent (as
hereinafter defined), but in no event shall the Amortized Face Amount of an
Original Issue Discount Note exceed its principal amount.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the Original Issue Date at the
rate per annum stated on the face thereof (which may be zero) until the
principal amount thereof is paid or duly made available for payment. Unless
otherwise provided in the applicable Pricing Supplement, interest on Fixed Rate
Notes will be computed on the basis of a 360-day year consisting of twelve
30-day months. Unless otherwise specified in the applicable Pricing Supplement,
interest on Fixed Rate Notes will be payable on the 15th day of each month
during the term of the Notes (each an "Interest Payment Date") and on the
Maturity Date. Unless otherwise provided in the applicable Pricing Supplement,
the "Regular Record Date" for Fixed Rate Notes will be the first day of each
month or if the Interest Payment Dates are other than the 15th day of the month,
the calendar day fifteen days preceding each Interest Payment Date whether or
not such day is a Business Day. If any Interest Payment Date or the Maturity
Date on a Fixed Rate Note falls on a day that is not a Business Day, the payment
shall be made on the next succeeding day that is a Business Day as if it were
made on the date such payment was due and no additional interest will accrue on
the amount so payable for the period from and after such Interest Payment Date
or the Maturity Date, as the case may be. Interest payments will be in the
amount of interest accrued from and including the next preceding Interest
Payment Date in respect of which interest has been paid or duly provided for (or
from and including the Original Issue Date if no interest has been paid or duly
provided for with respect to such Note) to but excluding the Interest Payment
Date or the Maturity Date, as the case may be.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from the Original Issue Date at
the interest rate index or formula which will be set forth in the applicable
Pricing Supplement until the principal amount thereof is paid or duly made
available for payment. The interest rate on each Floating Rate Note will be
calculated by reference to the specified interest rate index or formula plus or
minus the Spread and/or multiplied by the Spread Multiplier, if any. The
interest rate index or formula will be based upon the Index Maturity (as
hereinafter defined) and adjusted by a Spread and/or Spread Multiplier, if any,
as specified in the applicable Pricing Supplement. The "Spread" is the number of
basis points above or below the interest rate applicable to such Floating Rate
Note, and the "Spread Multiplier" is the percentage applicable to the interest
rate for such Floating Rate Note. The "Index Maturity" is the period to maturity
of the instrument or obligation with respect to which the interest rate index or
formula is calculated. The Spread, Spread Multiplier, Index Maturity and other
variable terms of the Floating Rate Notes are subject to change by the Company
from time to time, but no such change will affect any Floating Rate Note
theretofore issued or as to which an offer to purchase has been accepted by the
Company.
The applicable Pricing Supplement will specify for each Floating Rate Note
the following terms: Original Issue Date, the interest rate index or formula,
Initial Interest Rate (as hereinafter defined), Initial Interest Rate Reset
Date, Interest Payment Dates, Index Maturity, Maturity Date, Maximum Interest
Rate (as hereinafter defined) and/or Minimum Interest Rate (as hereinafter
defined), if any, Spread and/or Spread Multiplier, if any, Initial Redemption
Date, if any, Initial Redemption Percentage, if any, Annual Redemption
Percentage Reduction, if any, defeasance provisions, if any, and Optional
Repayment Dates, if any. Unless otherwise specified in the applicable Pricing
Supplement, the "Regular Record Date" for Floating Rate Notes with respect to
any Interest Payment Date will be the fifteenth calendar day, whether or not
such day is a Business Day, prior to such Interest Payment Date.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (each, an "Interest Rate
Reset Date"), as specified in the applicable Pricing
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Supplement. If any Interest Rate Reset Date for any Floating Rate Note would be
a day that is not a Business Day, such Interest Rate Reset Date will be
postponed to the next succeeding day that is a Business Day. Unless otherwise
specified in the applicable Pricing Supplement, "Business Day" means any day
other than a Saturday, Sunday, legal holiday or other day on which banks in The
City of New York are required or authorized by law or executive order to close.
A Floating Rate Note may also have either or both of the following: (i) a
maximum limit, or ceiling (the "Maximum Interest Rate"), on the rate of interest
that may accrue during any period; and (ii) a minimum limit, or floor (the
"Minimum Interest Rate"), on the rate of interest which may accrue during any
period. Notwithstanding any Maximum Interest Rate which may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on
Floating Rate Notes will in no event be higher than the maximum rate permitted
by New York law as the same may be modified by United States law of general
application. Under present New York law, the maximum rate of interest, subject
to certain exceptions, for any loan in an amount less than $250,000, is 16%, and
for any loan in the amount of $250,000 or more but less than $2,500,000, is 25%,
per annum on a simple interest basis. These limits do not apply to loans of
$2,500,000 or more.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate in effect with respect to a Floating Rate Note during the period
commencing on an Interest Rate Reset Date will be the rate determined on the
second Business Day preceding such Interest Rate Reset Date (the "Interest
Determination Date").
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate in effect with respect to a Floating Rate Note on each day that is
not an Interest Rate Reset Date will be the interest rate determined as of the
Interest Determination Date pertaining to the immediately preceding Interest
Rate Reset Date, and the interest rate in effect on any day that is an Interest
Rate Reset Date will be the interest rate determined as of the Interest
Determination Date pertaining to such Interest Rate Reset Date, subject in
either case to any Maximum or Minimum Interest Rate limitation referred to
above; provided, however, that the interest rate in effect with respect to a
Floating Rate Note for the period from the Original Issue Date to the Initial
Interest Rate Reset Date (the "Initial Interest Rate") will be specified in the
applicable Pricing Supplement, if available, and, unless otherwise provided in
the applicable Pricing Supplement, the interest rate in effect for the ten
calendar days immediately prior to the Maturity Date (with respect to any amount
to be redeemed or repaid) will be the interest rate in effect on the tenth
calendar day preceding such Maturity Date.
Interest payments will be in the amount of interest accrued from and
including the next preceding Interest Payment Date in respect of which interest
has been paid or duly provided for (or from and including the Original Issue
Date if no interest has been paid or duly provided for with respect to such
Note) to but excluding the Interest Payment Date or the Maturity Date, as the
case may be. However, in the case of Floating Rate Notes on which the interest
rate is reset daily or weekly, the interest payments will, unless otherwise
indicated in the applicable Pricing Supplement, include interest accrued only
from but excluding the Regular Record Date through which interest has been paid
(or from and including the Original Issue Date if no interest has been paid with
respect to such Note) through and including the Regular Record Date next
preceding the applicable Interest Payment Date, except that the interest payment
due on the Maturity Date will include interest accrued to but excluding such
date.
Unless otherwise indicated in the applicable Pricing Supplement, if any
Interest Payment Date for any Floating Rate Note (other than an Interest Payment
Date that occurs on the Maturity Date) would otherwise fall on a day that is not
a Business Day with respect to such Note, such Interest Payment Date shall be
the next succeeding day that is a Business Day. If the Maturity Date of any
Floating Rate Note shall fall on a day that is not a Business Day with respect
to such Note, the payment of interest, principal or premium (if any) due on such
date shall be made on the next succeeding day that is a Business Day and no
additional interest on such amounts shall accrue from the Maturity Date to and
including the date on which any such payment is required to be made.
Unless otherwise indicated in the applicable Pricing Supplement, the Bank
will be the Calculation Agent. Upon the request of the holder of a Floating Rate
Note, the Calculation Agent will provide the interest rate
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then in effect and, if determined, the interest rate that will become effective
as a result of a determination made for the next Interest Rate Reset Date with
respect to such Floating Rate Note. The Calculation Agent will also make certain
calculations, specified below, on or prior to the "Calculation Date." Unless
otherwise specified in the applicable Pricing Supplement, the "Calculation
Date," where applicable, pertaining to any Interest Determination Date will be
the earlier of (i) the tenth calendar day after such Interest Determination Date
or, if any such day is not a Business Day, the next succeeding Business Day, or
(ii) the Business Day next preceding the applicable Interest Payment Date or
Maturity Date, as the case may be.
Unless otherwise indicated in the applicable Pricing Supplement, accrued
interest on any Floating Rate Note will be determined by multiplying the face
amount of such Floating Rate Note by an accrued interest factor. Such accrued
interest factor will be computed by adding the interest factor calculated for
each day from and including the Original Issue Date, or from but excluding the
last date to which interest has been paid, as the case may be, to and including
the date for which accrued interest is being calculated. Unless otherwise
indicated in the applicable Pricing Supplement, the interest factor for each
such day will be computed by dividing the interest rate applicable to such day
by 360.
Unless otherwise indicated in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on Floating
Rate Notes will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) will be rounded upward to 9.87655% (or
.0987655)), and to the nearest cent (with one-half cent being rounded upward).
GOVERNING LAW
The Indentures and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
UNITED STATES TAXATION
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers (except where otherwise specifically
noted). Persons considering the purchase of the Notes should consult their own
tax advisors concerning the application of United States Federal income tax laws
to their particular situations as well as any consequences of the purchase,
ownership and disposition of the Notes arising under the laws of any other
taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source or (iv) any other
person whose income or gain in respect of a Note is effectively connected with
the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a holder of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
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Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Original Issue Discount Notes. The
following summary is based upon final Treasury regulations (the "OID
Regulations") issued by the Internal Revenue Service ("IRS") on January 27, 1994
under the original issue discount provisions of the Internal Revenue Code of
1986, as amended (the "Code").
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of 1%
of the Note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date). The issue price of an issue
of Notes equals the first price at which a substantial amount of such Notes has
been sold (ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers). The stated redemption price at maturity of a Note is the sum of
all payments provided by the Note other than "qualified stated interest"
payments. The term "qualified stated interest" generally means stated interest
that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate. In addition, under the
OID Regulations, if a Note bears interest for one or more accrual periods at a
rate below the rate applicable for the remaining term of such Note (e.g., Notes
with teaser rates or interest holidays), and if the greater of either the
resulting foregone interest on such Note or any "true" discount on such Note
(i.e., the excess of the Note's stated principal amount over its issue price)
equals or exceeds a specified de minimis amount, then the stated interest on the
Note would be treated as original issue discount rather than qualified stated
interest.
Payments of qualified stated interest on a Note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of an Original Issue Discount Note must include
original issue discount in income as ordinary interest for United States Federal
income tax purposes as it accrues under a constant yield method in advance of
receipt of the cash payments attributable to such income, regardless of such
U.S. Holder's regular method of tax accounting. In general, the amount of
original issue discount included in income by the initial U.S. Holder of an
Original Issue Discount Note is the sum of the daily portions of original issue
discount with respect to such Original Issue Discount Note for each day during
the taxable year (or portion of the taxable year) on which such U.S. Holder held
such Original Issue Discount Note. The "daily portion" of original issue
discount on any Original Issue Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Original Issue
Discount Note, provided that each accrual period is no longer than one year and
each scheduled payment of principal or interest occurs either on the final day
of an accrual period or on the first day of an accrual period. The amount of
original issue discount allocable to each accrual period is generally equal to
the difference between (i) the product of the Original Issue Discount Note's
adjusted issue price at the beginning of such accrual period and its yield to
maturity (determined on the basis of compounding at the close of each accrual
period and appropriately adjusted to take into account the length of the
particular accrual period) and (ii) the amount of any qualified stated interest
payments allocable to such accrual period. The "adjusted issue price" of an
Original Issue Discount Note at the beginning of any accrual period is the sum
of the issue price of the Original Issue Discount Note plus the amount of
original issue discount allocable to all prior accrual periods minus the amount
of any prior payments on the Original Issue Discount Note that were not
qualified stated interest payments. Under these rules, U.S. Holders generally
will have to include in income increasingly greater amounts of original issue
discount in successive accrual periods.
A U.S. Holder who purchases an Original Issue Discount Note for an amount
that is greater than its adjusted issue price as of the purchase date and less
than or equal to the sum of all amounts payable on the Original Issue Discount
Note after the purchase date other than payments of qualified stated interest,
will be considered to have purchased the Original Issue Discount Note at an
"acquisition premium." Under the acquisition premium rules, the amount of
original issue discount which such U.S. Holder must include in its gross income
with respect to such Original Issue Discount Note for any taxable year (or
portion thereof in
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which the U.S. Holder holds the Original Issue Discount Note) will be reduced
(but not below zero) by the portion of the acquisition premium properly
allocable to the period.
Under the OID Regulations, Floating Rate Notes are subject to special rules
whereby a Floating Rate Note will qualify as a "variable rate debt instrument"
if (a) its issue price does not exceed the total noncontingent principal
payments due under the Floating Rate Note by more than a specified de minimis
amount and (b) it provides for stated interest, paid or compounded at least
annually, at current values of (i) one or more qualified floating rates, (ii) a
single fixed rate and one or more qualified floating rates, (iii) a single
objective rate, or (iv) a single fixed rate and a single objective rate that is
a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Floating Rate Note is denominated. Although a multiple of a qualified floating
rate will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple that
is greater than zero but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than zero but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Floating Rate Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Floating Rate
Note's issue date) will be treated as a single qualified floating rate.
Notwithstanding the foregoing, a variable rate that would otherwise constitute a
qualified floating rate but which is subject to one or more restrictions such as
a maximum numerical limitation (i.e., a cap) or a minimum numerical limitation
(i.e., a floor) may, under certain circumstances, fail to be treated as a
qualified floating rate under the OID Regulations.
An "objective rate" is a rate that is not itself a qualified floating rate
but which is determined using a single fixed formula and which is based upon (i)
one or more qualified floating rates, (ii) one or more rates where each rate
would be a qualified floating rate for a debt instrument denominated in a
currency other than the currency in which the Floating Rate Note is denominated,
(iii) either the yield or changes in the price of one or more items of actively
traded personal property (other than stock or debt of the issuer or a related
party) or (iv) a combination of objective rates. The OID Regulations also
provide that other variable interest rates may be treated as objective rates if
so designated by the IRS in the future. Despite the foregoing, a variable rate
of interest on a Floating Rate Note will not constitute an objective rate if it
is reasonably expected that the average value of such rate during the first half
of the Floating Rate Note's term will be either significantly less than or
significantly greater than the average value of the rate during the final half
of the Floating Rate Note's term. A "qualified inverse floating rate" is any
objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the cost of newly borrowed
funds. The OID Regulations also provide that if a Floating Rate Note provides
for stated interest at a fixed rate for an initial period of less than one year
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Floating Rate Note's issue date
is intended to approximate the fixed rate (e.g., the value of the variable rate
on the issue date does not differ from the value of the fixed rate by more than
25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Floating Rate Note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, then any stated interest on such Note which is unconditionally
payable in cash or property (other than debt instruments of the issuer) at least
annually will constitute qualified stated interest and will be taxed
accordingly. Thus, a Floating Rate Note that provides for stated interest at
either a single qualified floating rate or a single objective rate throughout
the term thereof and that qualifies as a "variable rate debt instrument" under
the OID Regulations will generally not be treated as having been issued with
original issue discount unless the Floating Rate Note is issued at a "true"
discount (i.e., at a price below the Note's stated principal amount) in excess
of a specified de minimis amount. Original issue discount on such a Floating
Rate
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Note arising from "true" discount is allocated to an accrual period using the
constant yield method described above by assuming that the variable rate is a
fixed rate equal to (i) in the case of a qualified floating rate or qualified
inverse floating rate, the value as of the issue date, of the qualified floating
rate or qualified inverse floating rate, or (ii) in the case of an objective
rate (other than a qualified inverse floating rate), a fixed rate that reflects
the yield that is reasonably expected for the Floating Rate Note.
In general, any other Floating Rate Note that qualifies as a "variable rate
debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of original issue
discount and qualified stated interest on the Floating Rate Note. The OID
Regulations generally require that such a Floating Rate Note be converted into
an "equivalent" fixed rate debt instrument by substituting any qualified
floating rate or qualified inverse floating rate provided for under the terms of
the Floating Rate Note with a fixed rate equal to the value of the qualified
floating rate or qualified inverse floating rate, as the case may be, as of the
Floating Rate Note's issue date. Any objective rate (other than a qualified
inverse floating rate) provided for under the terms of the Floating Rate Note is
converted into a fixed rate that reflects the yield that is reasonably expected
for the Floating Rate Note. In the case of a Floating Rate Note that qualifies
as a "variable rate debt instrument" and provides for stated interest at a fixed
rate in addition to either one or more qualified floating rates or a qualified
inverse floating rate, the fixed rate is initially converted into a qualified
floating rate (or a qualified inverse floating rate, if the Floating Rate Note
provides for a qualified inverse floating rate). Under such circumstances, the
qualified floating rate or qualified inverse floating rate that replaces the
fixed rate must be such that the fair market value of the Floating Rate Note as
of the Floating Rate Note's issue date is approximately the same as the fair
market value of an otherwise identical debt instrument that provides for either
the qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate or a qualified inverse floating rate, the Floating Rate Note is
then converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Floating Rate Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Floating Rate Note will account for tax purposes for such original issue
discount and qualified stated interest as if the U.S. Holder held the
"equivalent" fixed rate debt instrument. Each accrual period, appropriate
adjustments will be made to the amount of qualified stated interest or original
issue discount assumed to have been accrued or paid with respect to the
"equivalent" fixed rate debt instrument in the event that such amounts differ
from the actual amount of interest accrued or paid on the Floating Rate Note
during the accrual period.
If a Floating Rate Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Floating Rate Note would be
treated as a contingent payment debt obligation. It is not entirely clear under
current law how a Floating Rate Note would be taxed if such Note were treated as
a contingent payment debt obligation. The proper United States Federal income
tax treatment of Floating Rate Notes that are treated as contingent payment debt
obligations will be more fully described in the applicable Pricing Supplement.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the original issue discount
consequences will depend, in part, on the particular terms and features of the
purchased Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue
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discount, subject to certain limitations and exceptions. This election is only
available for debt instruments acquired on or after April 4, 1994.
Short-Term Notes. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects to
do so. If such an election is not made, any gain recognized by the U.S. Holder
on the sale, exchange or maturity of the Short-Term Note will be ordinary income
to the extent of the original issue discount accrued on a straight-line basis,
or upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
Market Discount. If a U.S. Holder purchases a Note, other than an Original
Issue Discount Note, for an amount that is less than its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity) or, in
the case of an Original Issue Discount Note, for an amount that is less than its
adjusted issue price as of the purchase date, the amount of the difference will
be treated as "market discount," unless such difference is less than a specified
de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of an Original Issue Discount
Note, any payment that does not constitute qualified stated interest) on, or any
gain realized on the sale, exchange, retirement or other disposition of, a Note
as ordinary income to the extent of the lesser of (i) the amount of such payment
or realized gain or (ii) the market discount which has not previously been
included in income and is treated as having accrued on such Note at the time of
such payment or disposition. Market discount will be considered to accrue
ratably during the period from the date of acquisition to the maturity date of
the Note, unless the U.S. Holder elects to accrue market discount on the basis
of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note or
its earlier disposition in a taxable transaction, because a current deduction is
only allowed to the extent the interest expense exceeds an allocable portion of
market discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual compounding basis),
in which case the rules described above regarding the treatment as ordinary
income of gain upon the disposition of the Note and upon the receipt of certain
cash payments and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States Federal income tax purposes.
Premium. If a U.S. Holder purchases a Note for an amount that is greater
than its stated redemption price at maturity, such U.S. Holder will be
considered to have purchased the Note with "amortizable bond premium" equal in
amount to such excess. A U.S. Holder may elect to amortize such premium using a
constant yield method over the remaining term of the Note and may offset
interest otherwise required to be included in respect of the Note during any
taxable year by the amortized amount of such excess for the taxable year.
However, if the Note may be optionally redeemed after the U.S. Holder acquires
it at a price in excess of its stated redemption price at maturity, special
rules would apply which could result in a deferral of the amortization of some
bond premium until later in the term of the Note.
Disposition of a Note. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. A U.S.
Holder's adjusted tax basis in a Note generally will equal such U.S. Holder's
initial investment in the Note increased by any original issue discount included
in income (and accrued market discount, if any, if the U.S. Holder has included
such market discount in income) and decreased by the amount of any payments,
other than qualified
S-15
<PAGE> 16
stated interest payments, received and amortizable bond premium taken with
respect to such Note. Such gain or loss generally will be long-term capital gain
or loss if the Note were held for more than one year.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Note, unless such non-U.S. Holder is a direct or indirect
10% or greater stockholder of the Company, a controlled foreign corporation
related to the Company or a bank receiving interest described in Section
881(c)(3)(A) of Code. To qualify for the exemption from taxation, the last
United States payor in the chain of payment prior to payment to a non-U.S.
Holder (the "Withholding Agent") must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the beneficial owner of the
Note under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
beneficial owner to the organization or institution. The Treasury Department is
considering implementation of further certification requirements aimed at
determining whether the issuer of a debt obligation is related to holders
thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater stockholder of the Company
or, at the time of such individual's death, payments in respect of the Notes
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to beneficial owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the beneficial owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the beneficial owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
S-16
<PAGE> 17
PLAN OF DISTRIBUTION OF NOTES
The Notes are being offered on a continuous basis for sale by the Company
through Smith Barney Inc. and any other Agents designated in the applicable
Pricing Supplement. If agreed to by the Company and the applicable Agent, such
Agent may utilize its best efforts on an agency basis to solicit offers to
purchase the Notes at 100% of the principal amount thereof, unless otherwise
specified in an applicable Pricing Supplement. The Company will pay the
applicable Agent a commission which, depending on the maturity of the Notes,
will range from .20% to 3.00% of the principal amount of any Note sold through
such Agent. Commissions and discounts with respect to Notes with maturities in
excess of 30 years will be negotiated between the Company and such Agent at the
time of such sale. The Company may also sell Notes directly to investors and
other purchasers on its own behalf in those jurisdictions where it is authorized
to do so.
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers for resale to investors, and may allow any portion of
the discount received in connection with such purchases from the Company to such
dealers. After the initial public offering of Notes to be resold to investors
and other purchasers, the public offering price (in the case of Notes to be
resold on a fixed public offering price basis), concession and discount may be
changed.
The Company reserves the right to withdraw, cancel or modify any offer to
sell Notes without notice and may reject orders in whole or in part whether
placed directly with the Company or through an Agent. Each Agent will have the
right, in its discretion reasonably exercised, to reject, in whole or in part,
any offer to purchase Notes received by it on an agency basis.
Unless otherwise provided in a Pricing Supplement, payment of the purchase
price of the Notes will be required to be made in immediately available funds in
The City of New York on the date of settlement.
The Agents, whether acting as agent or principal, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The Company has agreed to indemnify the Agents against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that the Agents may be required to make in respect
thereof. The Agents may engage in transactions with, or perform services for,
the Company in the ordinary course of business.
The Agents may from time to time purchase and sell Notes in the secondary
market, but they are not obligated to do so, and there can be no assurance that
there will be a secondary market for the Notes or liquidity in the secondary
market if one develops. From time to time, each of the Agents may make a market
in the Notes, but no Agent is obligated to do so and may discontinue any
market-making at any time.
In addition to Notes being offered through the Agents as described herein,
other series of notes (including other series of Medium-Term Notes) that may
have terms identical or similar to the terms of the Notes may be concurrently
offered by the Company on a continuous basis both inside and outside the United
States pursuant to separate distribution agreements with the Agents or other
agents. Pursuant to such agreements, such agents may also purchase notes as
principal for their own account or for resale, and the Company may make direct
sales of notes on its own behalf. Any notes so offered and sold in excess of
certain amounts will reduce correspondingly the maximum aggregate principal
amount of Notes that may be offered by this Prospectus Supplement and the
accompanying Prospectus.
The offering of the Notes will conform to the requirements set forth in
applicable sections of Schedule E to the By-laws of the National Association of
Securities Dealers, Inc.
S-17
<PAGE> 18
EXPERTS
The Company only and consolidated financial statements of the Corporation
as of December 31, 1993 and 1992 and for each of the years in the three-year
period ended December 31, 1993 incorporated in this Prospectus Supplement and
Prospectus by reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1993, have been so incorporated in reliance on the report of
Price Waterhouse, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
LEGAL OPINIONS
The validity of the Notes is being passed upon for the Company by Catherine
M. Crowley, Senior Associate Counsel of the Company and the Bank, and on behalf
of the Agents by Brown & Wood, New York, New York. At June 30, 1994, Ms. Crowley
was the beneficial owner of or had options to purchase less than .01% of the
outstanding shares of Common Stock of the Company.
S-18
<PAGE> 19
PROSPECTUS
LOGO
$1,952,525,000
THE CHASE MANHATTAN CORPORATION
DEBT SECURITIES AND WARRANTS
------------------------
The Chase Manhattan Corporation (the "Company") may offer from time to time
pursuant hereto its unsecured debt securities which may be either Senior (the
"Senior Securities") or Subordinated (the "Subordinated Securities") in priority
of payment, consisting of debentures, notes or other evidences of indebtedness
(collectively, "Debt Securities"), or warrants to purchase Debt Securities (the
"Warrants"). The Debt Securities and Warrants are collectively referred to as
the "Securities". The Company may issue Securities at an aggregate initial
offering price which will result in proceeds to the Company of not more than
$1,952,525,000 or, if applicable, the equivalent thereof in any other currency
or currency units. The Securities may be offered as separate series in amounts,
at prices and on terms to be set forth in an accompanying Prospectus Supplement.
The terms of each series of Securities, including, where applicable, the
specific designation, priority, aggregate principal amount, authorized
denominations, maturity, interest rate or rates, interest payment dates, any
optional or mandatory redemption terms, any sinking fund provisions, any initial
public offering price, the proceeds to the Company, listing on any securities
exchange, and any other specific terms of or in connection with the offering and
sale of such series (the "Offered Securities") also will be set forth in any
accompanying Prospectus Supplement. As used herein, Securities shall include
securities denominated in United States dollars or, at the option of the
Company, if so specified in the applicable Prospectus Supplement, in any other
currency or composite of currencies or in amounts determined by reference to an
index.
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Securities will be
subordinated to all existing and future Senior Indebtedness of the Company, as
defined below. At December 31, 1992, the outstanding Senior Indebtedness of the
Company, exclusive of guarantees and other contingent obligations, was
approximately $4.1 billion. See "DESCRIPTION OF DEBT SECURITIES -- General".
When Warrants are offered, the Prospectus Supplement will set forth the
specific terms, such as, where applicable, the duration, offering price,
exercise price and detachability.
The Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See "PLAN
OF DISTRIBUTION". If any agents of the Company or any underwriters are involved
in the sale of any Offered Securities in respect of which this Prospectus is
being delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to the Company from such sale also will be set forth in a Prospectus
Supplement.
------------------------
THE OFFERED SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS OR THE PROSPECTUS SUPPLEMENT TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------------
THE DATE OF THIS PROSPECTUS IS MARCH 2, 1993.
<PAGE> 20
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Proxy statements, reports and other information concerning the
Company can be inspected and copied at the Commission's office at 450 Fifth
Street, N.W., Washington, D.C. 20549 and the Commission's Regional Offices in
New York (7 World Trade Center, New York, New York 10048) and Chicago
(Northwestern Atrium Center, 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661), and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Proxy statements, reports and other information
concerning the Company also may be inspected at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. This Prospectus
does not contain all the information set forth in the Registration Statement and
Exhibits thereto which the Company has filed with the Commission under the
Securities Act of 1933 (the "Act") and to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents of the
Company heretofore filed by it with the Commission:
(i) Annual Report on Form 10-K for the year ended December 31, 1992,
filed pursuant to Section 13 of the Exchange Act, including the portions of
THE CHASE MANHATTAN CORPORATION 1992 ANNUAL REPORT incorporated therein
(the "1992 Annual Report").
(ii) Current Reports on Form 8-K dated January 19, 1993, January 21,
1993 and January 26, 1993, filed pursuant to Section 13 of the Exchange
Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities of the Company offered hereby
shall be deemed to be incorporated by reference into this Prospectus. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, EXCEPT FOR THE EXHIBITS TO SUCH DOCUMENTS (OTHER THAN EXHIBITS
EXPRESSLY INCORPORATED BY REFERENCE THEREIN). WRITTEN REQUESTS SHOULD BE
DIRECTED TO:
THE CHASE MANHATTAN CORPORATION
1 CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10081
ATTENTION: OFFICE OF THE SECRETARY
TELEPHONE REQUESTS MAY BE DIRECTED TO (212) 552-6511.
------------------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement thereto are stated in United States dollars ("$",
"dollars" or "U.S.$").
2
<PAGE> 21
THE CHASE MANHATTAN CORPORATION
The Company is a bank holding company that was incorporated in 1969 and
whose principal subsidiary is The Chase Manhattan Bank (National Association)
(the "Bank"). As used herein, the term "Corporation" means the Company and its
consolidated subsidiaries and the term "Bank" means the Bank and its
subsidiaries.
In addition to the Bank, the Corporation holds investments in other
subsidiaries that provide a variety of financial services, including mortgage
banking, commercial and consumer financing, investment banking, securities
trading and investment advisory services. Over the last few years, the
Corporation has focused its business and marketing efforts on two types of
customers -- retail (individuals and small and medium-sized businesses) and
wholesale (primarily large corporations and institutions). The Corporation's
business groups serving retail customers are Consumer Products, Regional Banking
and Global Private Banking; those serving wholesale customers are Global
Corporate Finance, Global Risk Management and Transaction and Information
Services. In addition to these six core business groups, the Real Estate Finance
Sector manages the Corporation's loan portfolio related to the domestic
commercial real estate business and the LDC Portfolio Management group oversees
the Corporation's portfolio of cross-border extensions of credit to refinancing
countries.
The Company's ability to pay dividends on its preferred and common stock is
derived from several sources, including, among other sources, dividends from its
banking and nonbanking subsidiaries. The ability of the Company's banking
subsidiaries to pay dividends is subject to certain restrictions.
National banks are subject to various legal limitations which prohibit the
payment of dividends in certain circumstances and restrict the amount that may
be paid without the prior approval of the Office of the Comptroller of the
Currency ("OCC"). A national bank may not pay a dividend if that dividend would
exceed its net profits, as defined by national banking laws, then on hand.
Without the approval of the OCC, a national bank may not pay a dividend in any
given year in an amount greater than its net profits for that year combined with
its retained net profits from the preceding two years.
Under these limitations, at January 1, 1993, the Bank could declare
dividends in 1993 of approximately $370 million combined with an additional
amount equal to its retained net profits for 1993 up to the date of any dividend
declaration. Under applicable state and federal laws, The Chase Manhattan Bank
(USA) ("Chase USA") and Chase Bank of Maryland ("Chase Maryland") could declare
dividends in 1993 of approximately $740 million and $10 million, respectively,
combined with an additional amount equal to their respective retained net
profits for 1993 up to the date of any dividend declaration. In determining
whether, and to what extent, to pay dividends, each subsidiary bank also must
consider the effect of applicable risk-based capital guidelines and leverage
limitations.
The Company is a legal entity separate and distinct from the Bank and the
Company's other subsidiaries. There are various legal limitations on the extent
to which banks, such as the Bank, Chase USA and Chase Maryland, that are insured
by the Federal Deposit Insurance Corporation (the "FDIC"), can finance or
otherwise supply funds to certain of their affiliates. In particular, each such
bank that is a subsidiary of the Company is subject to certain restrictions on
any extensions of credit to, or other covered transactions, such as certain
purchases of assets, with, the Company or such affiliates. Such restrictions
prevent each such bank from lending to the Company and such affiliates unless
such extensions of credit are secured by U.S. Treasury obligations or other
specified collateral. Further, such secured extensions of credit by each such
bank are limited in amount as to the Company or any such affiliate to 10 percent
of such bank's capital and surplus and as to the Company and all such affiliates
in the aggregate to 20 percent of such bank's capital and surplus.
The Company's Executive Office is located at 1 Chase Manhattan Plaza, New
York, New York 10081 and its telephone number at said office is (212) 552-2222.
3
<PAGE> 22
REGULATORY DEVELOPMENTS
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was enacted, among other things, to increase funding for the FDIC's
Bank Insurance Fund, and establish standards for, and restrictions on,
activities of depository institutions based upon capital status and supervisory
evaluation by federal banking regulators. Federal banking agencies were required
to adopt various rules and regulations implementing FDICIA, some of which were
promulgated in 1992 and others have been or are to be proposed. A regulation
governing acceptance of brokered deposits became effective in June 1992. In
September 1992, the FDIC adopted rules implementing a transitional risk-based
deposit insurance system as of January 1, 1993; a final system will be put into
effect no later than January 1, 1994. Under this system, formerly uniform
assessments will now be calculated at differential rates based on an
institution's capital ratios and the FDIC's assignment of the institution to a
supervisory subgroup based upon a qualitative evaluation by the institution's
primary regulator.
On December 19, 1992, a prompt corrective action rule became effective,
establishing a series of mandatory and discretionary actions for federal
regulators to take based upon the capital category of an institution (well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized). A "well capitalized"
institution is one having a ratio of Tier 1 capital to total risk adjusted
assets (the "Tier 1 risk adjusted ratio") of 6% or more, a ratio of total
capital to total risk adjusted assets (the "Total risk adjusted ratio") of 10%
or more and a ratio of Tier 1 capital to total assets (the "leverage ratio") of
5% or more and is not otherwise subject to a capital directive to meet a
specific level for any capital measure. An "adequately capitalized" institution
is one having a Tier 1 risk adjusted ratio of 4% or more, a Total risk adjusted
ratio of 8% or more, a leverage ratio of 4% or more (3% for certain highly rated
institutions) and does not otherwise meet the well capitalized definition. The
three undercapitalized categories are based upon the amount by which an
institution's ratios fall below the ratios applicable to adequately capitalized
institutions. At December 31, 1992, the capital ratios of the Bank exceeded the
minimum capital ratios required of a "well capitalized" institution as defined
in the prompt corrective action rule. Also on December 19, 1992, a rule placing
limits on interbank liabilities was adopted, requiring insured financial
institutions to establish by June 1993 prudential standards for limiting
exposure to correspondent banks and restricting, as of June 1994, credit
exposure to less than adequately capitalized banks. On December 23, 1992, real
estate lending regulations were issued, requiring depository institutions to
adopt, by March 1993, real estate lending policies which address such
considerations as loan-to-value limits, loan administration procedures,
diversification standards and documentation, approval and reporting
requirements. A regulation governing advertising and disclosures of interest
rates, yields and fee schedules relating to consumer deposit accounts was
adopted in 1992 and requires compliance by June 1993.
The Company expects that the above rules and regulations will result in
increased costs to the Company, the Bank and their affiliates; however, based
upon its assessment of the overall impact of these rules and regulations, the
Company does not expect them to have a material effect on its operations.
Further rules proposed or to be proposed under FDICIA, governing such
matters as operational and managerial standards, auditing and reporting
requirements and capital requirements, are expected to be finalized and become
effective in 1993. Until the various regulations are adopted in final form,
however, it is difficult to assess how they will impact the Company's financial
condition or operations.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the
net proceeds from the sale of the Securities will be applied to general
corporate purposes, including, without limitation, advances to or investments in
banking and non-banking subsidiaries of the Company and the repayment of
commercial paper or other indebtedness of the Company.
The Company expects that it will, from time to time, engage in additional
private or public financings in character and amount to be determined as market
conditions warrant and as the need arises.
4
<PAGE> 23
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
the Corporation for each of the years in the five-year period ended December 31,
1992:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits...................... 1.4 x 1.3 x * * 1.5 x
Including Interest on Deposits...................... 1.2 1.1 * * 1.2
- ---------------
<FN>
* For the years ended December 31, 1990 and 1989, earnings did not cover fixed
charges by $91 million and $449 million, respectively, primarily as a result
of large additions to the reserve for possible credit losses and special
charges.
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income (loss) plus applicable income taxes and fixed charges, less equity in
undistributed earnings (losses) of unconsolidated subsidiaries and associated
companies. Fixed charges represent interest expense (exclusive of interest on
deposits in one case and inclusive of such interest in the other), amortization
of debt discount and issuance costs and one-third (the amount deemed to
represent an interest factor) of net rental expense under all lease commitments.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The Debt Securities may be issued from time to
time in one or more series. The particular terms of each series of Debt
Securities offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may apply to the Debt Securities so offered will be
described in the Prospectus Supplement relating to such Debt Securities.
The Senior Securities will be issued under an Indenture dated as of July 1,
1986, as supplemented by a First Supplemental Indenture dated as of November 1,
1990 and a Second Supplemental Indenture dated as of May 1, 1991 between the
Company and Bankers Trust Company, as Trustee (the "Senior Trustee") (said
Indenture as so supplemented, the "Senior Indenture"). The Subordinated
Securities will be issued under an Indenture dated as of May 1, 1987, as
supplemented by a First Supplemental Indenture dated as of May 1, 1991 and a
Second Supplemental Indenture dated as of October 1, 1992 between the Company
and Chemical Bank, as Trustee (the "Subordinated Trustee") (said Indenture as so
supplemented, the "Subordinated Indenture"). The Senior Indenture and the
Subordinated Indenture are hereinafter collectively referred to as the
"Indentures".
The statements under this caption relating to the Debt Securities are brief
summaries of certain provisions of the Indentures, do not purport to be complete
and are qualified in their entirety by reference to the applicable Indenture,
each of which is filed as an exhibit to the Registration Statement. Such
summaries encompass all the material provisions of the Debt Securities and their
related Indentures. All article and section references appearing herein are to
articles and sections of the applicable Indenture, and all capitalized terms not
defined herein have the meanings specified in such Indenture. Whenever terms
which are defined in an Indenture are referred to, it is intended that such
defined terms shall be incorporated herein by reference.
Because the Company is a holding company, its rights and the rights of its
creditors, including the Holders of the Debt Securities, to participate in the
assets of any subsidiary upon the latter's liquidation or recapitalization would
be subject to the prior claims of such subsidiary's creditors except to the
extent that the Company may itself be a creditor with recognized claims against
such subsidiary. There is no restriction in the Debt Securities or either
Indenture against the incurring of indebtedness by the Company, the Bank or any
other subsidiary of the Company.
The Senior Securities may be issued either in registered form ("Registered
Securities") or bearer form ("Bearer Securities") with coupons attached or both.
The Bearer Securities are being offered only to non-United States persons and to
offices of certain United States financial institutions located outside the
United States. The Subordinated Securities may only be issued in registered
form.
5
<PAGE> 24
GENERAL
Neither Indenture limits the amount of Debt Securities which may be issued
thereunder and Debt Securities may be issued thereunder up to the aggregate
principal amount which may be authorized from time to time by the Company. The
Senior Securities will be unsecured and will rank on a parity with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated
Securities will be unsecured and will be subordinate and junior in right of
payment to the Company's obligations to the Holders of Senior Indebtedness of
the Company. See "THE SUBORDINATED SECURITIES -- Subordination". Unless
otherwise set forth in the applicable Prospectus Supplement, neither the
Indentures nor the Debt Securities contain provisions which would afford holders
of Debt Securities protection in the event of a takeover, recapitalization or
similar restructuring involving the Company, which could adversely affect the
Debt Securities.
Reference is made to the Prospectus Supplement that will contain the
specific terms of the series of Debt Securities that are Offered Securities,
including where applicable: (i) the title and priority of the Offered
Securities; (ii) any limit on the aggregate principal amount of the Offered
Securities; (iii) the price or prices (expressed as a percentage of the
aggregate principal amount thereof) at which the Offered Securities will be
issued; (iv) the date or dates on which the Offered Securities will mature; (v)
the rate or rates (which may be fixed or variable) per annum at which the
Offered Securities will bear interest, if any, or the method of determining the
same, and the date or dates from which such interest, if any, will accrue; (vi)
the Interest Payment Dates, if any, for the interest payable on the Offered
Securities and the Regular Record Dates for the interest payable on Registered
Securities and whether any such payments may be postponed or deferred; (vii)
whether interest in respect of any portion of a temporary global Debt Security
representing the Offered Securities which is payable in respect of an Interest
Payment Date prior to the issuance of definitive Debt Securities will be
credited to the Persons entitled thereto on such Interest Payment Date; (viii)
any mandatory or optional sinking fund, amortization or analogous provisions;
(ix) the place or places where the principal of (and premium, if any) and
interest, if any, on the Offered Securities will be payable if other than solely
at the Principal Trust Office (as defined under "Payment and Paying Agents"
below); (x) the date, if any, after which and the price or prices at which the
Offered Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed, in whole or in part, and the other detailed terms and
provisions of any such optional or mandatory redemption provisions; (xi) whether
the Offered Securities are to be issuable as Registered Securities or Bearer
Securities or both, any restrictions applicable to the offer, sale or delivery
of Bearer Securities, whether the Offered Securities may be issued in global
form, and, if so, the circumstances under which such Offered Securities may be
exchanged for Offered Securities of like tenor issued in a different form, and
the name of the depository with respect to any global Offered Security; (xii)
any special provisions for the payment of additional amounts with respect to the
Offered Securities; (xiii) the denominations in which any Offered Securities
which are Registered Securities will be issuable if other than denominations of
$1,000 and any integral multiple thereof, and the denominations in which any
Offered Securities which are Bearer Securities will be issuable if other than
the denomination of $5,000; (xiv) the currency or currencies of payment of
principal of (and premium, if any) and interest, if any, on the Offered
Securities if other than dollars; (xv) any index, currency exchange rate,
commodity or derivative instrument price, or other publicly available data used
to determine the amount of payments of principal of (and premium, if any) and
interest, if any, on the Offered Securities; (xvi) any special United States tax
considerations applicable to any Offered Securities; (xvii) any special
provisions relating to defeasance of the Senior Securities; (xviii) any
conversion or exchange provisions; and (xix) any other terms of the Offered
Securities not inconsistent with the provisions of the applicable Indenture.
Debt Securities may be issued as Original Issue Discount Securities (as
defined in the applicable Indenture) to be sold at a substantial discount below
their principal amount. Special United States federal income tax considerations
applicable to Debt Securities issued at an original issue discount, including
Original Issue Discount Securities and other special considerations applicable
to such series of Debt Securities will be set forth in the Prospectus Supplement
relating thereto.
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REGISTRATION AND TRANSFER
Unless otherwise provided with respect to any series of Debt Securities,
the Debt Securities of each series will be issuable as Registered Securities. If
so provided with respect to a series of Senior Securities, however, Senior
Securities of such series will be issuable solely as Bearer Securities, or in a
combination of both Registered Securities and Bearer Securities. Unless
otherwise specified with respect to such series of Senior Securities, Senior
Securities issued in bearer form shall have interest coupons attached. (Senior
Indenture Section 201) Bearer Securities may not be offered, sold, resold or
delivered in connection with their original issuance in the United States or to
United States persons (each as defined below) other than offices located outside
the United States of certain United States financial institutions. Purchasers of
Bearer Securities will be subject to certification procedures, and may be
affected by certain limitations under United States tax laws. (Senior Indenture
Section 311) See "THE SENIOR SECURITIES -- Limitations on Issuance of Bearer
Securities".
If Senior Securities of any series are issuable as both Registered
Securities and Bearer Securities, at the option of the Holder and subject to the
terms of the Senior Indenture, (i) Bearer Securities (with all unmatured
coupons, except as provided below, and all matured coupons in default) of such
series will be exchangeable into an equal aggregate principal amount of
Registered Securities of the same series of any authorized denominations and
like tenor and (ii) Registered Securities of such series will be exchangeable
into an equal aggregate principal amount of Registered Securities of the same
series of different authorized denominations and like tenor. Bearer Securities
surrendered in exchange for Registered Securities between a Regular Record Date
and the relevant Interest Payment Date shall not be surrendered with the coupon
relating to such Interest Payment Date. (Senior Indenture Section 305) Bearer
Securities will not be issued in exchange for Registered Securities.
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for transfer (with the form of transfer
endorsed thereon duly executed), at the office of the Security Registrar and at
the office of any transfer agent appointed by the Company for such purpose with
respect to Debt Securities of a series and referred to in the applicable
Prospectus Supplement without service charge and upon payment of any taxes and
other governmental charges as described in the Indentures. Such transfer or
exchange will be effected upon the Security Registrar or such transfer agent, as
the case may be, being satisfied with the documents of title and identity of the
person making the request. (Indentures Section 305) Unless otherwise specified
in the applicable Prospectus Supplement with respect to any Offered Securities,
the Bank, acting through its office in The City of New York where at any
particular time its corporate agency business is conducted, is designated as
Security Registrar. (Indentures Section 1002)
In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange Debt Securities of any series
for a period of 15 days immediately preceding the date notice is given
identifying the serial numbers of the Debt Securities of that series called for
redemption; (ii) register the transfer of or exchange any Registered Security
called for redemption in whole or in part, except the unredeemed portion of any
Registered Security being redeemed in part; (Indentures Section 305) or (iii)
exchange any Bearer Security called for redemption, except to exchange such
Bearer Security for a Registered Security of that series which is immediately
surrendered for redemption. (Senior Indenture Section 305)
CONVERSION RIGHTS
The terms, if any, on which Debt Securities may be convertible into or
exchangeable for other securities of the Company will be set forth in the
Prospectus Supplement relating thereto.
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and interest, if any, on
Bearer Securities will be payable in the currency designated in the Prospectus
Supplement, subject to any applicable laws and regulations, at the offices of
such Paying Agents outside the United States as the Company may designate.
Unless otherwise indicated in the Prospectus Supplement, payment of interest on
Bearer Securities on any Interest Payment
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<PAGE> 26
Date will be made only against surrender of the coupon relating to such Interest
Payment Date. Unless otherwise indicated in the Prospectus Supplement, such
payment of principal of (and premium, if any) and interest, if any, on such
Bearer Security will be made by a check in the designated currency or, if
requested in writing by the Holder, by transfer to an account in the designated
currency maintained by the payee with a bank located outside the United States.
No payment with respect to any Bearer Security will be made at any office or
agency maintained by the Company in the United States nor will any such payment
be made by transfer to an account, or by mail to an address, in the United
States. Notwithstanding the foregoing, payments of principal of (and premium, if
any) and interest, if any, on Bearer Securities will be made in dollars at the
principal office of the Bank in The City of New York where at any particular
time its corporate trust business shall be administered (the "Principal Trust
Office") if payment of the full amount thereof in dollars at all offices or
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions. (Senior Indenture Sections 301,
1001, 1002)
Unless otherwise indicated in the Prospectus Supplement, payment of
principal (and premium, if any) on Registered Securities will be made in the
designated currency against surrender of such Registered Securities at the
Principal Trust Office or by check in the designated currency mailed to the
person in whose name such Debt Security is registered. Unless otherwise
indicated in the Prospectus Supplement, payment of any instalment of interest on
Registered Securities will be made to the person in whose name such Debt
Security is registered at the close of business on the Regular Record Date for
such interest. Unless otherwise indicated in the Prospectus Supplement, payments
of such interest will be made at the Principal Trust Office or, at the option of
the Company, by a check in the designated currency mailed to the Holder at such
Holder's registered address. (Indentures Sections 307, 1002)
The Bank acting through the Principal Trust Office has been designated as
the Company's Paying Agent in The City of New York. The Company may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts,
except that the Company will maintain at least one Paying Agent in The City of
New York for payments with respect to Registered Securities of each series and,
if Debt Securities of a series are issuable as Bearer Securities, at least one
Paying Agent in a city outside the United States where Senior Securities of such
series may be presented and surrendered for payment, provided that, if the
Senior Securities of such series are listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland Limited or the Luxembourg Stock Exchange or
any other stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent in London or
Luxembourg or any other required city located outside the United States, as the
case may be, for the Senior Securities of such series, so long as the Senior
Securities of such series are listed on such exchange. (Indentures Section 1002)
Any money paid by the Company to a Paying Agent for the payment of
principal of (and premium, if any) or interest on any Debt Security which remain
unclaimed at the end of two years after such principal (and premium, if any) or
interest has become due and payable will be repaid to the Company and the Holder
of such Debt Security or any coupon may thereafter look only to the Company for
payment thereof. (Indentures Section 1003)
PERMANENT GLOBAL DEBT SECURITIES
If any Debt Securities of a series are issuable in permanent global form,
the applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such permanent global Debt
Security may exchange such interests for Debt Securities of such series and of
like tenor and principal amount in any authorized form and denomination. No
Bearer Debt Security delivered in exchange for any portion of a permanent global
Debt Security shall be mailed or otherwise delivered to any location in the
United States or its possessions in connection with such exchange. (Senior
Indenture Section 1107) Principal of (and premium, if any) and interest, if any,
on any permanent global Debt Security will be payable in the manner described in
the applicable Prospectus Supplement. (Indentures Sections 305, 1002)
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RESTRICTIONS ON DISPOSITION OF BANK STOCK
The Senior Indenture provides that, so long as any Senior Securities issued
thereunder are Outstanding, the Company will not create a security interest in
more than 20% of the shares of Capital Stock of the Bank, or permit more than
20% of such shares (exclusive of directors' qualifying shares) to be held
directly or indirectly other than (i) by the Company or (ii) by any corporation
which is wholly-owned (except for directors' qualifying shares) by the Company.
(Section 1006) The term "Capital Stock of the Bank" is defined in the Senior
Indenture as the capital stock, par value $15.00 per share, of the Bank as such
capital stock exists on the date of execution of such Indenture and such other
shares of stock of the Bank as shall have ordinary power to vote for election of
directors of the Bank and shall not have any preference as to distribution of
assets upon any dissolution or winding-up of the Bank. (Section 101) The Senior
Indenture does not contain any restriction on sales by the Bank of its assets.
Although the Subordinated Indenture (Section 1005) contains a restriction on the
disposition of the Capital Stock of the Bank similar to that contained in the
Senior Indenture, in order to comply with certain regulatory interpretations,
such restriction was made inapplicable to any Subordinated Securities issued
after October 1, 1992.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each Indenture provides that the Company may, without the consent of the
Holders of any of the Outstanding Debt Securities under such Indenture,
consolidate with, merge into or transfer its assets substantially as an entirety
to any corporation organized and existing under the laws of the United States,
any State or the District of Columbia, provided that the successor corporation
assumes the Company's obligations on the Debt Securities and under the
Indenture, and provided that after giving effect to the transaction no Event of
Default shall have happened and be continuing and that certain other conditions
are met. (Indentures Section 801)
EXCHANGE OR REDEMPTION
Debt Securities may be subject to redemption and exchange in certain
events, in the manner, at the places and subject to the restrictions set forth
in or established pursuant to the applicable Indenture and set forth in the Debt
Securities and the Prospectus Supplement relating thereto.
NOTICES
Except as otherwise provided in the relevant Indenture, notices to Holders
of Bearer Securities will be given by publication at least twice in a daily
newspaper in The City of New York and, if Debt Securities of such series are
then listed on The Stock Exchange of the United Kingdom and the Republic of
Ireland Limited or the Luxembourg Stock Exchange or any other stock exchange
located outside the United States and such stock exchange shall so require, in a
daily newspaper in London or Luxembourg or any other required city located
outside the United States, as the case may be, or, if not practicable, elsewhere
in Europe. Notices to Holders of Registered Securities will be given by mail to
the addresses of such Holders as they appear in the Security Register.
(Indentures Sections 101, 106)
TITLE
Title to any Bearer Security, any coupons appertaining thereto and any
temporary global Debt Security will pass by delivery. The Company, the Trustee
thereof and any agent of the Company or of the Trustee thereof may treat the
bearer of any Bearer Security and the bearer of any coupon and the registered
owner of any Registered Security as the absolute owner thereof (whether or not
any such Debt Security or coupon shall be overdue and notwithstanding any notice
to the contrary) for the purpose of making payment and for all other purposes.
(Indentures Section 308)
REPLACEMENT OF SECURITIES AND COUPONS
Any Debt Security (including any coupons appertaining to Bearer Securities)
that becomes mutilated, destroyed, lost or stolen will be replaced by the
Company at the expense of the Holder upon delivery to the Trustee of the Debt
Security and any coupons appertaining thereto or evidence of the destruction,
loss or theft thereof satisfactory to the Company and such Trustee. An indemnity
satisfactory to such Trustee and the
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Company may be required before a replacement Debt Security or coupon will be
issued. (Indentures Section 306)
GOVERNING LAW
Each Indenture, the Debt Securities and the coupons will be governed by and
construed in accordance with the laws of the State of New York. (Senior
Indenture Section 113, Subordinated Indenture Section 112)
THE SENIOR SECURITIES
EVENTS OF DEFAULT AND WAIVER THEREOF
The Senior Indenture provides that the happening of one or more of the
following events shall constitute an Event of Default with respect to the Senior
Securities of any series: (i) default in the payment of interest on any Senior
Security of such series for a period of 30 days; (ii) default in the payment of
the principal of (or premium, if any, on) any Senior Security of such series;
(iii) default in performance, or breach, of any covenant or warranty of the
Company contained in the Senior Indenture for the benefit of Senior Securities
of such series for a period of 60 days after notice has been given to the
Company; (iv) certain events of insolvency of the Company; and (v) any other
Event of Default specifically provided for by the terms of the Senior Securities
of such series. Any additional Events of Default with respect to any series of
Senior Securities will be specified in the Prospectus Supplement relating to
such series. (Section 501) In case an Event of Default shall have occurred and
be continuing with respect to the Senior Securities of any series, the Senior
Trustee or the Holders of not less than 25% in principal amount of the Senior
Securities of such series then outstanding may declare the principal of the
Senior Securities of such series (or, if the Senior Securities of such series
were issued as discounted Senior Securities, such portion of the principal as
may be specified in the terms of that series) to be due and payable immediately,
but such declaration may be annulled, and certain past defaults waived, by the
Holders of not less than a majority in principal amount of the Senior Securities
of such series, upon the conditions provided in the Senior Indenture. (Sections
502, 513)
The Senior Indenture provides that, subject to the duty of the Senior
Trustee during a default to act with the required standard of care, the Senior
Trustee will be under no obligation to exercise any of its rights or powers
under the Senior Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Senior Trustee reasonable
indemnity. (Sections 601, 603) Subject to such provisions for the
indemnification of the Senior Trustee and certain other conditions, the Holders
of a majority in principal amount of the Outstanding Senior Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Senior Trustee, or exercising any
trust or power conferred on the Senior Trustee, with respect to the Senior
Securities of that series. (Section 512)
The Company is required to furnish to the Senior Trustee annually a
statement as to the performance by the Company of certain of its obligations
under the Senior Indenture and as to any default in such performance. (Section
1007)
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax and securities laws and
regulations, Bearer Securities may not be offered, sold, resold or delivered, as
part of their issuance at any time or otherwise until 40 days after the closing
date for those Senior Securities in the United States or to United States
persons (each as defined below) other than to offices of United States financial
institutions located outside the United States which agree in writing to comply
with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder,
and any underwriters, agents and dealers participating in the offering of Senior
Securities will agree that they will not offer any Bearer Securities for sale or
resale during the restricted period in the United States or to United States
persons (other than the financial institutions described above) nor deliver
Bearer Securities within the United States. Bearer Securities will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code."
As used herein, "United States person" means any citizen or resident of the
United States, any corporation or partnership or other entity created or
organized in or under the laws of the United States or any
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state thereof or any estate or trust the income of which is subject to United
States federal income taxation regardless of its source, and "United States"
means the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction. (Section 311)
TEMPORARY GLOBAL SENIOR SECURITIES
Pending the availability of definitive Senior Securities, Senior Securities
which are issuable as Bearer Securities initially may be represented by one or
more temporary global Senior Securities, without interest coupons, to be
deposited with a common depositary in London for the Euroclear System
("Euroclear") and Cedel S.A. for credit to the designated accounts against
certifications to the effect described below. Unless otherwise indicated in a
Prospectus Supplement, any such temporary global Senior Security will be
exchangeable only for definitive Bearer Securities. Such exchange may occur
following the availability of definitive forms of Bearer Securities, subject to
any further limitations described in the applicable Prospectus Supplement, and
only upon certification that such Bearer Securities are not being acquired by or
on behalf of a United States person (other than by or through certain foreign
branches of United States financial institutions) or by a person who has
purchased the Bearer Securities for resale within the United States or to United
States persons. No such Bearer Security delivered in exchange for a portion of a
temporary global Senior Security shall be mailed or otherwise delivered to any
location in the United States in connection with such exchange. (Sections 304,
311)
If so specified in the applicable Prospectus Supplement, interest in
respect of any portion of a temporary global Senior Security payable in respect
of an Interest Payment Date prior to the issuance of definitive Bearer
Securities will be paid to each of Euroclear and Cedel S.A. with respect to the
portion of such temporary global Senior Security held for its account. Each of
Euroclear and Cedel S.A. will undertake in such circumstances to credit such
interest received by it in respect of a temporary global Senior Security to the
respective accounts for which it holds such temporary global Senior Security
only upon receipt in each case of certification that, as of the relevant
Interest Payment Date, the portion of such temporary global Senior Security on
which such interest is to be so credited is either not beneficially owned by a
United States person (other than by or through certain foreign branches of
United States financial institutions) or by a person who has purchased the
Bearer Securities for resale to United States persons. (Sections 304, 311)
MODIFICATION AND WAIVER; MEETINGS
Modifications and amendments of the Senior Indenture may be made by the
Company and the Senior Trustee with the consent of the Holders of not less than
66 2/3% in principal amount of the Outstanding Senior Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Senior Security affected thereby, (i) change the Stated Maturity of
the principal of, or any instalment of principal of or interest on, any Senior
Security; (ii) reduce the principal amount of any Senior Security or change the
rate of interest or the method of calculation of interest thereon (except as
provided in the Senior Indenture or in such Senior Security), or any premium
payable upon the redemption thereof; (iii) change any obligation of the Company
to pay additional amounts pursuant to the Senior Indenture; (iv) reduce the
amount of principal of an Original Issue Discount Senior Security payable upon
acceleration of the maturity thereof; (v) adversely affect the right of
repayment, if any, at the option of the Holder thereof; (vi) change the coin or
currency in which any Senior Security or any premium or any interest thereon is
payable; (vii) impair the right to institute suit for the enforcement of any
payment on or with respect to any Senior Security; (viii) reduce the percentage
in principal amount of Outstanding Senior Securities of any series, the consent
of whose Holders is required for modification or amendment of the Senior
Indenture or for waiver of compliance with certain provisions of the Senior
Indenture or for waiver of certain defaults; (ix) change any obligation of the
Company to maintain an office or agency in the Borough of Manhattan, The City of
New York, or any obligation of the Company to maintain an office or agency
outside the United States pursuant to the Senior Indenture; or (x) modify
certain provisions of the Senior Indenture requiring consent of specified
percentages of Holders except to increase any such percentage. (Section 902)
The Holders of at least 66 2/3% in principal amount of the Outstanding
Senior Securities of each series may, on behalf of all Holders of Senior
Securities of that series, waive, insofar as that series is concerned,
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compliance by the Company with certain restrictive provisions of the Senior
Indenture. (Section 1008) The Holders of not less than a majority in principal
amount of the Outstanding Senior Securities of each series may, on behalf of the
Holders of all the Senior Securities of that series and any coupons appertaining
thereto, waive any past default under the Senior Indenture with respect to
Senior Securities of that series, except a default (i) in the payment of
principal of (or premium, if any) or interest, if any, on any Senior Security of
such series, or (ii) in respect of a covenant or provision of the Senior
Indenture which cannot be modified or amended without the consent of the Holder
of each Outstanding Senior Security of such series affected thereby. (Section
513)
The Senior Indenture contains provisions for convening meetings of the
Holders of Senior Securities of a series if Senior Securities of that series are
issuable as Bearer Securities. (Section 1301) A meeting may be called at any
time by the Trustee, and also, upon request, by the Company or the Holders of at
least 10% in principal amount of the Outstanding Senior Securities of such
series, in any such case upon notice given in accordance with "DESCRIPTION OF
DEBT SECURITIES -- Notices" above. (Section 1302) Except as limited by the
proviso in the second preceding paragraph, any resolution presented at a meeting
or adjourned meeting at which a quorum is present may be adopted by the
affirmative vote of the Holders of a majority in principal amount of the
Outstanding Senior Securities of that series; provided, however, that, except as
limited by the proviso in the second preceding paragraph, any resolution with
respect to any consent or waiver which may be given by the Holders of not less
than 66 2/3% in principal amount of the Outstanding Senior Securities of a
series may be adopted at a meeting or an adjourned meeting at which a quorum is
present only by the affirmative vote of the Holders of 66 2/3% in principal
amount of the Outstanding Senior Securities of that series; and provided,
further, that, except as limited by the proviso in the second preceding
paragraph, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which may be made, given or
taken by the Holders of a specified percentage, which is less than a majority,
in principal amount of the Outstanding Senior Securities of a series may be
adopted at a meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of the Holders of such specified percentage in
principal amount of the Outstanding Senior Securities of that series. Any
resolution passed or decision taken at any meeting of Holders of Senior
Securities of any series duly held in accordance with the Senior Indenture will
be binding on all Holders of Senior Securities of that series and the related
coupons. The quorum at any meeting called to adopt a resolution, and at any
reconvened meeting, will be persons holding or representing a majority in
principal amount of the Outstanding Senior Securities of a series; provided,
however, that if any action is to be taken at such meeting with respect to a
consent or waiver which may be given by the Holders of not less than 66 2/3% in
principal amount of the Outstanding Senior Securities of a series, the persons
entitled to vote 66 2/3% in principal amount of the Outstanding Senior
Securities of such series will constitute a quorum. (Section 1304)
DEFEASANCE
The Company may elect to defease and be discharged from its obligations
under the Senior Indenture with respect to Senior Securities of any series on
the terms and subject to the conditions contained in the Senior Indenture, by
(a) depositing irrevocably with the Senior Trustee as trust funds (i) in the
case of Senior Securities denominated in a foreign currency, money in such
foreign currency or Foreign Government Obligations (as defined below) of the
foreign government or governments issuing such foreign currency, in each case in
an amount which through the payment of interest, principal or premium, if any,
in respect thereof in accordance with their terms will provide (without any
reinvestment of such interest, principal or premium), not later than one
Business Day before the due date of any payment, money in such foreign currency
or (ii) in the case of Senior Securities denominated in U.S. dollars, U.S.
dollars or U.S. Government Obligations (as defined below), in each case in an
amount which through the payment of interest, principal or premium, if any, in
respect thereof in accordance with their terms will provide (without any
reinvestment of such interest, principal or premium), not later than one
Business Day before the due date of any payment, U.S. dollars or (iii) a
combination of U.S. dollars and U.S. Government Obligations or Foreign
Government Obligations, as applicable, sufficient to pay the principal of or
premium, if any, and interest, if any, on the Senior Securities of such series
as are due and (b) satisfying certain other conditions precedent specified in
the Senior Indenture. Such deposit and defeasance is conditioned among other
things upon the Company's delivery to the Senior
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Trustee of an opinion of counsel that the Holders of the Senior Securities of
such series will have no federal income tax consequences as a result of such
deposit and termination. (Article Fifteen)
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof. "Foreign Government Obligations" means securities denominated in a
foreign currency that are (i) direct obligations of a foreign government for the
payment of which its full faith and credit is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
a foreign government the payment of which is unconditionally guaranteed as a
full faith and credit obligation by such foreign government, which, in either
case, under clauses (i) or (ii) have, at the time of defeasance, a rating from a
nationally recognized rating agency in their country of issue or the United
States at least equivalent to the highest rating given to the Senior Securities
being defeased by Moody's Investors Service, Inc. or Standard & Poor's
Corporation at any time since the issuance of such Senior Securities, and are
not callable or redeemable at the option of the issuer thereof. (Section 101)
REGARDING THE SENIOR TRUSTEE
Bankers Trust Company, the Senior Trustee under the Senior Indenture, has
its principal corporate trust office at Four Albany Street, New York, New York
10015. Bankers Trust Company also serves as trustee under the indentures with
the Company relating to the Floating Rate Notes Due 1999, the Floating Rate
Notes Due 2009, convertible at the option of the holder into 8 1/2% Sinking Fund
Debentures Due 2009, the 8 1/2% Notes Due 1996, the 7 7/8% Notes Due 1997, the
7 3/8% Notes Due 1994, the fixed and floating rate Medium-Term Notes and Senior
Medium-Term Notes, Series A and Series B of the Company. The Corporation has
normal banking relationships with the Senior Trustee.
THE SUBORDINATED SECURITIES
EVENTS OF DEFAULT AND WAIVER THEREOF
The Subordinated Indenture defines an Event of Default with respect to
Subordinated Securities of any series as certain events involving the
bankruptcy, insolvency or reorganization of the Company and such other events as
may be established for any series of Subordinated Securities. (Section 501) In
order to comply with certain regulatory interpretations, this provision has been
modified to exclude from the definition of an Event of Default with respect to
any Subordinated Securities issued after October 1, 1992, the inability of the
Company to pay its debts as they become due and the appointment of a conservator
with respect to a depository institution subsidiary of the Company insured by
the FDIC or any successor agency. If an Event of Default with respect to
Subordinated Securities of any series at the time outstanding occurs and is
continuing, either the Subordinated Trustee or the Holders of not less than 25%
in aggregate principal amount of the Outstanding Subordinated Securities of that
series, by notice as provided in the Subordinated Indenture, may declare the
principal amount (or, if the Subordinated Securities of that series are Original
Issue Discount Subordinated Securities, such portion of the principal amount as
may be specified in the terms of that series) of all the Subordinated Securities
of that series to be due and payable immediately in cash. The foregoing
provision would be subject as to enforcement to the broad equity powers of a
federal bankruptcy court and to the determination by that court of the nature of
the rights of the Holders of the Subordinated Securities of such series. At any
time after a declaration of acceleration with respect to Subordinated Securities
of any series has been made, but before a judgment or decree for payment of the
money due has been obtained by the Subordinated Trustee, the Holders of a
majority aggregate principal amount of the Outstanding Subordinated Securities
of that series may, under certain circumstances, rescind and annul such
declaration. (Sections 502, 513)
The Subordinated Indenture does not provide for any right of acceleration
of the payment of principal of the Subordinated Securities of any series upon a
default in the payment (including any obligation to exchange Capital Securities
(as defined below) for Subordinated Securities of such series) of principal of
(or premium,
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if any) or interest, if any, on the Subordinated Securities of such series, or
in the performance of any covenant or agreement in the Subordinated Indenture or
in the terms of the Subordinated Securities of such series. In the event of any
such default (including a default in such payment or exchange at the stated
maturity date of the Subordinated Securities of such series), the Company will,
upon demand of the Subordinated Trustee, pay to it, for the benefit of the
Holders of the Subordinated Securities of such series, the whole amount then due
and payable on the Subordinated Securities of such series for principal (and
premium, if any) and interest, if any, including the delivery of any Capital
Securities then required to be delivered. The Subordinated Indenture provides
that if the Company fails to pay such amount (or to deliver any such Capital
Securities) forthwith upon such demand, the Subordinated Trustee may, among
other things, institute a judicial proceeding for the collection thereof or for
delivery of any Capital Securities required to be delivered. The Subordinated
Indenture also provides that if Capital Securities are exchangeable for
Subordinated Securities of such series and the Company shall fail to elect the
type of Capital Securities to be exchanged for Subordinated Securities of such
series on the relevant exchange date or shall fail to issue or deliver such
Capital Securities on or prior to such exchange date, the Company shall be
liable to the Holders of Subordinated Securities of such series for the payment
of the principal amount of Subordinated Securities of such series (or the
applicable percentage thereof) in cash on the earlier of the relevant proposed
exchange date or the stated maturity date of Subordinated Securities of such
series. The limitation on the right of acceleration described above permits
limited amounts of Subordinated Securities with certain original weighted
average maturities to qualify as supplementary or "Tier 2" capital of the
Company under current regulatory guidelines for bank holding companies. Any
additional Events of Default with respect to any series of Subordinated
Securities, including any related right of acceleration, will be specified in
the Prospectus Supplement relating to such series. (Section 503)
The Subordinated Indenture provides that, subject to the duty of the
Subordinated Trustee during the continuance of an Event of Default or Default to
act with the required standard of care, the Subordinated Trustee will be under
no obligation to exercise any of its rights or powers under the Subordinated
Indenture at the request or direction of any of the Holders of the Subordinated
Securities of any series, unless such Holders shall have offered to the
Subordinated Trustee reasonable indemnity. Subject to such provisions for the
indemnification of the Subordinated Trustee, the Holders of a majority in
aggregate principal amount of the Outstanding Subordinated Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Subordinated Trustee, or
exercising any trust or power conferred on the Subordinated Trustee, with
respect to the Subordinated Securities of such series.(Sections 512, 601, 603)
The Subordinated Indenture provides that notwithstanding any other
provision of the Subordinated Indenture, each Holder of Subordinated Securities
of any series shall have the right to institute suit for the enforcement of any
payment (including any delivery of Capital Securities to be exchanged for such
Subordinated Securities) of principal of (and premium, if any) and interest, if
any, on such Subordinated Securities on the respective stated maturity dates
expressed in such Subordinated Securities or on the Exchange Date or the
redemption date thereof, as the case may be, and that such right shall not be
impaired without the consent of such Holder. (Section 508)
The Holders of not less than a majority in principal amount of the
Outstanding Subordinated Securities of any series may, on behalf of the holders
of all Subordinated Securities of such series, waive any past default under the
Subordinated Indenture with respect to Subordinated Securities of such series
and its consequences, except a default (i) in the payment (including any
obligation to exchange Capital Securities for Subordinated Securities of such
series) of principal of (or premium, if any) or interest, if any, on any
Subordinated Security of such series, or (ii) in respect of a covenant or
provision of the Subordinated Indenture which cannot be modified or amended
without the consent of the Holder of each Outstanding Subordinated Security of
such series affected thereby. (Section 513)
The Company is required to file annually with the Subordinated Trustee a
written statement as to the existence or non-existence of defaults. (Section
1006)
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MODIFICATION AND WAIVER
The Subordinated Indenture provides that, with the consent of the Holders
of not less than 66 2/3% in principal amount of the Outstanding Subordinated
Securities of each series affected thereby, modifications and alterations of the
Subordinated Indenture may be made which affect the rights of the Holders of the
Subordinated Securities of such series, but no such modification or alteration
may be made without the consent of the Holder of each Subordinated Security
affected thereby which would (i) change the fixed maturity of the principal of,
or any instalment of principal of or interest on, any Subordinated Security, or
reduce the principal amount thereof or change the rate or rates (or the method
of ascertaining the rate or rates) of interest thereon (except as provided in
the Subordinated Indenture or in the Subordinated Securities of such series) or
any premium payable upon the redemption thereof, or reduce the portion of the
principal amount of any Original Issue Discount Subordinated Security payable
upon acceleration of the maturity thereof, or change any place where, or the
coin or currency in which, the principal amount of any Subordinated Security or
any premium or interest thereon is payable, or impair any right to institute
suit for the enforcement of any right to receive payment of the principal of
(and premium, if any) and interest, if any, on such Subordinated Security on the
respective stated maturity dates expressed in such Subordinated Security (or, in
the case of redemption, on the redemption date), or, if applicable, to have
delivered Capital Securities to be exchanged for such Subordinated Security and
to have such Capital Securities sold in a secondary offering to the extent
provided in such Subordinated Security and in the Subordinated Indenture, or
modify the provisions of the Subordinated Indenture with respect to the
subordination of the Subordinated Securities of such series in a manner adverse
to the Holders, or (ii) reduce the above-stated percentage in principal amount
of Outstanding Subordinated Securities of such series required to modify or
alter the Subordinated Indenture, or (iii) impair the right of any Holder of
Subordinated Securities of such series, subject to the provisions of the
Subordinated Indenture and of Subordinated Securities of such series, to receive
on any exchange date for Subordinated Securities of such series Capital
Securities with a market value equal to the amount established with respect to
the Securities of such series held by such Holder. (Sections 902, 1007)
EXCHANGEABILITY
If so provided in the applicable Prospectus Supplement, Subordinated
Securities may be exchangeable, either upon the occurrence of certain events
described in the applicable Prospectus Supplement or at the option of the
Company or both, for Capital Securities, and certain funds may be designated
with regard to the Subordinated Securities as Available Funds (as defined in the
applicable Prospectus Supplement) or Optional Available Funds (as defined in the
applicable Prospectus Supplement) for United States bank regulatory purposes. In
certain circumstances, Subordinated Securities may also provide Holders with the
right to elect to receive cash for Capital Securities issued in exchange for
Offered Subordinated Securities. The applicable Prospectus Supplement will set
forth the terms, conditions and restrictions relating to any of the foregoing
provisions applicable to a series of Subordinated Securities. (Sections 1301,
1310, 1401)
"Capital Securities" means any securities issued by the Company which
consist of any one of the following: (i) Common Stock (as defined in the
Subordinated Indenture), (ii) Perpetual Preferred Stock (as defined in the
Subordinated Indenture), or (iii) other securities which at the date of issuance
are securities of a type that may constitute capital of the Company in unlimited
amounts for which Subordinated Securities are permitted to be exchanged under
regulations of, or other determinations by, the Company's Primary Federal
Regulator (as defined in the applicable Prospectus Supplement), provided that if
any securities under (iii) are (a) issued in exchange for Subordinated
Securities under the Subordinated Indenture and (b) debt obligations for which
Capital Securities are exchangeable, the Company shall have received the
approval of the Company's Primary Federal Regulator for such issuance. Capital
Securities may have such terms, rights and preferences as may be determined by
the Company. (Section 101)
The staff of the Securities and Exchange Commission has advised that Rule
13e-4 and Rule 14e-1 of the Commission's rules and regulations relating to
tender offers, as currently interpreted and in effect, would be applicable to
the exchange of Capital Securities for Subordinated Securities and to the
related secondary offering. If the staff were to continue to take this position,
the Company intends, subject to its right to seek
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appropriate relief (which may or may not be available) from the application of
such rules, at the time of the exchange of Capital Securities for Subordinated
Securities and the related secondary offering to comply with Rule 13e-4 and Rule
14e-1 (or any successor rules), as then interpreted and in effect, and to afford
holders of Subordinated Securities all rights under, and to make all filings
required by, such rules (or successor rules).
SUBORDINATION
The obligation of the Company to make any payment on account of the
principal of (and premium, if any) and interest, if any, on the Subordinated
Securities will be subordinate and junior in right of payment to the Company's
obligations to the holders of Senior Indebtedness of the Company to the extent
described in the next paragraph. "Senior Indebtedness of the Company" is defined
in the Subordinated Indenture to mean the obligations of the Company to its
creditors other than the Holders of the Subordinated Securities, whether
outstanding on the date of execution of the Subordinated Indenture or thereafter
incurred, except obligations "ranking on a parity with the [Subordinated]
Securities" or "ranking junior to the [Subordinated] Securities" (as those terms
are defined in the Subordinated Indenture). The obligations of the Company in
respect of the Subordinated Securities will rank on a parity with the Company's
obligations in respect of the 7 3/8% Subordinated European Currency Unit Bonds
Due 1993, the Floating Rate Subordinated Notes Due 1995, the Floating Rate
Subordinated Notes Due 1997, the 7 1/2% Subordinated Notes Due 1997, the 10%
Subordinated Notes Due 1999, the 8% Subordinated Notes Due 1999, the 7 3/4%
Subordinated Notes due 1999, the Floating Rate Subordinated Notes Due 2000, the
9 3/8% Subordinated Notes Due 2001, the Floating Rate Subordinated Notes Due
2009, the 9 3/4% Subordinated Notes Due 2001, the 7.50% Subordinated Notes Due
2003 and the Subordinated Medium-Term Notes, Series A and Series B issued by the
Company and any other obligations of the Company ranking on a parity with the
Subordinated Securities. The obligations of the Company in respect of the
Subordinated Securities of any series will rank on a parity with the obligations
of the Company in respect of the Subordinated Securities of each other series.
(Section 1201)
In the case of any insolvency, receivership, conservatorship,
reorganization, readjustment of debt, marshalling of assets and liabilities or
similar proceedings or any liquidation or winding-up of or relating to the
Company as a whole, whether voluntary or involuntary, all obligations of the
Company to Holders of Senior Indebtedness of the Company shall be entitled to be
paid in full before any payment shall be made on account of the principal of
(and premium, if any) and interest, if any, on the Subordinated Securities. At
December 31, 1992, the outstanding Senior Indebtedness of the Company, exclusive
of guarantees and other contingent obligations, was approximately $4.1 billion.
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness of the Company, the Holders of the
Subordinated Securities, together with the holders of any obligations of the
Company ranking on a parity with the Subordinated Securities, shall be entitled
to be paid from the remaining assets of the Company the amounts at the time due
and owing on account of unpaid principal of (and premium, if any) and interest,
if any, on the Subordinated Securities before any payment or other distribution,
whether in cash, property or otherwise, shall be made on account of any capital
stock or any obligations of the Company ranking junior to the Subordinated
Securities. By reason of such subordination, in the event of the insolvency of
the Company, Holders of Senior Indebtedness of the Company may receive more,
ratably, and Holders of the Subordinated Securities having a claim pursuant to
the Subordinated Securities may receive less, ratably, than the other creditors
of the Company. Such subordination will not prevent the occurrence of any Event
of Default in respect of the Subordinated Securities. See "-- Events of Default
and Waiver Thereof" for limitations on the right of acceleration of Subordinated
Securities that qualify as capital under current regulatory guidelines. (Section
1201)
REGARDING THE SUBORDINATED TRUSTEE
Chemical Bank, the Subordinated Trustee under the Subordinated Indenture,
has its principal corporate trust office at 450 West 33rd Street, New York, New
York 10001. Chemical Bank serves as Trustee with respect to the 7 1/2%
Subordinated Notes Due 1997, the 10% Subordinated Notes Due 1999, the 8%
Subordinated Notes Due 1999, the 7 3/4% Subordinated Notes due 1999, the 9 3/8%
Subordinated Notes Due 2001, the 9 3/4% Subordinated Notes Due 2001, the 7.50%
Subordinated Notes Due 2003 and the Subordinated Medium-Term Notes, Series A and
Series B of the Company, which are currently outstanding under the
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Subordinated Indenture. Chemical Bank also serves as trustee under the indenture
with the Company relating to the Floating Rate Subordinated Notes Due 1995. The
Corporation has normal banking relationships with the Subordinated Trustee.
DESCRIPTION OF CAPITAL SECURITIES
The following Capital Securities, if so indicated in a Prospectus
Supplement relating to the Offered Securities, may be issuable in exchange for a
series of Subordinated Securities, or upon conversion thereof. The Capital
Securities which may be exchanged for Subordinated Securities, inter alia may
consist of Common Stock and Preferred Stock.
COMMON STOCK
The Company is authorized to issue 500,000,000 shares of Common Stock, par
value $2.00 per share ("Common Stock"). At December 31, 1992, 156,096,382 shares
of Common Stock were outstanding, 3,960,615 shares of Common Stock were reserved
for issuance pursuant to the Company's Floating Rate Subordinated Notes Due 1996
(which were subsequently redeemed on January 13, 1993), 12,286,851 shares of
Common Stock were reserved for issuance pursuant to the Chase Lincoln First Bank
N.A. 1982 Incentive Stock Plan, The Chase Manhattan 1982 Long-Term Incentive
Plan and The Chase Manhattan 1987 Long-Term Incentive Plan and 11,585,991 shares
of Common Stock were reserved for issuance pursuant to the Company's Dividend
Reinvestment and Stock Purchase Plan.
Holders of shares of Common Stock are entitled to one vote per share and,
subject to the rights, if any, of holders of shares of the outstanding series of
preferred stock of the Company (as described below under "Preferred Stock"),
have equal rights to participate in dividends when declared and, in the event of
liquidation, in the net assets of the Company available for distribution to
stockholders. The Company may not declare any dividends on, or make any payment
on account of the purchase, redemption or other retirement of, its Common Stock
unless full cumulative dividends, where applicable, have been paid or declared
and set apart for payment upon all outstanding shares of the preferred stock of
the Company and the Company is not in default or in arrears with respect to any
sinking or other analogous fund or any call for tender obligations or any other
agreement for the purchase, redemption or other retirement of any shares of the
preferred stock of the Company. The holders of shares of Common Stock do not
have redemption or sinking fund rights, and none of the holders of shares of
Common Stock is entitled to preemptive rights or preferential rights to
subscribe for shares of Common Stock or any other securities of the Company,
except for certain Junior Participating Preferred Stock Purchase Rights that
attached to the Common Stock on February 27, 1989 and which are attached to any
shares of Common Stock issued after that date, which are exercisable or
transferable separately from shares of Common Stock only upon the occurrence of
certain events including the acquisition by a person or group of affiliated or
associated persons of 20% or more of the outstanding shares of Common Stock of
the Company. Such rights are more fully described in the 1992 Annual Report of
the Company and will be more fully described in any Prospectus Supplement
applicable to Debt Securities that are convertible or exchangeable into Common
Stock. Shares of Common Stock are fully paid and nonassessable; however, federal
law (12 U.S.C. sec. 55) provides for the enforcement of any pro rata assessment
of stockholders of a national bank to cover impairment of capital by sale, to
the extent necessary, of the stock of any assessed stockholder failing to pay
his assessment, and the Company, as the stockholder of the Bank and other
national banking subsidiaries, is subject to such assessment and sale. The
shares of Common Stock are listed on the New York Stock Exchange. The transfer
agent and registrar for the Common Stock of the Company is Mellon Securities
Trust Company.
The Restated Certificate of Incorporation of the Company ("Certificate of
Incorporation") includes a "fair price provision" that would require a 75%
stockholder vote for approval of certain business combinations, including
certain mergers, asset sales, security issuances, recapitalizations and
liquidations, involving the Company or its subsidiaries and certain acquiring
persons (namely, a person, entity or specified group which beneficially owns
more than 10% of the voting stock of the Company), unless the "fair price" and
other procedural requirements of the provision are met, or unless approved by a
majority of directors who are not affiliated with the acquiring party. This
provision includes a requirement of a 75% stockholder vote to amend or repeal
it. The Certificate of Incorporation also provides for classification of the
Company's Board of
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Directors into three classes and includes related provisions requiring (i)
advance notice of stockholder nominations of directors, (ii) limitations on
filling newly created directorships and vacancies, (iii) removal of directors
only for cause and by vote of at least 75% of the shares entitled to vote, (iv)
a limitation on action by written consent of holders of Common Stock other than
at a meeting of stockholders and (v) a requirement of a 75% stockholder vote to
amend or repeal such provisions.
PREFERRED STOCK
Under the Certificate of Incorporation, the Board of Directors of the
Company is authorized to issue up to 100,000,000 shares of Preferred Stock,
without par value, in one or more series, with such voting powers, full or
limited but not to exceed one vote per share, or without voting powers, and with
such designations, preferences and relative, participating, optional or other
voting rights, and qualifications, limitations or restrictions thereof, as shall
be stated and expressed in the resolution or resolutions of the Board of
Directors providing for the issue thereof.
At December 31, 1992, the following series of Preferred Stock were
outstanding: Preferred Stock, 6 3/4% Series B, with a stated value of $100 per
share; Preferred Stock, 7.60% Series C, with a stated value of $100 per share;
Preferred Stock, Floating Rate Series E, with a stated value of $50 per share;
Preferred Stock, Floating Rate Series F, with a stated value of $50 per share;
Preferred Stock, 10 1/2% Series G, with a stated value of $25 per share;
Preferred Stock, 9.76% Series H, with a stated value of $25 per share; Preferred
Stock, 10.84% Series I, with a stated value of $25 per share; Preferred Stock,
9.08% Series J, with stated value of $25 per share; Preferred Stock, 8- 1/2%
Series K, with a stated value of $25 per share; and Preferred Stock, 8.32%
Series L, with a stated value of $25 per share. On January 28, 1993, the Company
issued 6,900,000 shares of Preferred Stock, 8.40% Series M, with a stated value
of $25 per share.
Holders of shares of Preferred Stock generally have only contingent voting
rights with respect to the election of directors. In the event of liquidation,
before any distribution to the holders of Common Stock, the holders of the
shares of each outstanding series of Preferred Stock generally are entitled to
receive an amount equal to the stated value of such shares, plus accrued and
unpaid dividends. At December 31, 1992, such preferential amounts were
approximately $1.5 billion in the aggregate, exclusive of any dividend accruals.
OTHER CAPITAL SECURITIES
The Company may also select any other securities to be exchanged for
Subordinated Securities or to be sold and the proceeds of such sale to be
Available Funds or Optional Available Funds which qualify at the date of
issuance as Capital Securities as determined by the Company's Primary Federal
Regulator, provided that if any such other securities are issued in exchange for
Subordinated Securities and are debt obligations for which Capital Securities
may be exchanged, the Company will have received the approval of its Primary
Federal Regulator for such issuance. Such other Capital Securities will have
such terms as may be determined by the Company and approved by its Board of
Directors.
DESCRIPTION OF WARRANTS
The Company may issue, together with any Debt Securities of a series
offered or separately, Warrants for the purchase of other Debt Securities of
such series. The Warrants are to be issued under Warrant Agreements (each a
"Warrant Agreement") to be entered into between the Company and a bank or trust
company, as Warrant Agent (the "Warrant Agent"), all as set forth in the
applicable Prospectus Supplement relating to the particular issue of Warrants. A
copy of the form of Warrant Agreement, including the form of Warrant
Certificates representing the Warrants (the "Warrant Certificates"), reflecting
the alternative provisions to be included in the Warrant Agreements that will be
entered into with respect to particular offerings of Warrants, is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following summaries of certain provisions of the Warrant Agreement and the
Warrant Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all provisions of the Warrant
Agreement and the Warrant Certificates, respectively, including the definition
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therein of certain terms. Such summaries encompass all the material provisions
contained in the form of Warrant Agreement and the form of Warrant Certificate.
The applicable Prospectus Supplement will describe the following terms of
the Warrants being offered thereby, the Warrant Agreement relating to such
Warrants and the Warrant Certificates representing such Warrants: (i) the number
of Warrants offered; (ii) the designation, aggregate principal amount and terms
of the Debt Securities purchasable upon exercise of such Warrants; (iii) the
designation and terms of any related Debt Securities with which such Warrants
are issued and the number of such Warrants issued with each such Debt Security;
(iv) the date, if any, on and after which such Warrants and the related Debt
Securities will be separately transferable; (v) the principal amount of Debt
Securities purchasable upon exercise of one Warrant and the price at which such
principal amount of Debt Securities may be purchased upon such exercise; (vi)
the date on which the right to exercise the Warrants shall commence and the date
on which such right shall expire (the "Expiration Date"); (vii) the form in
which the Warrants represented by the Warrant Certificates will be issued and
where the Warrants represented by Warrant Certificates may be transferred and
registered; and (viii) any other terms of the Warrants. The applicable
Prospectus Supplement will contain a summary of the United States federal income
tax, accounting and other consequences with respect to the Warrants.
If issued in definitive form, Warrant Certificates will be exchangeable for
new Warrant Certificates of authorized denominations at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement. Prior to the exercise of Warrants, holders of such
Warrants will not have any of the rights of Holders of the Debt Securities
purchasable upon such exercise and will not be entitled to payments of principal
of (or premium, if any) or interest, if any, on the Debt Securities purchasable
upon such exercise.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Debt Securities at such exercise price as shall in each case be set forth in, or
calculable from, the Prospectus Supplement relating to such Warrant. Warrants
may be exercised at any time up to the close of business on the Expiration Date
set forth in the Prospectus Supplement relating to such Warrants. After the
close of business on the Expiration Date (or such later date to which such
Expiration Date may be extended by the Company), unexercised Warrants will
become void.
Warrants may be exercised by delivery to the Warrant Agent of payment as
provided in the applicable Prospectus Supplement of the amount required to
purchase the Debt Securities purchasable upon such exercise together with
certain information set forth on the reverse side of the Warrant Certificate.
Warrants will be deemed to have been exercised upon receipt of the exercise
price, subject to the receipt, within five business days, of the Warrant
Certificate evidencing such Warrants. Upon receipt of such payment and the
Warrant Certificate properly completed and duly exercised at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, issue and
deliver pursuant to the applicable Indenture the Debt Securities purchasable
upon such exercise. If fewer than all of the Warrants represented by such
Warrant Certificate are exercised, a new Warrant Certificate will be issued for
the remaining amount of outstanding Warrants.
PLAN OF DISTRIBUTION
The Company may sell Securities to one or more underwriters for public
offering and sale by them or may sell Securities to investors directly or
through agents which solicit or receive offers on behalf of the Company or
through dealers or through a combination of any such methods of sale. Any such
underwriter or agent involved in the offer and sale of the Offered Securities
will be named in an accompanying Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company also may offer and sell the Offered Securities in
exchange for one
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or more of its outstanding issues of debt or convertible debt securities. The
Company also may, from time to time, authorize agents acting on a best efforts
basis as agents of the Company to solicit or receive offers to purchase the
Offered Securities upon the terms and conditions as are set forth in the
accompanying Prospectus Supplement. In connection with the sale of Offered
Securities, underwriters or agents may be deemed to have received compensation
from the Company in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of Offered Securities for whom they may
act as agents. Underwriters may sell Offered Securities to or through dealers,
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Any compensation paid by the Company to underwriters or agents in
connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers, are
set forth in an accompanying Prospectus Supplement. Underwriters, dealers and
agents participating in a distribution of the Offered Securities (including
agents only soliciting or receiving offers to purchase Offered Securities on
behalf of the Company) may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions,
under the Act. Underwriters, dealers and agents may be entitled, under
agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Act. The Company may agree to reimburse underwriters or agents for certain
expenses incurred in connection with the distribution of the Offered Securities.
If so indicated in an accompanying Prospectus Supplement, the Company will
authorize agents or dealers acting as the Company's agents to solicit offers by
certain institutions to purchase Offered Securities from the Company at the
public offering price set forth in such Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than, and the aggregate principal amount of Offered
Securities sold pursuant to Contracts shall be not less nor more than, the
respective amounts stated in such Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Offered Securities covered by
its Contracts shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject, and
(ii) if the Offered Securities are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of the Offered
Securities less the principal amount thereof covered by Contracts.
Each underwriter, dealer and agent participating in the distribution of any
Offered Securities which are issuable as Bearer Securities will agree that it
will not offer, sell or deliver, directly or indirectly, Bearer Securities in
the United States or to United States persons (other than qualifying financial
institutions), in connection with the original issuance of the Offered
Securities. See "THE SENIOR SECURITIES -- Limitations on Issuance of Bearer
Securities".
Offers of the Securities may not be made in Great Britain except to persons
whose ordinary business it is to buy or sell shares or debentures, whether as
principal or agent, and this Prospectus and any Prospectus Supplement or any
other offering material relating to the Securities may not be distributed in or
from Great Britain except to persons whose business involves the acquisition and
disposal, or the holding, of securities, whether as principal or as agent.
Certain of the underwriters, dealers or agents and their associates may be
customers of, engage in transactions with, and perform services for, the Company
in the ordinary course of business.
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Each offering of the Offered Securities will be conducted in compliance
with any applicable requirements of Schedule E to the By-Laws of the National
Association of Securities Dealers, Inc. This Prospectus may be used by an
affiliate of the Company in connection with offers and sales related to market
making activities. Any such affiliate may act as principal or agent in any such
transactions. Such sales will be made at prices related to the prevailing market
prices at the time of sale.
EXPERTS
The Company only and consolidated financial statements of the Corporation
as of December 31, 1992 and 1991 and for each of the years in the three-year
period ended December 31, 1992 incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K for the year ended December 31, 1992,
have been so incorporated in reliance on the report of Price Waterhouse,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL OPINION
The legality of the Securities offered hereby will be passed upon for the
Company by Robert B. Adams, Senior Vice President and Assistant General Counsel
of the Company and the Bank. As of December 31, 1992, Mr. Adams was the
beneficial owner of or had options to purchase less than 0.02% of the
outstanding shares of Common Stock of the Company.
21
<PAGE> 40
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NO DEALER, SALESMAN OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY
PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE AGENTS. THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY PRICING
SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY IN
ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
(INCLUDING ANY PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS NOT BEEN ANY CHANGE IN THE FACTS CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY PRICING SUPPLEMENT) OR THE
ACCOMPANYING PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-------
<S> <C>
Summary Financial Data................ S-3
Ratios of Earnings to Fixed Charges... S-4
Certain Regulatory Matters............ S-4
Description of Notes.................. S-4
United States Taxation................ S-11
Plan of Distribution of Notes......... S-17
Experts............................... S-18
Legal Opinions........................ S-18
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Chase Manhattan Corporation....... 3
Regulatory Developments............... 4
Use of Proceeds....................... 4
Ratios of Earnings to Fixed Charges... 5
Description of Debt Securities........ 5
The Senior Securities................. 10
The Subordinated Securities........... 13
Description of Capital Securities..... 17
Description of Warrants............... 18
Plan of Distribution.................. 19
Experts............................... 21
Legal Opinion......................... 21
</TABLE>
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[logo]
$200,000,000
THE CHASE MANHATTAN
CORPORATION
SENIOR MEDIUM-TERM NOTES,
SERIES C
AND
SUBORDINATED MEDIUM-TERM NOTES,
SERIES C
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PROSPECTUS SUPPLEMENT
AUGUST 11, 1994
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SMITH BARNEY INC.
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