<PAGE> 1
Pursuant to Rule 424(b)(3)
Registration Nos. 33-55295 and 33-58144
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 23, 1994)
$2,627,525,000
THE CHASE MANHATTAN CORPORATION
SENIOR MEDIUM-TERM NOTES, SERIES B AND
SUBORDINATED MEDIUM-TERM NOTES, SERIES B
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 $2,627,525,000 aggregate initial public
offering price of its Senior Medium-Term Notes, Series B (the "Senior Notes")
and Subordinated Medium-Term Notes, Series B (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 September 30,
1994, the outstanding Senior Indebtedness of the Company, exclusive of
guarantees and other contingent obligations, was approximately $2.8 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 except in the event that certain additional
payments are required to be made with respect to a Note and then only in certain
specified circumstances. See "DESCRIPTION OF NOTES--Tax Redemption" in this
Prospectus Supplement. Each Note may be denominated in U.S. dollars, other
currencies or composite currencies, such as the European Currency Unit ("ECU"),
as may be described in an applicable Pricing Supplement (the "Specified
Currency"). See "FOREIGN CURRENCY RISKS" in this Prospectus Supplement. Unless
otherwise specified in the applicable Pricing Supplement, the Notes will be
issued in denominations of $1,000 or any integral multiple thereof or the amount
in other currencies or composite currencies set forth herein (see "DESCRIPTION
OF NOTES--General" in this Prospectus Supplement) or in an applicable Pricing
Supplement.
The interest rate or interest rate formula and Specified Currency 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.
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued in fully registered form and will be represented by a global
security registered either in the name of a nominee of The Depository Trust
Company ("DTC") relating to the Notes held by or through participants in DTC or
in the name of a common depositary for Morgan Guaranty Trust Company of New
York, Brussels office, as operator for the Euroclear System ("Euroclear"), and
Cedel, S.A. ("Cedel") relating to Notes held by participants in Euroclear and
Cedel. Beneficial interests in Notes in book-entry form will be shown on, and
transfers thereof will be effected only through, records maintained by DTC,
Euroclear and Cedel and their respective participants. 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
Notes in registered form outside the United States, and the sale of such Notes
will reduce the amount of Notes that may be sold hereunder. Certain of the Notes
to be sold outside the United States may be listed on the Luxembourg Stock
Exchange. In such event, notice of such listing will be provided to initial
purchasers of such Notes in the applicable pricing supplement.
------------------------
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% .125% - .750% 99.875% - 99.250%
- ------------------------------------------------------------------------------------------------------------------------
Total(4)................... $2,627,525,000 $3,284,406.25 - $19,706,437.50 $2,624,240,593.75 - 2,607,818,562.50
========================================================================================================================
<FN>
(1) Unless otherwise specified in the applicable Pricing Supplement, each Note
will be issued at 100% of its principal amount.
(2) Chase Securities, Inc., Bear, Stearns & Co. Inc., CS First Boston
Corporation, Goldman, Sachs & Co., Lehman Brothers, Lehman Brothers Inc.
(including its affiliate Lehman Government Securities Inc.), Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley &
Co. Incorporated, and Salomon Brothers Inc (each, an "Agent" and
collectively, the "Agents"), will purchase the Notes, as principal, from the
Company, for resale to investors and other purchasers at varying prices
relating to prevailing market prices at the time of resale as determined by
the applicable Agent, or if so specified in an applicable Pricing
Supplement, for resale at a fixed public offering price. Unless otherwise
specified in the applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of the
principal amount thereof less a percentage of the principal amount equal to
the commission applicable to an agency sale (as described below) of a Note
of identical maturity. 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 a commission to each such Agent, ranging from .125% to .750% of the
principal amount of a Note, depending upon its maturity, sold through such
Agent. See "PLAN OF DISTRIBUTION OF NOTES."
(3) Before deducting expenses payable by the Company estimated at $575,000.
(4) Or the equivalent thereof in one or more currencies or composite currencies
other than U.S. dollars.
</TABLE>
------------------------
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.
------------------------
CHASE SECURITIES, INC.
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
------------------------
The date of this Prospectus Supplement is December 7, 1994.
<PAGE> 2
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 (to be sold in the United States
pursuant to this Prospectus Supplement and to be sold outside the United States
by means of a separate prospectus supplement) 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 (to be sold in the United States pursuant to
this Prospectus Supplement and to be sold outside the United States by means of
a separate prospectus supplement) 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"). The Senior Indenture and the Subordinated Indenture are
collectively referred to herein 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 Debt Securities authorized for
issuance is $2,627,525,000. 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 $2,627,525,000 (or its equivalent in other currencies or composite
currencies), subject to reduction as a result of future sales of the Company's
Senior Notes and Subordinated Notes outside the United States and the future
sale of 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 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 September 30, 1994, the outstanding Senior
Indebtedness of the Company, exclusive of guarantees and other contingent
obligations of the Company, was approximately $2.8 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.
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<PAGE> 3
The Notes will be offered on a continuous basis and will mature on any day
nine months or longer from the date of issue, as selected by the purchaser and
agreed to by the Company.
Unless otherwise indicated in the Pricing Supplement, the Notes will bear
interest at a fixed rate, or at floating rates determined by reference to one or
more of the Base Rates (as hereinafter defined) described below, which may be
adjusted by a Spread and/or Spread Multiplier (as hereinafter defined)
applicable to such Floating Rate Notes, 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.
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 such denominations as may be agreed between the
Company and the relevant purchasers and as indicated in the relevant Pricing
Supplements, except that the minimum denomination of each Note denominated in
U.S. dollars, denominated in sterling (or where the purchase price shall be
received in the United Kingdom) or denominated in Yen shall be $1,000, 100,000
pounds sterling or 1,000,000 yen, respectively, or such other minimum
denomination as may be allowed or required from time to time by any relevant
central bank or equivalent governmental body, however designated, or by any
laws or regulations applicable to the Notes or to the relevant Specified
Currency. The Notes will be issued in integral multiples of 1,000 units of any
Specified Currency in excess of their minimum denominations.
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.
With respect to Notes issued in book-entry form and represented by global
Notes registered in the name of DTC, Euroclear or Cedel or their respective
nominees, all references herein to "registered holders" or "holders" will be to
DTC, Euroclear or Cedel or their respective nominees, and not to owners of
beneficial interests in such Notes, except as otherwise provided. See
"Book-Entry Notes" below.
S-3
<PAGE> 4
In the case of a Note denominated in a Specified Currency other than U.S.
dollars, unless the holder has elected otherwise, payment in respect of such a
Note shall be made in U.S. dollars based upon the exchange rate as determined by
the Exchange Rate Agent (as hereinafter defined) based on the highest bid
quotation for U.S. dollars received by such Exchange Rate Agent at approximately
11:00 A.M., New York City time, on the second Business Day (as hereinafter
defined) preceding the applicable payment date (or, if no such rate is quoted on
such date, the last date on which such rate was quoted), from three recognized
foreign exchange dealers in The City of New York selected by the Exchange Rate
Agent and approved by the Company (one of which may be the Exchange Rate Agent)
for the purchase by the quoting dealer, for settlement on such payment date, of
the aggregate amount of the Specified Currency payable on such payment date in
respect of all Notes denominated in such Specified Currency. All currency
exchange costs will be borne by the holders of such Notes by deductions from
such payments. If no such bid quotations are available, payments will be made in
the Specified Currency, unless such Specified Currency is unavailable due to the
imposition of exchange controls or to other circumstances beyond the Company's
control, in which case payment will be made as described under "FOREIGN CURRENCY
RISKS -- Payment Currency" in this Prospectus Supplement.
BOOK-ENTRY NOTES
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"). Any Notes
issued in book-entry form will be represented by (i) a Global Book-Entry Note (a
"DTC Global Note") deposited with The Chase Manhattan Bank, N.A. (the "Bank"),
as custodian (the "Custodian") for DTC, and registered in the name of Cede &
Co., as nominee of DTC, and/or (ii) a Global Book-Entry Note (a "Euroclear/Cedel
Global Note") deposited with the Bank, as common depositary (the "Common
Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as
operator of Euroclear, and Cedel.
Ownership of beneficial interests in a DTC Global Note or a Euroclear/Cedel
Global Note will be shown on, and the transfer of such interests will be
effected only through, records maintained by DTC, Euroclear or Cedel, as the
case may be. 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 DTC Global Note or
a Euroclear/Cedel Global Note.
So long as DTC or its nominee for a DTC Global Note, or Euroclear or Cedel
or the nominee of the Common Depositary for a Euroclear/Cedel Global Note, is
the registered holder of its respective Global Book-Entry Note, DTC or its
nominee or Euroclear or Cedel or the nominee of the Common Depositary, as the
case may be, 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 DTC Global Note
through DTC ("DTC Holders") will occur in accordance with DTC rules. Transfers
between persons owning beneficial interests in a Euroclear/Cedel Global Note
through Euroclear or Cedel ("Euroclear Holders" or "Cedel Holders,"
respectively) will occur in accordance with the applicable rules and operating
procedures of Euroclear or Cedel, as the case may be. Transfers between DTC
Holders, on the one hand, and Euroclear Holders or Cedel Holders on the other,
of Global Book-Entry Notes will be effected in accordance with DTC, Euroclear or
Cedel rules by the Bank as Common Depositary for Euroclear or Cedel and as
Custodian for DTC; however, such transactions will be effected on a
free-of-payment basis only, not on a delivery-against-payment
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<PAGE> 5
basis, and will require delivery of instructions to DTC, Euroclear or Cedel, as
the case may be, by the counterparty on any such system in accordance with its
rules and procedures and within its established deadlines. DTC, Euroclear or
Cedel will, if the transaction meets its settlement requirements, deliver
instructions to the Bank as Common Depositary and as Custodian for DTC to take
action to effect final settlement on its behalf by delivering or receiving Notes
in DTC, Euroclear or Cedel, as the case may be. DTC Holders, Euroclear Holders
and Cedel Holders may not deliver instructions directly to the Bank as Custodian
for DTC or as Common Depositary for Euroclear and Cedel.
Because of time-zone differences, credits of Notes received in Euroclear or
Cedel as a result of a transaction with a DTC Holder will be made during
subsequent securities settlement processing as of the business day of Euroclear
or Cedel following the DTC settlement date and such credits or any transactions
in such Notes settled during such processing will be reported to the relevant
Euroclear Holders or Cedel Holders on such day.
THE DEPOSITORY TRUST COMPANY. 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 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 DTC Global Note will be made by the Company to
DTC or its nominee, as the case may be, as the registered owner of such DTC
Global Note. The Company expects that DTC or its nominee, upon any receipt of
any payment of principal, premium or interest in respect of a DTC Global 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 DTC Global 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
DTC Global 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 DTC Global 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 DTC Global Note and is
required to receive and transmit distributions of principal of, and premium (if
any) and interest (if any) on, such DTC Global Note. DTC Participants and
Indirect DTC Participants with which owners of beneficial interests in a DTC
Global 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 DTC Global Note to pledge such interests to persons or
entities that do not participate in the DTC system, or otherwise take actions in
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<PAGE> 6
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.
CEDEL. Cedel is incorporated under the laws of Luxembourg as a
professional depositary. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including U.S. dollars. Cedel provides
to Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally-traded securities
and securities lending and borrowing. Cedel interfaces with domestic markets in
several countries. As a professional depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Agents. Indirect access to Cedel is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Cedel Participant,
either directly or indirectly.
EUROCLEAR. Euroclear was created in 1968 to hold securities for its
participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 27 currencies, including U.S.
dollars. Euroclear includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries in a
manner generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office (the "Euroclear Operator"), under contract with
Euro-clear Clearance System S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Agents. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either directly
or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of Euroclear and applicable Belgian law
(collectively, the "Euroclear Terms and Conditions"). The Euroclear Terms and
Conditions govern transfers of securities and cash within Euroclear, withdrawal
of securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Euroclear Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
PAYMENTS ON EUROCLEAR/CEDEL GLOBAL NOTE. Principal of, premium (if any)
and interest (if any) on Notes represented by a Euroclear/Cedel Global Note will
be paid only to Euroclear or Cedel or the Common Depositary. All such payments
will be made in immediately available funds. Each of Euroclear and Cedel will
undertake in such circumstances to credit such principal, premium and interest
received by it in respect of any portion of a Euroclear/Cedel Global Note to the
respective accounts having an interest therein. Distributions with respect to
beneficial interests in a Euroclear/Cedel Global Note will be credited to the
cash
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<PAGE> 7
accounts of Euroclear Participants or Cedel Participants in accordance with the
relevant system's rules and procedures, to the extent received by such system or
by the Common Depositary.
ALTERNATE PROCEDURES. Although DTC, Euroclear and Cedel have agreed to the
foregoing procedures in order to facilitate transfers of beneficial interests in
Global Book-Entry Notes among their respective participants, they are under no
obligation to perform or continue to perform such procedures and such procedures
may be discontinued at any time.
If DTC, Euroclear or Cedel 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 DTC Global Note or
Euroclear/Cedel Global Note, as the case may be. 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 the minimum denomination at which Notes
may be newly issued, in case of Notes denominated in a Specified Currency other
than U.S. dollars) or any amount in excess thereof that is an integral multiple
of 1,000 units of the Specified Currency in which the Notes are denominated 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, Euroclear or Cedel may be
transferred or exchanged through a participating member of DTC, Euroclear or
Cedel. 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.
Notwithstanding the foregoing, a registered holder of $10,000,000 or more (or
the equivalent in a Specified Currency other than U.S. dollars) in aggregate
principal amount of Notes issued in certificated form (whether having identical
or different terms and provisions) shall be entitled to receive payments of
interest by the transfer of immediately available funds to an account at a bank
located in The City of New York (or other bank consented to by the Company)
designated by such holder (provided that such bank has appropriate facilities
therefor).
PAYING AGENT, REGISTRAR AND TRANSFER AGENT
The initial Paying Agent, Registrar and Transfer Agent is The Chase
Manhattan Bank, N.A. 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
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the stated Maturity Date, except in the event any additional payments are
required to be paid with respect to such Note as described under "Tax
Redemption" below. 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
units of the Specified Currency (provided that any remaining principal amount of
such Note shall be at least $1,000 (or in the case of Notes denominated in a
Specified Currency other than U.S. dollars, the minimum denomination at which
Notes may be issued in such Specified Currency)) 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 units of the Specified Currency (provided that
any remaining principal amount of such Note shall be at least $1,000 (or in the
case of Notes denominated in a Specified Currency other than U.S. dollars, the
minimum denomination at which Notes may be issued in such Specified Currency))
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.
While the Notes are represented by the Global Book-Entry Note held by or on
behalf of the Custodian and/or Common Depositary, and registered in the name of
DTC or its nominee for a DTC Global Note, or Euroclear or Cedel or the nominee
of the Common Depositary for a Euroclear/Cedel Global Note, the option for
repayment may be exercised by the applicable DTC, Euroclear or Cedel
Participant, on behalf of the beneficial owners of the Global Book-Entry Notes,
by delivering a written notice substantially similar to the above mentioned form
to the applicable Trustee at its corporate trust office (or such other address
of which the Company shall from time to time notify the Holders), not more than
60 nor less than 30 days prior to the date of repayment. Notices of elections
from DTC, Euroclear or Cedel Participants on behalf of beneficial owners of the
Global Book-Entry Note to exercise their option to have such Book-Entry Notes
repaid must be received by the applicable Trustee by 5:00 P.M., New York City
time, on the last day for giving such notice. In order to ensure that a notice
is received by the applicable Trustee on a particular day, the beneficial owner
of the Global Book-Entry Note must direct the applicable Participant before such
Participant's deadline for accepting instructions for that day. Different
Participants may have different deadlines for accepting instructions from their
customers. Accordingly, beneficial owners of the Global Book-Entry Notes should
consult the applicable Participants through which they own their interest
therein for the respective deadlines for such Participants. All notices shall be
executed by a duly authorized officer of such Participant (with signature
guaranteed) and shall be irrevocable. In addition, beneficial owners of the
Global Book-Entry Notes shall effect delivery by causing the applicable
Participant to transfer such beneficial owner's interest in the Global
Book-Entry Notes, on the Custodian and/or Common Depositary's records, to the
applicable Trustee. See "Book-Entry Notes".
If applicable, the Company will comply with the requirements of Rule 14a-1
under the Securities Exchange Act of 1934, as amended, and any other securities
laws or regulations in connection with any such repayment.
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The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, may be surrendered to the Trustee
for cancellation.
Notwithstanding anything in this Prospectus Supplement to the contrary, if
a Note is an Original Issue Discount Note (other than an Indexed Note (as
hereinafter defined)), the amount payable on such Note in the event of
redemption or repayment prior to the stated 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.
TAX REDEMPTION
Unless otherwise provided in the applicable Pricing Supplement, each Note
will be subject to redemption as a whole but not in part at the option of the
Company, at a redemption price equal to the principal amount thereof (or in the
case of Original Issue Discount Notes at the Amortized Face Amount thereof)
together with accrued and unpaid interest (if any) to the date fixed for
redemption, upon notice given as described above to the holder of a Note, if the
Company determines that as a result of any change in or amendment to the laws
(or any regulations or rulings promulgated thereunder) of the United States or
of any political subdivision or taxing authority thereof or therein affecting
taxation, or any change in the application or official interpretation of such
laws, regulations or rulings, which change or amendment becomes effective on or
after the date hereof, the Company has or will become obligated to pay
Additional Amounts (as hereinafter defined) with respect to Notes as described
in the first paragraph under "Payment of Additional Amounts" below; provided
that no such notice of redemption shall be given earlier than 90 days prior to
the earliest date on which the Company would be obligated to pay such Additional
Amounts were a payment in respect of Notes then due.
The Company will make its determination as soon as practicable after it
becomes aware of an event that might give rise to such a determination. The
Trustee of the Notes that are to be redeemed will give notice to the holders of
the affected Notes, within 15 days after the date such Trustee is notified of
the Company's election to redeem Notes as described above or pay Additional
Amounts as defined below. Such notice will state the nature of the Company's
election, the reasons for and the nature of such determination and the last day
by which redemption may be made.
PAYMENT OF ADDITIONAL AMOUNTS
The Company will, subject to the limitations and exceptions set forth
below, pay to a holder on behalf of an owner of a beneficial interest (an
"Owner") of any Note who is a United States Alien (as hereinafter defined) such
additional amounts (the "Additional Amounts") as may be necessary so that every
net payment to such Owner of principal and premium (if any) and interest (if
any) on such Note, after deduction or withholding for or on account of any
present or future tax, assessment or other governmental charge imposed upon such
Owner, or by reason of the making of such net or additional payment, by the
United States, or any political subdivision or taxing authority thereof or
therein, will not be less than the amount provided for in such Note to be then
due and payable. However, the Company shall not be required to make any such
payment of Additional Amounts for or on account of:
(1) any tax, assessment or other governmental charge which would not
have been imposed but for (i) the existence of any present or former
connection between such Owner (or between a fiduciary, settlor or
beneficiary of, or possessor of a power over, such Owner, if such Owner is
an estate or a trust, or between a member or shareholder of such Owner, if
such Owner is a partnership or corporation) and the United States,
including, without limitation, such Owner (or such fiduciary, settlor,
beneficiary, possessor, member or shareholder) being or having been a
citizen or resident or treated as a resident thereof, or being or having
been engaged in a trade or business or present therein, or having or having
had
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a permanent establishment therein, or (ii) the presentation of a Note for
payment on a date more than 15 days after the date on which such payment
became due and payable or the date on which payment thereof is duly
provided for, whichever occurs later;
(2) any estate, inheritance, gift, sales, transfer, personal property
or any similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge imposed by reason
of such Owner's past or present status (i) as a private foundation or other
tax exempt organization or a domestic or foreign personal holding company
with respect to the United States, (ii) as a corporation that accumulates
earnings to avoid United States income taxes, (iii) as a controlled foreign
corporation with respect to the United States, (iv) as the owner, actually
or constructively, of 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, or (v) as a bank that
acquires a Note as an extension of credit made pursuant to a loan agreement
entered into in the ordinary course of its trade or business;
(4) any tax, assessment or other governmental charge which is payable
primarily otherwise than by deduction or withholding from payments on a
Note;
(5) any tax, assessment or other governmental charge that would not
have been imposed but for a failure to comply with applicable
certification, information or other reporting requirements concerning the
nationality, residence, identity or connection with the United States of
the holder or Owner of a Note if, without regard to any tax treaty, such
compliance is required by statute or regulation of the United States as a
precondition to relief or exemption from such tax, assessment or other
governmental charge;
(6) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from a payment on a Note, if such payment can
be made without such withholding by any other Paying Agent of the Company
outside the United States;
(7) any tax, assessment or other governmental charge that would not
have been so imposed but for the Owner being or having been a person within
a country with respect to which the United States Treasury Department has
determined under Sections 871(h)(5) and 881(c)(5) of the Internal Revenue
Code of 1986, as amended (the "Code"), on or before the Original Issue Date
specified in the applicable Pricing Supplement that payments of interest to
persons within such country are not subject to the repeal of the United
States withholding tax provided for in Sections 871(h) and 881(c) of the
Code; or
(8) any combination of items (1), (2), (3), (4), (5), (6) or (7),
above;
nor shall Additional Amounts be paid to any holder on behalf of any Owner who is
a fiduciary or partnership or other than the sole Owner of the Note to the
extent that a beneficiary or settlor with respect to such fiduciary, a member of
such partnership or the Owner would not have been entitled to payment of the
Additional Amount had such beneficiary, settlor, member or Owner been the sole
Owner of the Note. The term "United States Alien" means any person who, for
United States Federal income tax purposes, is a foreign corporation, a
nonresident alien individual, a nonresident alien fiduciary of a foreign estate
or trust, or a foreign partnership one or more of the members of which is, for
United States Federal income tax purposes, a foreign corporation, a nonresident
alien individual or a nonresident alien fiduciary of a foreign estate or trust.
Except as specifically provided above, the Company will not be required to
make any payment with respect to any tax, assessment or other governmental
charge imposed by any government or any political subdivision or taxing
authority thereof or therein.
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 semi-annually on April 15 and
October 15 of each year during the term of the Notes (each an "Interest Payment
Date") and on the
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Maturity Date. Unless otherwise provided in the applicable Pricing Supplement,
the "Regular Record Date" for Fixed Rate Notes will be the April 1 or October 1
immediately preceding an Interest Payment Date or if the Interest Payment Dates
are other than April 15 and October 15, the calendar day fifteen days preceding
each Interest Payment Date whether or not such day is a Business Day (as
hereinafter defined). 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 rates determined as described below until the principal amount thereof is
paid or duly made available for payment. Unless otherwise indicated in the
applicable Pricing Supplement, interest on Floating Rate Notes will be
determined by reference to a "Base Rate", which may be one or more of the
following (a) the "Certificate of Deposit Rate" ("Certificate of Deposit Rate
Notes"), (b) the "CMT Rate" ("CMT Rate Notes"), (c) the "Commercial Paper Rate"
("Commercial Paper Rate Notes"), (d) the "Federal Funds Rate" ("Federal Funds
Rate Notes"), (e) "LIBOR" ("LIBOR Notes"), (f) "LIBID" ("LIBID Notes"), (g) the
"Prime Rate" ("Prime Rate Notes"), (h) the "Treasury Rate" ("Treasury Rate
Notes") or (i) such other Base Rate or interest rate formula as may be set forth
in an applicable Pricing Supplement. The Base Rate 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
interest rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate, plus or minus the Spread and/or multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points above or below
the Base Rate applicable to such Floating Rate Note, and the "Spread Multiplier"
is the percentage of the Base Rate 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 Base Rate 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 Base Rate, 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,
Optional Repayment Dates and Optional Repayment Prices, if any, and defeasance
provisions, if any.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually, annually or based upon another
specified period (each, an "Interest Rate Reset Period," and the first day of
each Interest Rate Reset Period being an "Interest Rate Reset Date"), as
specified in the applicable Pricing Supplement. Unless otherwise provided in the
applicable Pricing Supplement, the Interest Rate Reset Date will be, in the case
of Floating Rate Notes which reset (a) daily, each Business Day; (b) weekly, the
Wednesday of each week (with the exception of weekly reset Treasury Rate Notes,
the Interest Rate Reset Date of which shall be Tuesday of each week except as
provided below); (c) monthly, the third Wednesday of each month; (d) quarterly,
the third Wednesday of March, June, September and December of each year; (e)
semi-annually, the third Wednesday of the two months specified in the applicable
Pricing Supplement; and (f) annually, the third Wednesday of the month specified
in the applicable Pricing 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,
except that in the case of
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a LIBOR Note or a LIBID Note, if the next succeeding Business Day is in the next
succeeding calendar month, such Interest Rate Reset Date shall be the next
preceding Business Day. Unless otherwise specified in the applicable Pricing
Supplement, "Business Day" means any day, other than a Saturday or Sunday, that
meets each of the following applicable requirements: the day is (a) not a day on
which banking institutions are authorized or required by law, regulation or
executive order to be closed in The City of New York, (b) if the Note is
denominated or payable in a Specified Currency other than U.S. dollars, (i) not
a day on which banking institutions are authorized or required by law,
regulation or executive order to close in the principal financial center of the
country issuing the Specified Currency (which in the case of the ECU shall
include the financial center of each country that issues a component currency of
the ECU) and (ii) a day on which banking institutions in such financial center
are carrying out transactions in such Specified Currency, (c) with respect to
LIBOR and LIBID Notes, a day on which dealings in deposits in the LIBOR Currency
(as hereinafter defined) are transacted in the London interbank market (a
"London Banking Day") and (d) with respect to any Notes where the Specified
Currency is the ECU, a day that is an "ECU Settlement Day." An "ECU Settlement
Day" means any day that (a) is not either (i) a Saturday or a Sunday or (ii) a
day which appears as an ECU Non-Settlement Day on the display designated as Page
"ISDE" on the Reuters Monitor Money Rates Service (or a day so designated by the
ECU Banking Association, if ECU Non-Settlement Days do not appear on that page)
and, if ECU Non-Settlement Days do not appear on that page (and are not so
designated), a day on which payments in the ECU cannot be settled in the
international interbank market and (b) is a day on which payments in the ECU can
be settled by commercial banks and in foreign exchange markets in the place in
which the relevant account for payment is located.
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
"Interest Determination Date." The Interest Determination Date with respect to
an Interest Rate Reset Date for Certificate of Deposit Rate Notes, CMT Rate
Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes and Prime Rate
Notes will be the second Business Day preceding such Interest Rate Reset Date.
The Interest Determination Date with respect to an Interest Rate Reset Date for
LIBOR Notes and LIBID Notes will be the second London Banking Day preceding such
Interest Rate Reset Date. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date with respect to an Interest Rate
Reset Date for Treasury Rate Notes will be the day of the week in which the
Interest Rate Reset Date falls on which Treasury bills are auctioned (Treasury
bills are normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday);
provided, however, that if as a result of a legal holiday an auction is held on
the Friday of the week preceding an Interest Rate Reset Date, the related
Interest Determination Date will be such preceding Friday; and provided further,
that if an auction shall fall on any day that would otherwise be an Interest
Rate Reset Date for a Treasury Rate Note, then the Interest Rate Reset Date will
instead be the first Business Day following the date of such auction.
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
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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.
Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset (a) daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified in
the applicable Pricing Supplement; (b) quarterly, on the third Wednesday of
March, June, September and December of each year; (c) semi-annually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and (d) annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement (each, an "Interest
Payment Date") and, in each case, on the Maturity Date.
Unless otherwise indicated on the applicable Pricing Supplement, 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.
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
date is a Business Day, prior to such Interest Payment Date.
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, except
that in the case of a LIBOR Note or a LIBID Note, if the next succeeding
Business Day falls in the next succeeding calendar month, the Interest Payment
Date will be advanced to the immediately preceding 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 Chase
Manhattan Bank, N.A. will be the Calculation Agent. Upon the request of the
holder of a Floating Rate Note, the Calculation Agent will provide the interest
rate 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 (or, in the case of Treasury Rate Notes or CMT Rate Notes, by the actual
number of days in the year).
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 all U.S. dollar
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amounts used in or resulting from such calculation on Floating Rate Notes will
be rounded to the nearest cent (with one-half cent being rounded upward), or in
the case of Floating Rate Notes denominated in a Specified Currency other than
U.S. dollars, to the smallest unit of the Specified Currency (with one-half unit
being rounded upward).
The interest rate that will become effective on each subsequent Interest
Rate Reset Date will be determined by the applicable Calculation Agent
(calculated with reference to the Base Rate and the Spread and/or Spread
Multiplier, if any, specified in the applicable Pricing Supplement) as follows
(such determination, in the absence of manifest error, to be binding upon all
parties):
CERTIFICATE OF DEPOSIT RATE: Unless otherwise indicated in the applicable
Pricing Supplement, "Certificate of Deposit Rate" means, with respect to any
Interest Determination Date relating to a Certificate of Deposit Rate Note (a
"Certificate of Deposit Rate Interest Determination Date"), the rate on that day
for negotiable U.S. dollar certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication ("H.15(519)"), under the
heading "CDs (Secondary Market)," or, if such rate is not so published by 3:00
P.M., New York City time, on the applicable Calculation Date, the Certificate of
Deposit Rate will be the rate on such Certificate of Deposit Rate Interest
Determination Date for negotiable certificates of deposit of the Index Maturity
specified in the applicable Pricing Supplement as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M.
Quotations for U.S. Government Securities" ("Composite Quotations") under the
heading "Certificates of Deposit." If such rate is not published by 3:00 P.M.,
New York City time, on such Calculation Date, then the Certificate of Deposit
Rate for that Certificate of Deposit Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on such
Certificate of Deposit Rate Interest Determination Date, of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of
New York (which may include the Agents or their affiliates) selected by the
Calculation Agent, after consultation with the Company, for negotiable
certificates of deposit of major United States money center banks (in the market
for negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement in denominations
of $5,000,000; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
Certificate of Deposit Rate will be the Certificate of Deposit Rate in effect on
such Certificate of Deposit Rate Interest Determination Date.
CMT Rate Notes. CMT Rate Notes will bear interest at the rates (calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Notes and any applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the Designated CMT Telerate Page (as hereinafter defined) under the
caption ". . . Treasury Constant Maturities . . . Federal Reserve Board Release
H.15 . . . Mondays Approximately 3:45 P.M.," under the column for the Designated
CMT Maturity Index (as hereinafter defined) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date and
(ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the related CMT Rate
Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page, or if not displayed by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or if not published by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with
respect to such Interest Rate Reset Date as may then be published by either the
Board of Governors of the Federal Reserve
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System or the United States Department of the Treasury that the Calculation
Agent, after consultation with the Company, determines to be comparable to the
rate formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate for the CMT Rate
Interest Determination Date will be calculated by the Calculation Agent and will
be a yield to maturity, based on the arithmetic mean of the secondary market
closing offer side prices as of approximately 3:30 P.M., New York City time, on
the CMT Rate Interest Determination Date reported, according to their written
records, by three leading primary United States government securities dealers
(each, a "Reference Dealer") in The City of New York (which may include the
Agents or their affiliates) selected by the Calculation Agent, after
consultation with the Company, (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United States ("Treasury Notes") with an original
maturity of approximately the Designated CMT Maturity Index and a remaining term
to maturity of not less than such Designated CMT Maturity Index minus one year.
If the Calculation Agent cannot obtain three such Treasury Note quotations, the
CMT Rate for such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 P.M., New
York City time, on the CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent, after consultation with the Company, and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the next
highest to the Designated CMT Maturity Index and a remaining term to maturity
closest to the Designated CMT Maturity Index and in an amount of at least $100
million. If three or four (and not five) of such Reference Dealers are quoting
as described above, then the CMT Rate will be based on the arithmetic mean of
the offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated; provided, however, that if fewer than three Reference
Dealers selected by the Calculation Agent are quoting as described herein, the
CMT Rate will be the CMT Rate in effect on such CMT Rate Interest Determination
Date. If two Treasury Notes with an original maturity as described in the third
preceding sentence have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the quotes for the Treasury Note with the shorter
remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519)). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
COMMERCIAL PAPER RATE: Unless otherwise indicated in the applicable
Pricing Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Commercial Paper Rate Note (a "Commercial Paper
Rate Interest Determination Date"), the Money Market Yield (as hereinafter
defined) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the heading "Commercial Paper." In the event that such rate is not published by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Commercial Paper Rate Interest Determination Date, then the Commercial Paper
Rate shall be the Money Market Yield on such Commercial Paper Rate Interest
Determination Date of the rate for commercial paper of the Index Maturity
specified in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Commercial Paper." If the rate for a Commercial
Paper Rate Interest Determination Date is not published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York
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City time, on such Calculation Date, the Commercial Paper Rate for that
Commercial Paper Rate Interest Determination Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 A.M., New York City time, on such Commercial
Paper Rate Interest Determination Date, of three leading dealers of commercial
paper in The City of New York (which may include the Agents or their affiliates)
selected by the Calculation Agent, after consultation with the Company, on such
Commercial Paper Rate Interest Determination Date, for commercial paper of the
specified Index Maturity placed for an industrial issuer whose bond rating is
"AA," or the equivalent, from a nationally recognized statistical rating agency;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate
will be the Commercial Paper Rate in effect on such Commercial Paper Rate
Interest Determination Date.
"Money Market Yield" shall be the yield (expressed as a percentage)
calculated in accordance with the following formula:
D X 360
Money Market Yield = ----------------------------X 100
360 - (D X M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal, and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
FEDERAL FUNDS RATE: Unless otherwise indicated in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Federal Funds Rate Note (a "Federal Funds Rate
Interest Determination Date"), the rate on that day for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
so published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Federal Funds Rate Interest Determination Date, the Federal
Funds Rate will be the rate on such Federal Funds Rate Interest Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate." If such rate has not been published in either H.15(519)
or Composite Quotations by 3:00 P.M., New York City time, on such Calculation
Date, the Federal Funds Rate will be calculated by the applicable Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight Federal Funds arranged by each of three leading brokers of Federal
Funds transactions in The City of New York (which may include the Agents or
their affiliates) selected by the Calculation Agent, after consultation with the
Company, prior to 9:00 A.M., New York City time, on such Federal Funds Rate
Interest Determination Date; provided, however, that if the brokers selected as
aforesaid by the Calculation Agent are not quoting as described above, the
Federal Funds Rate in effect for the applicable period will be Federal Funds
Rate in effect on such Federal Funds Rate Interest Determination Date.
LIBOR: Unless otherwise indicated in the applicable Pricing Supplement,
LIBOR will be determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to any Interest Determination Date relating to a
LIBOR Note (a "LIBOR Interest Determination Date"), LIBOR will be either
(a) if "LIBOR Reuters" is specified in the applicable Pricing Supplement,
the arithmetic mean of the offered rates (unless the specified Designated
LIBOR Page (as hereinafter defined) by its terms provides only for a single
rate, in which case such single rate shall be used) for deposits in the
LIBOR Currency (as hereinafter defined) having the Index Maturity
designated in the applicable Pricing Supplement, as of 11:00 A.M., London
time (unless such rate is superseded by a corrected rate before 12:00 noon,
London time, in which case such corrected rate shall be the applicable
rate), on that LIBOR Interest Determination Date, if at least two such
offered rates appear (unless, as aforesaid, only a single rate is required)
on such Designated LIBOR Page or (b) if "LIBOR Telerate" is specified in
the applicable Pricing Supplement, the rate for deposits in the LIBOR
Currency having the Index Maturity designated in the applicable Pricing
Supplement commencing on the second London Banking Day immediately
following that LIBOR Interest Determination Date that appears on the
Designated LIBOR Page specified in the applicable Pricing Supplement as of
11:00 A.M., London time (unless such rate is superseded by a corrected rate
before 12:00 noon, London time, in which case such corrected rate shall be
the applicable rate), on that LIBOR
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Interest Determination Date. If LIBOR cannot be determined under clause (a)
or (b) of this paragraph (i), as applicable, LIBOR in respect of the
related LIBOR Interest Determination Date will be determined as if the
parties had specified the rate described in paragraph (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
LIBOR cannot be determined under paragraph (i) above, the Calculation Agent
will request that the London offices of four major banks in London selected
by the Calculation Agent, after consultation with the Company, provide such
Calculation Agent with its offered quotations for deposits in the LIBOR
Currency for the period of the Index Maturity specified in the applicable
Pricing Supplement to prime banks in the London interbank market as of
approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date, commencing on the second London Banking Day immediately following
such LIBOR Interest Determination Date and in a principal amount that is
representative for a single transaction in such market at such time. If at
least two such quotations are provided, LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two such quotations are provided, LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in the applicable Principal Financial Center (as
hereinafter defined), on such LIBOR Interest Determination Date by three
major banks in such Principal Financial Center selected by the Calculation
Agent, after consultation with the Company, for loans commencing on the
second London Banking Day immediately following such LIBOR Interest
Determination Date in the LIBOR Currency to major European banks having the
Index Maturity specified in the applicable Pricing Supplement and in a
principal amount that is representative for a single transaction in such
LIBOR Currency in such market at such time. If at least two such quotations
are provided, LIBOR for such LIBOR Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two such quotations are
provided as requested, LIBOR will be LIBOR in effect on such LIBOR Interest
Determination Date.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable LIBOR Currency, or (b) if "LIBOR Telerate" is specified
in the applicable Pricing Supplement, the display on the Dow Jones Telerate
Service (or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purposes of displaying British
Bankers' Association interest settlement rates) for the purpose of displaying
the London interbank rates of major banks for the applicable LIBOR Currency. If
neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable Pricing
Supplement, LIBOR for the applicable LIBOR Currency will be determined as if
LIBOR Telerate (and, if the U.S. dollar is the LIBOR Currency, Page 3750 (or
such other page as may replace Page 3750 on that service)) had been specified.
"LIBOR Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the LIBOR Currency shall be the U.S. dollar.
"Principal Financial Center" will generally be the capital city of the
country of the specified LIBOR Currency, except that with respect to the U.S.
dollar and the ECU, the Principal Financial Center shall be The City of New York
and Luxembourg, respectively.
LIBID: Unless otherwise indicated in the applicable Pricing Supplement,
LIBID will be determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to any Interest Determination Date relating to a
LIBID Note (a "LIBID Interest Determination Date"), LIBID will be
determined on the basis of the bid rates quoted to prime banks in the
London interbank market at approximately 11:00 A.M., London time, for
deposits in U.S. dollars of not less than U.S. $1 million, for the period
of the Index Maturity specified in the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following such
LIBID Interest Determination Date, by the London offices of four major
banks in the London interbank market named on the Reuters Screen LIBO Page
(as hereinafter defined) and selected by the Calculation Agent, after
consultation with the Company (the "LIBID Reference Banks"), on the LIBID
Interest
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Determination Date. If at least two such quotations appear on the Reuters
Screen LIBO Page, LIBID for such LIBID Interest Determination Date will be
the arithmetic mean of such quotations as determined by the Calculation
Agent. If fewer than two such quotations appear on such page, LIBID for
such LIBID Interest Determination Date will be determined as if the parties
had specified the rate described in (ii) below. As used herein, "Reuters
Screen LIBO Page" means the display designated as Page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO Page on that service) for the purpose of displaying London interbank
offered rates of major banks.
(ii) With respect to a LIBID Interest Determination Date on which
fewer than two such quotations appear on the Reuters Screen LIBO Page, the
Calculation Agent will request that each LIBID Reference Bank provide such
Calculation Agent with a quotation of the bid rate quoted to such bank by
the head offices of major banks in The City of New York for deposits in
United States dollars of not less than U.S. $1 million for the period of
the Index Maturity as specified in the applicable Pricing Supplement, as of
approximately 11:00 A.M., London time, on such LIBID Interest Determination
Date, such deposits commencing on the second London Banking Day immediately
following such LIBID Interest Determination Date, that is representative
for a single transaction in such market at such time. If at least two such
quotations are provided, LIBID for such LIBID Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two such
quotations are provided, LIBID for such LIBID Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00
A.M., New York City time, on such LIBID Interest Determination Date by
three major banks in The City of New York selected by the Calculation
Agent, after consultation with the Company, for loans in U.S. dollars of
not less than U.S. $1 million to leading European banks, having the Index
Maturity designated in the applicable Pricing Supplement and in the
principal amount equal to an amount of not less than U.S. $1 million that
is representative for a single transaction in such market at such time;
provided, however, that if the banks selected as aforesaid by the
Calculation Agent are not quoting as described above, LIBID will be LIBID
in effect on such LIBID Interest Determination Date.
If LIBID with respect to any LIBID Note is indexed to the bid rates for
deposits in a Specified Currency other than U.S. dollars, the applicable Pricing
Supplement will set forth the method for determining such rate.
PRIME RATE: Unless otherwise indicated in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Interest Determination Date
relating to a Prime Rate Note (a "Prime Rate Interest Determination Date"), the
arithmetic mean of the prime rates, as of the close of business on such Prime
Rate Interest Determination Date, quoted on the basis of the actual number of
days in the year divided by 360, by three major money center banks in The City
of New York selected by the Calculation Agent, after consultation with the
Company. If fewer than three quotations are provided, the Prime Rate shall be
calculated by the Calculation Agent and shall be determined as the arithmetic
mean on the basis of the prime rates, as of the close of business on such Prime
Rate Interest Determination Date, quoted in The City of New York by three
substitute banks or trust companies organized and doing business under the laws
of the United States, or any State thereof, each having total equity capital of
at least $500 million and being subject to supervision or examination by a
Federal or State authority, selected by the Calculation Agent, after
consultation with the Company; provided, however, that if the banks or trust
companies selected as aforesaid by the Calculation Agent are not quoting as
described above, the Prime Rate will be the Prime Rate in effect on such Prime
Rate Interest Determination Date.
TREASURY RATE: Unless otherwise indicated in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Treasury Rate Note (a "Treasury Rate Interest Determination
Date"), the rate applicable to the most recent auction of direct obligations of
the United States ("Treasury bills") having the Index Maturity specified in the
applicable Pricing Supplement, as published in H.15(519) under the heading
"Treasury bills--auction average (investment)" or, if not so published by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Treasury
Rate Interest Determination Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the auction of Treasury bills having
the specified Index Maturity are not announced as provided by 3:00 P.M., New
York City time, on such Calculation Date,
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<PAGE> 19
or if no such auction is held in a particular week, then the Treasury Rate shall
be a yield to maturity (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 P.M., New York
City time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers (which may include the
Agents or their affiliates), selected by the Calculation Agent, after
consultation with the Company, for the issue of Treasury bills with a remaining
maturity closest to the applicable Index Maturity; provided, however, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
described above, the rate of interest in effect for the applicable period will
be the rate of interest in effect on such Treasury Rate Interest Determination
Date.
FOREIGN-CURRENCY NOTES
If any Note is not to be denominated in U.S. dollars, certain provisions
with respect thereto will be set forth in an applicable Pricing Supplement,
which will indicate the Specified Currency, along with any other terms relating
to the non-U.S. dollar denomination that are not specified herein.
INDEXED NOTES
General. The Company may from time to time offer Notes ("Indexed Notes")
with respect to which the principal amount payable at maturity (the "Indexed
Principal Amount") and/or the interest payable on any Interest Payment Date will
be determined by reference to a measure (the "Index") which will be related to
(i) the rate of exchange between the Specified Currency for such Note and the
other currency or composite currency (the "Indexed Currency") specified in the
applicable Pricing Supplement on specified dates (such Indexed Notes, "Currency
Indexed Notes"); (ii) the difference in the level of a specified commodities
index (the "Commodities Index"), which may be based on one or more commodities,
on specified dates (such Indexed Notes, "Commodity Indexed Notes"); (iii) the
difference in the level of a specified securities index (the "Securities
Index"), which may be based on one or more U.S. or other securities, on
specified dates (such Indexed Notes, "Securities Indexed Notes"); or (iv) such
other objective price or economic measures as are described in the applicable
Pricing Supplement. The manner of determining the Indexed Principal Amount of an
Indexed Note (if other than as specified below), and historical and other
information concerning the Indexed Currency, Commodities Index, Securities Index
or other Index used in making such determination, will be set forth in the
applicable Pricing Supplement, together with information concerning tax
consequences to the holders of such Indexed Notes.
If the determination of the Indexed Principal Amount of an Indexed Note is
based on an Index calculated or announced by a third party and such third party
either suspends the calculation or announcement of such Index or changes the
basis upon which such Index is calculated (other than changes consistent with
policies in effect at the time such Indexed Note was issued and permitted
changes described in the applicable Pricing Supplement), then such Index shall
be calculated for purposes of such Indexed Note by the determination agent named
or provided for in the Pricing Supplement (the "Determination Agent") on the
same basis, and subject to the same conditions and controls, as applied to the
original third party. If for any reason such Index cannot be calculated on the
same basis, and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Note
shall be calculated in the manner set forth in the applicable Pricing
Supplement. Any determination of such Determination Agent shall, in the absence
of manifest error, be binding on all parties.
Unless otherwise specified in the applicable Pricing Supplement, any
interest on an Indexed Note will be payable by the Company based on the amount
designated in the applicable Pricing Supplement as the face amount of such
Indexed Note (the "Face Amount"). The applicable Pricing Supplement will
describe whether the principal amount of the related Indexed Note that would be
payable upon redemption or repayment prior to its stated maturity will be the
Face Amount of such Indexed Note, the Indexed Principal Amount of such Indexed
Note at the time of redemption or repayment, or another amount described in such
Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, (a) for
the purpose of determining whether holders of the requisite principal amount of
Debt Securities outstanding under the applicable Indenture have made a demand or
given a notice of waiver or taken any other action, the outstanding principal
amount of Indexed Notes will be deemed to be the Face Amount thereof, and (b) in
the event of an acceleration of the maturity of an Indexed Note, the principal
amount payable to the holder of such Indexed Note upon acceleration will be the
principal amount determined by reference to the formula by which the principal
amount of such Indexed Note would be determined on the date of the maturity
thereof as if the date of acceleration were the date of the maturity.
Currency Indexed Notes. The Company may from time to time offer Currency
Indexed Notes with respect to which the principal amount payable at maturity,
and/or the interest payable on each Interest Payment Date and at maturity, is
determined by the rate of exchange on specified dates between the currency or
currency unit in which such Notes are denominated (the "Denominated Currency")
and the other currency or currency unit designated as the Indexed Currency in
the applicable Pricing Supplement. Unless otherwise indicated in the applicable
Pricing Supplement, holders of Currency Indexed Notes (i) will be entitled to
receive a principal amount of such Currency Indexed Notes exceeding the Face
Amount if, at maturity, the rate at which the Denominated Currency can be
exchanged for the Indexed Currency is greater than the rate of such exchange
designated as the "base exchange rate" in the applicable Pricing Supplement (the
"Base Exchange Rate"), and will be entitled to receive a principal amount of
such Currency Indexed Notes less than the Face Amount of such Currency Indexed
Notes, if, at maturity, the rate at which the Denominated Currency can be
exchanged for the Indexed Currency is less than such Base Exchange Rate and/or
(ii) will be entitled to receive an amount of interest on each Interest Payment
Date or at maturity at an interest rate greater than the base interest rate of
such Currency Indexed Note as designated in the applicable Pricing Supplement
(the "Base Interest Rate") if, on such Interest Payment Date or at maturity, as
the case may be, the rate at which the Denominated Currency can be exchanged
into the Indexed Currency is greater than the Base Interest Rate, and will be
entitled to receive an amount of interest on each Interest Payment Date or at
maturity at an interest rate less than the Base Interest Rate if, on such
Interest Payment Date or at maturity, as the case may be, the rate at which the
Denominated Currency can be exchanged into the Indexed Currency is less than the
Base Exchange Rate, in each case determined as described below. Information as
to the relative historical value of the applicable Denominated Currency against
the applicable Indexed Currency, any exchange controls applicable to such
Denominated Currency or Indexed Currency, and the tax consequences to owners of
beneficial interests in Currency Indexed Notes will be set forth in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, principal
of a Currency Indexed Note will be payable by the Company in the Denominated
Currency at maturity in an amount equal to the Face Amount of the Currency
Indexed Note, plus or minus an amount determined by the Determination Agent by
reference to the difference between the Base Exchange Rate and the rate at which
the Denominated Currency can be exchanged for the Indexed Currency (the "Spot
Rate") as determined on the second Exchange Rate Day (as hereinafter defined)
prior to the Maturity Date of such Currency Indexed Note (the "Determination
Date") in the manner specified in the applicable Pricing Supplement. The
principal amount of the Currency Indexed Notes determined by the Determination
Agent to be payable at maturity will be payable to the holders thereof in the
manner set forth herein and in the applicable Pricing Supplement. In the absence
of manifest error, the determination by the Determination Agent of the Spot Rate
and the principal amount of Currency Indexed Notes payable at maturity shall be
final and binding on the Company and the holders of such Currency Indexed Notes.
Any formulas to be used by the Determination Agent to determine the
principal amount of a Currency Indexed Note payable at maturity will be
specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the term
"Exchange Rate Day" shall mean any day which is a Business Day in The City of
New York and (a) if the Denominated Currency or Indexed Currency is the Canadian
Dollar, in Toronto, Canada, (b) if the Denominated Currency or Indexed Currency
is the Japanese Yen, in Tokyo, Japan, (c) if the Denominated Currency or Indexed
Currency is the Pound Sterling, in London, England, (d) if the Denominated
Currency or the Indexed Currency is the
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Australian Dollar, in Melbourne or Sydney, Australia, (e) if the Denominated
Currency or the Indexed Currency is the ECU, in each of the financial centers of
each country that issues a component currency of the ECU and/or (f) if the
Denominated Currency or Indexed Currency is any other currency or composite
currency (other than the U.S. dollar), in the capital and the principal
financial center of the country or countries of such Denominated Currency or
Indexed Currency.
Unless otherwise specified in the applicable Pricing Supplement, interest
will be payable by the Company in the Denominated Currency based on the Face
Amount of the Currency Indexed Notes and such interest will be payable at the
rate and times and in the manner set forth herein and in the applicable Pricing
Supplement. In the event that the applicable Pricing Supplement specifies that
interest on the Currency Indexed Notes will be determined by reference to an
Indexed Currency and unless otherwise specified in such Pricing Supplement,
interest will be payable by the Company in the Denominated Currency on each
Interest Payment Date and at maturity at a rate per annum equal to the Base
Interest Rate multiplied by an Interest Index Factor. The "Interest Index
Factor" shall be an amount determined by the Determination Agent by reference to
the following formula:
Interest Spot Rate
---------------------
Base Exchange Rate
where, "Interest Spot Rate" is (i) if at an Interest Payment Date, the rate at
which the Denominated Currency can be exchanged for the Indexed Currency as
determined as of the Interest Determination Date, which shall be the second
Exchange Rate Day prior to such Interest Payment Date, by the Determination
Agent in the manner specified in the applicable Pricing Supplement, for an
amount of Indexed Currency equal to (a) the product of (x) the aggregate Face
Amount of such Currency Indexed Notes and (y) the Base Interest Rate specified
in the applicable Pricing Supplement, multiplied by (b) the Base Exchange Rate
and (ii) if at maturity, the Spot Rate. The amount of interest determined by the
Determination Agent to be payable on any Interest Payment Date and at maturity
in respect of the Currency Indexed Notes will be payable to the holders thereof
in the manner set forth herein and in the applicable Pricing Supplement. In the
absence of manifest error, the determination by the Determination Agent of the
Interest Index Factor, the Interest Spot Rate and the amount of interest payable
on each Interest Payment Date and on the Maturity Date, shall be final and
binding on the Company and the holders of such Currency Indexed Notes.
Unless otherwise specified in the applicable Pricing Supplement, on the
basis of the aforesaid determinations by the Determination Agent, (i) if the
Base Exchange Rate equals the Interest Spot Rate on any Interest Determination
Date or the Spot Rate on the Maturity Date for any Currency Indexed Note, then
the amount of interest payable in respect of such Currency Indexed Note on the
applicable Interest Payment Date or at maturity, as the case may be, would
represent an interest rate equal to the Base Interest Rate of such Currency
Indexed Note; (ii) if the Interest Spot Rate on any Interest Determination Date
or the Spot Rate on the Maturity Date exceeds the Base Exchange Rate (i.e., the
Denominated Currency has appreciated against the Indexed Currency during the
term of the Currency Indexed Note), then the amount of interest so payable would
represent an interest rate greater than the Base Interest Rate of such Currency
Indexed Note; (iii) if the Interest Spot Rate on any Interest Determination Date
or the Spot Rate on the Maturity Date is less than the Base Exchange Rate (i.e.,
the Denominated Currency has depreciated against the Indexed Currency during the
term of the Currency Indexed Note) but is greater than zero, then the amount of
interest so payable would represent an interest rate less than the Base Interest
Rate of such Currency Indexed Note; and (iv) if the Interest Spot Rate on any
Interest Determination Date or the Spot Rate on the Maturity Date is less than
or equal to zero, then the Interest Spot Rate or Spot Rate, as the case may be,
will be deemed to be zero and no amount of interest would be payable in respect
of the Currency Indexed Note on the applicable Interest Payment Date or at
maturity, as the case may be. If the methods of determining interest amounts set
forth above are applicable to a Currency Indexed Note, then, unless otherwise
specified in the applicable Pricing Supplement, there would be no maximum amount
of interest payable in respect of such Currency Indexed Note on any Interest
Payment Date or at maturity, but the minimum amount of interest so payable would
be zero.
Securities and Commodity Indexed Notes. The Company may from time to time
offer Notes with respect to which the principal and/or interest will be
determined by reference to the price of one or more
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<PAGE> 22
specified securities or commodities, to one or more securities or commodities
exchange indices or other indices or by other similar methods or formulas. The
Pricing Supplement relating to any such Note will set forth the method by which
the amount of interest payable and the amount payable at maturity in respect of
such Note will be determined, the tax consequences to owners of beneficial
interests in such Notes, a description of certain risks associated with
investments in such Notes and other information relating to such Notes.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS
AS TO THE RISKS ENTAILED BY ANY INVESTMENT IN INDEXED NOTES. SUCH INDEXED NOTES
ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH
RESPECT TO FOREIGN CURRENCY TRANSACTIONS, COMMODITY PRICES AND COMMODITY AND
FINANCIAL OR NON-FINANCIAL INDICES.
DUAL CURRENCY NOTES
The Company may from time to time offer Notes ("Dual Currency Notes") with
respect to which the Company will have the option of making each scheduled
payment of principal and interest due on such Notes in either the currency in
which the Face Amount thereof is specified in the applicable Pricing Supplement
(the "Face Amount Currency") or another currency specified therein (the
"Optional Payment Currency"). If the Company elects to make a payment in the
Optional Payment Currency, the amount payable in such Optional Payment Currency
shall be determined using the exchange rate specified in such Pricing Supplement
(the "Designated Exchange Rate"). If the Company chooses to make any payment in
the Optional Payment Currency instead of the Face Amount Currency, payments of
interest and principal may be worth less, at the then current exchange rate,
than if the Company had made such payment in the Face Amount Currency.
Accordingly, a holder of Dual Currency Notes may receive a principal payment at
maturity which, at the then current exchange rate, is less than such holder's
investment denominated in the Face Amount Currency. See "FOREIGN CURRENCY RISKS"
in this Prospectus Supplement. Information as to the relative historical value
of the applicable Face Amount Currency against the applicable Optional Payment
Currency, any exchange controls applicable to such Face Amount Currency or
Optional Payment Currency, and the tax consequences to owners of beneficial
interests in Dual Currency Notes will be set forth in the applicable Pricing
Supplement.
Scheduled Payments of Principal and Interest. Interest on the Dual
Currency Notes will be payable based on the Face Amount of the Dual Currency
Notes at the rate stated in the applicable Pricing Supplement on each Interest
Payment Date until the principal thereof is paid or made available for payment.
The principal amount of each Dual Currency Note will be payable at maturity.
The Pricing Supplement for each issuance of Dual Currency Notes will
specify, among other things, the Face Amount of the Dual Currency Notes of such
issuance, the Face Amount Currency and Optional Payment Currency of such
issuance and the Designated Exchange Rate for such issuance, which will be a
fixed exchange rate used for converting amounts denominated in the Face Amount
Currency into amounts denominated in the Optional Payment Currency. The Pricing
Supplement will also specify the Option Election Dates (as hereinafter defined)
and Interest Payment Dates for the related issue of Dual Currency Notes. Each
"Option Election Date" will be approximately 10 days before an Interest Payment
Date or the Maturity Date, as the case may be, and will be the date on which the
Company must elect to make payments due on the related Interest Payment Date or
the Maturity Date in the Face Amount Currency or the Optional Payment Currency.
If such election is made, notice of such election shall be provided within four
Business Days of the Option Election Date and shall state (i) the Interest
Payment Date or the Maturity Date and (ii) the Designated Exchange Rate. Any
such notice by the Company, once given, may not be withdrawn. If the Company
elects on any Option Election Date to pay the amounts due on the succeeding
Interest Payment Date in the Optional Payment Currency, then it shall pay all
amounts due with respect to the affected issue of Dual Currency Notes in the
Optional Payment Currency on such Interest Payment Date or Maturity Date. If the
Company does not elect on an Option Election Date to pay the amount due on the
related Interest Payment Date or the Maturity Date in the Optional Payment
Currency, then such payment shall be made in the Face Amount Currency and no
notice of the manner of such payment will be given.
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<PAGE> 23
Payment Due Upon Redemption or Acceleration. If any Dual Currency Note is
redeemed prior to its maturity, or if the payment of principal of any Dual
Currency Note is accelerated in accordance with the provisions described under
"THE SENIOR SECURITIES -- Events of Default and Waiver Thereof" and "THE
SUBORDINATED SECURITIES -- Events of Default and Waiver Thereof" in the
accompanying Prospectus, then the Company shall pay to the holder of such Dual
Currency Note on the redemption date or the date of acceleration an amount equal
to (i) the Face Amount thereof in the Face Amount Currency plus accrued interest
in such currency to but excluding the redemption date or date of acceleration,
as the case may be, minus (ii) the product of the Total Option Value (as
hereinafter defined) multiplied by a fraction, the numerator of which is the
Face Amount of such Dual Currency Note and the denominator of which is the
aggregate Face Amount of all Dual Currency Notes of the same issue as such Dual
Currency Note.
The "Total Option Value" of any Dual Currency Note is an amount (calculated
as of the date (the "Option Value Calculation Date") on which the Company
notifies the Trustee for such Note that such Dual Currency Note will be
redeemed, or the date of acceleration, as the case may be, by the option value
calculation agent who will be designated in the applicable Pricing Supplement
(the "Option Value Calculation Agent")) equal to the sum of the Option Values
(calculated as of such date by the Option Value Calculation Agent) for all
Interest Payment Dates occurring after the Option Value Calculation Date up to
and including the Maturity Date. The "Option Value" for an Interest Payment Date
is the amount calculated by the Option Value Calculation Agent to be the
arithmetic mean of the prices quoted on the Option Value Calculation Date by
three reference banks (which banks shall be selected by the Option Value
Calculation Agent and shall be reasonably acceptable to the Company) for the
right on the Option Election Date immediately preceding such Interest Payment
Date to purchase for value on such Interest Payment Date from such reference
banks (A) the aggregate amount of the Face Amount Currency due on such Interest
Payment Date with respect to all of the Dual Currency Notes of the issue of such
Dual Currency Note in exchange for (B) the amount of the Optional Payment
Currency that would be received if the amount in clause (A) were converted into
the Optional Payment Currency at the Designated Exchange Rate.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS
AS TO THE RISKS ENTAILED BY AN INVESTMENT IN DUAL CURRENCY NOTES. DUAL CURRENCY
NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED
WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
GOVERNING LAW
The Indentures and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
CERTAIN INVESTMENT CONSIDERATIONS
An investment in Notes indexed, as to principal, premium and/or interest,
to one or more values of currencies (including exchange rates between
currencies), commodities or interest rate indices entails significant risks that
are not associated with similar investments in a conventional fixed-rate debt
security. If the interest rate of such a Note is so indexed, it may result in an
interest rate that is less than that payable on a conventional fixed-rate debt
security issued at the same time, including the possibility that no interest
will be paid, and, if the principal of and/or premium on such a Note is so
indexed, the amount of principal and/or premium payable in respect thereof may
be less than the original purchase price of such Note if allowed pursuant to the
terms thereof, including the possibility that no such amount will be paid. The
secondary market for such Notes will be affected by a number of factors,
independent of the creditworthiness of the Company and the value of the
applicable currency, commodity or interest rate index, including the volatility
of the applicable currency, commodity or interest rate index, the time remaining
to the maturity of such Notes, the amount outstanding of such Notes and market
interest rates. The value of the applicable currency, commodity or interest rate
index depends on a number of interrelated factors, including economic, financial
and political events, over which the Company has no control. Additionally, if
the formula used to determine the amount of principal, premium and/or interest
payable with respect to such Notes contains a multiple or leverage factor, the
effect of any change in the applicable currency, commodity or interest rate
index will be
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<PAGE> 24
increased. The historical experience of the relevant currencies, commodities or
interest rate indices should not be taken as an indication of future performance
of such currencies, commodities or interest rate indices during the term of any
Note. The credit ratings assigned to the Company's debt securities are a
reflection of the Company's credit status and, in no way are a reflection of the
potential impact of the factors discussed above, or any other factors, on the
market value of the Notes. Accordingly, prospective investors should consult
their own financial and legal advisors as to the risks entailed by an investment
in such Notes and the suitability of such Notes in light of their particular
circumstances.
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in, or the payment of which is
related to the value of, a Specified Currency other than the currency of the
country in which a purchaser is resident or the currency (including any
composite currency) in which a purchaser conducts its business (the "home
currency") entails significant risks that are not associated with a similar
investment in a security denominated in the home currency. Such risks include,
without limitation, the possibility of significant changes in rates of exchange
between the home currency and the Specified Currency and the possibility of the
imposition or modification of foreign exchange controls with respect to the
Specified Currency. Such risks generally depend on factors over which the
Company has no control, such as economic and political events and the supply of
and demand for the relevant currencies. In recent years, rates of exchange for
certain currencies have been highly volatile, and such volatility may be
expected to continue in the future. Fluctuations in any particular exchange rate
that have occurred in the past are not necessarily indicative, however, of
fluctuations in the rate that may occur during the term of any Note.
Depreciation of the Specified Currency in which a Note is payable against the
relevant home currency would result in a decrease in the effective yield of such
Note below its stated rate of interest, and in certain circumstances, could
result in a loss to the investor on a home currency basis. In addition,
depending on the specific terms of a Note, changes in exchange rates relating to
any of the currencies involved may result in a decrease in its effective yield
and, in certain circumstances, could result in a loss to the investor of all or
a substantial portion of the principal of a Note.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency on an Interest Payment Date or the Maturity Date with
respect to a Note. There can be no assurances that exchange controls will not
restrict or prohibit payments of principal or interest in any such currency or
composite currency. Even if there are not actual exchange controls, it is
possible that on an Interest Payment Date or Maturity Date with respect to any
particular Note, a Specified Currency for such Note would not be available to
the Company to make payments of interest and principal then due. In that event,
the Company will make required payments in U.S. dollars on the basis of the
Market Exchange Rate (as hereinafter defined) on the date of such payment, or if
such rate of exchange is not then available, on the basis of the Market Exchange
Rate as of the most recent date for which the Market Exchange Rate is available.
See "Payment Currency" below.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN CURRENCY INDEXED NOTES OR IN NOTES DENOMINATED
IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, A CURRENCY (INCLUDING
ANY COMPOSITE CURRENCY) OTHER THAN A PROSPECTIVE PURCHASER'S HOME CURRENCY, AND
THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF
SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH
RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR
OWN FINANCIAL, LEGAL AND TAX ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT
IN CURRENCY INDEXED NOTES OR IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS
RELATED TO THE VALUE OF, CURRENCIES (INCLUDING COMPOSITE CURRENCIES) OTHER THAN
THE PARTICULAR HOME CURRENCY. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT
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<PAGE> 25
FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY
TRANSACTIONS.
Pricing Supplements relating to Notes denominated in a Specified Currency
other than the U.S. dollar may contain information concerning historical
exchange rates for such Specified Currency against the U.S. dollar, a
description of the currency or composite currency and any exchange controls
affecting such currency or composite currency. The information contained therein
shall constitute a part of this Prospectus Supplement, will be furnished as a
matter of information only and should not be regarded as indicative of the range
of or trends in fluctuations in currency exchange rates that may occur in the
future.
PAYMENT CURRENCY
Purchasers are required to pay for the Notes in the currency specified in
the applicable Pricing Supplement. Currently, there are limited facilities in
the United States for conversion of U.S. dollars into foreign currencies, and
vice versa. In addition, many United States banks do not offer non-U.S. dollar
denominated checking or savings account facilities in the United States.
Payments of principal, premium (if any) and interest (if any) on each Note
will be made in its Specified Currency (see "DESCRIPTION OF NOTES -- General" in
this Prospectus Supplement) unless otherwise specified in the applicable Pricing
Supplement. Except as set forth below, if payment on a Note is required to be
made in a currency other than U.S. dollars and such currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the
Company's control, or is no longer used by the government of the country issuing
such currency or for the settlement of transactions by public institutions in
that country or within the international banking community, then all payments
due on that due date with respect to such Note shall be made in U.S. dollars
until such currency is again available or so used. The amount so payable on any
date in such foreign currency shall be converted into U.S. dollars at a rate
determined by the Exchange Rate Agent on the basis of the most recently
available Market Exchange Rate or as otherwise indicated in an applicable
Pricing Supplement. The initial Exchange Rate Agent will be The Chase Manhattan
Bank, N.A.
Any payment required to be made on Notes denominated in a Specified
Currency other than U.S. dollars which is instead made in U.S. dollars under the
circumstances described above will not constitute a default of any obligation
under the Indenture under which such Notes shall have been issued.
Payments in Yen to a non-resident of Japan may be made only by transfer to
a non-resident account maintained by the payee with, or by a check drawn upon,
an authorized foreign exchange bank.
Unless otherwise specified in the applicable Pricing Supplement, a holder
of a Note denominated in a Specified Currency other than U.S. dollars may
subsequent to the issuance thereof request that future payments be converted, or
not be converted, as the case may be, to U.S. dollars by transmitting a written
request for such payments to the Paying Agent on or prior to the Regular Record
Date or at least 16 days prior to maturity or earlier redemption or repayment,
as the case may be. Such request shall include appropriate payment instructions
and shall be in writing (mail or hand delivered) or by cable, telex or facsimile
transmission. A holder may elect to receive all future payments of principal,
premium, if any, and interest, if any, in either the Specified Currency or in
U.S. dollars, as specified in the written request, and need not file a separate
election for each payment. Such election will remain in effect until revoked by
a subsequent election made in the manner and at the times prescribed in this
paragraph. Owners of beneficial interests in Global Book-Entry Notes should
contact their broker or nominee to determine whether and how an election to
receive payments in the Specified Currency may be made.
In order for a holder of a Note who will, either by the terms of the Note
or pursuant to an election of such holder, receive payments of principal,
premium (if any) and interest (if any) in a Specified Currency other than U.S.
dollars by wire transfer, such holder must designate an appropriate account with
a bank located in the country of the Specified Currency. Such designation shall
be made by filing the appropriate information with the Paying Agent on or prior
to the Regular Record Date or at least 16 days prior to maturity or earlier
redemption or repayment, as the case may be. The Paying Agent will, subject to
applicable laws and
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<PAGE> 26
regulations and until it receives notice to the contrary, make such payment and
all succeeding payments to such holder of a Note by wire transfer to the
designated account. If a payment cannot be made by wire transfer because the
required information has not been received by the Paying Agent on or before the
requisite date, payment will be made by check or draft mailed to the holder of a
Note at its registered address.
The "Market Exchange Rate" with respect to any currency other than U.S.
dollars means, for any day, the noon dollar buying rate in The City of New York
on such day for cable transfers of such currency as published by the Federal
Reserve Bank of New York, or, if such rate is not published for such day, the
equivalent rate as determined by the Exchange Rate Agent.
All determinations made by the Exchange Rate Agent shall be at its sole
discretion and, in the absence of manifest error, shall be conclusive for all
purposes and binding on holders of the Notes and the Exchange Rate Agent shall
have no liability therefor.
VALUE OF THE ECU
Subject to the provisions in "Payment Currency" above, where any Notes are
to be denominated in ECUs, "ECU" shall mean at any time an amount equal in value
to one European Currency Unit and "European Currency Unit" denotes the unit of
account that is from time to time used in the European Monetary System. At the
date of this Prospectus Supplement, the ECU is valued, pursuant to Council
Regulation (EEC) No. 3180/78 of December 18, 1978, as amended by Council
Regulation (EEC) No. 1971/89 of June 19, 1989 (as amended from time to time), on
the basis of specified amounts of the currencies of certain of the member
countries of the European Community, as follows:
<TABLE>
<S> <C> <C> <C>
0.6242 German mark 0.130 Luxembourg franc
0.08784 Pound sterling 0.1976 Danish krone
1.332 French franc 0.008552 Irish pound
151.8 Italian lira 1.440 Greek drachma
0.2198 Dutch guilder 6.885 Spanish peseta
3.301 Belgian franc 1.393 Portuguese escudo
</TABLE>
The components of the ECU, or the specified amount of any component, may be
changed from time to time by the European Community.
If payment in respect of a Note is required to be made in ECUs and ECUs are
unavailable or the ECU is not then used in the European Monetary System, then
the Exchange Rate Agent shall, without liability on its part, choose a component
currency (the "Payment Currency") of the ECU in which all payments in respect of
such Note shall be made until the ECU is again so used. The amount of each
payment in such Payment Currency shall be computed on the basis of the
equivalent of the ECU in that currency, determined as described below, as of the
fourth Luxembourg business day prior to the date on which such payment is due.
Any payment in respect of such Note made under such circumstances in the Payment
Currency will not constitute a default of any obligation under the Indenture
under which such Note shall have been issued.
Notwithstanding the foregoing, on the first Luxembourg business day on
which the ECU is no longer used in the European Monetary System, the Exchange
Rate Agent shall, without liability on its part, choose a Payment Currency in
which all payments in respect of Notes denominated in ECU having a due date
prior thereto but not yet paid are to be made. The amount of each payment in
such Payment Currency shall be computed on the basis of the equivalent of the
ECU in that currency, determined as described below, as of such first Luxembourg
business day. Any payment in respect of such Notes made in the Payment Currency
under such circumstances will not constitute a default of any obligation under
the Indenture under which such Notes shall have been issued.
The equivalent of the ECU in the relevant Payment Currency as of any date
(the "Day of Valuation") shall be determined by the Exchange Rate Agent on the
following basis. The component currencies of the ECU for this purpose (the
"Components") shall be the currency amounts that were components of the ECU when
the ECU was most recently used in the European Monetary System or for the
settlement of transactions by public institutions of or within the European
Community. The equivalent of the ECU in the Payment Currency shall be calculated
by, first, aggregating the U.S. dollar equivalents of the Components, and then,
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using the rate used for determining the U.S. dollar equivalent of the Components
in the Payment Currency as set forth below, calculating the equivalent in the
Payment Currency of such aggregate amount in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be determined by
the Exchange Rate Agent on the basis of the middle spot delivery quotations
prevailing at 2:30 p.m. Luxembourg time on the Day of Valuation, as obtained by
the Exchange Rate Agent from one or more major banks in the country of issue of
the Component in question.
If the official unit of any component currency of the ECU is altered by way
of combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
shall be replaced by amounts of such two or more currencies, each of which shall
be equal to the amount of the former component currency divided by the number of
a currencies into which that currency was divided.
If no direct quotations are available for a Component on a Day of Valuation
from any of the banks selected for this purpose, because foreign exchange
markets are closed in the country of issue of that Component, or for any other
reason, then, in computing the U.S. dollar equivalent of such Component the
Exchange Rate Agent shall (except as provided below) use the most recent direct
quotations for such Component obtained by it; provided that such most recent
quotations may be used only if they were prevailing in the country of issue not
more than two Luxembourg business days before such Day of Valuation. Beyond such
period of two Luxembourg business days, the Exchange Rate Agent shall determine
the U.S. dollar equivalent of such Component on the basis of cross rates derived
from the middle spot delivery quotations for such Component and for the U.S.
dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as
obtained by the Exchange Rate Agent from one or more major banks in a country
other than the country of issue of such Component. Notwithstanding the
foregoing, within such period of two Luxembourg business days, the Exchange Rate
Agent shall determine the U.S. dollar equivalent of such Component on the basis
of such cross rates if the Exchange Rate Agent and the Company judge that the
equivalent so calculated is more representative than the U.S. dollar equivalent
calculated on the basis of such most recent direct quotations. If there is more
than one market for dealing in any component currency by reason of foreign
exchange regulations or for any other reason, the market to be referred to in
respect of such currency shall be that upon which a non-resident issuer of
securities denominated in such currency would purchase such currency in order to
make payments in respect of such securities.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. The Judiciary Law of the State of New York provides, however, that an
action based upon an obligation denominated in a currency other than U.S.
dollars will be rendered in the foreign currency of the underlying obligation
and converted into U.S. dollars at the rate of exchange prevailing on the date
of the entry of the judgment or decree.
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
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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 an 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 an Owner of a Note that is not a U.S. Holder.
UNITED STATES 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).
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 or, in the case of a Note
providing for the payment of any amount other than qualified stated interest (as
hereinafter defined) prior to maturity, multiplied by the weighted average
maturity of such Note). The issue price of each Note in 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.
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
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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 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 and Indexed Notes
(collectively, "Variable Rate Notes") are subject to special rules whereby a
Variable 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 Variable 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
Variable 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 Variable Rate Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable 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 unless such cap or floor is
fixed throughout the term of the Note.
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 Variable 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 Variable 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 Variable 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 Variable 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
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to inversely reflect contemporaneous variations in the cost of newly borrowed
funds. The OID Regulations also provide that if a Variable 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 Variable 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 Variable 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 Variable 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 Variable 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 Variable
Rate 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 Variable Rate Note.
In general, any other Variable 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 Variable Rate Note. The OID
Regulations generally require that such a Variable 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 Variable 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
Variable Rate Note's issue date. Any objective rate (other than a qualified
inverse floating rate) provided for under the terms of the Variable Rate Note is
converted into a fixed rate that reflects the yield that is reasonably expected
for the Variable Rate Note. In the case of a Variable 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 Variable 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 Variable Rate Note as
of the Variable 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 Variable Rate Note is
then converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Variable 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 Variable Rate Note will account 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 Variable Rate Note during the accrual period.
If a Variable Rate Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Variable Rate Note would be
treated as a contingent payment debt obligation. It is not certain under current
law how a Variable Rate Note would be taxed if such Note were treated as a
contingent payment debt
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obligation. The proper United States Federal income tax treatment of Variable
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 discount, subject to certain
limitations and exceptions.
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, such U.S. Holder will be treated
as having purchased such Note at a "market discount," unless such market
discount 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
certain earlier dispositions, 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. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the taxable
year to which such election applies and may be revoked only with the consent of
the IRS.
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Premium. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, 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. Any election to amortize bond premium applies to
all taxable debt obligations then owned and thereafter acquired by the U.S.
Holder and may be revoked only with the consent of the IRS.
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 (other than amounts representing accrued and unpaid interest) 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 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.
NOTES DENOMINATED OR ON WHICH INTEREST IS PAYABLE IN A FOREIGN CURRENCY
As used herein, "Foreign Currency" means a currency or currency unit other
than U.S. dollars.
PAYMENTS OF INTEREST IN A FOREIGN CURRENCY
Cash Method. A U.S. Holder who uses the cash method of accounting for
United States Federal income tax purposes and who receives a payment of interest
on a Note (other than original issue discount or market discount) will be
required to include in income the U.S. dollar value of the Foreign Currency
payment, such value determined by translating the Foreign Currency payment at an
appropriate spot rate on the date such payment is received, regardless of
whether the payment is in fact converted to U.S. dollars at that time, and such
U.S. dollar value will be the U.S. Holder's tax basis in such Foreign Currency.
Accrual Method. A U.S. Holder who uses the accrual method of accounting
for United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the U.S.
dollar value of the amount of interest income (including original issue discount
or market discount and reduced by amortizable bond premium to the extent
applicable) that has accrued and is otherwise required to be taken into account
with respect to a Note during an accrual period. The U.S. dollar value of such
accrued income will be determined by translating such income at the average rate
of exchange for the accrual period or, with respect to an accrual period that
spans two taxable years, at the average rate for the partial period within the
taxable year. A U.S. Holder may elect, however, to translate such accrued
interest income using the spot rate of exchange on the last day of the accrual
period or, with respect to an accrual period that spans two taxable years, using
the spot rate of exchange on the last day of the taxable year. If the last day
of an accrual period is within five business days of the date of receipt of the
accrued interest, a U.S. Holder may translate such interest using the spot rate
of exchange on the date of receipt. The above election will apply to all other
debt obligations held by the U.S. Holder and may not be changed without the
consent of the IRS. A U.S. Holder should consult a tax advisor before making the
above election. A U.S. Holder will recognize exchange gain or loss (which will
be treated as ordinary income or loss) with respect to accrued interest income
on the date such income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (as described above under "Payments of
Interest in a Foreign Currency -- Cash Method") in respect of such accrual
period and the U.S. dollar value of interest income that has accrued during such
accrual period (as determined above).
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Purchase, Sale and Retirement of Notes. A U.S. Holder who purchases a Note
with previously owned Foreign Currency will recognize ordinary income or loss in
an amount equal to the difference, if any, between such U.S. Holder's tax basis
in the Foreign Currency and the U.S. dollar value of the Foreign Currency used
to purchase the Note, determined on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder 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. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued market discount not previously included in the U.S. Holder's income) and
will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Note has been held by such U.S. Holder for more than one year. To
the extent the amount realized represents accrued but unpaid interest, however,
such amounts must be taken into account as interest income, with exchange gain
or loss computed as described in "Payments of Interest in a Foreign Currency"
above. If a U.S. Holder receives Foreign Currency on such a sale, exchange or
retirement, the amount realized will be based on the U.S. dollar value of the
Foreign Currency on (i) the date of receipt of such Foreign Currency in the case
of a cash basis U.S. Holder and (ii) the date of disposition in the case of an
accrual basis U.S. Holder. In the case of a Note that is denominated in Foreign
Currency and is traded on an established securities market, a cash basis U.S.
Holder (or, upon election, an accrual basis U.S. Holder) will determine the U.S.
dollar value of the amount realized by translating the Foreign Currency payment
at the spot rate of exchange on the settlement date of the sale. A U.S. Holder's
adjusted tax basis in a Note will equal the cost of the Note to such holder,
increased by the amounts of any market discount or original issue discount
previously included in income by the holder with respect to such Note and
reduced by any amortized acquisition or other premium and any principal payments
received by the holder. A U.S. Holder's tax basis in a Note, and the amount of
any subsequent adjustments to such holder's tax basis, will be the U.S. dollar
value of the Foreign Currency amount paid for such Note, or of the Foreign
Currency amount of the adjustment, determined on the date of such purchase or
adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date such payment is received or the Note is disposed
of, and the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date the U.S. Holder acquired the Note. Such Foreign
Currency gain or loss will be recognized only to the extent of the total gain or
loss realized by the U.S. Holder on the sale, exchange or retirement of the
Note.
Original Issue Discount. In the case of an Original Issue Discount Note or
Short-Term Note, (i) original issue discount is determined in units of the
Foreign Currency, (ii) accrued original issue discount is translated into U.S.
dollars as described in "Payments of Interest in a Foreign Currency -- Accrual
Method" above and (iii) the amount of Foreign Currency gain or loss on the
accrued original issue discount is determined by comparing the amount of income
received attributable to the discount (either upon payment, maturity or an
earlier disposition), as translated into U.S. dollars at the rate of exchange on
the date of such receipt, with the amount of accrued original issue discount, as
translated above.
Premium and Market Discount. In the case of a Note with market discount,
(i) market discount is determined in units of the Foreign Currency, (ii) accrued
market discount taken into account upon the receipt of any partial principal
payment or upon the sale, exchange, retirement or other disposition of the Note
(other than accrued market discount required to be taken into account currently)
is translated into U.S. dollars at the exchange rate on such disposition date
(and no part of such accrued market discount is treated as exchange gain or
loss) and (iii) accrued market discount currently includible in income by a U.S.
Holder for any accrual period is translated into U.S. dollars on the basis of
the average exchange rate in effect during such accrual period, and the exchange
gain or loss is determined upon the receipt of any partial principal payment or
upon the sale, exchange, retirement or other disposition of the Note in the
manner described in "Payments of Interest in a Foreign Currency -- Accrual
Method" above with respect to computation of exchange gain or loss on accrued
interest.
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With respect to a Note issued with amortizable bond premium, such premium
is determined in the relevant Foreign Currency and reduces interest income in
units of the Foreign Currency. Although not certain, a U.S. Holder should
recognize exchange gain or loss equal to the difference between the U.S. dollar
value of the bond premium amortized with respect to a period, determined on the
date the interest attributable to such period is received, and the U.S. dollar
value of the bond premium determined on the date of the acquisition of the Note.
Exchange of Foreign Currencies. A U.S. Holder will have a tax basis in any
Foreign Currency received as interest or on the sale, exchange or retirement of
a Note equal to the U.S. dollar value of such Foreign Currency, determined at
the time the interest is received or at the time of the sale, exchange or
retirement. Any gain or loss realized by a U.S. Holder on a sale or other
disposition of Foreign Currency (including its exchange for U.S. dollars or its
use to purchase Notes) will be ordinary income or loss.
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 shareholder of the Company, a controlled foreign corporation
related to the Company or a bank receiving interest described in section
881(c)(3)(A) of the 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 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 Owner. The statement may be made on
an IRS Form W-8 or a substantially similar form, and the 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 Owner to the organization or
institution. The Treasury Department is considering implementation of further
certification requirements.
Generally, a non-U.S. Holder will not be subject to United States 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 shareholder 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 registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered 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).
S-34
<PAGE> 35
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 registered 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
Owner would be allowed as a refund or a credit against such Owner's United
States Federal income tax provided the required information is furnished to the
IRS.
PLAN OF DISTRIBUTION OF NOTES
The Notes are being offered on a continuous basis for sale by the Company
through the Agents, each of which will purchase the Notes as principal from the
Company for resale to investors and other purchasers at varying prices relating
to prevailing market prices at the time of resale as determined by the
applicable Agent, or, if so specified in an applicable Pricing Supplement, for
resale at a fixed public offering price. Unless otherwise specified in an
applicable Pricing Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount thereof
less a percentage of the principal amount equal to the commission applicable to
an agency sale (as described below) of a Note of identical maturity. 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 .125% to .750% 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.
In the event of any sales of Notes to more than one Agent as principal,
under certain circumstances, the commitments of any non-defaulting Agent may be
increased as set forth in the Distribution Agreement among the Company and the
Agents.
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.
S-35
<PAGE> 36
In addition to Notes being offered through the Agents as described herein,
other 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 outside the
United States pursuant to a distribution agreement or 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, and any
other securities offered and sold pursuant to the accompanying Prospectus in
excess of certain limits, 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.
LEGAL OPINIONS
The validity of the Notes is being passed upon for the Company by Robert B.
Adams, Senior Vice President and Deputy General Counsel of the Company and the
Bank, and on behalf of the Agents by Brown & Wood, New York, New York.
S-36
<PAGE> 37
PROSPECTUS
[LOGO]
$2,827,525,000
THE CHASE MANHATTAN CORPORATION
DEBT SECURITIES, DEBT WARRANTS, PREFERRED STOCK,
CURRENCY WARRANTS, INDEX WARRANTS AND INTEREST RATE WARRANTS
------------------------
The Chase Manhattan Corporation (the "Company") may offer from time to time
pursuant hereto its (i) 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"), (ii) warrants to purchase Debt Securities (the "Debt Warrants"),
(iii) shares of its preferred stock without par value ("Preferred Stock"), (iv)
warrants entitling the holders thereof to receive from the Company, upon
exercise, the cash value of the right to sell ("Currency Put Warrants") and to
purchase ("Currency Call Warrants" and, together with the Currency Put Warrants,
the "Currency Warrants") a certain amount of one currency or currency unit for a
certain amount of a different currency or currency unit, all as shall be
designated by the Company at the time of offering, (v) warrants entitling the
holders thereof to receive from the Company, upon exercise, an amount in cash
determined by reference to decreases ("Index Put Warrants") or increases ("Index
Call Warrants") in the level of a specified index (an "Index") which may be
based on one or more U.S. or foreign stocks, bonds or other securities, one or
more U.S. or foreign interest rates, one or more currencies or currency units,
or any combination of the foregoing, or determined by reference to the
differential between any two Indices ("Index Spread Warrants" and, together with
the Index Put Warrants and the Index Call Warrants, the "Index Warrants"), all
as shall be designated by the Company at the time of offering, and (vi) warrants
entitling the holders thereof to receive from the Company, upon exercise, an
amount in cash determined by reference to decreases ("Interest Rate Put
Warrants") or increases ("Interest Rate Call Warrants" and, together with the
Interest Rate Put Warrants, the "Interest Rate Warrants") in the yield, closing
price or rate of one or more specified debt instruments issued either by the
United States Government or by a foreign government (the "Government Debt
Instrument"), in the interest rate or interest rate swap rate established from
time to time by one or more specified financial institutions (the "Financial
Institution Rate") or in any specified combination of Government Debt
Instruments and/or Financial Institution Rates, all as shall be designated by
the Company at the time of offering. The Debt Securities, Debt Warrants,
Preferred Stock, Currency Warrants, Index Warrants and Interest Rate Warrants
are collectively referred to as the "Securities." The Debt Warrants, Currency
Warrants, Index Warrants and Interest Rate Warrants are collectively referred to
as the "Warrants."
The Company may issue Securities at an aggregate initial offering price
which will result in proceeds to the Company of not more than $2,827,525,000 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 the applicable Prospectus Supplement. The terms of each
series of Securities, including, where applicable, the specific designation,
priority, aggregate principal amount or number of shares, authorized
denominations or stated value per share, maturity, interest or dividend rate or
rates (or method of ascertaining same), interest or dividend payment dates, any
optional or mandatory redemption terms, any conversion, exchange or 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 the applicable 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, currency unit 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 September 30, 1994, the outstanding Senior Indebtedness of
the Company, exclusive of guarantees and other contingent obligations, was
approximately $2.8 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 specific designation, aggregate
number of Warrants, the initial public offering price, exercise price,
detachability, the currency or currency unit for which the Warrants may be
purchased, the currency or currency unit in which the cash settlement value or
the exercise price is payable, the method of calculation of the cash settlement
value, the date on which such Warrants become exercisable and the expiration
date, provisions, if any, for the automatic exercise and/or cancellation prior
to the expiration date, a discussion of certain United States federal income
tax, accounting or other special considerations applicable thereto and any other
terms in connection with such offering and sale.
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 the applicable Prospectus
Supplement. The net proceeds to the Company from such sale also will be set
forth in the applicable 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 NOVEMBER 23, 1994.
<PAGE> 38
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
"SEC"). Proxy statements, reports and other information concerning the Company
can be inspected and copied at the SEC's office at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the SEC's Regional Offices in New York (7 World Trade
Center, Suite 1300, 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 SEC 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 SEC 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 SEC:
(i) Annual Report on Form 10-K for the year ended December 31, 1993,
filed pursuant to Section 13 of the Exchange Act, including the portions of
THE CHASE MANHATTAN CORPORATION 1993 ANNUAL REPORT incorporated therein
(the "1993 Annual Report").
(ii) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1994, June 30, 1994 and September 30, 1994, filed pursuant to Section 13 of
the Exchange Act.
(iii) Current Reports on Form 8-K dated January 18, 1994, January 20,
1994, April 18, 1994, April 29, 1994, May 18, 1994, July 18, 1994, August
3, 1994, August 3, 1994, August 11, 1994, October 18, 1994 and November 18,
1994 filed pursuant to Section 13 of the Exchange Act.
(iv) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 10 filed pursuant to Section 12 of
the Exchange Act on April 11, 1969, as amended by amendments thereto on
Form 8 filed on June 20, 1969, April 8, 1988, May 17, 1990 and April 19,
1993 and the description of the Company's Junior Participating Preferred
Stock Purchase Rights contained in the Company's Registration Statement on
Form 8-A filed on February 17, 1989, including all amendments and reports
filed for the purpose of updating such descriptions prior to the
termination of the offering of the Securities of the Company offered
hereby.
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> 39
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 commercial
and consumer financing, investment banking, securities trading and investment
advisory services. The Corporation's primary strategy is that of a global bank
with a diversified domestic base serving three interrelated franchises: global
financial services, domestic consumer products and regional banking in the
northeastern United States. 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 National Consumer Product Companies, Regional Banking and
Global Private Banking; those serving wholesale customers are Global Corporate
Finance, Global Markets and Transaction and Information Services. In addition to
these 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"). Under these limitations as recently amended, a national bank
may not pay a dividend in an amount greater than its undivided profits. The
approval of the OCC is required if the total of all dividends declared by a
national bank in any calendar year exceeds such bank's net income for that year,
combined with its retained net income for the preceding two calendar years, less
any required transfers to surplus.
At September 30, 1994, under the more restrictive of these limitations, the
Bank could declare dividends during the remainder of 1994 of approximately $1.3
billion, combined with an additional amount equal to its net income from
September 30, 1994 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 during the remainder
of 1994 of approximately $1 billion and $6 million, respectively, combined with
an additional amount equal to their respective retained net profits from
September 30, 1994 up to the date of any dividend declaration. The payment of
dividends by bank holding companies and their banking subsidiaries may also be
limited by other factors, including applicable regulatory 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"), may finance or
otherwise supply funds to certain of their affiliates. In particular, each 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 banking subsidiaries of the Company from lending to the Company and
their affiliates unless such extensions of credit are secured by collateral in
specified amounts and are made on terms and conditions that are substantially
the same as those prevailing for comparable transactions with non-affiliated
companies. Further, such covered transactions by any 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.
3
<PAGE> 40
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.
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, most of which have
already been promulgated; others of which are still in the rulemaking process.
Through September 30, 1994, regulations have been promulgated under FDICIA
covering a variety of matters including assessment of risk-based deposit
insurance and prompt corrective action measures available to federal regulators
based on the capital category of an institution. Based upon its assessment of
the impact of all of the regulations issued under FDICIA, the Company does not
expect any of them to have a material effect on its operations.
Further rules have been proposed under FDICIA, governing such matters as
accounting and capital requirements. 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 the applicable 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.
RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
the Corporation for the nine-month period ending September 30, 1994 and for each
of the years in the five-year period ended December 31, 1993:
<TABLE>
<CAPTION>
YEAR ENDED
NINE MONTHS DECEMBER 31,
ENDED --------------------------------
SEPTEMBER 30, 1994 1993 1992 1991 1990 1989
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Excluding Interest on Deposits.................. 1.9x 1.3 x 1.4 x 1.3 x * *
Including Interest on Deposits.................. 1.4 1.1 1.2 1.1 * *
</TABLE>
- ---------------
* 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.
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.
4
<PAGE> 41
RATIOS OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS
The following are the consolidated ratios of earnings to fixed charges and
preferred stock dividend requirements for the Corporation for the nine-month
period ended September 30, 1994 and for each of the years in the five-year
period ended December 31, 1993:
<TABLE>
<CAPTION>
YEAR ENDED
NINE MONTHS DECEMBER 31,
ENDED --------------------------------
SEPTEMBER 30, 1994 1993 1992 1991 1990 1989
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Excluding Interest on Deposits.................. 1.7x 1.2 x 1.2 x 1.2 x * *
Including Interest on Deposits.................. 1.4 1.1 1.1 1.1 * *
- ---------------
<FN>
* For the years ended December 31, 1990 and 1989, earnings did not cover fixed
charges and preferred stock dividend requirements by $231 million and $580
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) applicable to common stock plus applicable income taxes, fixed
charges and preferred stock dividend requirements, 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 and preferred stock dividend requirements 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,
one-third (the amount deemed to represent an interest factor) of net rental
expense under all lease commitments and dividend requirements on the outstanding
preferred stock.
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 applicable Prospectus Supplement.
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 the Amended and Restated Indenture, dated as of
September 1, 1993, between the Company and Chemical Bank, as Trustee (the
"Subordinated Trustee") (said Indenture is referred to as 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 include
brief summaries of certain provisions of the Indentures, do not purport to be
complete and are subject to, 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, including the definitions
therein of certain terms. 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
5
<PAGE> 42
Debt Securities or either Indenture against the incurring of indebtedness by the
Company, the Bank or any other subsidiary of the Company.
The Debt Securities may be issued either in registered form ("Registered
Securities") or bearer form ("Bearer Securities") with coupons attached or both.
The Bearer Securities will be offered only to non-United States persons and to
offices of certain United States financial institutions located outside the
United States.
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 applicable Prospectus Supplement that will contain
the specific terms of the series of Debt Securities that are Offered Securities,
including where applicable: (1) the title and priority of the Offered
Securities; (2) any limit on the aggregate principal amount of the Offered
Securities; (3) the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which the Offered Securities will be issued; (4)
the date or dates on which the Offered Securities will mature; (5) 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; (6) 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; (7) 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; (8) any mandatory or optional
sinking fund, amortization or analogous provisions; (9) 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); (10) 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; (11) 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; (12) any special
provisions for the payment of additional amounts with respect to the Offered
Securities; (13) 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; (14) the currency, currency unit or currencies of
payment of principal of (and premium, if any) and interest, if any, on the
Offered Securities if other than dollars; (15) 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; (16) any special United States
tax considerations applicable to any Offered Securities; (17) any special
provisions relating to defeasance of the Senior Securities; (18) any conversion
or exchange provisions; and (19) any other terms of the Offered Securities not
inconsistent with the provisions of the applicable Indenture.
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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 applicable Prospectus
Supplement.
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 Debt Securities, however, Debt
Securities may be issued solely as Bearer Securities, or in a combination of
both Registered Securities and Bearer Securities. Unless otherwise specified
with respect to such series of Debt Securities, Debt Securities issued in bearer
form shall have interest coupons attached. (Indentures 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. (Indentures Section 311) See
"-- Limitations on Issuance of Bearer Securities."
If Debt 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 respective 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 be surrendered without the coupon relating
to such Interest Payment Date. (Indentures 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)
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 of redemption is given; (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;
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. (Indentures Section 305) The
Subordinated Indenture also provides that the Company shall not be required to
(i) issue, register the transfer of or exchange Subordinated Securities of any
series during a period beginning at the opening of business 15 days before the
day of mailing of a notice of exchange of Capital Securities (as defined below)
for Subordinated Securities of that series selected for exchange of Capital
Securities therefor and ending at the close of business on the day of such
mailing; or (ii) register the transfer of or exchange any security of a series
selected for exchange for Capital Securities. (Subordinated Indenture Section
305)
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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 their
closing date, in the United States or to United States persons 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 Debt 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 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. (Indentures Section
311)
TEMPORARY GLOBAL DEBT SECURITIES
Pending the availability of definitive Debt Securities, Debt Securities
which are issuable as Bearer Securities initially may be represented by one or
more temporary global Debt 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 the applicable Prospectus
Supplement, any such temporary global Debt 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 Debt Security shall be mailed or otherwise delivered to any
location in the United States in connection with such exchange. (Indentures
Sections 304, 311)
If so specified in the applicable Prospectus Supplement, interest in
respect of any portion of a temporary global Debt 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 Debt 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 Debt Security to the respective accounts
for which it holds such temporary global Debt Security only upon receipt in each
case of certification that, as of the relevant Interest Payment Date, the
portion of such temporary global Debt 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. (Indentures Sections 304, 311)
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
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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. 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)
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, currency unit or currencies
designated in the applicable 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
applicable Prospectus Supplement, payment of interest on Bearer Securities on
any Interest Payment Date will be made only against surrender of the coupon
relating to such Interest Payment Date. Unless otherwise indicated in the
applicable 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 currency unit or, if requested in writing by the
Holder, by transfer to an account in the designated currency or currency unit
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. (Indentures Sections 301, 1001,
1002)
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal (and premium, if any) on Registered Securities will be made in the
currency, currency unit or currencies designated in the applicable Prospectus
Supplement against surrender of such Registered Securities at the Principal
Trust Office or by check in the designated currency or currency unit mailed to
the person in whose name such Debt Security is registered. Unless otherwise
indicated in the applicable 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 applicable 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 or
currency unit 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 Debt Securities of such
series may be presented and surrendered for payment, provided that, if the Debt
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 Debt Securities of such series, so long as the Debt
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)
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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.
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)
CONVERSION RIGHTS
The terms, if any, on which Debt Securities may be convertible into or
exchangeable for other securities, including, without limitation, other
securities of the Company and securities of other entities, will be set forth in
the applicable Prospectus Supplement.
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 applicable Prospectus Supplement.
MEETINGS
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. (Senior Indenture Section 1301) The Subordinated
Indenture also contains provisions for convening meetings of the Holders of
Subordinated Securities. (Subordinated Indenture Section 1601) A meeting may be
called at any time by the respective Trustee, and also, upon request, by the
Company or the Holders of at least 10% in principal amount of the Outstanding
Securities of such series, in any such case upon notice given in accordance with
"-- Notices" below. (Senior Indenture Section 1302, Subordinated Indenture
Section 1602) Except as limited by the provisos in "THE SENIOR
SECURITIES -- Modifications and Waiver" and "THE SUBORDINATED
SECURITIES -- Modifications and Waiver", any resolution presented at a meeting
or adjourned meeting duly reconvened 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 Securities of that series; provided, however, that, except as
limited by such provisos, 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 Securities of a series may be adopted at a meeting or an
adjourned meeting duly reconvened at which a quorum is present only by the
affirmative vote of the Holders of 66 2/3% in principal amount of the
Outstanding Securities of that series; and provided, further, that, except as
limited by the provisos referred to immediately above, 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
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Outstanding 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
Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Outstanding Securities of any series duly held in
accordance with the applicable Indenture will be binding on all Holders of Debt
Securities of that series and any 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
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
Securities of a series, the persons holding or representing 66 2/3% in principal
amount of the Outstanding Securities of such series will constitute a quorum.
(Senior Indenture Section 1304, Subordinated Indenture Section 1604)
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 Senior
Trustee or the Subordinated Trustee, as the case may be, and any agent of the
Company or of such Trustee 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 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
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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. (Section 501) Any additional Events of Default with respect to any
series of Senior Securities will be specified in the applicable Prospectus
Supplement relating to such series. 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)
MODIFICATION AND WAIVER
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, (1) change the Stated Maturity of
the principal of, or any instalment of principal of or interest on, any Senior
Security; (2) 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; (3) change any obligation of the Company to
pay additional amounts pursuant to the Senior Indenture; (4) reduce the amount
of principal of an Original Issue Discount Senior Security payable upon
acceleration of the maturity thereof; (5) adversely affect the right of
repayment, if any, at the option of the Holder thereof; (6) change the coin or
currency in which any Senior Security or any premium or any interest thereon is
payable; (7) impair the right to institute suit for the enforcement of any
payment on or with respect to any Senior Security; (8) 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; (9) 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 (10) 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,
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
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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)
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 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
10006. Bankers Trust Company also serves as trustee under the indentures with
the Company relating to the Floating Rate Notes Due 1999, the 8 1/2% Notes Due
1996, the 7 7/8% Notes Due 1997, 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.
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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. However, 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 do not constitute Events of
Default under the Subordinated Indenture. (Section 501) 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 in 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, 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 applicable Prospectus Supplement. (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
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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)
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)
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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 SEC has advised that Rule 13e-4 and Rule 14e-1 of the
SEC'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 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 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 9 3/4% Subordinated Notes Due 2001, the 7.50% Subordinated Notes Due
2003, the Floating Rate Subordinated Notes Due 2003, the Floating Rate
Subordinated Notes Due August 1, 2003, the 8% Subordinated Notes Due 2004, the
7 7/8% Subordinated Notes Due 2004, the 6.50% Subordinated Notes Due 2005, the
6.75% Subordinated Notes Due 2008, the 6 1/8% Subordinated Notes Due 2008, the
6.50% Subordinated Notes Due 2009, the Floating Rate Subordinated Notes Due 2009
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)
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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
September 30, 1994, the outstanding Senior Indebtedness of the Company,
exclusive of guarantees and other contingent obligations, was approximately $2.8
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. (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, the Floating Rate Subordinated Notes Due 2003, the
Floating Rate Subordinated Notes Due August 1, 2003, the 8% Subordinated Notes
Due 2004, the 7 7/8% Subordinated Notes Due 2004, the 6.50% Subordinated Notes
Due 2005, the 6.75% Subordinated Notes Due 2008, the 6 1/8% Subordinated Notes
Due 2008, the 6.50% Subordinated Notes Due 2009 and the Subordinated Medium-Term
Notes, Series A and Series B, of the Company, which are currently outstanding
under the Subordinated Indenture. The Corporation has normal banking
relationships with the Subordinated Trustee.
DESCRIPTION OF PREFERRED STOCK
The following description of Preferred Stock sets forth certain general
terms and provisions of the series of Preferred Stock to which any Prospectus
Supplement may relate. Certain other terms of any particular series of Preferred
Stock (including Preferred Stock issuable upon conversion or exchange of any
Debt Security) will be described in the applicable Prospectus Supplement. If so
indicated in the applicable Prospectus Supplement, the terms of any such series
of Preferred Stock may differ from the terms set forth below. The description of
Preferred Stock set forth below and the description of the terms of a particular
series of Preferred Stock set forth in the applicable Prospectus Supplement do
not purport to be complete and are qualified in their entirety by reference to
the Company's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and the Certificate of Designation, Preferences
and Rights relating to such series of Preferred Stock, which will be filed or
incorporated by reference as an exhibit to the Registration Statement to which
this Prospectus relates. Preferred Stock, if so indicated in the applicable
Prospectus Supplement, may be issuable in exchange for a series of Debt
Securities or upon conversion thereof.
GENERAL
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,
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preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions providing for the issue thereof
adopted by the Board of Directors and as are not stated and expressed in the
Certificate of Incorporation. As used herein the term "Board of Directors" means
the Board of Directors of the Company and includes any duly authorized committee
thereof. Prior to the issuance of each series of Preferred Stock, the Board of
Directors will adopt resolutions creating and designating such series as a
series of preferred stock of the Company.
As of September 30, 1994, there were 56,000,000 shares of preferred stock
of the Company outstanding and having an aggregate stated value of approximately
$1,400,000,000. Unless otherwise specified in the applicable Prospectus
Supplement, the shares of each series of Preferred Stock will rank on a parity
as to dividends and distributions of assets with each other and with the
currently outstanding series of preferred stock of the Company which have been
designated as 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 a stated value of $25 per share, Preferred
Stock, 8 1/2% Series K, with a stated value of $25 per share, Preferred Stock,
8.32% Series L, with a stated value of $25 per share, Preferred Stock, 8.40%
Series M, with a stated value of $25 per share, and Preferred Stock, Adjustable
Rate Series N, with a stated value of $25 per share, and will rank senior to the
Company's authorized but unissued Junior Participating Preferred Stock.
Under regulations adopted by the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), if the holders of shares of any series of
preferred stock of the Company become entitled to vote for the election of
directors because dividends on such series are in arrears (see "Voting Rights"),
such series may then be deemed a "class of voting securities" and a holder of 25
percent or more of such series (or a holder of 5 percent or more if it otherwise
exercises a "controlling influence" over the Company) may then be subject to
regulation as a bank holding company in accordance with the Bank Holding Company
Act of 1956, as amended. In addition, at such time as such series is deemed a
class of voting securities, any other bank holding company may be required to
obtain the prior approval of the Federal Reserve Board to acquire 5 percent or
more of such series.
Reference is made to the Prospectus Supplement relating to either the
particular series of Preferred Stock offered thereby or the particular series of
Debt Securities offered thereby which is convertible or exchangeable for a
particular series of Preferred Stock for certain specific terms thereof,
including: (i) the designation, number of shares and stated value per share;
(ii) the amount of liquidation preference; (iii) the initial public offering
price at which shares of such series of Preferred Stock will be sold; (iv) the
dividend rate or rates (or method of ascertaining the same); (v) the dates on
which dividends shall be payable, the date from which dividends shall accrue and
the record dates for determining the holders entitled to such dividends; (vi)
any redemption or sinking fund provisions; (vii) any conversion or exchange
provisions; and (viii) any additional dividend, redemption, liquidation or other
preferences or rights and qualifications, limitations or restrictions thereof.
The shares of Preferred Stock will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
Unless otherwise specified in the applicable Prospectus Supplement, the
transfer agent, registrar and dividend disbursing agent for shares of each
series of Preferred Stock will be Mellon Securities Trust Company.
VOTING RIGHTS
Holders of shares of Preferred Stock will have no voting rights, except as
set forth below or otherwise required by law.
In the event that six quarterly dividends (whether or not consecutive)
payable on any share or shares of any series of preferred stock of the Company
shall be in arrears, the holders of shares of each series of Preferred Stock,
voting separately as a class with the holders of shares of any one or more other
series of
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preferred stock of the Company upon which like voting rights have been conferred
(including any other series of Preferred Stock), shall be entitled at the
Company's next annual meeting of stockholders (and at each subsequent annual
meeting of stockholders), unless all dividends in arrears have been paid or
declared and set apart for payment prior to such meeting (or such subsequent
meeting), to cast one-fortieth (1/40) of one vote for each $25 of involuntary
liquidation preference (exclusive of accrued and unpaid dividends thereon) for
each share of such series of Preferred Stock held of record (but not more than
one vote per share) for the election of two directors of the Company, with the
remaining directors of the Company to be elected by the holders of shares of any
other class or classes or series of stock entitled to vote therefor. Until the
arrears in payments of all dividends which permitted the election of such
directors shall cease to exist, any director who has been so elected pursuant to
the preceding sentence may be removed at any time, either with or without cause,
only by the affirmative vote of the holders of the shares at the time entitled
to cast a majority of the votes entitled to be cast for the election of any such
director at a special meeting of such holders called for that purpose, and any
vacancy thereby created may be filled by the vote of such holders. If and when
such arrears shall cease to exist, the holders of shares of such series of
Preferred Stock shall be divested of the foregoing special voting rights,
subject to revesting in the event of each and every subsequent like arrears in
payments of dividends. Upon the termination of each such special voting right,
the terms of office of all persons who may have been elected directors by vote
of the holders of such shares of preferred stock of the Company pursuant to such
special voting right shall immediately terminate.
Without the consent of the holders of shares entitled to cast at least
two-thirds of the votes entitled to be cast by the holders of the total number
of shares of preferred stock of the Company then outstanding, voting as a class
without regard to series, with the holders of shares of each series of Preferred
Stock being entitled to cast one-fortieth (1/40) of one vote for each $25 of
involuntary liquidation preference (exclusive of accrued and unpaid dividends
thereon) for each share of such series of Preferred Stock (but not more than one
vote per share), the Company may not: (a) create any class or series of stock
which shall have preference as to dividends or distributions of assets over any
outstanding series of preferred stock of the Company (other than a series which
has no right to object to such creation) or (b) alter or change the provisions
of the Certificate of Incorporation so as to adversely affect the voting power,
preferences or special rights of the holders of shares of preferred stock of the
Company; provided, however, that if such creation or such alteration or change
would adversely affect the voting power, preferences or special rights of one or
more, but not all, series of preferred stock of the Company at the time
outstanding, consent of the holders of shares entitled to cast at least two-
thirds of the votes entitled to be cast by the holders of all of the shares of
all such series so affected, voting as a class, shall be required in lieu of the
consent of the holders of shares entitled to cast at least two-thirds of the
votes entitled to be cast by the holders of the total number of shares of
preferred stock of the Company at the time outstanding. Without limiting the
generality of the foregoing, the creation of any class or series of stock
entitled to vote as a class together with the holders of shares of any series of
Preferred Stock on the matters set forth in this paragraph, the holders of
shares of which are entitled to cast more than one-fortieth (1/40) of one vote
for each $25 of involuntary liquidation preference (exclusive of accrued and
unpaid dividends thereon) to which the holders of such shares of such class or
series are entitled, shall be deemed to adversely affect the voting power of
such series of Preferred Stock.
DIVIDENDS
The holders of shares of each series of Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of funds legally
available therefor, cumulative or non-cumulative cash or other dividends on such
dates and at such rate or rates as are set forth in, or as are determined by the
method described in, the applicable Prospectus Supplement. Dividends on the
shares of each series of Preferred Stock will accrue from the date on which the
Company initially issues shares of such series or as otherwise set forth in the
applicable Prospectus Supplement. Each dividend will be payable to holders of
record as they appear on the stock register of the Company on the record dates
fixed by the Board of Directors, as specified in the applicable Prospectus
Supplement.
So long as the shares of any series of Preferred Stock shall be
outstanding, unless (i), when applicable, full cumulative dividends shall have
been paid or declared and set apart for payment on all outstanding shares
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of Preferred Stock and other classes and series of preferred stock of the
Company (other than Junior Stock, as defined below) and (ii) the Company shall
not be in default or in arrears with respect to any sinking or other analogous
fund or other agreement for the purchase, redemption or other retirement of any
shares of preferred stock of the Company (other than Junior Stock), the Company
may not declare any dividends on any shares of Common Stock, par value $2.00 per
share, of the Company ("Common Stock") or any other stock of the Company ranking
as to dividends or distributions of assets junior to each series of Preferred
Stock (the Common Stock and any such other stock being herein referred to as
"Junior Stock"), or make any payment on account of, or set apart money for, a
sinking or other analogous fund for the purchase, redemption or other retirement
of any shares of Junior Stock or make any distribution in respect thereof,
whether in cash or property or in obligations or stock of the Company, other
than Junior Stock. In the event that there shall be outstanding shares of any
other series of preferred stock of the Company (including any other series of
Preferred Stock) ranking on a parity as to dividends with any series of
Preferred Stock and dividends on shares of such series of Preferred Stock or
such other series of preferred stock of the Company are in arrears, the Company,
in making any dividend payment on account of such arrears, is required to make
payments ratably on all outstanding shares of such series of Preferred Stock and
such other series of preferred stock of the Company in proportion to the
respective amounts of dividends in arrears on all such outstanding shares of
such series of Preferred Stock and such other series of preferred stock of the
Company to the date of such dividend payment. Holders of shares of any series of
Preferred Stock shall not be entitled to any dividend, whether payable in cash,
property or stock, in excess of full cumulative dividends on shares of such
series of Preferred Stock. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments which may be in
arrears.
REDEMPTION
The shares of any series of Preferred Stock may be redeemable at the option
of the Company and may be subject to mandatory redemption pursuant to a sinking
fund or otherwise, in each case upon the terms, at the times and at the
redemption prices set forth in the applicable Prospectus Supplement.
If any dividends on shares of any series of Preferred Stock are in arrears,
no shares of such series shall be redeemed unless all outstanding shares of such
series are simultaneously redeemed, and the Company shall not purchase or
otherwise acquire any shares of such series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of such series
pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of such series.
LIQUIDATION PREFERENCE
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of shares of each series of Preferred
Stock shall be entitled to receive out of the assets of the Company available
for distribution to stockholders, before any distribution of assets is made to
the holders of Common Stock or of any other shares of stock of the Company
ranking as to such a distribution junior to the shares of such series, an amount
described in the applicable Prospectus Supplement. The holders of the presently
outstanding shares of preferred stock of the Company are entitled to receive
amounts equal to the stated value of such shares. If upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the amounts
payable with respect to shares of each series of Preferred Stock and any other
shares of stock of the Company ranking as to any such distribution on a parity
with shares of such series of Preferred Stock are not paid in full, the holders
of shares of such series of Preferred Stock and of such other shares will share
ratably in any such distribution of assets of the Company in proportion to the
full respective preferential amounts to which they are entitled. After payment
to the holders of shares of such series of Preferred Stock of the full
preferential amounts to which they are entitled, the holders of shares of such
series of Preferred Stock will not be entitled to any further participation in
any distribution of assets by the Company, unless otherwise provided in the
applicable Prospectus Supplement. The consolidation or merger of the Company
with or into any other corporation, or the sale of substantially all the assets
of the Company in consideration for the issuance of equity securities of another
corporation, shall not be regarded as a liquidation, dissolution or winding up
of the
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Company, if the voting power, preferences or special rights of the holders of
shares of such series of Preferred Stock are not impaired thereby.
CONVERSION AND EXCHANGEABILITY PROVISIONS
The terms, if any, on which shares of any series of Preferred Stock are
convertible into or exchangeable for shares of Common Stock will be set forth in
the applicable Prospectus Supplement. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the holder, or at the
option of the Company, in which the number of shares of Common Stock to be
received by the holders of Preferred Stock would be calculated by reference to
the market price of Common Stock as of a time stated in the applicable
Prospectus Supplement. See "DESCRIPTION OF COMMON STOCK."
DESCRIPTION OF COMMON STOCK
If so specified in the Prospectus Supplement relating to the Offered
Securities, the Offered Securities are convertible into or exchangeable for
shares of Common Stock. The statements below describing the Common Stock are in
general terms and are in all respects subject to, and are qualified in their
entirety by reference to, the applicable provisions of the Certificate of
Incorporation.
The Company is authorized to issue 500,000,000 shares of Common Stock. At
September 30, 1994, 181,289,886 shares of Common Stock were outstanding,
19,011,983 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, The Chase Manhattan 1987 Long-Term Incentive
Plan, and The Chase Manhattan 1994 Long-Term Incentive Plan, 3,310,875 shares of
Common Stock were reserved for issuance pursuant to warrants issued in
settlement of a legal action, 14,000,000 shares of Common Stock were reserved
for issuance pursuant to The Chase Manhattan Stock Option Program for Employees,
and 9,596,151 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 above under "DESCRIPTION OF
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 were distributed in 1989 as dividends to holders of
Common Stock on or after February 27, 1989 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 1993 Annual Report of
the Company and will be more fully described in any Prospectus Supplement
applicable to Preferred Stock that is convertible or exchangeable into Company
Stock. Shares of Common Stock are fully paid and nonassessable; however, federal
law (12 U.S.C. Section 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.
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The 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 Board of 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 the holders 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 provision.
DESCRIPTION OF WARRANTS
The Company may issue, together with any Debt Securities of a series
offered or separately, Debt Warrants for the purchase of other Debt Securities
of any series or Currency Warrants, Index Warrants and Interest Rate Warrants.
The Warrants are to be issued under separate Warrant Agreements (each a "Warrant
Agreement" and respectively a "Debt Warrant Agreement," a "Currency Warrant
Agreement," an "Index Warrant Agreement" and an "Interest Rate Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as Warrant Agent (each a "Warrant Agent" and respectively a "Debt Warrant
Agent," a "Currency Warrant Agent," an "Index Warrant Agent" and an "Interest
Rate Warrant Agent"), all as set forth in the applicable Prospectus Supplement.
A copy of the form of each type of Warrant Agreement, including the form of
Warrant Certificate representing each type of Warrant (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 Agreements 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 Agreements and the Warrant
Certificates, respectively, including the definition therein of certain terms.
Such summaries encompass all the material provisions contained in the form of
Warrant Agreements and the form of Warrant Certificates.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the following terms of
the Debt Warrants being offered thereby, the Debt Warrant Agreement relating to
such Debt Warrants and the Debt Warrant Certificates representing such Debt
Warrants: (1) the number of Debt Warrants offered; (2) the designation,
aggregate principal amount and terms of the Debt Securities purchasable upon
exercise of such Debt Warrants; (3) the designation and terms of any related
Debt Securities with which such Debt Warrants are issued and the number of such
Debt Warrants issued with each such Debt Security; (4) the date, if any, on and
after which such Debt Warrants and the related Debt Securities will be
separately transferable; (5) the principal amount of Debt Securities purchasable
upon exercise of one Debt Warrant and the price at which such principal amount
of Debt Securities may be purchased upon such exercise; (6) the date on which
the right to exercise the Debt Warrants shall commence and the date on which
such right shall expire (the "Debt Warrant Expiration Date"); (7) the form in
which the Debt Warrants represented by the Debt Warrant Certificates will be
issued and where the Debt Warrants represented by Debt Warrant Certificates may
be transferred and registered; and (8) any other terms of the Debt Warrants. The
applicable Prospectus Supplement will contain a summary of the United States
federal income tax, accounting and other consequences with respect to the Debt
Warrants.
If issued in definitive form, Debt Warrant Certificates will be
exchangeable for new Debt Warrant Certificates of authorized denominations at
the corporate trust office of the Debt Warrant Agent or any other office
indicated in the applicable Prospectus Supplement. Prior to the exercise of Debt
Warrants, holders of such Debt Warrants will not have any of the rights of
Holders of the Debt Securities purchasable upon such
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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 DEBT WARRANTS
Each Debt Warrant will entitle the holder, upon payment of the exercise
price, if any, 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
applicable Prospectus Supplement. Debt Warrants will be exercisable (i) at any
time up to the close of business on the Debt Warrant Expiration Date set forth
in the applicable Prospectus Supplement or (ii) only at maturity. 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 Debt Warrants will
become void.
Debt Warrants may be exercised by delivery to the Debt 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 Debt Warrant
Certificate. Debt Warrants will be deemed to have been exercised upon receipt of
the exercise price, subject to the receipt, within five business days, of the
Debt Warrant Certificate evidencing such Debt Warrants. Upon receipt of such
payment and the Debt Warrant Certificate properly completed and duly exercised
at the corporate trust office of the Debt 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 Debt
Warrants represented by such Debt Warrant Certificate are exercised, a new Debt
Warrant Certificate will be issued for the remaining amount of outstanding Debt
Warrants.
CURRENCY WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants, Index
Warrants or Interest Rate Warrants, or separately, Currency Warrants (a) in the
form of Currency Put Warrants, entitling the owners thereof to receive from the
Company the Currency Warrant Cash Settlement Value (as defined in the applicable
Prospectus Supplement) of the right to sell a specified amount of one currency
(whether U.S. dollars or a foreign currency or foreign currency unit) (a "Base
Currency") for a specified amount of a different currency (whether U.S. dollars
or a foreign currency or foreign currency unit) (a "Reference Currency"), (b) in
the form of Currency Call Warrants, entitling the owners thereof to receive from
the Company the Currency Warrant Cash Settlement Value of the right to purchase
a specified amount of a Base Currency for a specified amount of a Reference
Currency, or (c) in such other form as specified in the applicable Prospectus
Supplement. The applicable Prospectus Supplement will set forth the formula
pursuant to which the Currency Warrant Cash Settlement Value will be determined,
including any multipliers, if applicable.
The applicable Prospectus Supplement will describe the following terms of
the Currency Warrants being offered thereby, the Currency Warrant Agreement
relating to such Currency Warrants and the Currency Warrant Certificates
representing such Currency Warrants: (1) the title and number of such Currency
Warrants offered; (2) the aggregate amount of such Currency Warrants; (3) the
initial offering price of such Currency Warrants; (4) the exercise price, if
any; (5) the currency or currency unit in which the initial offering price, the
exercise price, if any, and the Currency Warrant Cash Settlement Value of such
Currency Warrants is payable; (6) the Base Currency and the Reference Currency
for such Currency Warrants; (7) whether such Currency Warrants shall be Currency
Put Warrants, Currency Call Warrants or otherwise; (8) the formula for
determining the Currency Warrant Cash Settlement Value, if applicable, of each
Currency Warrant; (9) whether and under what circumstances a minimum and/or
maximum expiration value is applicable upon the expiration or exercise of such
Currency Warrants; (10) the effect or effects, if any, of the occurrence of a
Market Disruption Event or Force Majeure Event (each as defined in the
applicable Prospectus Supplement); (11) the date on which the right to exercise
such Currency Warrants shall commence and the date (the "Currency Warrant
Expiration Date") on which such right shall expire; (12) any minimum number of
Currency Warrants which must be exercised at any one time, other than upon
automatic exercise; (13) the maximum number, if any, of such Currency Warrants
that may, subject to
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election by the Company, be exercised by all owners (or by any person or entity)
on any day; (14) any provisions for the automatic exercise of such Currency
Warrants other than at expiration; (15) whether and under what circumstances
such Currency Warrants may be canceled by the Company prior to their expiration
date; (16) any other procedures and conditions relating to the exercise of such
Currency Warrants; (17) the identity of the Currency Warrant Agent; (18) any
national securities exchange on which such Currency Warrants will be listed;
(19) provisions, if any, for issuing such Currency Warrants in certificated
form; (20) if such Currency Warrants are not issued in book-entry form, the
place or places at which payments in respect of such Currency Warrants are to be
made by the Company; (21) if applicable, a discussion of certain United States
federal income tax, accounting or other special considerations applicable
thereto; and (22) any other terms of the Currency Warrants.
Other important information concerning Currency Warrants is set forth below
under "Certain Items Applicable to Currency Warrants, Index Warrants and
Interest Rate Warrants."
INDEX WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants,
Currency Warrants or Interest Rate Warrants, or separately, Index Warrants (a)
in the form of Index Put Warrants, entitling the owners thereof to receive from
the Company the Index Warrant Cash Settlement Value (as defined in the
applicable Prospectus Supplement) in cash, which amount will be determined by
reference to the amount, if any, by which the Fixed Amount (as defined in the
applicable Prospectus Supplement) at the time of exercise exceeds the Index
Value (as defined in the applicable Prospectus Supplement), (b) in the form of
Index Call Warrants, entitling the owners thereof to receive from the Company
the Index Warrant Cash Settlement Value in cash, which amount will be determined
by reference to the amount, if any, by which the Index Value at the time of
exercise exceeds the Fixed Amount, (c) in the form of Index Spread Warrants,
entitling the owners thereof to receive from the Company the Index Warrant Cash
Settlement Value in cash, which amount will be determined by reference to the
amount, if any, by which the Reference Index Value (as defined in the applicable
Prospectus Supplement) at the time of exercise exceeds the Base Index Value (as
defined in the applicable Prospectus Supplement) or (d) in such other form as
shall be specified in the applicable Prospectus Supplement. The applicable
Prospectus Supplement will set forth the formula pursuant to which the Index
Warrant Cash Settlement Value will be determined, including any multipliers, if
applicable.
The applicable Prospectus Supplement will describe the following terms of
the Index Warrants being offered thereby, the Index Warrant Agreement relating
to such Index Warrants and the Index Warrant Certificate representing such Index
Warrants: (1) the title and number of such Index Warrants offered; (2) the
aggregate amount of such Index Warrants; (3) the initial offering price of such
Index Warrants; (4) the exercise price, if any; (5) the currency or currency
unit in which the initial offering price, the exercise price, if any, and the
Index Warrant Cash Settlement Value of such Index Warrants is payable; (6) the
Index or Indices for such Index Warrants, which may be based on one or more U.S.
or foreign stocks, bonds, or other securities, one or more U.S. or foreign
interest rates, one or more currencies or currency units, or any combination of
the foregoing, and may be a preexisting U.S. or foreign index compiled and
published by a third party or an index based on one or more securities, interest
rates or currencies selected by the Company solely in connection with the
issuance of such Index Warrants, and certain information regarding such Index or
Indices and the underlying securities, interest rates or currencies (including,
to the extent possible, the policies of the publisher of the Index with respect
to additions, deletions and substitutions of such securities, interest rates or
currencies); (7) whether such Index Warrants shall be Index Put Warrants, Index
Call Warrants, Index Spread Warrants or otherwise; (8) the method of providing
for a substitute Index or Indices or otherwise determining the amount payable in
connection with the exercise of such Index Warrants if any Index changes or
ceases to be made available by its publisher, which determination will be made
by an independent expert; (9) the formula for determining the Index Warrant Cash
Settlement Value, if applicable, of each Index Warrant; (10) whether and under
what circumstances a minimum and/or maximum expiration value is applicable upon
the expiration or exercise of such Index Warrants; (11) the effect or effects,
if any, of the occurrence of a Market Disruption Event or Force Majeure Event
(as defined in the applicable Prospectus
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Supplement); (12) the date on which the right to exercise such Index Warrants
shall commence and the date (the "Index Warrant Expiration Date") on which such
right shall expire; (13) any minimum number of Index Warrants which must be
exercised at any one time, other than upon automatic exercise; (14) the maximum
number, if any, of such Index Warrants that may, subject to election by the
Company, be exercised by all owners (or by any person or entity) on any day;
(15) any provisions for the automatic exercise of such Index Warrants other than
at expiration; (16) whether and under what circumstances such Index Warrants may
be canceled by the Company prior to their expiration date; (17) any provisions
permitting a Holder to condition any notice of exercise on the absence of
certain specified changes in the Index Value, the Base Index Value or the
Reference Index Value after the date of exercise; (18) any other procedures and
conditions relating to the exercise of such Index Warrants; (19) the identity of
the Index Warrant Agent; (20) any national securities exchange on which such
Index Warrants will be listed; (21) provisions, if any, for issuing such Index
Warrants in certificated form; (22) if such Index Warrants are not issued in
book-entry form, the place or places at which payments in respect of such Index
Warrants are to be made by the Company; (23) if applicable, a discussion of
certain United States federal income tax, accounting or other special
considerations applicable thereto; and (24) any other terms of such Index
Warrants.
Other important information concerning Index Warrants is set forth below
under "Certain Items Applicable to Currency Warrants, Index Warrants and
Interest Rate Warrants."
INTEREST RATE WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants,
Currency Warrants or Index Warrants, or separately, Interest Rate Warrants (a)
in the form of Interest Rate Put Warrants, entitling the owners thereof to
receive from the Company the Interest Rate Warrant Cash Settlement Value (as
defined in the applicable Prospectus Supplement) in cash, which amount will be
determined by reference to the amount, if any, by which the Spot Amount (as
defined in the applicable Prospectus Supplement) is less than the Strike Amount
(as defined in the applicable Prospectus Supplement) on the applicable valuation
date following exercise, (b) in the form of Interest Rate Call Warrants,
entitling the owners thereof to receive from the Company the Interest Rate
Warrant Cash Settlement Value in cash, which amount will be determined by
reference to the amount, if any, by which the Spot Amount on the applicable
valuation date following exercise exceeds the Strike Amount or (c) in such other
form as shall be specified in the applicable Prospectus Supplement. The
applicable Prospectus Supplement will set forth the formula pursuant to which
the Interest Rate Warrant Cash Settlement Value will be determined, including
any multipliers, if applicable. The Strike Amount may either be a fixed yield,
price or rate of a Government Debt Instrument, a Financial Institution Rate or
any combination of Government Debt Instrument and/or Financial Institution Rates
or a yield, price or rate that varies during the term of the Interest Rate
Warrants in accordance with a schedule or formula. The Government Debt
Instrument will be one or more instruments specified in the applicable
Prospectus Supplement issued either by the United States government or by a
foreign government. The Financial Institution Rate will be one or more interest
rates or interest rate swap rates established from time to time by one or more
financial institutions specified in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the following terms of
the Interest Rate Warrants being offered thereby, the Interest Rate Warrant
Agreement relating to such Interest Rate Warrants and the Interest Rate Warrant
Certificate representing such Interest Rate Warrants: (1) the title and number
of such Interest Rate Warrants offered, (2) the aggregate amount of such
Interest Rate Warrants; (3) the initial offering price of such Interest Rate
Warrants; (4) the exercise price, if any; (5) the currency or currency unit in
which the initial offering price, the exercise price, if any, and the Interest
Rate Warrant Cash Settlement Value of such Interest Rate Warrants is payable;
(6) the Government Debt Instrument (which may be one or more debt instruments
issued either by the United States government or by a foreign government), the
Financial Institution Rate (which may be one or more interest rates or interest
rate swap rates established from time to time by one or more specified financial
institutions) or the other yield, price or rate utilized for such Interest Rate
Warrants, and certain information regarding such Government Debt Instrument or
Financial Institution Rate; (7) whether such Interest Rate Warrants shall be
Interest Rate Put Warrants, Interest Rate Call Warrants or otherwise; (8) the
Strike Amount, the method of determining the Spot
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Amount and the method of expressing movements in the yield or closing price of
the Government Debt Instrument or in the level of the Financial Institution Rate
as a cash amount in the currency in which the Interest Rate Warrant Cash
Settlement Value of such Warrants is payable; (9) the formula for determining
the Interest Rate Warrant Cash Settlement Value, if applicable, of each Interest
Rate Warrant; (10) whether and under what circumstances a minimum and/or maximum
expiration value is applicable upon the expiration or exercise of such Interest
Rate Warrants (as defined in the applicable Prospectus Supplement); (11) the
effect or effects, if any, of the occurrence of a Market Disruption Event or
Force Majeure Event (as defined in the applicable Prospectus Supplement); (12)
the date on which the right to exercise such Interest Rate Warrants shall
commence and the date (the "Interest Rate Warrant Expiration Date") on which
such right shall expire; (13) any minimum number of Interest Rate Warrants which
must be exercised at any one time, other than upon automatic exercise; (14) the
maximum number, if any, of such Interest Rate Warrants that may, subject to
election by the Company, be exercised by all owners (or by any person or entity)
on any day; (15) any provisions for the automatic exercise of such Interest Rate
Warrants other than at expiration; (16) whether and under what circumstances
such Interest Rate Warrants may be canceled by the Company prior to their
expiration date; (17) any provisions permitting a Holder to condition any notice
of exercise on the absence of certain specified changes in the Spot Amount after
the date of exercise; (18) any other procedures and conditions relating to the
exercise of such Interest Rate Warrants; (19) the identity of the Interest Rate
Warrant Agent; (20) any national securities exchange on which such Interest Rate
Warrants will be listed; (21) provisions, if any, for issuing such Interest Rate
Warrants in certified form; (22) if such Interest Rate Warrants are not issued
in book-entry form, the place or places at which payments in respect of such
Interest Rate Warrants are to be made by the Company; (23) if applicable, a
discussion of certain United States federal income tax, accounting or other
special considerations applicable thereto; and (24) any other terms of such
Interest Rate Warrants.
Other important information concerning Interest Rate Warrants is set forth
below under "Certain Items Applicable to Currency Warrants, Index Warrants and
Interest Rate Warrants."
CERTAIN ITEMS APPLICABLE TO CURRENCY WARRANTS, INDEX WARRANTS AND INTEREST RATE
WARRANTS
Exercise of Warrants
Unless otherwise specified in the applicable Prospectus Supplement, (a)
each Currency Warrant, Index Warrant and Interest Rate Warrant will entitle the
holder, upon payment of the exercise price, if any, to the applicable Cash
Settlement Value of such Warrant, on the applicable Exercise Date, in each case
as such terms will further be defined in the applicable Prospectus Supplement
(Section 1.1 of the applicable Warrant Agreement) and (b) if not exercised prior
to 1:30 p.m., New York City time on the applicable Warrant Expiration Date, the
Warrants will be deemed automatically exercised on such Warrant Expiration Date
(Section 2.3). As described below, Currency Warrants, Index Warrants and
Interest Rate Warrants may also be deemed to be automatically exercised if they
are delisted. Procedures for exercise of the Currency Warrants, Index Warrants
and Interest Rate Warrants will be set out in the applicable Prospectus
Supplement.
Market Disruption and Force Majeure Events
If so specified in the applicable Prospectus Supplement, following the
occurrence of a Market Disruption Event or Force Majeure Event (as each term
shall be defined therein), the Cash Settlement Value of a Currency Warrant, an
Index Warrant or an Interest Rate Warrant may be determined on a different basis
than under normal exercise of a Warrant or the determination of the applicable
Cash Settlement Value. In addition, if so specified in the applicable Prospectus
Supplement, Currency Warrants, Index Warrants and Interest Rate Warrants may, in
certain circumstances, be canceled by the Company prior to their expiration date
and the holders thereof will be entitled to receive only the applicable
Cancellation Amount. The Cancellation Amount may be either a fixed amount or an
amount that varies during the term of the Warrants in accordance with a schedule
or formula.
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Settlement Currency
Currency Warrants, Index Warrants and Interest Rate Warrants will be
settled only in U.S. dollars (unless settlement in a foreign currency is
specified in the applicable Prospectus Supplement and is permissible under
securities exchange rules approved by the SEC) and accordingly will not require
or entitle an owner to sell, deliver, purchase or take delivery of the currency,
security or other instrument underlying such Warrants. If any of the Currency
Warrants, Index Warrants or Interest Rate Warrants are sold for, or if the
exercise price, if any, is payable in, foreign currencies or foreign currency
units or if the amount payable by the Company in respect of any series of
Currency Warrants, Index Warrants or Interest Rate Warrants is payable in
foreign currencies or foreign currency units, the restrictions, elections, tax
consequences, specific terms and other information with respect to such issue of
Warrants and such currencies or currency units will be set forth in the
applicable Prospectus Supplement.
Listing
Unless otherwise specified in the applicable Prospectus Supplement, each
issue of Currency Warrants, Index Warrants and Interest Rate Warrants will be
listed on a national securities exchange, as specified in the applicable
Prospectus Supplement, subject only to official notice of issuance, as a
pre-condition to the sale of any such Warrants. It may be necessary in certain
circumstances for such national securities exchange to obtain the approval of
the SEC in connection with any such listing. Unless otherwise specified in the
applicable Prospectus Supplement, in the event that such Warrants are delisted
from, or permanently suspended from trading on, such exchange, and, at or prior
to such delisting or suspension, such Warrants shall not have been listed on
another national securities exchange or traded pursuant to the rules of another
self-regulatory organization, any such Warrants not previously exercised will be
deemed automatically exercised on the date such delisting or permanent trading
suspension becomes effective (Section 2.3 of the applicable Warrant Agreement).
The applicable Cash Settlement Value to be paid in such event will be as set
forth in the applicable Prospectus Supplement. The Company will notify holders
of such Warrants as soon as practicable of such delisting or permanent trading
suspension. The applicable Warrant Agreement will contain a covenant of the
Company not to seek delisting of such Warrants from, or permanent suspension of
their trading on, such exchange (Section 2.4 of the Currency Warrant Agreement
and the Interest Rate Warrant Agreement and Section 2.5 of the Index Warrant
Agreement).
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 the applicable 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 or more of its outstanding issues of debt or convertible debt
securities. The Company 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 applicable 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
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dealers, will be set forth in the applicable 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 the applicable 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 DEBT 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.
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, 1993 and 1992 and for each of the years in the three-year
period ended December 31, 1993 incorporated in this 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.
28
<PAGE> 65
LEGAL OPINION
The legality of the Securities offered hereby will be passed upon for the
Company by Robert B. Adams, Senior Vice President and Deputy General Counsel of
the Company and the Bank. As of September 30, 1994, Mr. Adams was the beneficial
owner of or had options to purchase less than 0.1% of the outstanding shares of
Common Stock of the Company.
29
<PAGE> 66
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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
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
PAGE
-------
<S> <C>
Description of Notes.................. S-2
Certain Investment Considerations..... S-23
Foreign Currency Risks................ S-24
United States Taxation................ S-27
Plan of Distribution of Notes......... S-35
Legal Opinions........................ S-36
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... 4
Ratios of Earnings to Fixed Charges
and Preferred Stock Dividend
Requirements........................ 5
Description of Debt Securities........ 5
The Senior Securities................. 11
The Subordinated Securities........... 14
Description of Preferred Stock........ 17
Description of Common Stock........... 21
Description of Warrants............... 22
Plan of Distribution.................. 27
Experts............................... 28
Legal Opinion......................... 29
</TABLE>
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[LOGO]
$2,627,525,000
THE CHASE MANHATTAN
CORPORATION
SENIOR MEDIUM-TERM NOTES,
SERIES B
AND
SUBORDINATED MEDIUM-TERM NOTES,
SERIES B
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
CHASE SECURITIES, INC.
BEAR STEARNS & CO. INC.
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
DECEMBER 7, 1994
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