<PAGE> 1
Filed pursuant to Rule 424(b)(3)
Registration Statement Nos. 33-49965 and 33-57104
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 15, 1995)
(LOGO)
$500,000,000
CHEMICAL BANKING CORPORATION
SENIOR MEDIUM-TERM NOTES, SERIES D
SUBORDINATED MEDIUM-TERM NOTES, SERIES B
DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
Chemical Banking Corporation (the "Company") may offer from time to time
its Senior Medium-Term Notes, Series D (the "Senior Notes") and its Subordinated
Medium-Term Notes, Series B (the "Subordinated Notes" and, together with the
Senior Notes, the "Notes"), having an aggregate initial public offering price
not to exceed $500,000,000. Each Note will mature on a date from 9 months to 30
years from its date of issue, as mutually agreed between the purchaser and the
Company.
The Senior Notes will be unsecured obligations of the Company and the
Subordinated Notes will be unsecured and subordinated obligations of the Company
subject to acceleration only upon certain events of bankruptcy or reorganization
as described in the accompanying Prospectus under "Description of Debt
Securities". There will be no right of acceleration of the payment of the
principal of the Subordinated Notes upon a default in the payment of interest or
a default in the performance of any covenant or agreement in the Subordinated
Notes or the Subordinated Indenture (as defined in this Prospectus Supplement).
See "Description of Debt Securities -- Subordinated Securities" in the
accompanying Prospectus.
(continued)
THE NOTES ARE UNSECURED DEBT OBLIGATIONS OF THE COMPANY, ARE NOT DEPOSITS
OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
------------------
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, ANY SUPPLEMENT HERETO OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Agents' Discounts
Price to Public (1) and Commissions (2) Proceeds to Company (2)(3)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 100% .20% - 3.00% 97.0% - 99.8%
- ------------------------------------------------------------------------------------------------------
Total $500,000,000(4) $1,000,000 - $15,000,000(4) $485,000,000 - $499,000,000(4)
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, each Note
will be issued at 100% of its principal amount.
(2) The Company will pay Smith Barney Inc., as agent, and such other agents as
may be named from time to time (the "Agents"), a commission, which may range
from .20% to 3.00% of the principal amount of any Note, depending upon its
maturity, sold through such Agent, unless otherwise specified in the
applicable Pricing Supplement. The Company may also sell Notes to any Agent,
acting as principal, at a discount for resale at a fixed offering price or
at varying prices related to market prices at the time of resale. The
commission on or discount with respect to such sales will be negotiated at
the time of such sale. The Company may also sell Notes directly to
investors, and no commission will be payable on any such sales made by the
Company.
(3) Before deducting expenses payable by the Company estimated at $150,000.
(4) Or the equivalent thereof in other currencies or currency units.
------------------------
SMITH BARNEY INC.
------------------------
The date of this Prospectus Supplement is March 15, 1995.
<PAGE> 2
The Notes will be issued in fully registered form in denominations of
$1,000 and integral multiples of $1,000 in excess thereof, unless otherwise
provided in the accompanying supplement to this Prospectus Supplement (a
"Pricing Supplement"). The Notes may be redeemable at the option of the Company
or the holder thereof, or obligate the Company to redeem or purchase the Notes
pursuant to sinking fund or analogous provisions, in each case as indicated in
the applicable Pricing Supplement. See "Description of the Medium-Term Notes" in
this Prospectus Supplement.
Each Note will be represented by a global Note (a "Global Note") registered
in the name of a nominee of The Depository Trust Company, as Depositary, or
other depositary (each such Note represented by a Global Note being referred to
herein as a "Book-Entry Note"). Beneficial interests in Book-Entry Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary or its participants. Except as described under
"Description of the Medium-Term Notes -- Book-Entry Notes" in this Prospectus
Supplement, owners of Notes will not be entitled to receive physical delivery of
Notes in definitive form, and the Depositary, and not the owners of beneficial
interests of the Notes, will be considered the holder thereof.
The series designation of the Notes, the interest rate or interest rate
formula, if any, issue price, stated maturity, any interest payment dates, any
redemption provisions and any repayment provisions for each Note will be
established by the Company prior to the date of issuance of such Note and will
be indicated in the applicable Pricing Supplement. The Notes may bear interest
at (i) a fixed rate ("Fixed Rate Notes") or (ii) a floating rate ("Floating Rate
Notes") on which rates are determined, and adjusted periodically, by reference
to an interest rate basis or formula, adjusted by a Spread or Spread Multiplier
(each as defined herein), if any. Interest rates and interest rate formulas are
subject to change by the Company, but no such change will affect any Note
already issued or which the Company has agreed to issue. Fixed Rate Notes may be
issued in the form of Original Issue Discount Notes (as defined herein) which
will be offered at a discount from the principal amount thereof due at the
stated maturity of such Notes. There may not be any periodic payments of
interest on Original Issue Discount Notes. In the event of an acceleration of
maturity of any Original Issue Discount Note, the amount payable to the holder
of such Original Issue Discount Note upon such acceleration will be determined
in accordance with the applicable Pricing Supplement and the terms of such
security, but will be an amount less than the amount payable at the maturity of
the principal of such Original Issue Discount Note.
A foreign currency supplement (a "Multi-Currency Prospectus Supplement")
relating to Notes denominated in other than U.S. dollars will describe certain
terms that relate to such Notes.
Unless otherwise indicated in the applicable Pricing Supplement, interest
on the Notes will be payable monthly on the 15th day of each month and at stated
maturity.
The Notes may be offered on a continuing basis by the Company through the
Agents, each of which has agreed or will agree to use reasonable best efforts to
solicit offers to purchase the Notes. The Agents may include affiliates of the
Company, which have separately agreed to use reasonable efforts to solicit
offers to purchase the Notes. The Company may also sell the Notes to any Agent,
acting as principal, for its own account or for resale to one or more investors
or to another broker-dealer (acting as principal for purposes of resale) at a
fixed offering price or at varying prices related to prevailing market prices at
the time of resale. The Company may also accept (but not solicit) offers to
purchase Notes through additional agents on substantially the same terms and
conditions as would apply to sales through Agents. The Notes will not be listed
on any securities exchange, and there can be no assurance that the Notes will be
sold or that there will be a secondary market for the Notes. The Company
reserves the right to withdraw, cancel or modify the offer or solicitation of
offers made hereby without notice. The Company or any Agent, if it solicits such
offer, may reject any offer in whole or in part. See "Plan of Distribution" in
this Prospectus Supplement.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE AGENTS. THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED HEREBY NOR DO THEY
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE PROSPECTUS AT ANY TIME DOES NOT IMPLY
THAT THE INFORMATION THEY CONTAIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR
RESPECTIVE DATES.
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<PAGE> 3
DESCRIPTION OF THE MEDIUM-TERM NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Debt Securities" and
the "Senior Securities" or the "Subordinated Securities", as applicable)
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities, Senior Securities
and Subordinated Securities, as the case may be, set forth in the Prospectus, to
which description reference is hereby made. The following description will apply
to the Notes unless otherwise specified in the applicable Pricing Supplement.
GENERAL
The Notes are limited initially to an aggregate initial public offering
price not to exceed U.S. $500,000,000, subject to reduction as a result of the
sale of other Debt Securities or Offered Securities. Such limit may be increased
by action of the Company's Board of Directors or, subject to certain
limitations, its Borrowings Committee.
The Notes offered hereby may be Senior Securities or Subordinated
Securities. The Notes constituting Senior Securities will be issued under the
Indenture, dated as of December 1, 1989, as amended, between the Company and The
Chase Manhattan Bank (National Association), as Trustee (the "Senior
Indenture"), will constitute one series of Senior Securities established by the
Company pursuant to such Senior Indenture and will rank pari passu with all
other Senior Securities of the Company. The Notes constituting Subordinated
Securities will be issued under the Indenture, dated as of April 1, 1987, as
amended and restated as of December 15, 1992, between the Company and Morgan
Guaranty Trust Company of New York, as succeeded to by First Trust of New York
(National Association), as Trustee (the "Subordinated Indenture" and, together
with the Senior Indenture, the "Indentures"), will constitute one series of
Subordinated Securities established by the Company pursuant to such Subordinated
Indenture, will rank pari passu with all other subordinated debt of the Company
and, together with such other subordinated debt, will be subordinated in right
of payment to the prior payment in full of the Senior Indebtedness (as defined
in the Subordinated Indenture) of the Company and, under the circumstances
described in the Subordinated Indenture, to Additional Senior Obligations of the
Company. See "Description of Debt Securities -- Subordinated
Securities -- Subordination" in the accompanying Prospectus. As of December 31,
1994, the aggregate principal amount of Senior Indebtedness and Additional
Senior Obligations (as each such term is defined in the Subordinated Indenture)
outstanding was approximately $7.7 billion. The statements in this Prospectus
Supplement concerning the Notes do not purport to be complete and are subject
to, and qualified in their entirety by reference to, the Senior Indenture and
the Subordinated Indenture, including definitions therein of certain terms.
Payment of principal of the Notes constituting Subordinated Securities may
be accelerated only upon certain events of bankruptcy or reorganization of the
Company. There is no right of acceleration of the payment of principal of the
Notes constituting Subordinated Securities upon a default in the payment of
interest on such Notes or in the performance of any covenant of the Company
contained in the Subordinated Indenture. See "Description of Debt
Securities -- Subordinated Securities -- Defaults and Waiver Thereof " in the
accompanying Prospectus. Except as may be set forth in a supplement to this
Prospectus Supplement, the Notes constituting Subordinated Securities are not
convertible into any other securities and are not exchangeable for Capital
Securities (as defined in the Subordinated Indenture) of the Company. See
"Description of Debt Securities -- Subordinated Securities" in the accompanying
Prospectus.
The Notes are being offered on a continuing basis. Each Note will mature on
a Business Day from 9 months to 30 years from its date of issue, as mutually
agreed between the purchaser and the Company. Except as provided in the
applicable Pricing Supplement, the Notes will not be subject to redemption or
repayment prior to maturity and will not be subject to any sinking fund.
The Notes may be (i) Fixed Rate Notes or (ii) Floating Rate Notes on which
rates are determined, and adjusted periodically, by reference to an interest
rate basis or formula, adjusted by a Spread or Spread Multiplier, if any. See
"Interest and Interest Rates" below. Fixed Rate Notes may be issued in the form
of Original Issue Discount Notes (as defined in "Certain United States Federal
Income Tax Consequences" below) which will be offered at a discount from the
principal amount thereof due at the stated maturity of
S-3
<PAGE> 4
such Notes. There may not be any periodic payments of interest on Original Issue
Discount Notes. In the event of an acceleration of maturity of any Original
Issue Discount Note, the amount payable to the holder of such Original Issue
Discount Note upon such acceleration will be determined in accordance with the
applicable Pricing Supplement and the terms of such security, but will be an
amount less than the amount payable at the maturity of the principal of such
Original Issue Discount Note. For a discussion of the United States federal
income tax consequences with respect to Original Issue Discount Notes, see
"Certain United States Federal Income Tax Consequences" below.
The Notes will be denominated in U.S. dollars and payments of principal of
and interest on the Notes will be made in U.S. dollars, except as may otherwise
be provided in an applicable Pricing Supplement and Multi-Currency Prospectus
Supplement. Except as provided in the applicable Pricing Supplement, the
authorized denominations of the Notes denominated in U.S. dollars will be U.S.
$1,000 and integral multiples of U.S. $1,000 in excess thereof.
Each Note will be issued as a Book-Entry Note. All Notes issued on the same
day and having the same terms (including, but not limited to, the same series
designation, Interest Payment Dates, rate of interest, date of maturity and
redemption or repayment provisions) will be represented by a single Book-Entry
Note. A beneficial interest in a Book-Entry Note will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary or
its participants and, except under the limited circumstances described below,
Book-Entry Notes will not be issuable in certificated form. See "Book-Entry
Notes" below. In the case of Book-Entry Notes, payments of principal and
interest will be made to the Depositary or its nominee. Payments to beneficial
owners of Book-Entry Notes will be made through the Depositary and its
participants. See "Book-Entry Notes" below.
If the Notes are to be denominated in a foreign currency or composite
currency, then certain provisions with respect thereto will be set forth in a
Multi-Currency Prospectus Supplement and the applicable Pricing Supplement. The
Notes may also be issued with the principal amount thereof payable at stated
maturity and the interest payable thereon to be determined by reference to one
or more financial or other indices, as specified in the applicable Pricing
Supplement.
INTEREST AND INTEREST RATES
Each Note, except certain Original Issue Discount Notes, will accrue
interest from and including its date of issue and will be either a Fixed Rate
Note or a Floating Rate Note. The applicable Pricing Supplement will designate
whether a particular Note is a Fixed Rate Note or a Floating Rate Note and, in
the case of a Floating Rate Note, the interest rate basis or formula applicable
to such Note.
Interest on a Note will be payable on the first Interest Payment Date
following its date of issue, unless the date of its issue is on or after the
Record Date for such Interest Payment Date, in which event interest will be
payable commencing on the next following Interest Payment Date. Unless otherwise
indicated in the applicable Pricing Supplement, if any Interest Payment Date
other than the date of maturity for any Floating Rate Note falls on a day that
is not a Market Day, such Interest Payment Date shall be postponed to the next
day that is a Market Day. If the date of maturity for any Fixed Rate Note or
Floating Rate Note or the Interest Payment Date for any Fixed Rate Note falls on
a day that is not a Market Day, payment of principal, premium, if any, and
interest with respect to such Note will be paid on the next succeeding Market
Day with the same force and effect as if made on such date of maturity or
Interest Payment Date and no interest on such payment will accrue from and after
such date of maturity or Interest Payment Date. "Market Day" means any Business
Day or any other day specified in the applicable Pricing Supplement. "Business
Day" means any day that is not a Saturday or Sunday and that in New York City,
is not a day on which banking institutions generally are authorized or required
by law or executive order to close. "Record Date" means the date on which a Note
must be held in order for the holder to receive an interest payment on the next
Interest Payment Date. Unless otherwise specified in a Note and the applicable
Pricing Supplement, the Record Date for any Interest Payment Date will be the
fifteenth day (whether or not a Market Day) next preceding such Interest Payment
Date. "Interest Payment Date" means the date on which payments of interest on a
Note (other than payments on maturity) are to be made.
S-4
<PAGE> 5
The interest rate on the 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 laws
of general application. Under current New York law, the maximum rate of interest
is 25% per annum on a simple interest basis. This limit will not apply to Notes
in a principal amount of $2,500,000 or more.
Unless otherwise indicated in the applicable Pricing Supplement, interest
on the Notes will be payable monthly on the 15th day of each month and at stated
maturity.
FLOATING RATE NOTES
The applicable Pricing Supplement relating to a Floating Rate Note will
specify the Spread or Spread Multiplier, if any, and the maximum or minimum
interest rate limitation or ceiling, if any, applicable to each Floating Rate
Note. "Spread" means the constant amount to be added to the interest rate index
in effect with respect to a Floating Rate Note. "Spread Multiplier" means the
percentage by which the interest rate index in effect with respect to a Floating
Rate Note is to be multiplied. The Pricing Supplement may also contain
particulars as to the Calculation Agent, Calculation Date, Index Maturity,
Initial Interest Rate, Interest Determination Date and Reset Date (each as
defined below), as well as the applicable Interest Payment Date and Record Dates
with respect to each Note. "Calculation Agent" means the agent appointed by the
Company to calculate interest rates for Floating Rate Notes. "Calculation Date"
means the date on which the Calculation Agent is to calculate an interest rate
for a Floating Rate Note. "Index Maturity" means, with respect to a Floating
Rate Note, the period to maturity of the instrument or obligation on which the
interest rate index or formula is based.
Unless otherwise indicated in the applicable Pricing Supplement, each
interest payment on any Interest Payment Date in respect of Floating Rate Notes
(other than Floating Rate Notes that reset daily or weekly) will include
interest accrued from and including the date of issue or the last date to which
interest has been paid, as the case may be, to but excluding the applicable
Interest Payment Date or the date of maturity, as the case may be. In the case
of Floating Rate Notes that reset daily or weekly, unless otherwise indicated in
the applicable Pricing Supplement, each interest payment on any Interest Payment
Date will include interest accrued from and including the date of issue or from
but excluding the last date in respect of which interest has been paid, as the
case may be, to and including the Record Date preceding the applicable Interest
Payment Date or to but excluding the date of maturity, as the case may be.
With respect to a Floating Rate Note, accrued interest will be calculated
by multiplying the principal amount of such Note by an accrued interest factor.
Such accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise specified in the applicable Pricing Supplement, the
interest factor (expressed as a decimal rounded to the nearest ten-thousandth,
with five hundred-thousandths rounded upwards) for each such day is computed by
dividing the interest rate in effect on such day (expressed as a decimal rounded
to the nearest ten-thousandth, with five hundredth-thousandths rounded upwards)
by (i) the actual number of days in the year, in the case of Floating Rate Notes
that apply an interest formula based on treasury rates, and (ii) 360, in the
case of all other Floating Rate Notes. The interest rate in effect on each day
with respect to a Floating Rate Note will be (i) if such day is a Reset Date,
the interest rate with respect to the Interest Determination Date pertaining to
such Reset Date, or (ii) if such day is not a Reset Date, the interest rate with
respect to the Interest Determination Date pertaining to the preceding Reset
Date, subject in either case to any adjustment by a Spread or a Spread
Multiplier and to any maximum or minimum interest rate limitation. "Reset Date"
means the date on which a Floating Rate Note will begin to bear interest at the
interest rate determined as of any Interest Determination Date. "Interest
Determination Date" means the date as of which the interest rate for a Floating
Rate Note is to be calculated, to be effective as of the following Reset Date
and calculated on the related Calculation Date. In all such cases, however, (i)
the interest rate in effect for the period from and including the date of issue
to the initial Reset Date set forth in the Pricing Supplement with respect to
such Note will be the Initial Interest Rate specified in the applicable Pricing
Supplement and (ii) the interest rate in effect for the ten calendar days prior
to the date of maturity will be that in effect on the tenth calendar day
preceding such date of maturity. "Initial Interest Rate" means the rate at which
a Floating Rate Note will bear interest from and including the date of issue to
but excluding the first Reset Date, as set forth in the Note and the applicable
Pricing Supplement.
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<PAGE> 6
Unless otherwise specified in the applicable Pricing Supplement, Chemical
Bank will be the "Calculation Agent" with respect to calculating the rate of
interest payable on Floating Rate Notes. Upon the request of a registered holder
of a Floating Rate Note, the Calculation Agent will provide the interest rate
then in effect and, if different, the interest rate which will become effective
as a result of a determination made on the most recent Interest Determination
Date with respect to such Floating Rate Note.
FIXED RATE NOTES
The applicable Pricing Supplement relating to a Fixed Rate Note will
designate a fixed rate of interest per annum payable on such Note (which may be
zero). Fixed Rate Notes may bear one or more annual rates of interest during the
periods or under the circumstances specified therein and in the applicable
Pricing Supplement. Interest, if any, on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes issued the same day and having the same
terms (including, but not limited to, the same series designation, Interest
Payment Dates, rate of interest, date of maturity, and redemption or repayment
provisions) will be represented by one or more permanent Global Notes. Each
permanent Global Note representing Book-Entry Notes will be deposited with, or
on behalf of, The Depository Trust Company, as Depositary (the "Depositary"),
and will be registered in the name of a nominee of the Depositary, or other
depositary, or will remain in the custody of the Trustee under the applicable
Indenture pursuant to the FAST Balance Certificate Agreement between the
Depositary and each Trustee. No permanent Global Note may be transferred except
as a whole by the Depositary for such permanent Global Note to a nominee of the
Depositary or by a nominee of the Depositary to another nominee of the
Depositary.
Ownership of Book-Entry Notes will be limited to institutions that have
accounts with the Depositary or its nominee ("participants") or persons that may
hold interests through participants. In addition, ownership of Book-Entry Notes
by participants will only be evidenced by, and the transfer of that ownership
interest will be effected only through, records maintained by the Depositary or
its nominee, as the case may be. Ownership of Book-Entry Notes by persons that
hold through participants will only be evidenced by, and the transfer of that
ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to transfer Book-Entry
Notes.
The Company expects that, pursuant to procedures established by the
Depositary, upon the issuance of a permanent Global Note representing Book-Entry
Notes, and the deposit of such permanent Global Note with, or for the account
of, the Depositary, the Depositary will immediately credit, on its book-entry
registration and transfer system, the respective principal amounts of the
Book-Entry Notes represented by such permanent Global Note to the accounts of
participants. The accounts to be credited shall be designated by the soliciting
Agent, or by the Company if such Notes are offered and sold directly by the
Company.
Payments of principal, premium, if any, and interest on Book-Entry Notes
represented by any permanent Global Note registered in the name of or held by
the Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the registered owner and the holder of the permanent Global
Note representing such Book-Entry Notes. The Company expects that the
Depositary, upon receipt of any payment of principal, premium, if any, or
interest in respect of a permanent Global Note, will immediately credit, on its
book-entry registration and transfer system, accounts of the relevant
participants with such payment in amounts proportionate to their respective
beneficial interests in the principal amount of such permanent Global Note as
shown on the records of the Depositary. Payments by participants to owners of
Book-Entry Notes held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name", and will be the
responsibility of such participants. None of the Company, either Trustee or the
Paying Agent or any other agent of the Company, will have any responsibility or
liability for any aspect of the Depositary's records or any participant's
records relating to or payments made on account of Book-Entry Notes or for
maintaining, supervising or reviewing any of the Depositary's records or any
participant's records relating to such Book-Entry Notes.
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<PAGE> 7
Book-Entry Notes represented by a permanent Global Note are exchangeable
for definitive Notes, in registered form, of like tenor and of an equal
aggregate principal amount, only if (i) the Depositary notifies the Company that
it is unwilling or unable to continue as Depositary for such permanent Global
Note or if at any time the Depositary ceases to be a clearing agency registered
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
a successor depositary is not appointed by the Company within 90 days, (ii) the
Company in its sole discretion determines that such Book-Entry Notes shall be
exchangeable for definitive Notes in registered form or (iii) there shall have
occurred and be continuing an Event of Default or an event which, with the
giving of notice or lapse of time or both, would constitute an Event of Default
with respect to the Notes. Any permanent Global Note representing Book-Entry
Notes that is exchangeable pursuant to the preceding sentence shall be
exchangeable in whole for definitive Notes in registered form, of like tenor and
of an equal aggregate principal amount, in denominations of U.S. $1,000 and
integral multiples of U.S. $1,000 in excess thereof. Such definitive Notes shall
be registered in the name or names of such person or persons as the Depositary
shall instruct the relevant Trustee or registrar. It is expected that such
instructions may be based upon directions received by the Depositary from its
participants with respect to ownership of Book-Entry Notes.
Except as provided above, owners of Book-Entry Notes will not be entitled
to receive physical delivery of Notes in definitive form and will not be
considered the holders thereof for any purpose under the relevant Indenture, and
no permanent Global Note representing Book-Entry Notes shall be exchangeable,
except for another permanent Global Note of like denomination and tenor to be
registered in the name of the Depositary or its nominee. As a result, the
ability of a holder of a beneficial interest in a Note to pledge such Note to
persons or entities that do not participate in the Depositary's system, or to
otherwise take action with respect to such interests, may be affected by the
lack of a physical certificate evidencing such interest. Accordingly, each
person owning a Book-Entry Note must rely on the procedures of the Depositary
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a holder
under the relevant Indenture. The Company understands that under existing
industry practices, in the event that the Company requests any action of holders
or an owner of a Book-Entry Note desires to give or take any action a holder is
entitled to give or take under the relevant Indenture, the Depositary would
authorize the participants owning the relevant Book-Entry Notes to give or take
such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
The Depositary has advised the Company that the Depositary 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 New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. The Depositary was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes to the accounts of the
participants, thereby eliminating the need for physical transfer and delivery of
securities certificates. The Depositary's participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations, some of whom (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly. Persons who are not participants may beneficially own securities
held by the Depositary only through participants.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the ownership of Notes as of the date hereof. Except where
noted, it deals only with Notes held as capital assets by United States Holders
that are initial purchasers and does not deal with special situations, such as
those of dealers in securities or currencies, financial institutions, insurance
companies, persons holding Notes as a part of a synthetic security, hedging or
conversion transaction or a straddle or United States Holders whose "functional
currency" is not the U.S. dollar. Furthermore, the discussion below does not
include any description of the tax laws of any state, local or foreign
governments that may be applicable to the Notes or the holders thereof. The
discussion below is based upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and regulations, rulings and judicial decisions
thereunder as of the date hereof, and
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such authorities may be repealed, revoked or modified so as to result in federal
income tax consequences different from those discussed below. Any special United
States federal income tax considerations relevant to a particular issue of the
Notes will be provided in the applicable Pricing Supplement. PERSONS CONSIDERING
THE PURCHASE, OWNERSHIP OR DISPOSITION OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR
PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.
PAYMENTS OF INTEREST
Except as set forth below, interest on a Note will generally be taxable to
a United States Holder as ordinary income from domestic sources at the time it
is paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes. As used herein, a "United States Holder" of a Note
means a holder that is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source. A "Non-United States Holder" is a holder that is not a
United States Holder. If payments on a Note are denominated in or determined by
reference to currencies or composite currencies other than U.S. dollars
("Foreign Currency"), special rules apply. Such rules will be described in the
applicable Pricing Supplement.
ORIGINAL ISSUE DISCOUNT
United States Holders of Notes issued with original issue discount ("OID")
will be subject to special tax accounting rules, as described in greater detail
below. United States Holders of such Notes should be aware that they generally
must include OID in gross income in advance of the receipt of cash attributable
to that income. However, United States Holders of such Notes generally will not
be required to include separately in income cash payments received on the Notes,
even if denominated as interest, to the extent such payments do not constitute
qualified stated interest (as defined below). Notes issued with OID will be
referred to as "Original Issue Discount Notes." Notice will be given in the
applicable Pricing Supplement when the Company determines that a particular Note
will be an Original Issue Discount Note.
This summary is based upon Treasury regulations which became effective on
April 4, 1994 (the "OID Regulations"). A Note with an "issue price" that is less
than its stated redemption price at maturity (the sum of all payments to be made
on the Note other than "qualified stated interest") will be issued with original
issue discount if such difference is at least 0.25 percent of the stated
redemption price at maturity multiplied by the number of complete years to
maturity. The "issue price" of each Note in a particular offering will be the
first price at which a substantial amount of that particular offering is sold
(other than to an underwriter, placement agent or wholesaler). The term
"qualified stated interest" means stated interest that is unconditionally
payable in cash or in property (other than debt instruments of the issuer) at
least annually at a single fixed rate or, subject to certain conditions, based
on one or more interest indices. Interest is payable at a single fixed rate only
if the rate appropriately takes into account the length of the interval between
payments. Notice will be given in the applicable Pricing Supplement when the
Company determines that a particular Note will bear interest that is not
qualified stated interest.
In the case of a Note issued with de minimis OID (i.e., discount that is
not OID because it is less than 0.25 percent of the stated redemption price at
maturity multiplied by the number of complete years to maturity), the United
States Holder generally must include such de minimis OID in income as stated
principal payments on the Notes are made in proportion to the amount of
principal paid. Any amount of de minimis OID that has been included in income
shall be treated as capital gain.
Certain of the Notes may be redeemed prior to their stated maturity at the
option of the Company and/or at the option of the holder. Original Issue
Discount Notes containing such features may be subject to rules that differ from
the general rules discussed herein. Persons considering the purchase of Original
Issue Discount Notes with such features should carefully examine the applicable
Pricing Supplement and should consult their own tax advisors with respect to
such features since the tax consequences with respect to OID will depend, in
part, on the particular terms and features of the Notes.
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United States Holders of Original Issue Discount Notes with a maturity upon
issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includible in income by the initial United States Holder of an Original
Issue Discount Note is the sum of the "daily portions" of OID with respect to
the Note for each day during the taxable year or portion of the taxable year in
which such United States Holder held such Note ("accrued OID"). The daily
portion is determined by allocating to each day in any "accrual period" a pro
rata portion of the OID allocable to that accrual period. The "accrual period"
for an Original Issue Discount Note may be of any length and may vary in length
over the term of the Note, provided that each accrual period is no longer than
one year and each scheduled payment of principal or interest occurs on the first
day or the final day of an accrual period. The amount of OID allocable to any
accrual period is an amount equal to the excess, if any, of (a) the product of
the 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 properly adjusted for the length of the accrual period) over
(b) the sum of any qualified stated interest allocable to the accrual period.
OID allocable to a final accrual period is the difference between the amount
payable at maturity (other than a payment of qualified stated interest) and the
adjusted issue price at the beginning of the final accrual period. Special rules
will apply for calculating OID for an initial short accrual period. The
"adjusted issue price" of a Note at the beginning of any accrual period is equal
to its issue price increased by the accrued OID for each prior accrual period
(determined without regard to the amortization of any acquisition or bond
premium, as described below) and the amount of any qualified stated interest on
the Note that has accrued prior to the beginning of the accrual period but is
not payable until a later date and reduced by any payments made on such Note
(other than qualified stated interest) on or before the first day of the accrual
period. Under these rules, a United States Holder will have to include in income
increasingly greater amounts of OID in successive accrual periods. The Company
is required to provide information returns stating the amount of OID accrued on
Notes held of record by persons other than corporations and other exempt
holders.
In the case of an Original Issue Discount Note that is a Floating Rate
Note, both the "yield to maturity" and "qualified stated interest" will be
determined solely for purposes of calculating the accrual of OID as though the
Note will bear interest in all periods at a fixed rate generally equal to the
rate that would be applicable to interest payments on the Note on its date of
issue or, in the case of certain Floating Rate Notes, the rate that reflects the
yield to maturity that is reasonably expected for the Note. Additional rules may
apply if interest on a Floating Rate Note is based on more than one interest
index. Persons considering the purchase of Floating Rate Notes should carefully
examine the applicable Pricing Supplement and should consult their own tax
advisors regarding the U.S. federal income tax consequences of the holding and
disposition of such Notes.
United States Holders may elect to treat all interest on any Note as OID
and calculate the amount includible in gross income under the constant yield
method described above. For the purposes of this election, interest includes
stated interest, acquisition discount, OID, de minimis OID, market discount, de
minimis market discount and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium. The election is to be made for the taxable
year in which the United States Holder acquired the Note, and may not be revoked
without the consent of the Internal Revenue Service (the "IRS"). Such election
may affect the taxation of other debt instruments held by such electing United
States Holders. UNITED STATES HOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS
ABOUT THIS ELECTION.
SHORT-TERM NOTES
In the case of Original Issue Discount Notes having a term of one year or
less ("Short-Term Notes"), under the OID Regulations all payments (including all
stated interest) will be included in the stated redemption price at maturity
and, thus, United States Holders will generally be taxable on the discount in
lieu of stated interest. The discount will be equal to the excess of the stated
redemption price at maturity over the issue price of a Short-Term Note, unless
the United States Holder elects to compute this discount using tax basis instead
of issue price. In general, cash method United States Holders of a Short-Term
Note are not required to include accrued discount in their income currently
unless they elect to do so. United States Holders, including banks, regulated
investment companies, dealers in securities and cash basis United States
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Holders who so elect, that report income for federal income tax purposes on the
accrual method and certain other United States Holders are required to accrue
discount on such Short-Term Notes (as ordinary income) on a straight-line basis,
unless an election is made to accrue the discount according to a constant yield
method based on daily compounding. In the case of a United States Holder that is
not required, and does not elect, to include discount in income currently, any
gain realized on the sale, exchange or retirement of the Short-Term Note will be
ordinary income to the extent of the discount accrued through the date of sale,
exchange or retirement. In addition, a United States Holder that does not elect
to currently include accrued discount in income may be required to defer
deductions for a portion of the United States Holder's interest expense with
respect to any indebtedness incurred or continued to purchase or carry such
Notes.
MARKET DISCOUNT
If a United States Holder purchases a Note (other than an Original Issue
Discount Note) for an amount that is less than its stated redemption price at
maturity or, in the case of an Original Issue Discount Note, its adjusted issue
price, the amount of the difference will be treated as "market discount" for
federal income tax purposes, unless such difference is less than a specified de
minimis amount. Under the market discount rules, a United States Holder will be
required to treat any principal payment on, or any gain on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to the extent of
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. In addition, the United States Holder may be required to defer,
until the maturity of the Note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such Note.
Any 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 United
States Holder elects to accrue on a constant interest method. A United States
Holder of a Note may elect to include market discount in income currently as it
accrues (on either a ratable or constant interest method), in which case the
rule described above regarding deferral of interest deductions will not apply.
This election to include market discount in income currently, once made, applies
to all market discount obligations acquired on or after the first taxable year
to which the election applies and may not be revoked without the consent of the
IRS.
ACQUISITION PREMIUM; AMORTIZABLE BOND PREMIUM
A United States Holder that purchases a Note for an amount that is greater
than its adjusted issue price but equal to or less than the sum of all amounts
payable on the Note after the purchase date other than payments of qualified
stated interest will be considered to have purchased such Note at an
"acquisition premium." Under the acquisition premium rules, the amount of OID
which such holder must include in its gross income with respect to such Note for
any taxable year will be reduced by the portion of such acquisition premium
properly allocable to such year.
A United States Holder that purchases a Note for an amount in excess of the
sum of all amounts payable on the Note after the purchase date other than
qualified stated interest will be considered to have purchased the Note at a
"premium" and will not be required to include any OID in income. A United States
Holder generally may elect to amortize the premium over the remaining term of
the Note on a constant yield method. The amount amortized in any year will be
treated as a reduction of the United States Holder's interest income from the
Note. Bond premium on a Note held by a United States Holder that does not make
such an election will decrease the gain or increase the loss otherwise
recognized on disposition of the Note. The election to amortize premium on a
constant yield method once made applies to all debt obligations held or
subsequently acquired by the electing United States Holder on or after the first
day of the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
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SALE, EXCHANGE AND RETIREMENT OF NOTES
A United States Holder's tax basis in a Note will, in general, be the
United States Holder's cost therefor, increased by OID, market discount or any
discount with respect to a Short-Term Note previously included in income by the
United States Holder and reduced by any amortized premium and any cash payments
on the Note other than qualified stated interest. Upon the sale, exchange or
retirement of a Note, a United States Holder will recognize gain or loss equal
to the difference between the amount realized upon the sale, exchange or
retirement (less any accrued qualified stated interest, which will be taxable as
such) and the adjusted tax basis of the Note. Except as described above with
respect to certain Short-Term Notes or with respect to market discount, such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if at the time of sale, exchange or retirement the Note has been held for
more than one year. Under current law, net capital gains of individuals are,
under certain circumstances, taxed at lower rates than items of ordinary income.
The deductibility of capital losses is subject to limitations.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any Paying Agent of
principal or interest (which for purposes of this discussion includes OID)
on a Note owned by a Non-United States Holder, provided (i) that the
beneficial owner does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled
to vote within the meaning of section 871(h)(3) of the Code and the
regulations thereunder, (ii) the beneficial owner is not a controlled
foreign corporation that is related to the Company through stock ownership,
(iii) the beneficial owner is not a bank whose receipt of interest on a
Note is described in section 881(c)(3)(A) of the Code and (iv) the
beneficial owner satisfies the statement requirement (described generally
below) set forth in section 871(h) and section 881(c) of the Code and the
regulations thereunder;
(b) no withholding of United States federal income tax will be
required with respect to any gain or income realized by a Non-United States
Holder upon the sale, exchange or retirement of a Note; and
(c) a Note beneficially owned by an individual who at the time of
death is a Non-United States Holder will not be subject to United States
federal estate tax as a result of such individual's death, provided that
such individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the company entitled
to vote within the meaning of section 871(h)(3) of the Code and provided
that the interest payments with respect to such Note would not have been,
if received at the time of such individual's death, effectively connected
with the conduct of a United States trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, a paying
agent of the Company with a statement to the effect that the beneficial owner is
not a U.S. person, citizen or resident. Pursuant to current temporary Treasury
regulations, these requirements will be met if (1) the beneficial owner provides
his name and address, and certifies, under penalties of perjury, that he is not
a U.S. person, citizen or resident (which certification may be made on an
Internal Revenue Service Form W-8 (or successor form) or (2) a financial
institution holding the Debt Security on behalf of the beneficial owner
certifies, under penalties of perjury, that such statement has been received by
it and furnishes a paying agent with a copy thereof.
Payments to Non-United States Holders not meeting the requirements of
paragraph (a) above and thus subject to withholding of United States federal
income tax may nevertheless be exempt from such withholding if the beneficial
owner of the Note provides the Company with a properly executed (1) Internal
Revenue Service Form 1001 (or successor form) claiming an exemption from
withholding under the benefit of a tax treaty or (2) Internal Revenue Service
Form 4224 (or successor form) stating that interest paid on the Note is
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not subject to withholding tax because it is effectively connected with the
owner's conduct of a trade or business in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on Notes and to the
proceeds of sale of a Note made to United States Holders other than certain
exempt recipients (such as corporations). A 31 percent backup withholding tax
will apply to such payments if the United States Holder fails to provide a
taxpayer identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-United States
Holders if a statement described in (a)(iv) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on a Note are paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the beneficial owner of such Note, or if a foreign office of a broker
(as defined in applicable Treasury regulations) pays the proceeds of the sale of
a Note to the owner thereof. If, however, such nominee, custodian, agent or
broker is, for United States federal income tax purposes, a U.S. person, a
controlled foreign corporation or a foreign person that derives 50% or more of
its gross income for certain periods from the conduct of a trade or business in
the United States, such payments will not be subject to backup withholding but
will be subject to information reporting, unless (1) such custodian, nominee,
agent or broker has documentary evidence in its records that the beneficial
owner is not a U.S. person and certain other conditions are met or (2) the
beneficial owner otherwise establishes an exemption. Temporary Treasury
regulations provide that the Treasury is considering whether backup withholding
will apply with respect to such payments of principal, interest or the proceeds
of a sale that are not subject to backup withholding under the current
regulations. Under proposed Treasury regulations not currently in effect backup
withholding will not apply to such payments absent actual knowledge that the
payee is a United States person.
Payments of principal, interest, OID and premium on a Note paid to the
beneficial owner of a Note by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the proceeds of
sale of a Note, will be subject to both backup withholding and information
reporting unless the beneficial owner provides the statement referred to in
(a)(iv) above and the payor does not have actual knowledge that the beneficial
owner is a United States person or otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
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PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through
Smith Barney Inc. in those jurisdictions where such offering by the Company is
authorized. No commission or underwriting discount will be payable on any sale
made directly to an investor by the Company.
The Company may also sell the Notes to or through Agents that become
parties to a Master Agency Agreement (each an "Agent"), the form of which is
filed as exhibit to the Registration Statement referred to in the accompanying
Prospectus (the "Retail Master Agency Agreement"). Each Agent's obligations are
separate and several from that of any other Agent. Each Agent will use
reasonable best efforts when requested by the Company to solicit purchases of
the Notes. The Company will pay each Agent a commission to be negotiated at the
time of sale, which may range from .20% to 3.00% of the principal amount of each
Note, depending on its stated maturity, sold through such Agent, unless
otherwise specified in the applicable Pricing Supplement. The Agents may include
Chemical Securities Inc., a wholly owned subsidiary of the Company, which has
separately agreed to use its reasonable best efforts to solicit offers to
purchase the Notes.
The Company also may sell Notes to any Agent, acting as principal, for its
own account or for resale to one or more investors or other purchasers,
including other broker-dealers. The Company may also accept (but not solicit)
offers to purchase Notes through additional agents on substantially the same
terms and conditions (including commissions) as would apply to purchases under
the Retail Master Agency Agreement.
The Agents may sell any Notes they have purchased as principal to any
dealer at a discount and, unless otherwise specified in the applicable Pricing
Supplement, such discount allowed to any dealer will not be in excess of the
discount to be received by such Agent from the Company. 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 ranging from .20% to 3.00% of the
principal amount of such Note, depending upon its stated maturity, and may be
resold by the Agent to investors and other purchasers from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale, or may be
resold to certain dealers as described above. After the initial public offering
of any Notes, the public offering price, concession and discount may be changed.
The name of any Agent or other person through which Notes are sold by the
Company or to which Notes are sold for resale to investors, as well as any
commissions or discounts payable to such Agents or other persons in respect
thereof, will be set forth in the applicable Pricing Supplement.
The Company will have the sole right to accept offers to purchase Notes and
may, in its absolute discretion, reject any proposed purchase of Notes in whole
or in part. Each Agent will have the right, in its discretion reasonably
exercised, to reject in whole or in part any proposed purchase of Notes through
it.
Any agent, including any Agent, may be deemed to be an "underwriter" within
the meaning of the Securities Act of 1933, as amended (the "Act"). The Company
will agree to indemnify each Agent and certain other persons against certain
liabilities, including liabilities under the Act.
The Notes are not, and will not be, listed on any securities exchange. The
Company has been advised by the Agents that each of the Agents may from time to
time purchase and sell Notes in the secondary market, but is not obligated to do
so and may discontinue making a market in such Notes at any time without notice.
No assurance can be given as to the existence or liquidity of any secondary
market for the Notes.
The Agents engage or may engage in transactions with and perform services
for the Company in the ordinary course of business.
The offer and sale of any Notes by Chemical Securities Inc. will comply
with the requirements of Schedule E to the By-laws of the National Association
of Securities Dealers, Inc. See "Plan of Distribution" in the accompanying
Prospectus.
Unless otherwise indicated in the Pricing Supplement, payment of the
purchase price of the Notes will be required to be made in immediately available
funds in New York City on the date of settlement.
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In addition to Notes being offered through the Agents as described herein,
other series of notes (including other series of Medium-Term Notes) that may
have terms identical or similar to the terms of the Notes may be concurrently
offered by the Company on a continuous basis both inside and outside the United
States pursuant to separate distribution agreements with the Agents or other
agents. Pursuant to such agreements, such agents may also purchase notes as
principal for their own account or for resale, and the Company may make direct
sales of notes on its own behalf. Any notes so offered and sold in excess of
certain amounts will reduce correspondingly the maximum aggregate principal
amount of Notes that may be offered by this Prospectus Supplement and the
accompanying Prospectus.
LEGAL OPINIONS
The validity of the Notes being offered hereby will be passed upon for the
Company by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York, counsel for the Company, and for the Agents,
by Cravath, Swaine & Moore, New York, New York. Cravath, Swaine & Moore has
represented and continues to represent the Company and its subsidiaries in a
substantial number of matters on a regular basis.
All such opinions will be conditioned upon, and subject to, certain
assumptions regarding future action required to be taken by the Company and the
appropriate Trustee in connection with the issuance and sale of any particular
Note offered hereby, the specific terms of Notes offered hereby and other
matters which may affect the validity of Notes offered hereby but which cannot
be ascertained on the date of such opinions.
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PROSPECTUS
(LOGO)
Chemical Banking Corporation
Debt Securities
Preferred Stock
Common Stock
Warrants
Chemical Banking Corporation (the "Company") intends to issue from time to
time in one or more series its (i) unsecured debt securities, which may either
be senior (the "Senior Securities") or subordinated (the "Subordinated
Securities"; the Senior Securities and the Subordinated Securities being
referred to collectively as the "Debt Securities"), (ii) warrants to purchase
the Debt Securities (the "Debt Warrants"), (iii) shares of preferred stock, par
value $1 per share (the "Preferred Stock"), which may be issued in the form of
depositary shares evidenced by depositary receipts (the "Depositary Shares"),
(iv) warrants to purchase the Preferred Stock or Depositary Shares ("Preferred
Stock Warrants"), (v) shares of common stock, par value $1 per share (the
"Common Stock"), (vi) warrants to purchase shares of Common Stock ("Common Stock
Warrants"; the Debt Warrants, Preferred Stock Warrants and Common Stock Warrants
being referred to herein collectively as the "Securities Warrants"); and (vii)
currency warrants entitling the holder to receive the cash value in U.S. dollars
of the right to purchase or the right to sell foreign currencies or composite
currencies, including European Currency Units ("ECU") (the "Currency Warrants"),
having an aggregate initial public offering price not to exceed $2,546,200,000
or the equivalent thereof in one or more foreign currencies or composite
currencies, including ECU, on terms to be determined at the time of sale. The
Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Securities
Warrants and Currency Warrants offered hereby (collectively, the "Offered
Securities") may be offered, separately or as units with other Offered
Securities, in separate series in amounts, at prices and on terms to be
determined at the time of sale and to be set forth in a supplement to this
Prospectus (a "Prospectus Supplement").
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Securities will be
subordinate to all existing and future Senior Indebtedness and, under certain
circumstances, Additional Senior Obligations, each as defined herein. The
holders of Subordinated Securities of any series may be obligated at maturity to
exchange such Subordinated Securities for Capital Securities of the Company.
Unless otherwise indicated in the applicable Prospectus Supplement, the maturity
of the Subordinated Securities will be subject to acceleration only in the event
of certain events of bankruptcy or reorganization of the Company. See
"Description of Debt Securities".
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, currency,
denomination, maturity, priority, interest rate (which may be variable or
fixed), time of payment of interest, terms for optional redemption or repayment
or for sinking fund payments, terms for conversion into or exchange for Capital
Securities or other Offered Securities, the designation of the Trustee acting
under the applicable Indenture and the initial public offering price; (ii) in
the case of Preferred Stock, the specific title and stated value, number of
shares or fractional interests therein, and the dividend, liquidation,
redemption, conversion, voting and other rights, the initial public offering
price, and whether interests in the Preferred Stock will be represented by
Depositary Shares; (iii) in the case of Common Stock, the initial offering
price; (iv) in the case of Securities Warrants, the duration, offering price,
exercise price and detachability thereof; (v) in the case of Currency Warrants,
whether the Currency Warrants are call warrants or put warrants, the currency to
which U.S. dollars will be compared, the method of determining the cash value
payable upon exercise of such Currency Warrants, the aggregate amount, offering
price and exercise period of such Currency Warrants, the risks associated with
such Currency Warrants and the manner of and any restrictions on the exercise of
such Currency Warrants (see "Risk Factors Relating to Currency Warrants"); and
(vi) in the case of all Offered Securities, whether such Offered Security will
be offered separately or as a unit with other Offered Securities, will be set
forth in the accompanying Prospectus Supplement. The Prospectus Supplement will
also contain information, where applicable, about certain United States Federal
income tax considerations relating to, and any listing on a securities exchange
of, the Offered Securities covered by the Prospectus Supplement.
The Offered Securities may be sold for public offering to underwriters or
dealers, which may be a group of underwriters represented by one or more
managing underwriters. In addition, the Offered Securities may be sold directly
by the Company or through agents designated from time to time. See "Plan of
Distribution". The names of any such agents, dealers or managing underwriters,
and of any underwriters, involved in the sale of the Offered Securities in
respect of which this Prospectus is being delivered and the applicable agent's
commission, dealer's purchase price or underwriter's discount will be set forth
in the Prospectus Supplement. The net proceeds to the Company from such sale
will also be set forth in the Prospectus Supplement. Any underwriters, dealers
or agents participating in the offering of Offered Securities may be deemed
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The Company may also issue the Offered Securities to one or
more persons in exchange for outstanding securities of the Company acquired by
such persons from third parties in open market transactions or in privately
negotiated transactions. The newly issued Offered Securities in such cases may
be offered pursuant to this Prospectus and the applicable Prospectus Supplement
by such persons acting as principal for their own accounts, at market prices
prevailing at the time of sale, at prices otherwise negotiated or at fixed
prices. Unless otherwise indicated in the applicable Prospectus Supplement, the
Company will only receive outstanding securities and will not receive cash
proceeds in connection with such exchanges or sales. See "Plan of Distribution".
This Prospectus and the related Prospectus Supplement may be used by direct
or indirect wholly-owned subsidiaries of the Company in connection with offers
and sales related to secondary market transactions in Offered Securities. Such
subsidiaries 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.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF OFFERED SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. THE DEBT SECURITIES WILL BE
UNSECURED OBLIGATIONS OF THE COMPANY, WILL NOT BE OBLIGATIONS OF A DEPOSITORY
INSTITUTION AND WILL NOT BE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL 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. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROSPECTUS IS MARCH 15, 1995.
<PAGE> 16
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the offices of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the following regional offices of the
Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and Seven World Trade Center, New York, New York
10048. Copies of such material can also be obtained from the Commission's Public
Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549, at prescribed rates. Certain of the Company's securities
are listed on the New York Stock Exchange, and reports, proxy material and other
information concerning the Company may be inspected at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1993;
(b) The Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1994, June 30, 1994 and September 30, 1994;
(c) The Company's Current Reports on Form 8-K dated January 21, 1994,
April 20, 1994, June 1, 1994, June 20, 1994, July 7, 1994, July 21, 1994,
September 28, 1994, October 20, 1994, December 1, 1994, January 3, 1995,
January 19, 1995 and March 14, 1995; and
(d) The descriptions of the Common Stock, the Preferred Stock and the
purchase rights for units of Junior Participating Preferred Stock set forth
in the Company's Registration Statements filed pursuant to Section 12 of
the Exchange Act and any amendment or report filed for the purpose of
updating those descriptions.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Offered Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. 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 the accompanying Prospectus
Supplement, 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.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED TO: CHEMICAL
BANKING CORPORATION, 270 PARK AVENUE, NEW YORK, NEW YORK 10017, ATTENTION:
OFFICE OF THE SECRETARY, TELEPHONE (212) 270-4040.
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$", "dollars", "U.S.
dollars" or "U.S.$").
2
<PAGE> 17
CHEMICAL BANKING CORPORATION
GENERAL
The Company is a bank holding company organized under the laws of Delaware
in 1968 and registered under the Bank Holding Company Act of 1956, as amended
(the "BHCA"). The Company conducts domestic and international financial services
businesses through various bank and non-bank subsidiaries. The principal bank
subsidiaries of the Company are Chemical Bank, a New York banking corporation
("Chemical Bank"), and Texas Commerce Bank National Association, a subsidiary of
Texas Commerce Equity Holdings, Inc., a bank holding company subsidiary of the
Company ("Texas Commerce").
At December 31, 1994, the Company had total assets of approximately $171.4
billion and stockholders' equity of approximately $10.7 billion. The Company is
the third largest bank holding company in the United States in terms of total
assets. Chemical Bank is the fourth largest bank in the United States in terms
of deposits. At December 31, 1994, Chemical Bank had total assets of
approximately $133.5 billion, total loans of approximately $62.3 billion and
total deposits of approximately $78.2 billion. Texas Commerce is the second
largest bank holding company in Texas in terms of total deposits and, as of
December 31, 1994, had total assets of approximately $20.0 billion. The Company
owns a 40% interest in The CIT Group Holdings, Inc. ("CIT"), which engages in
diversified financial services activities, including asset-based financing and
leasing, sales financing and factoring.
BUSINESS
The activities of the Company and its subsidiaries are internally
organized, for management information purposes, into three principal lines of
business. A brief description of each principal line of business is presented
below.
Global Bank
The Global Bank is organized into four principal management entities: (i)
Banking and Corporate Finance (worldwide wholesale client management and venture
capital activities); (ii) Structured Finance (acquisition finance, loan
syndications, high-yield securities and mergers and acquisitions); (iii) Asia,
Europe and Global Markets (securities, foreign exchange and derivatives trading,
the Company's treasury functions and the administration of the international
branch system in Asia and Europe); and (iv) Emerging Markets (cross-border
investment banking, local merchant banking and trade finance).
Regional Bank
The Regional Bank includes New York Markets (consumer banking and
commercial and professional banking); Retail Card Services; National Consumer
Business; Middle Market (regional commercial banking); Private Banking; Chemical
New Jersey Holdings, Inc.; and Geoserve (cash management, funds transfer, trade,
corporate trust and securities services worldwide). The Regional Bank maintains
a leading market share position in serving the financial needs of middle market
commercial enterprises and small businesses in the New York metropolitan area.
Private Banking serves a high net worth clientele with banking, advisory and
investment services.
Texas Commerce
Texas Commerce is a leader in providing financial products and services to
businesses and individuals throughout Texas. Texas Commerce is the primary bank
for more large corporations and middle market companies than any other bank in
Texas with 115 locations statewide.
3
<PAGE> 18
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges and
the ratios of earnings to combined fixed charges and preferred stock dividend
requirements for each of the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits.................................. 2.0 2.2 1.7 1.1 1.1
Including Interest on Deposits.................................. 1.5 1.5 1.3 1.0 1.1
Earnings to Combined Fixed Charges and Preferred Stock Dividend
Requirements:
Excluding Interest on Deposits.................................. 1.9 2.0 1.6 1.0 1.1
Including Interest on Deposits.................................. 1.4 1.5 1.2 1.0 1.0
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and of
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income from continuing operations plus total taxes based
on income and fixed charges. Fixed charges, excluding interest on deposits,
include interest expense (other than on deposits), one-third (the proportion
deemed representative of the interest factor) of rents, net of income from
subleases, and capitalized interest. Fixed charges, including interest on
deposits, include all interest expense, one-third (the proportion deemed
representative of the interest factor) of rents, net of income from subleases,
and capitalized interest.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Offered
Securities offered hereby will be added to the general funds of the Company and
will be available for general corporate purposes, which may include the
reduction of short-term indebtedness, equity investments in or extensions of
credit to its bank and non-bank subsidiaries, the reduction of outstanding
long-term indebtedness of the Company, the redemption of certain of the
Company's outstanding preferred stock, or the financing of possible business
expansion. Pending specific application, the net proceeds will be invested
temporarily or applied to the reduction of short-term indebtedness. Except as
otherwise described in a Prospectus Supplement, specific application of the
proceeds to such purposes will not have been made at the date of the applicable
Prospectus Supplement, although the management of the Company will have
determined that funds should be raised at that time in anticipation of the
future funding requirements of the Company or its subsidiaries or in
anticipation of repayments of borrowings or redemptions of preferred stock.
DESCRIPTION OF DEBT SECURITIES
GENERAL
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 particular terms of any Debt Securities
and the extent, if any, to which such general provisions may apply to such Debt
Securities will be described in the Prospectus Supplement relating to such Debt
Securities.
The Senior Securities will be issued from time to time in series under an
Indenture dated as of December 1, 1989 between the Company and The Chase
Manhattan Bank (National Association), as Trustee (the "Senior Indenture"). The
Subordinated Securities will be issued from time to time in series under an
Indenture dated as of April 1, 1987, as amended and restated as of December 15,
1992, between the Company and Morgan Guaranty Trust Company of New York, as
succeeded to by First Trust of New York (National Association), as Trustee (the
"Subordinated Indenture"). The Senior Indenture and the Subordinated Indenture
are herein referred to collectively as the "Indentures".
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<PAGE> 19
The statements under this caption are brief summaries of certain provisions
contained in the Indentures, do not purport to be complete and are qualified in
their entirety by reference to the Indentures, copies of which are exhibits to
the Registration Statement of which this Prospectus is a part. Numerical
references in parentheses below are to sections of the applicable Indenture.
Wherever capitalized terms are used but not defined herein, such terms shall
have the meanings assigned to them in the applicable Indenture, it being
intended that such referenced sections of the Indentures and such defined terms
shall be incorporated herein by reference.
Neither Indenture limits the amount of Debt Securities which may be issued
thereunder and Debt Securities may be issued under either of the Indentures 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 subordinated and junior to
all Senior Indebtedness (as defined below under "Subordinated
Securities -- Subordination") and, in certain circumstances relating to the
dissolution, winding-up, liquidation or reorganization of the Company, to all
Additional Senior Obligations (as defined below under "Subordinated
Securities -- Subordination") to the extent set forth below under "Subordinated
Securities". Since the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary, including Chemical
Bank and Texas Commerce, upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of holders of the Debt Securities to benefit
indirectly from such distribution), is subject to the prior claims of creditors
of that subsidiary, except to the extent that the Company may itself be
recognized as a creditor of that subsidiary. Claims on the Company's
subsidiaries by creditors other than the Company include long-term debt and
substantial obligations with respect to deposit liabilities, Federal funds
purchased, securities sold under repurchase agreements, commercial paper and
other short-term borrowings.
The Debt Securities may be issued in one or more separate series of Senior
Securities and/or one or more separate series of Subordinated Securities.
Reference is made to the Prospectus Supplement relating to the particular series
of Debt Securities offered thereby for the terms of such Debt Securities,
including, where applicable: (i) the specific title of such Debt Securities;
(ii) any limit on the aggregate principal amount or aggregate initial offering
price of such Debt Securities; (iii) the purchase price of such Debt Securities
(expressed as a percentage of the principal amount thereof); (iv) the date or
dates on which the principal of such Debt Securities will be payable and the
provisions, if any, for extension of such payment date or dates; (v) the rate or
rates per annum at which such Debt Securities will bear interest, if any,
including the rate of interest, if any, applicable to overdue payments of
principal, or the method by which any such rate or rates will be determined and
the dates on which such interest, if any, will be payable, the record dates for
such interest payment dates and the date from which such interest, if any, will
accrue; (vi) the place or places where the principal of (and premium, if any)
and interest, if any, with respect to the Debt Securities will be payable; (vii)
the terms of any mandatory or optional redemption provisions applicable to the
Debt Securities; (viii) the terms of any sinking fund and analogous provisions
with respect to the Debt Securities; (ix) authorized denominations of the Debt
Securities (if other than denominations of $1,000 and integral multiples
thereof); (x) if other than the currency of the United States, the currency or
currencies, including ECU and other composite currencies, in which payment of
the principal of (and premium, if any) and interest, if any, on the Debt
Securities will be payable (which may be different for principal, premium and
interest); (xi) if the principal of (and premium, if any) or interest, if any,
on such Debt Securities are to be payable at the election of the Company or a
holder thereof in one or more currencies or composite currencies, the currencies
or composite currencies in which payment may be made and the manner of making
such election; (xii) any provisions relating to the conversion or exchange of
such Debt Securities; (xiii) the index, if any, with reference to which the
amount of payments of principal of (and premium, if any) or interest, if any, on
such Debt Securities will be determined; (xiv) whether such Debt Securities are
Senior Securities or Subordinated Securities, or include both; (xv) the portion
of the principal amount of such Debt Securities which will be payable upon
declaration of acceleration of the maturity thereof, if other than the principal
amount thereof; (xvi) any Events of Default applicable to such Debt Securities
(if not set forth in the applicable Indenture); (xvii) if such Debt Securities
are Senior Securities, whether the provisions of the Senior Indenture relating
to "Defeasance and Covenant Defeasance" will be applicable to such series of
Debt
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<PAGE> 20
Securities; (xviii) whether any of such Debt Securities are to be issuable in
permanent global form; (xix) the terms of any Currency Warrants or Securities
Warrants being offered with such Debt Securities; and (xx) any other specific
terms of such Debt Securities (including any covenants applicable to the Debt
Securities if not set forth in the applicable Indenture).
The Debt Securities offered hereby will be issued only in fully registered
form without coupons. The Indentures also provide that Debt Securities of a
series may be issued as permanent global Debt Securities. See "Permanent Global
Debt Securities" below. No service charge will be made for any transfer or
exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Unless otherwise provided in the applicable Prospectus Supplement,
principal of (and premium, if any) and interest, if any, on the Debt Securities
will be payable, and the Debt Securities offered hereby will be transferable or
exchangeable, at the corporate trust office of Chemical Bank in New York City,
provided that payment of interest on any Debt Securities may be made at the
option of the Company by check mailed to the registered holders of the Debt
Securities at their registered addresses. The Company will have the right to
require a holder of any Debt Security, in connection with the payment of the
principal of (and premium, if any) and interest, if any, on such Debt Security,
to certify information to the Company or, in the absence of such certification,
the Company will be entitled to rely on any legal presumption to enable the
Company to determine its duties and liabilities, if any, to deduct or withhold
taxes, assessments or governmental charges from such payment.
If the principal of (and premium, if any) or interest, if any, on any Debt
Securities are to be payable in any currency other than U.S. dollars or, at the
election of the Company or a holder thereof, in one or more currencies or
composite currencies, or if any index is used to determine the amount of
payments of principal of (and premium, if any) or interest, if any, on any
series of Debt Securities, any special Federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus Supplement
relating thereto.
Some of the Debt Securities may be issued as original issue discount Debt
Securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates), to be sold at a discount below their stated
principal amount. Federal income tax, accounting and other special
considerations applicable to any such original issue discount Debt Securities
will be described in the Prospectus Supplement relating thereto.
Neither Indenture contains any restriction on the Company's ability to
enter into a highly leveraged transaction or any provision affording special
protection to holders of Debt Securities in the event the Company engages in a
highly leveraged transaction. Further, neither Indenture contains any provisions
that would provide protection to holders of Debt Securities upon a sudden and
dramatic decline in the credit quality of the Company resulting from a takeover,
recapitalization or similar restructuring of the Company.
The Debt Securities of certain series may be issued under the Indentures
upon the exercise of Securities Warrants issued with other Debt Securities or
upon exchange or conversion of exchangeable or convertible Debt Securities. The
specific terms of any such Securities Warrants, the specific terms of exchange
or conversion of any such Debt Securities and the specific terms of the Debt
Securities issuable upon the exercise of any such Securities Warrants or upon
any such exchange or conversion will be described in the Prospectus Supplement
relating to any Debt Securities issued with Securities Warrants or any such
exchangeable or convertible Debt Securities.
SENIOR SECURITIES
The Senior Securities will be direct, unsecured obligations of the Company
and will constitute Senior Indebtedness issued on a parity with the other Senior
Indebtedness of the Company. As of December 31, 1994, Senior Indebtedness and
Additional Senior Obligations of the Company aggregated approximately $7.7
billion. See "Subordinated Securities -- Subordination" below.
Limitation on Disposition of Stock of Chemical Bank. The Senior Indenture
contains a covenant by the Company that, so long as any of the Senior Securities
are outstanding, but subject to the rights of the
6
<PAGE> 21
Company in connection with its consolidation with or merger into another person
or a sale of the Company's assets, neither the Company nor any Intermediate
Subsidiary will sell, assign, transfer, grant a security interest in or
otherwise dispose of any shares of, or securities convertible into, or options,
warrants or rights to subscribe for or purchase shares of, Voting Stock of
Chemical Bank (except to the Company or an Intermediate Subsidiary), nor will
the Company or any Intermediate Subsidiary permit Chemical Bank to issue any
shares of, or securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of Chemical Bank, nor will the
Company permit any Intermediate Subsidiary that owns any shares of, or
securities convertible into, or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of Chemical Bank to cease to be an Intermediate
Subsidiary, unless (i) any such sale, assignment, transfer, grant of a security
interest or other disposition is made for fair market value, as determined by
the Board of Directors of the Company (the "Board of Directors") or such
Intermediate Subsidiary, and (ii) the Company and any one or more Intermediate
Subsidiaries will collectively own at least 80% of the issued and outstanding
Voting Stock of Chemical Bank (or any successor to Chemical Bank) free and clear
of any security interest after giving effect to such transaction. The foregoing,
however, shall not preclude Chemical Bank from being consolidated with or merged
into another domestic banking corporation, if after such merger or consolidation
the Company, or any successor thereto in a permissible merger, and any one or
more Intermediate Subsidiaries own or owns at least 80% of the Voting Stock of
the resulting bank and, giving effect to the transaction, no Event of Default,
and no event which, after notice or lapse of time or both, would become an Event
of Default, shall have happened and be continuing. An Intermediate Subsidiary is
defined in the Senior Indenture as a Subsidiary (i) that is organized under the
laws of any domestic jurisdiction and (ii) of which all the shares of each class
of capital stock issued and outstanding, and all securities convertible into,
and options, warrants and rights to subscribe for or purchase shares of, such
capital stock, are owned directly by the Company, free and clear of any security
interest. The limitation on the disposition of the Voting Stock of Chemical Bank
does not prevent Chemical Bank from engaging in a sale of assets to the extent
otherwise permitted by the Senior Indenture. (Section 1006).
Events of Default. The Senior Indenture defines an Event of Default with
respect to any series of Senior Securities as any one of the following events:
(i) default in payment of interest on any Senior Security of that series and
continuance of such default for 30 days; (ii) default in the payment of
principal of (or premium, if any, on) any Senior Security of that series at
Maturity; (iii) default in the deposit of any sinking fund payment, when and as
due by the terms of a Senior Security of that series, and continuance of such
default for 5 days; (iv) failure by the Company for 60 days after due notice in
performance of any other of the covenants or warranties in the Senior Indenture
(other than a covenant or warranty included in the Senior Indenture solely for
the benefit of a series of Senior Securities other than that series); (v)(A)
failure by the Company to pay indebtedness for money borrowed, including Senior
Securities of other series, in an aggregate principal amount exceeding
$25,000,000, at the later of final maturity or upon the expiration of any
applicable period of grace with respect to such principal amount or (B)
acceleration of the maturity of any of the Company's indebtedness for money
borrowed, including Senior Securities of other series, in an aggregate principal
amount exceeding $25,000,000, if such failure to pay or acceleration results
from a default under the instrument giving rise to, or securing, such
indebtedness for money borrowed and is not rescinded or annulled within 30 days
after due notice, unless such default is contested in good faith by appropriate
proceedings; (vi) certain events of bankruptcy, insolvency or reorganization of
the Company or Chemical Bank; and (vii) any other Event of Default provided with
respect to Senior Securities of that series. (Section 501).
If any Event of Default with respect to Senior Securities of any series at
the time Outstanding occurs and is continuing, either the Trustee or the holders
of not less than 25% in principal amount of the Outstanding Senior Securities of
that series may declare the principal amount (or, if the Senior Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all Senior
Securities of that series to be due and payable immediately (provided that no
such declaration is required upon certain events of bankruptcy); but upon
certain conditions such declaration may be annulled and past defaults (except,
unless theretofore cured, a default in payment of principal of (or premium, if
any) or interest on the Senior Securities of that series and certain other
specified defaults) may be waived by the holders of a majority in principal
amount of the Outstanding Senior Securities of that series on behalf of the
holders of all Senior Securities of that series. (Sections 502 and 513).
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<PAGE> 22
Reference is made to the Prospectus Supplement relating to each series of
Senior Securities which are Original Issue Discount Securities for the
particular provisions relating to acceleration of the Maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
The Senior Indenture provides that the Trustee will, within 90 days after
the occurrence of a default known to it with respect to Senior Securities of any
series at the time Outstanding with respect to which it is trustee, give to the
holders of the Outstanding Senior Securities of that series notice of such
default if uncured or not waived, provided that, except in the case of default
in the payment of principal of (or premium, if any) or interest, if any, on any
Senior Security of that series, or in the payment of any sinking fund
installment which is provided for such series, such Trustee will be protected in
withholding such notice if such Trustee in good faith determines that the
withholding of such notice is in the interest of the holders of the Outstanding
Senior Securities of such series and, provided further, that such notice shall
not be given until 60 days after the occurrence of a default with respect to
Outstanding Senior Securities of any series in the performance of a covenant in
the Senior Indenture other than for the payment of the principal of (or premium,
if any) or interest, if any, on any Senior Security of such series or the
deposit of any sinking fund payment with respect to the Senior Securities of
such series. The term "default" with respect to any series of Outstanding Senior
Securities for the purpose only of this provision means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Senior Securities of such series. (Section 602).
The Senior Indenture provides that, subject to the duty of the Trustee
during default to act with the required standard of care, the Trustee will not
be under any 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 Trustee reasonable security or indemnity. (Section
603). The Senior Indenture provides that the holders of a majority in principal
amount of Outstanding Senior Securities of any series may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee for that series, or exercising any trust or other power conferred on
such Trustee, provided that such Trustee may decline to act if such direction is
contrary to law or the Senior Indenture. (Section 512).
The Senior Indenture includes a covenant that the Company will file
annually with the Trustee a certificate of no default, or specifying any default
that exists. (Section 1007).
Defeasance and Covenant Defeasance. The Senior Indenture provides, if such
provision is made applicable to the Senior Securities of any series pursuant to
Section 301 of the Senior Indenture (which will be indicated in the Prospectus
Supplement applicable thereto), that the Company may elect (i) to defease and be
discharged from all of its obligations with respect to such Senior Securities
then outstanding (except for the obligations to register the transfer or
exchange of such Senior Securities, to replace temporary or mutilated,
destroyed, lost or stolen Senior Securities, to maintain an office or agency in
respect of the Senior Securities and to hold moneys for payment in trust)
("defeasance") and/or (ii) to be released from its obligations with respect to
such Senior Securities then outstanding under Section 1005 and Section 1006 (and
any other sections applicable to such Senior Securities that are determined
pursuant to Section 301 to be subject to covenant defeasance) and the
consequences of the occurrence of an event of default specified in Section
501(4) (insofar as it is with respect to Section 1005, Section 1006 or any other
section applicable to such Senior Securities that is determined pursuant to
Section 301 to be subject to covenant defeasance) or Section 501(5) of the
Senior Indenture (Section 1005 containing the covenant to pay taxes and other
claims, Section 1006 containing the restrictions described above under
"Limitation on Disposition of Stock of Chemical Bank" and Sections 501(4) and
501(5) containing the provisions described above under "Events of Default"
relating to covenant defaults and cross-defaults, respectively) ("covenant
defeasance"), in either case upon the deposit with the Trustee (or other
qualifying trustee), in trust for such purpose, of money, and/or U.S. Government
Obligations which through the payment of principal and interest in accordance
with their terms will provide money in an amount sufficient, without
reinvestment, to pay the principal of (and premium, if any) and interest, if
any, on such Senior Securities to maturity or redemption, as the case may be,
and any mandatory sinking fund or analogous payments thereon. As a condition to
defeasance or covenant defeasance, the Company must deliver to the Trustee an
Opinion of Counsel (as specified in the Senior Indenture) to the effect that the
holders of such Senior Securities will not recognize income, gain or loss for
8
<PAGE> 23
Federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
or covenant defeasance had not occurred. Such opinion, in the case of defeasance
under clause (i) above, must refer to and be based upon a ruling of the Internal
Revenue Service issued to the Company or published as a revenue ruling or upon a
change in applicable Federal income tax law, in any such case after the date of
the Senior Indenture.
Under current Federal income tax law, defeasance would likely be treated as
a taxable exchange of such Senior Securities for interests in the defeasance
trust. As a consequence, a holder would recognize gain or loss equal to the
difference between the holder's cost or other tax basis for such Senior
Securities and the value of the holder's proportionate interest in the
defeasance trust, and thereafter would be required to include in income a
proportionate share of the income, gain or loss, as the case may be, of the
defeasance trust. Under current Federal income tax law, covenant defeasance
would ordinarily not be treated as a taxable exchange of such Senior Securities.
Purchasers of such Senior Securities should consult their own advisors with
respect to the tax consequences to them of such defeasance and covenant
defeasance, including the applicability and effect of tax laws other than the
Federal income tax law.
If the Company exercises its covenant defeasance option with respect to any
series of Senior Securities, payment of such Senior Securities may not be
accelerated by reference to the covenants relating to covenant defeasance
described above. The Company may exercise its defeasance option with respect to
such Senior Securities notwithstanding its prior exercise of its covenant
defeasance option. If the Company exercises its defeasance option, payment of
such Senior Securities may not be accelerated because of any Event of Default.
If the Company exercises its defeasance option or covenant defeasance option and
an acceleration were to occur, the realizable value at the acceleration date of
the money and U.S. Government Obligations in the defeasance trust could be less
than the principal and interest then due on such Senior Securities, in that the
required deposit in the defeasance trust is based upon scheduled cash flows
rather than market value, which will vary depending upon interest rates and
other factors.
The Prospectus Supplement may further describe the provisions, if any,
applicable to defeasance or covenant defeasance with respect to the Senior
Securities of a particular series.
Modification of the Indenture. Modification and amendments of the Senior
Indenture may be made by the Company and the Trustee with the consent of the
holders of not less than a majority in principal amount of each series of
Outstanding Senior Securities affected thereby, by executing supplemental
indentures adding any provisions to or changing or eliminating any of the
provisions of the Senior Indenture or modifying the rights of the holders of
Outstanding Senior Securities of such series, except that no such supplemental
indenture may (i) change the Stated Maturity of any Senior Security of any
series, or reduce the principal amount thereof (or premium, if any, thereon), or
reduce the rate of payment of interest thereon, or change certain other
provisions relating to the yield of the Senior Securities or change the currency
or currencies in which the same is payable; (ii) reduce the aforesaid percentage
of Outstanding Senior Securities of any series, the consent of the holders of
which is required for any supplemental indenture, or reduce the percentage of
principal amount of Outstanding Senior Securities necessary for waiver of
compliance with certain provisions of the Senior Indenture or for waiver of
certain covenants and defaults; or (iii) modify the provisions of the Senior
Indenture relating to modification and amendment of the Senior Indenture. The
Senior Indenture provides, however, that each of the amendments and
modifications listed in clauses (i) through (iii) above may be made with the
consent of the holder of each Outstanding Senior Security affected thereby.
(Section 902).
Consolidation, Merger and Sale of Assets. The Company, without the consent
of the holders of any of the Senior Securities under the Senior Indenture, may
consolidate with or merge into any other person or transfer or lease its assets
substantially as an entirety to any person or may permit any corporation to
merge into the Company, provided that: (i) the successor is a person organized
under the laws of any domestic jurisdiction; (ii) the successor person, if other
than the Company, assumes the Company's obligations on the Senior Securities and
under the Senior Indenture; (iii) after giving effect to the transaction, no
Event of
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<PAGE> 24
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing; and (iv) certain
other conditions are met. (Section 801).
Outstanding Senior Securities. The Senior Indenture provides that, in
determining whether the holders of the requisite principal amount of Outstanding
Senior Securities have given any request, demand, authorization, direction,
notice, consent or waiver, (i) the portion of the principal amount of an
Original Issue Discount Security that shall be deemed to be Outstanding for such
purpose shall be that portion of the principal amount thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof; (ii) the portion of the principal amount of a Senior Security
denominated in a foreign or composite currency or currencies that shall be
deemed to be Outstanding for such purpose shall be the U.S. dollar equivalent,
determined on the date of original issuance of such Senior Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the date of original issuance of such Senior Security
of the amount determined as provided in (i) above) of such Senior Security;
(iii) the portion of the principal amount of a Senior Security for which the
amount of payments of principal of and any premium or interest on such Senior
Security may be determined with reference to an index that shall be deemed to be
Outstanding for such purpose shall be determined as of the date of original
issuance of such Senior Security; and (iv) Senior Securities owned by the
Company, any of its Affiliates or any other obligor upon the Senior Securities
shall not be deemed to be Outstanding. (Section 101).
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of the
Company. The obligations of the Company pursuant to the Subordinated Securities
will be subordinate in right of payment to all Senior Indebtedness and, in
certain circumstances relating to the dissolution, winding-up, liquidation or
reorganization of the Company, to all Additional Senior Obligations, whether
outstanding as of the date hereof or hereafter created, assumed or incurred, as
discussed below under "Subordination". The Subordinated Indenture does not
contain any restriction on the amount of Senior Indebtedness or Additional
Senior Obligations which the Company may incur.
Unless otherwise indicated in the applicable Prospectus Supplement, the
maturity of the Subordinated Securities will be subject to acceleration only in
the event of certain events of bankruptcy or reorganization of the Company. See
"Defaults and Waiver Thereof" below.
The holders of Subordinated Securities of a specified series that are
convertible into Common Stock ("Subordinated Convertible Securities") will be
entitled at certain times specified in the Prospectus Supplement relating to
such Subordinated Convertible Securities, subject to prior redemption, repayment
or repurchase, to convert any Subordinated Convertible Securities of such series
into Common Stock, at the conversion price set forth in such Prospectus
Supplement, subject to adjustment and to such other terms as are set forth in
such Prospectus Supplement.
The holders of Subordinated Securities of any series may be obligated at
maturity, or at any earlier time as set forth in the Prospectus Supplement
relating to such series, to exchange them for Capital Securities of the Company.
The terms of any such exchange and the Capital Securities issuable upon such
exchange will be described in the Prospectus Supplement relating to such series
of Subordinated Securities. (Article Seventeen). "Capital Securities" may
consist of Common Stock, perpetual preferred stock or other capital securities
of the Company acceptable to its primary Federal banking regulator. Currently,
the Company's primary Federal banking regulator is the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). Whenever Subordinated
Securities are exchangeable for Capital Securities, the Company will be
obligated to deliver Capital Securities with a market value equal to the
principal amount of such Subordinated Securities. In addition, the Company will
unconditionally undertake, at the expense of the Company, to sell the Capital
Securities in a sale (the "Secondary Offering") on behalf of any holders who
elect to receive cash for the Capital Securities. The Common Stock is described
below under "Description of Common Stock." A general description of the
preferred stock of the Company is set forth below under "Description of
Preferred Stock".
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The staff of the Commission has advised the Company that Rule 13e-4 of the
Commission's rules and regulations relating to tender offers by issuers, as
currently in effect and interpreted, would be applicable to the exchange of
Subordinated Securities of any series for Capital Securities and to any
Secondary Offering. If, at the time of the exchange of Subordinated Securities
of any series for Capital Securities and the Secondary Offering, Rule 13e-4 (or
any successor rule or rules) applies to such transactions, the Company will
comply with such rule (or any successor rule or rules) and will afford holders
of such Subordinated Securities all rights and will make all filings required by
such rule (or successor rule or rules). If fewer than all of the Subordinated
Securities of a series may be exchanged for Capital Securities pursuant to the
terms of such Subordinated Securities, the particular Subordinated Securities to
be exchanged shall be selected by the Trustee utilizing a method the Trustee
deems fair and equitable, provided that such method shall comply with the
requirements of applicable law, including Federal securities law.
Subordination. The Subordinated Securities will be subordinate in right of
payment as provided in the Subordinated Indenture to all Senior Indebtedness
and, under certain circumstances, to all Additional Senior Obligations.
The Subordinated Indenture provides that "Senior Indebtedness" shall mean
the principal of (and premium, if any) and interest on (i) all indebtedness of
the Company for money borrowed, whether outstanding on the date of execution of
the Subordinated Indenture or thereafter created, assumed or incurred, except
(A) Subordinated Securities issued under the Subordinated Indenture, (B)
Antecedent CBC Subordinated Indebtedness (as hereinafter defined), (C) Assumed
MHC Subordinated Indebtedness (as hereinafter defined) and (D) such other
indebtedness of the Company which by its terms is expressly stated to be not
superior in right of payment to the Subordinated Securities or to rank pari
passu in right of payment with the Subordinated Securities (such other
indebtedness hereinafter referred to as "Other Subordinated Indebtedness") and
(ii) any deferrals, renewals or extensions of any such Senior Indebtedness. The
term "indebtedness of the Company for money borrowed" shall mean any obligation
of, or any obligation guaranteed by, the Company for the repayment of money
borrowed, whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for payment of the purchase price of
property or assets.
The Subordinated Indenture also provides that "Additional Senior
Obligations" shall mean all indebtedness of the Company, whether outstanding on
December 15, 1992 or thereafter created, assumed or incurred, for claims in
respect of derivative products such as interest and foreign exchange rate
contracts, commodity contracts and similar arrangements; provided, however, that
Additional Senior Obligations do not include claims in respect of Senior
Indebtedness or obligations which, by their terms, are expressly stated to be
not superior in right of payment to the Subordinated Securities or to rank pari
passu in right of payment with the Subordinated Securities. For purposes of this
definition, "claim" shall have the meaning assigned thereto in Section 101(4) of
the United States Bankruptcy Code of 1978, as amended and in effect on December
15, 1992.
At December 31, 1994, an aggregate principal amount of approximately $750
million of Subordinated Securities and an aggregate principal amount of
approximately $100 million of Other Subordinated Indebtedness was outstanding.
Antecedent CBC Subordinated Indebtedness includes the following outstanding
subordinated indebtedness of the Company issued prior to December 15, 1992: (i)
the 10 1/8% Subordinated Capital Notes Due 2000; (ii) the 9 3/4% Subordinated
Capital Notes Due 1999; (iii) the 8 1/2% Subordinated Notes Due 2002; (iv) the
8 5/8% Subordinated Debentures Due 2002; (v) the 8 1/8% Subordinated Notes Due
2002; (vi) the 10 3/8% Subordinated Notes Due 1999; and (vii) the Floating Rate
Subordinated Capital Note Due 1998. At December 31, 1994, an aggregate principal
amount of approximately $1.05 billion of Antecedent CBC Subordinated
Indebtedness was outstanding.
Assumed MHC Subordinated Indebtedness includes the following outstanding
subordinated indebtedness of the Company which was assumed by the Company as a
result of the Merger: (i) the Floating Rate Subordinated Notes Due 1997; and
(ii) the 8 1/2% Subordinated Capital Notes Due February 15, 1999. At
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<PAGE> 26
December 31, 1994, an aggregate principal amount of approximately $242 million
of Assumed MHC Subordinated Indebtedness was outstanding.
The Subordinated Securities will be subordinate in right of payment as
provided in the Subordinated Indenture to all Senior Indebtedness. No payment
pursuant to the Subordinated Securities or exchange for Capital Securities may
be made, and no holder of the Subordinated Securities shall be entitled to
demand or receive any such payment or exchange, unless all amounts of principal
(and premium, if any) and interest, if any, then due with respect to all Senior
Indebtedness shall have been paid in full or duly provided for, and unless at
the time of such payment or exchange and immediately after giving effect
thereto, there shall not exist with respect to any such Senior Indebtedness any
event of default permitting the holders thereof to accelerate the maturity
thereof or any event which, with notice or lapse of time or both, would become
such an event of default. Such subordination will not prevent the occurrence of
any default in respect of the Subordinated Securities. See "Defaults and Waivers
Thereof " below for limitations on the rights of acceleration. (Article
Sixteen).
Upon any distribution of the assets of the Company upon dissolution,
winding-up, liquidation or reorganization, (i) the holders of Senior
Indebtedness will be entitled to receive payment in full of principal (and
premium, if any) and interest, if any, before any payment or distribution is
made on the Subordinated Securities, and (ii) if, after giving effect to the
operation of clause (i) above, (A) amounts remain available for payment or
distribution in respect of the Subordinated Securities and (B) creditors in
respect of Additional Senior Obligations have not received payment in full of
amounts due or to become due thereon or payment of such amounts has not been
duly provided for, then such amounts available for payment or distribution in
respect of the Subordinated Securities shall first be applied to pay or provide
for the payment in full of all such Additional Senior Obligations before any
payment may be made on the Subordinated Securities.
The Subordinated Securities will not be subordinated to indebtedness of the
Company which is not Senior Indebtedness or Additional Senior Obligations, and
the creditors of the Company who do not hold Senior Indebtedness or Additional
Senior Obligations will not benefit from the subordination provisions described
herein. In the event of the bankruptcy or reorganization of the Company before
or after maturity of the Subordinated Securities (and prior to any exchange or
conversion thereof), such other creditors would rank pari passu in right of
payment with holders of the Subordinated Securities, subject, however, to the
broad equity powers of a Federal bankruptcy court pursuant to which such court
may, among other things, reclassify the claims of holders of any series of
Subordinated Securities into a class of claims having a different relative
priority with respect to the claims of such other creditors or any other claims
against the Company.
No series of subordinated debt securities of the Company (including,
without limitation, the Subordinated Securities, the Antecedent CBC Subordinated
Indebtedness, the Assumed MHC Subordinated Indebtedness and the Other
Subordinated Indebtedness), is subordinated to any other series of subordinated
debt securities of the Company. However, Antecedent CBC Subordinated
Indebtedness is subordinated, by its terms, only to Senior Indebtedness;
Subordinated Securities and Other Subordinated Indebtedness will be
subordinated, by their terms, to Senior Indebtedness and, in certain
circumstances relating to the dissolution, winding-up, liquidation or
reorganization of the Company, to Additional Senior Obligations; and Assumed MHC
Subordinated Indebtedness is subordinated, by its terms, to Senior Indebtedness,
Additional Senior Obligations and all other obligations of the Company to its
creditors other than any obligation of the Company as is by its terms expressly
stated to be not superior in right of payment to or to rank pari passu in right
of payment with such Assumed MHC Subordinated Indebtedness. As a result of the
differences between the subordination provisions applicable to the Subordinated
Securities, the Antecedent CBC Subordinated Indebtedness, the Assumed MHC
Subordinated Indebtedness and the Other Subordinated Indebtedness, in the event
of a dissolution, winding-up, liquidation or reorganization of the Company, the
holders of Subordinated Securities and Other Subordinated Indebtedness may
receive less, ratably, than the holders of Antecedent CBC Subordinated
Indebtedness, but more, ratably, than the holders of Assumed MHC Subordinated
Indebtedness.
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Limitation on Disposition of Voting Stock of Chemical Bank. With respect
to Subordinated Securities, the Subordinated Indenture contains no covenant that
the Company will not sell, transfer or otherwise dispose of any shares of, or
securities convertible into, or options, warrants or rights to subscribe for or
purchase shares of, voting stock of Chemical Bank, nor does it prohibit Chemical
Bank from issuing any shares of, securities convertible into, or options,
warrants or rights to subscribe for or purchase shares of, voting stock of
Chemical Bank. However, the Subordinated Indenture does contain a covenant by
the Company, for the exclusive benefit of the Antecedent CBC Subordinated
Indebtedness and subject to the provisions described below under "Consolidation,
Merger and Sale of Assets," that the Company will not sell, transfer or
otherwise dispose of any shares of, or securities convertible into, or options,
warrants or rights to subscribe for or purchase shares of, voting stock of
Chemical Bank, nor will it permit Chemical Bank to issue any shares of,
securities convertible into, or options, warrants or rights to subscribe for or
purchase shares of, voting stock of Chemical Bank, with the following
exceptions: (i) issuances or sales of directors' qualifying shares; (ii)
issuances or sales of shares to the Company; (iii) sales or other dispositions
or issuances for fair market value, as determined by the Board of Directors, if
after giving effect to such sales, dispositions or issuances and to the issuance
of any shares issuable upon conversion of convertible securities or upon the
exercise of options, warrants or rights, the Company would own directly or
indirectly through subsidiaries not less than 80% of the issued and outstanding
shares of voting stock of Chemical Bank; (iv) sales or other dispositions or
issuances made in compliance with an order or direction of a court or regulatory
authority of competent jurisdiction; and (v) sales of voting stock by Chemical
Bank to its shareholders if such sales do not reduce the percentage of shares of
voting stock owned by the Company. (Section 5.07).
Defaults and Waiver Thereof. The Subordinated Indenture defines an Event
of Default with respect to any series of Subordinated Securities as (i) any one
of certain events of bankruptcy or reorganization affecting the Company and (ii)
any other Event of Default specifically provided for by the terms of such series
of Subordinated Securities, as described in the Prospectus Supplement relating
thereto. (Section 7.01). In case an Event of Default shall have occurred and be
continuing with respect to any series of Subordinated Securities then
outstanding under the Subordinated Indenture, the Trustee or the holders of at
least 25% in aggregate principal amount of the Subordinated Securities of that
series which are then outstanding may declare the principal (or, in the case of
original issue discount Subordinated Securities, such lesser amount of principal
as may be provided therein) of all Subordinated Securities of that series to be
due and payable immediately in cash, but such declaration may be annulled, and
certain past defaults may be waived, by the holders of not less than a majority
in aggregate principal amount of the Subordinated Securities of that series,
upon the conditions provided in the Subordinated Indenture. (Section 7.01). The
right of the holders of Subordinated Securities of a series to demand payment in
cash would exist upon the occurrence and continuance of an Event of Default
before or after the stated maturity of the Subordinated Securities of such
series, so long as the Subordinated Securities of such series have not been
exchanged or converted as provided in the Subordinated Indenture. Any such right
to payment in cash would, in the event of the bankruptcy or reorganization of
the Company, 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
and status of the payment claims of the holders of the Subordinated Securities.
Prior to any declaration accelerating the maturity of the Subordinated
Securities of any series, the holders of a majority in aggregate principal
amount of the Subordinated Securities of that series at the time outstanding may
on behalf of the holders of all Subordinated Securities of that series waive any
past default or Event of Default and its consequences, except a default in the
payment of the principal of (or premium, if any) or interest, if any, on the
Subordinated Securities of that series. (Section 7.07).
Unless otherwise provided in the terms of a series of Subordinated
Securities, there will be no right of acceleration of the payment of principal
of the Subordinated Securities of such series upon a default in the payment of
principal or interest or a default in the performance of any covenant or
agreement in the Subordinated Securities or the Subordinated Indenture. In the
event of a default in the payment of interest or principal (including the
delivery of any Capital Securities in exchange for Subordinated Securities) or
the performance of any covenant or agreement in the Subordinated Securities or
the Subordinated Indenture, the Trustee may, subject to certain limitations and
conditions, seek to enforce payment of such interest or
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<PAGE> 28
principal (including the delivery of any Capital Securities in exchange for
Subordinated Securities) or the performance of such covenant or agreement.
The Subordinated Indenture provides that the Trustee shall, within 90 days
after the occurrence of a default with respect to the Subordinated Securities of
any series, give to the holders of the Subordinated Securities of that series
notice of all uncured defaults known to it (the term "default" being defined to
include the events specified above without grace periods or notice), provided,
that except in the case of an Event of Default that relates to the bankruptcy or
reorganization of the Company or a default in payment of principal (or premium,
if any) or interest, if any, in respect of the Subordinated Securities of that
series, or the obligation to deliver Capital Securities in exchange for such
Subordinated Securities, the Trustee shall be protected in withholding such
notice if and so long as the board of directors or trustees, the executive
committee or a trust committee of directors or responsible officers or both, of
the Trustee, in good faith determines that the withholding of such notice is in
the interest of such holders. (Section 7.08). The Company will be required to
furnish to the Trustee annually an officers' certificate as to the absence of
defaults under the Subordinated Indenture. (Section 5.06).
Subject to the provisions of the Subordinated Indenture relating to the
duties of the Trustee, the Trustee will be under no obligation to exercise any
of its rights or powers under the Subordinated Indenture at the request, order
or direction of any of the holders of the Subordinated Securities, unless such
holders shall have offered to the Trustee reasonable security or indemnity.
Subject to such provision for security or indemnification, the holders of a
majority in principal amount of the Subordinated Securities of any series then
outstanding under the Subordinated Indenture will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to,
or exercising any trust or power conferred on, the Trustee with respect to the
Subordinated Securities of such series. (Sections 7.07 and 8.02).
Modification of the Indenture. The Subordinated Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in principal amount of the Subordinated
Securities at the time outstanding of each series affected by such modification,
to modify the Subordinated Indenture or any supplemental indenture or the rights
of the holders of the Subordinated Securities, provided that no such
modification shall, without the consent of the holder of each Subordinated
Security affected thereby: (i) change the stated maturity date of the principal
of, or any installment of principal of or interest on, any such Subordinated
Security; (ii) reduce the principal amount of (or premium, if any) or interest,
if any, on any such Subordinated Security; (iii) reduce the portion of the
principal amount of an original issue discount Subordinated Security payable
upon acceleration of the maturity thereof; (iv) reduce any amount payable upon
redemption of any Subordinated Security; (v) change the place or places where,
or the coin or currency in which, any Subordinated Security or any premium or
the interest thereon is payable; (vi) change the definition of "Market Value";
(vii) impair the right of any holders of Subordinated Securities of any series
to receive on any Exchange Date for Subordinated Securities of such series
Capital Securities with a Market Value equal to that required by the terms of
the Subordinated Securities; (viii) impair the conversion rights of any holders
of Subordinated Securities of a series entitled to the conversion rights set
forth in Article Nineteen of the Subordinated Indenture; (ix) impair the right
of a holder to institute suit for the enforcement of any payment on or with
respect to any such Subordinated Security (including any right of redemption at
the option of the holder of such Subordinated Security) or impair any rights to
the delivery of Capital Securities in exchange for any Subordinated Security or
to require the Company to sell Capital Securities in a Secondary Offering or to
require the delivery of Common Stock, Debt Securities or other property upon
conversion of Subordinated Securities; (x) reduce the above-stated percentage of
Subordinated Securities of any series the consent of the holders of which is
necessary to modify or amend the Subordinated Indenture or reduce the percentage
of Subordinated Securities of any series the holders of which are required to
waive any past default or Event of Default; or (xi) modify the foregoing
requirements. (Section 11.02).
The Subordinated Indenture permits the Company and the Trustee to amend the
Subordinated Indenture in certain circumstances without the consent of the
holders of Subordinated Securities to evidence
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<PAGE> 29
the merger of the Company or the replacement of the Trustee, to effect
modifications which do not affect any series of Subordinated Securities already
outstanding and for certain other purposes. (Section 11.01).
Consolidation, Merger and Sale of Assets. The Company may not merge or
consolidate with any other corporation or sell or convey all or substantially
all of its assets as an entirety to any other corporation, unless (i) either the
Company shall be the continuing corporation or the successor corporation shall
expressly assume the payment of the principal of (including issuance and
delivery of Capital Securities) (and premium, if any) and interest, if any, on
the Subordinated Securities and the performance and observance of all the
covenants and conditions of the Subordinated Indenture binding upon the Company,
and (ii) the Company or such successor corporation shall not, immediately after
such merger or consolidation or such sale or conveyance, be in default in the
performance of any such covenant or condition. (Article Twelve).
PERMANENT GLOBAL DEBT SECURITIES
If any Debt Securities are to be issued in permanent global form, the
Prospectus Supplement relating thereto 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 like
tenor of any authorized form and denomination. Principal of (and premium, if
any) and interest, if any, on a permanent global Debt Security will be payable
in the manner described in the Prospectus Supplement relating thereto. Persons
holding beneficial interests in such a permanent global Debt Security will,
pursuant to arrangements between such persons and the depository (the record
holder of the global Debt Security), be treated as holders of the Debt Security
for other purposes to the extent specified in writing by such depository.
INFORMATION CONCERNING THE TRUSTEES
The Company, Chemical Bank and certain other subsidiaries of the Company
maintain deposits with, and conduct other banking transactions with, the
Trustees under each of the Indentures in the ordinary course of business. First
Trust of New York (National Association) is trustee under indentures of the
Company pursuant to which Senior Indebtedness is outstanding.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain terms of any series of the Preferred
Stock offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of the Preferred Stock. If so indicated in
the Prospectus Supplement, the terms of any such series may differ from the
terms set forth below. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Certificate of Designations relating to such series of the Preferred Stock which
will be filed with the Commission promptly after the offering of such series of
Preferred Stock. A form of Certificate of Designations is filed as an exhibit to
the Registration Statement to which this Prospectus relates.
GENERAL
Under the Company's Certificate of Incorporation, the Board of Directors of
the Company (the "Board of Directors") is authorized, without further
stockholder action, to provide for the issuance of up to 200,000,000 shares of
preferred stock, $1 par value per share, in one or more series, with such voting
powers and with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions, as shall be set forth in resolutions providing for the issue
thereof adopted by the Board of Directors or a duly authorized committee
thereof. The Company may amend from time to time its Certificate of
Incorporation to increase the number of authorized shares of preferred stock.
Any such amendment would require the approval of the holders of a majority of
the outstanding shares of Common Stock, and the approval of the holders of a
majority of the outstanding shares of all series of
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preferred stock voting together as a single class without regard to series. As
of the date of this Prospectus, the Company has seven series of preferred stock
outstanding, which are described below under "Outstanding Preferred Stock".
Under regulations adopted by the Federal Reserve Board, if the holders of
any series of Preferred Stock become entitled to vote for the election of
directors because dividends on such series are in arrears as described below
under "Voting Rights", such series may then be deemed a "class of voting
securities" and a holder of 25% or more of such series (or a holder of 5% 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
BHCA. In addition, at such time as such series is deemed a class of voting
securities, (i) any other bank holding company may be required to obtain the
prior approval of the Federal Reserve Board under the BHCA to acquire or retain
5% or more of such series, and (ii) any person other than a bank holding company
may be required to obtain the approval of the Federal Reserve Board under the
Change in Bank Control Act to acquire or retain 10% or more of such series.
The Preferred Stock shall have the dividend, liquidation, redemption,
voting and conversion rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of the Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specific terms, including: (i) the
title and liquidation preference per share of such Preferred Stock and the
number of shares offered; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable, whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to accumulate; (iv) any redemption or sinking fund provisions of such Preferred
Stock; (v) any conversion provisions of such Preferred Stock; (vi) whether the
Company has elected to offer Depositary Shares with respect to such Preferred
Stock as described below under "Depositary Shares"; and (vii) any additional
dividend, liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations and restrictions of such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity as to dividends and distributions in the event of a liquidation with the
outstanding preferred stock of the Company and each other series of the
Preferred Stock. See "Outstanding Preferred Stock" below.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, out of assets of the Company
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. Such rate may be fixed or variable or both. Each such dividend
will be payable to the holders of record as they appear on the stock books of
the Company (or, if applicable, the records of the Depositary referred to below
under "Depositary Shares") on such record dates as will be fixed by the Board of
Directors or a duly authorized committee thereof. Dividends on any series of the
Preferred Stock may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating thereto. If the Board of Directors fails to
declare a dividend payable on a dividend payment date on any series of Preferred
Stock for which dividends are noncumulative, then the right to receive a
dividend in respect of the dividend period ending on such dividend payment date
will be lost, and the Company shall have no obligation to pay the dividend
accrued for that period, whether or not dividends are declared for any future
period.
No full dividends will be declared or paid or set apart for payment on the
Preferred Stock of any series ranking, as to dividends, on a parity with or
junior to any other series of preferred stock for any period unless full
dividends have been or contemporaneously are declared and paid, or declared and
a sum sufficient for the payment thereof set apart for such payment, on such
other series of preferred stock for the then-current dividend payment period
and, if such other preferred stock is cumulative, all other dividend payment
periods terminating on or before the date of payment of such full dividends.
When dividends are not paid in full upon
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any series of the Preferred Stock and any other preferred stock ranking on a
parity as to dividends with such series of the Preferred Stock, all dividends
declared upon such series of the Preferred Stock and any other preferred stock
ranking on a parity as to dividends will be declared pro rata so that the amount
of dividends declared per share on such series of the Preferred Stock and such
other preferred stock will in all cases bear to each other the same ratio that
accrued dividends per share on such series of the Preferred Stock and such other
preferred stock bear to each other. Except as provided in the preceding
sentence, unless full dividends, including, in the case of cumulative Preferred
Stock, accumulations, if any, in respect of prior dividend payment periods, on
all outstanding shares of any series of the Preferred Stock have been paid, no
dividends (other than in shares of Common Stock or another stock ranking junior
to such series of the Preferred Stock as to dividends and upon liquidation) will
be declared or paid or set aside for payment or other distributions made upon
the Common Stock or any other stock of the Company ranking junior to or on a
parity with the Preferred Stock as to dividends or upon liquidation, nor will
any Common Stock or any other stock of the Company ranking junior to or on a
parity with such series of the Preferred Stock as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Company (except by conversion
into or exchange for stock of the Company ranking junior to such series of the
Preferred Stock as to dividends and upon liquidation). 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.
The amount of dividends payable for each dividend period will be computed
by annualizing the applicable dividend rate and dividing by the number of
dividend periods in a year, except that the amount of dividends payable for the
initial dividend period or any period shorter than a full dividend period shall
be computed on the basis of 30-day months, a 360-day year and the actual number
of days elapsed in the period.
Each series of Preferred Stock will be entitled to dividends as described
in the Prospectus Supplement relating to such series, which may be based upon
one or more methods of determination. Different series of the Preferred Stock
may be entitled to dividends at different dividend rates or based upon different
methods of determination.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of each series of Preferred Stock will be
entitled to receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of Common
Stock or any other class of stock ranking junior to such series of the Preferred
Stock upon liquidation, liquidating distributions in the amount set forth in the
Prospectus Supplement relating to such series of the Preferred Stock plus an
amount equal to accrued and unpaid dividends for the then-current dividend
period and, if such series of the Preferred Stock is cumulative, for all
dividend periods prior thereto. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Preferred Stock of any series and any other shares of stock of
the Company ranking as to any such distribution on a parity with such series of
the Preferred Stock are not paid in full, the holders of the Preferred Stock of
such series 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 of the full amount of the
liquidating distribution to which they are entitled, the holders of such series
of Preferred Stock will have no right or claim to any of the remaining assets of
the Company. Neither the sale of all or substantially all the property or
business of the Company nor the merger or consolidation of the Company into or
with any other corporation shall be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, of the Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or in part, at
the option of the Company, and may be subject to mandatory redemption pursuant
to a sinking fund, in each case upon terms, at the times and at the redemption
prices set forth in the Prospectus Supplement relating to such series.
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The Prospectus Supplement relating to a series of Preferred Stock which is
subject to mandatory redemption shall specify the number of shares of such
series of Preferred Stock which shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of redemption. The redemption price may be payable in cash,
capital stock or in cash received from the net proceeds of the issuance of
capital stock of the Company, as specified in the Prospectus Supplement relating
to such series of Preferred Stock. If the redemption price is payable only from
the net proceeds of the issuance of capital stock of the Company, the terms of
such series may provide that, if no such capital stock shall have been issued or
to the extent the net proceeds from any issuances are insufficient to pay in
full the aggregate redemption price then due, the applicable shares of such
series of Preferred Stock shall automatically and mandatorily be converted into
shares of the applicable capital stock of the Company pursuant to conversion
provisions specified in the Prospectus Supplement relating to such series of
Preferred Stock.
If fewer than all the outstanding shares of any series of the Preferred
Stock are to be redeemed, whether by mandatory or optional redemption, the
selection of the shares to be redeemed shall be determined by lot or pro rata as
may be determined by the Board of Directors or a duly authorized committee
thereof, or by any other method which may be determined by the Board of
Directors or such committee to be equitable. From and after the date of
redemption (unless default shall be made by the Company in providing for the
payment of the redemption price), dividends shall cease to accrue on the shares
of Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price) shall cease.
In the event that full dividends, including accumulations in the case of
cumulative Preferred Stock, on any series of the Preferred Stock have not been
paid, such series of the Preferred Stock may not be redeemed in part and the
Company may not purchase or acquire any shares of such series of the Preferred
Stock otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of such series of the Preferred Stock.
CONVERSION RIGHTS
The Prospectus Supplement for any series of the Preferred Stock will state
the terms, if any, on which shares of that series are convertible into shares of
Common Stock or another series of preferred stock of the Company. As described
under "Redemption" above, under certain circumstances, the Preferred Stock may
be mandatorily converted into Common Stock or another series of preferred stock
of the Company. The Preferred Stock will have no preemptive rights.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will not be entitled to vote.
Except as indicated in the Prospectus Supplement relating to a particular series
of Preferred Stock, in the event the Company issues full shares of any series of
Preferred Stock, each such share will be entitled to one vote on matters on
which holders of such series of the Preferred Stock are entitled to vote.
However, as more fully described below under "Depositary Shares", if the Company
elects to issue Depositary Shares representing a fraction of a share of a series
of Preferred Stock, each such Depositary Share will, in effect, be entitled to
such fraction of a vote, rather than a full vote. Since each full share of any
series of Preferred Stock shall be entitled to one vote, the voting power of
such series, on matters on which holders of such series and holders of other
series of preferred stock are entitled to vote as a single class, shall depend
on the number of shares in such series, not the aggregate liquidation preference
or initial offering price of the shares of such series of Preferred Stock.
If at the time of any annual meeting of the Company's stockholders the
equivalent of six quarterly dividends payable on any series of the Preferred
Stock or any other series of preferred stock are in default, the number of
directors of the Company will be increased by two and the holders of all
outstanding series of preferred stock, voting as a single class without regard
to series, will be entitled to elect those additional two directors at each such
annual meeting. Each director elected by the holders of shares of the Preferred
Stock
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shall continue to serve as such director for the full term for which he or she
shall have been elected, notwithstanding that prior to the end of such term such
default shall cease to exist.
The affirmative vote or consent of the holders of at least two-thirds of
the outstanding shares of any series of Preferred Stock, voting as a separate
class, will be required for any amendment of the Company's Certificate of
Incorporation (or any certificate amendatory thereof or supplemental thereto
relating to any series of the Preferred Stock) which will adversely affect the
powers, preferences, privileges or rights of such series of the Preferred Stock.
The affirmative vote or consent of the holders of shares representing at least
two-thirds of the voting power of the outstanding shares of any series of
Preferred Stock and any other series of preferred stock of the Company ranking
on a parity with such series of the Preferred Stock as to dividends or upon
liquidation, voting as a single class without regard to series, will be required
to authorize, effect or validate (i) the creation, authorization or issuance of,
(ii) the reclassification of any authorized stock of the Company into, or (iii)
the creation, authorization or issuance of any obligation or security
convertible into or evidencing the right to purchase, any additional class or
series of stock ranking prior to such series of the Preferred Stock as to
dividends or upon liquidation.
In addition to the foregoing voting rights, under the Delaware General
Corporation Law as now in effect, the holders of the Preferred Stock will have
the voting rights set forth under "General" above with respect to amendments to
the Company's Certificate of Incorporation which would increase the number of
authorized shares of preferred stock of the Company.
OUTSTANDING PREFERRED STOCK
As of December 31, 1994, there were issued and outstanding (i) 4,000,000
shares of 10.96% Preferred Stock (the "10.96% Preferred"); (ii) 3,999,900 shares
of 10% Convertible Preferred Stock (the "10% Preferred"); (iii) 14,000,000
shares of 8 3/8% Preferred Stock (the "8 3/8% Preferred"); (iv) 2,000,000 shares
of 7.92% Cumulative Preferred Stock (the "7.92% Preferred"); (v) 2,000,000
shares of 7.58% Cumulative Preferred Stock (the "7.58% Preferred"), (vi)
2,000,000 shares of 7 1/2% Cumulative Preferred Stock (the "7 1/2% Preferred")
and (vii) 2,000,000 shares of Adjustable Rate Cumulative Preferred Stock, Series
L (the "Series L Preferred"). In addition, as of December 31, 1994, 4,000,000
shares of preferred stock, designated as Junior Participating Preferred Stock,
were reserved for issuance pursuant to the Shareholders' Rights Agreement
described below under "Description of Common Stock -- Shareholders' Rights
Plan".
All series of outstanding preferred stock rank on a parity with each other
series and all have preference over the Common Stock with respect to the payment
of dividends and the distribution of assets in the event of the liquidation or
dissolution of the Company. Unless otherwise specified in the Prospectus
Supplement relating to a particular series of the Preferred Stock, all such
series of outstanding preferred stock will rank on a parity with the Preferred
Stock as to dividends and liquidation.
Dividends on all outstanding series of preferred stock are cumulative. The
amounts of the cumulative dividends on the Series L Preferred vary with the
interest rates on certain U.S. Government obligations. Dividends on the 10.96%
Preferred, 10% Preferred, 8 3/8% Preferred, 7.92% Preferred, 7.58% Preferred and
7 1/2% Preferred are fixed at their respective rates.
In the event of a liquidation or dissolution of the Company, the holders of
(i) 10% Preferred are entitled to receive a distribution of $50 per share; (ii)
7.92% Preferred, 7.58% Preferred, 7 1/2% Preferred and Series L Preferred are
each entitled to receive a distribution of $100 per share; and (iii) 10.96%
Preferred and 8 3/8% Preferred are each entitled to receive a distribution of
$25 per share plus, in each case, accrued and unpaid dividends, if any.
Shares of 10.96% Preferred are redeemable at the option of the Company at
any time on or after June 30, 2000 at a redemption price per share of $25.
Shares of 10% Preferred are redeemable at the option of the Company at any time
on or after May 1, 1995 at an initial redemption price per share of $53 and
thereafter at prices declining to $50 per share on and after May 1, 2001. Shares
of 8 3/8% Preferred are redeemable at the option of the Company at any time on
or after June 1, 1997 at a redemption price per share of $25. Shares of 7.92%
Preferred are redeemable at the option of the Company at any time on or after
October 1, 1997 at a
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redemption price per share of $100. Shares of 7.58% Preferred are redeemable at
the option of the Company at any time on or after April 1, 1998 at a redemption
price per share of $100. Shares of 7 1/2% Preferred are redeemable at the option
of the Company at any time on or after June 1, 1998 at a redemption price per
share of $100. Shares of Series L Preferred are redeemable at the option of the
Company at any time on or after June 30, 1999 at a redemption price per share of
$100. The redemption prices set forth above with respect to each outstanding
series of preferred stock will be increased, in each case, by the amount of
accrued and unpaid dividends thereon, if any, to the date fixed for redemption.
The shares of the 10% Preferred are convertible into shares of the Common
Stock at a conversion price of $26.20 per share of Common Stock, subject to
adjustment in certain events.
TRANSFER AGENT AND REGISTRAR
Chemical Bank will be the transfer agent, registrar and dividend
disbursement agent for the Preferred Stock and any Depositary Shares
representing an interest therein. The registrar for shares of Preferred Stock
will send notices to shareholders of any meetings at which holders of the
Preferred Stock have the right to elect directors of the Company or to vote on
any other matter.
DEPOSITARY SHARES
General. The Company may, at its option, elect to offer fractional shares
of Preferred Stock, rather than full shares of Preferred Stock. In the event
such option is exercised, the Company will issue to the public receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock) of
a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
Dividends and Other Distributions. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the Preferred Stock
to the record holders of Depositary Shares relating to such Preferred Stock in
proportion to the number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
Redemption of Depositary Shares. If a series of Preferred Stock
represented by Depositary Shares is subject to redemption, the Depositary Shares
will be redeemed from the proceeds received by the Depositary
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resulting from the redemption, in whole or in part, of such series of Preferred
Stock held by the Depositary. The redemption price per Depositary Share will be
equal to the applicable fraction of the redemption price per share payable with
respect to such series of the Preferred Stock. Whenever the Company redeems
shares of Preferred Stock held by the Depositary, the Depositary will redeem as
of the same redemption date the number of Depositary Shares representing the
shares of Preferred Stock so redeemed. If fewer than all the Depositary Shares
are to be redeemed, the Depositary Shares to be redeemed will be selected by lot
or pro rata as may be determined by the Depositary.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of the Preferred Stock are entitled to vote, the Depositary will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each record holder of
such Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Depositary
as to the exercise of the voting rights pertaining to the amount of the
Preferred Stock represented by such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the amount of the Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Company will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of the Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Shares representing
such Preferred Stock.
Amendment and Termination of the Depositary Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Depositary. However, any amendment which materially and adversely alters
the rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
the Company or the Depositary only if (i) all outstanding Depositary Shares have
been redeemed or (ii) there has been a final distribution in respect of the
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Receipts.
Charges of Depositary. The Company will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. The Company will pay charges of the Depositary in connection with
the initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges, including a fee for the
withdrawal of shares of Preferred Stock upon surrender of Depositary Receipts,
as are expressly provided in the Deposit Agreement to be for their accounts.
Miscellaneous. The Depositary will forward to holders of Depository
Receipts all reports and communications from the Company which are delivered to
the Depositary and which the Company is required to furnish to the holders of
the Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or upon information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Receipts or other
persons believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering to the Company notice of its election to do so, and the
Company may at any time remove the Depositary, any such resignation or removal
to take effect upon the appointment of a successor Depositary and its acceptance
of such appointment. Such successor Depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank or
trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
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DESCRIPTION OF COMMON STOCK
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the General Corporation Law of the
State of Delaware, the Company's Restated Certificate of Incorporation,
including Certificates of Designations pursuant to which the outstanding series
of preferred stock were issued and the terms of the Rights Agreement dated as of
April 13, 1989, as amended (the "Rights Agreement"), described below.
GENERAL
The Company is authorized to issue up to 400,000,000 shares of Common
Stock. At December 31, 1994, the Company had outstanding 254,009,187 shares of
Common Stock (including 9,497,533 shares held in its treasury). As of December
31, 1994, approximately 16,965,476 shares of Common Stock were reserved for
issuance under various employee incentive and stock purchase plans and under the
Company's Dividend Reinvestment Plan. In addition, as of such date, the Company
had also reserved 7,699,809 shares of Common Stock for issuance upon the
conversion of the 10% Preferred. On December 1, 1994, the Company announced that
it intends to repurchase up to 6,000,000 shares of its Common Stock on the open
market from time to time during the 12 months following such announcement.
Management will consider expanding this program upon the completion of the
divestitures of Chemical Bank New Jersey, National Association and CIT.
Holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor,
provided that, so long as any shares of preferred stock are outstanding, no
dividends (other than dividends payable in Common Stock) or other distributions
(including redemptions and purchases) may be made with respect to the Common
Stock unless full dividends on the shares of preferred stock, including
accumulations in the case of cumulative preferred stock, have been paid.
Subject to the rights, if any, of the holders of any series of preferred
stock, all voting rights are vested in the holders of shares of Common Stock,
each share being entitled to one vote on all matters presented for a vote,
including the election of directors. Holders of shares of Common Stock have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors can elect 100% of the directors,
and, in such event, the holders of the remaining shares voting for the election
of directors will not be able to elect any directors.
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, after there have been paid or set aside for
the holders of all series of preferred stock the full preferential amounts to
which such holders are entitled, the holders of Common Stock will be entitled to
share equally and ratably in any assets remaining after the payment of all debts
and liabilities.
The issued and outstanding shares of Common Stock are fully paid and
nonassessable. Holders of shares of Common Stock are not entitled to preemptive
rights. Shares of Common Stock are not convertible into shares of any other
class of capital stock.
Chemical Bank is the transfer agent, registrar and dividend disbursement
agent for the Common Stock.
SHAREHOLDERS' RIGHTS PLAN
The Company has adopted a Shareholders' Rights Plan which is intended to
protect stockholders in the event of unsolicited offers or attempts to acquire
the Company, including offers that do not treat all stockholders equally,
acquisitions in the open market of shares constituting control without offering
fair value to all stockholders and other coercive or unfair takeover tactics
that could impair the Board of Directors' ability to represent stockholders'
interests fully. Pursuant to the Shareholders' Rights Plan, the Board of
Directors declared a dividend distribution of one right (a "Right") for each
outstanding share of Common Stock to stockholders of record at the close of
business on April 24, 1989 (the "Record Date"), and authorized the issuance of
one Right (as adjusted pursuant to the Rights Agreement, as described below) for
each share of Common Stock issued between the Record Date and the Chemical
Distribution Date (as described below). Each Right entitles the registered
holder to purchase from the Company a unit consisting of
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one one-hundredth of a share (a "Unit") of Junior Participating Preferred Stock
at a price of $150 per Unit, subject to adjustment. The description and terms of
the Rights are set forth in the Rights Agreement between the Company and
Chemical Bank, as Rights Agent. One Right will be distributed with each share of
Common Stock issued by the Company, including shares of Common Stock issued (i)
upon the conversion of any Subordinated Convertible Securities into shares of
Common Stock, (ii) in exchange for Subordinated Securities that are exchangeable
for Common Stock, (iii) upon conversion of any shares of Preferred Stock that
are convertible into Common Stock or (iv) upon exercise of Common Stock
Warrants.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person that attempts to acquire the Company without
the approval of the Board of Directors unless the offer is conditioned on a
substantial number of Rights being acquired. The Rights, however, should not
affect offers for all outstanding shares of Common Stock at a fair price and
otherwise in the best interests of the Company and its stockholders as
determined by the Board of Directors, since the Board of Directors may, at its
option, redeem all, but not fewer than all, the then outstanding Rights.
Initially, the Rights are and will be attached to all certificates
representing Common Stock at the time outstanding. The Rights will separate from
the Common Stock on the Chemical Distribution Date, which is defined as (i) 10
days after a person acquires 20% or more of the Common Stock or voting power of
the Company, (ii) 10 business days following commencement of a tender offer for
25% or more of the Common Stock or voting power of the Company or (iii) 10
business days after an owner of 10% or more of the Common Stock or voting power
of the Company is determined by the unaffiliated "Continuing Directors" (as
defined in the Rights Agreement) to be an "Adverse Person". An Adverse Person is
one who intends to have the Company repurchase such person's ownership interest,
who intends to pressure the Company into action for the financial gain of such
person or whose ownership is likely to cause a material adverse impact on the
Company (including, but not limited to, impairment of the Company's (i)
relationships with customers, (ii) ability to maintain its capital position,
(iii) ability to meet the convenience and needs of the communities it serves,
(iv) business reputation or (v) ability to deal with governmental agencies) to
the detriment of the Company's stockholders.
If a "Flip-in Event" occurs, the holder of a Right is entitled to receive
Common Stock or other property of the Company valued at two times the exercise
price of the Right. A Flip-in Event occurs if a person acquires 20% or more of
the Common Stock or voting power of the Company (except certain offers to
acquire all of the Common Stock deemed by the Continuing Directors to be fair
and in the best interests of the Company) or if a person is determined to be an
Adverse Person.
If a "Triggering Event" occurs, the holder of a Right is entitled to
receive common stock of a company that has acquired the Company valued at two
times the exercise price of the Right. A Triggering Event occurs if the Company
is acquired in a merger or other business combination in which the Company is
not the survivor or if 50% or more of the Company's assets or earning power is
sold or transferred.
Following the occurrence of a Flip-in Event or a Triggering Event, all
Rights that are beneficially owned by an acquiring person or an Adverse Person
will be null and void.
To avoid the consequences of a Flip-in Event, the Company may redeem the
Rights in whole, but not in part, at a redemption price of $0.01 per Right.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Common Stock. Securities Warrants may be issued
independently or together with Debt Securities, Preferred Stock or Common Stock
offered by any Prospectus Supplement and may be attached to or separate from any
such Offered Securities. Each series of Securities Warrants will be issued under
a separate warrant agreement (a "Securities Warrant Agreement") to be entered
into between the Company and Chemical Bank or another bank or trust company, as
warrant agent (the "Securities Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant Agent will act solely as an agent of the
Company in connection with the Securities Warrants and will not assume any
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<PAGE> 38
obligation or relationship of agency or trust for or with any holders of
Securities Warrants or beneficial owners of Securities Warrants. Copies of the
forms of Securities Warrant Agreements, including the forms of Securities
Warrant Certificates representing the Securities Warrants, are filed as exhibits
to the Registration Statement of which this Prospectus is a part. The following
summary of certain provisions of the Securities Warrants does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Securities Warrant Agreements.
Reference is made to the Prospectus Supplement relating to the particular
issue of Securities Warrants offered thereby for the terms of such Securities
Warrants, including, where applicable: (i) the designation, aggregate principal
amount, currencies, denominations and terms of the series of Debt Securities
purchasable upon exercise of Securities Warrants to purchase Debt Securities and
the price at which such Debt Securities may be purchased upon such exercise;
(ii) the designation, number of shares, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights) of the
series of Preferred Stock purchasable upon exercise of Securities Warrants to
purchase Preferred Stock and the price at which such number of shares of
Preferred Stock of such series may be purchased upon such exercise; (iii) the
number of shares of Common Stock purchasable upon the exercise of Securities
Warrants to purchase Common Stock and the price at which such number of shares
of Common Stock may be purchased upon such exercise; (iv) the date on which the
right to exercise such Securities Warrants shall commence and the date (the
"Expiration Date") on which such right shall expire; (v) United States Federal
income tax consequences applicable to such Securities Warrants; and (vi) any
other terms of such Securities Warrants. Securities Warrants for the purchase of
Preferred Stock and Common Stock will be offered and exercisable for U.S.
dollars only. Securities Warrants will be issued in registered form only. The
exercise price for Securities Warrants will be subject to adjustment in
accordance with the applicable Prospectus Supplement.
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or such number of shares of Preferred Stock
or Common Stock at such exercise price as shall in each case be set forth in, or
calculable from, the Prospectus Supplement relating to the offered Securities
Warrants, which exercise price may be subject to adjustment upon the occurrence
of certain events as set forth in such Prospectus Supplement. 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 Securities Warrants will
become void. The place or places where, and the manner in which, Securities
Warrants may be exercised shall be specified in the Prospectus Supplement
relating to such Securities Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, Preferred Stock or Common Stock, holders of such Securities Warrants
will not have any of the rights of holders of the Debt Securities, Preferred
Stock or Common Stock, as the case may be, purchasable upon such exercise,
including the right to receive payments of principal of (and premium, if any) or
interest, if any, on the Debt Securities purchasable upon such exercise or to
enforce covenants in the applicable Indenture, or to receive payments of
dividends, if any, on the Preferred Stock or Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
RISK FACTORS RELATING TO CURRENCY WARRANTS
THE CURRENCY WARRANTS INVOLVE A HIGH DEGREE OF RISK, INCLUDING RISKS
ARISING FROM FLUCTUATIONS IN THE PRICE OF THE UNDERLYING CURRENCY, FOREIGN
EXCHANGE RISKS AND THE RISK OF EXPIRING WORTHLESS. FURTHER, THE CASH SETTLEMENT
VALUE OF THE CURRENCY WARRANTS AT ANY TIME PRIOR TO EXERCISE OR EXPIRATION MAY
BE LESS THAN THE TRADING VALUE OF THE CURRENCY WARRANTS. THE TRADING VALUE OF
THE CURRENCY WARRANTS WILL FLUCTUATE BECAUSE SUCH VALUE IS DEPENDENT, AT ANY
TIME, ON A NUMBER OF FACTORS, INCLUDING THE TIME REMAINING TO EXERCISE THE
CURRENCY WARRANTS, THE RELATIONSHIP BETWEEN THE EXERCISE PRICE OF THE CURRENCY
WARRANTS AND THE PRICE AT SUCH TIME OF THE DESIGNATED CURRENCY AND THE EXCHANGE
RATE ASSOCIATED WITH THE DESIGNATED CURRENCY. BECAUSE THE CURRENCY WARRANTS ARE
UNSECURED OBLIGATIONS OF THE COMPANY, CHANGES IN THE PERCEIVED CREDITWORTHINESS
OF THE COMPANY MAY ALSO BE EXPECTED TO AFFECT THE TRADING PRICES OF THE CURRENCY
WARRANTS. FINALLY, THE AMOUNT OF ACTUAL CASH SETTLEMENT OF A CURRENCY WARRANT
MAY VARY AS A RESULT OF FLUCTUATIONS IN THE PRICE OF THE DESIGNATED CURRENCY
BETWEEN THE TIME INSTRUCTIONS ARE GIVEN TO EXERCISE THE CURRENCY WARRANT AND THE
TIME SUCH EXERCISE IS ACTUALLY EFFECTED.
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<PAGE> 39
PURCHASERS SHOULD BE PREPARED TO SUSTAIN A LOSS OF SOME OR ALL OF THE
PURCHASE PRICE OF THEIR CURRENCY WARRANTS. PROSPECTIVE PURCHASERS OF CURRENCY
WARRANTS SHOULD BE EXPERIENCED WITH RESPECT TO OPTIONS AND OPTION TRANSACTIONS
AND SHOULD REACH AN INVESTMENT DECISION ONLY AFTER CAREFUL CONSIDERATION WITH
THEIR ADVISERS OF THE SUITABILITY OF THE CURRENCY WARRANTS IN LIGHT OF THEIR
PARTICULAR FINANCIAL CIRCUMSTANCES, THE INFORMATION SET FORTH UNDER "DESCRIPTION
OF CURRENCY WARRANTS" HEREIN, THE INFORMATION SET FORTH UNDER "RISK FACTORS" IN
THE PROSPECTUS SUPPLEMENT RELATING TO THE PARTICULAR ISSUE OF CURRENCY WARRANTS
AND TO THE OTHER INFORMATION REGARDING THE CURRENCY WARRANTS AND THE DESIGNATED
CURRENCY SET FORTH IN SUCH PROSPECTUS SUPPLEMENT.
DESCRIPTION OF CURRENCY WARRANTS
The following description of the terms of the Currency Warrants sets forth
certain general terms and provisions of the Currency Warrants to which any
Prospectus Supplement may relate. The particular terms of the Currency Warrants
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions do not apply to the Currency Warrants so offered will be
described in the Prospectus Supplement relating to such Currency Warrants.
Each issue of Currency Warrants will be issued under a warrant agreement
(each, a "Currency Warrant Agreement") to be entered into between the Company
and Chemical Bank or another bank or trust company, as warrant agent (the
"Currency Warrant Agent"), all as described in the Prospectus Supplement
relating to such Currency Warrants. The Currency Warrant Agent will act solely
as the agent of the Company under the applicable Currency Warrant Agreement and
will not assume any obligation or relationship of agency or trust for or with
any holders of such Currency Warrants. A copy of the form of Currency Warrant
Agreement, including the form of warrant certificate, is filed as an exhibit to
the Registration Statement of which this Prospectus is a part. The following
summary of certain provisions of the Currency Warrants does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the particular Currency Warrants and Currency Warrant
Agreement.
The Company may issue Currency Warrants either in the form of currency put
warrants entitling the holders thereof to receive from the Company the cash
settlement value in U.S. dollars of the right to sell a specified amount of a
specified foreign currency or composite currency (the "Designated Currency") for
a specified amount of U.S. dollars (each, a "Currency Put Warrant"), or in the
form of currency call warrants entitling the holders thereof to receive from the
Company the cash settlement value in U.S. dollars of the right to purchase a
specified amount of a Designated Currency for a specified amount of U.S. dollars
(each, a "Currency Call Warrant").
Reference is hereby made to the Prospectus Supplement relating to the
particular issue of Currency Warrants offered thereby for the terms of such
Currency Warrants, including, where applicable: (i) whether such Currency
Warrants shall be Currency Put Warrants, Currency Call Warrants or both; (ii)
the aggregate amount of such Currency Warrants; (iii) the offering price of such
Currency Warrants; (iv) the Designated Currency, which currency may be a foreign
currency or a composite currency, including ECU, and information regarding such
currency or composite currency; (v) the date on which the right to exercise such
Currency Warrants commences and the date on which such right expires; (vi) the
manner in which such Currency Warrants may be exercised; (vii) the circumstances
which will cause the Currency Warrants to be deemed automatically exercised;
(viii) the minimum number, if any, of such Currency Warrants exercisable at any
one time and any other restrictions on exercise; (ix) the method of determining
the amount payable in connection with the exercise of such Currency Warrants;
(x) the national securities exchange on which such Currency Warrants will be
listed; (xi) whether such Currency Warrants will be represented by certificates
or issued in book-entry form; (xii) the place or places at which payment of the
cash settlement value of such Currency Warrants is to be made by the Company, if
applicable; (xiii) information with respect to book-entry procedures, if any;
(xiv) the plan of distribution of such Currency Warrants; and (xv) any other
terms of such Currency Warrants.
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<PAGE> 40
Prospective purchasers of Currency Warrants should be aware of special
United States Federal income tax considerations applicable to instruments such
as the Currency Warrants. The Prospectus Supplement relating to each issue of
Currency Warrants will describe such tax considerations.
Except as may otherwise be provided in the applicable Prospectus
Supplement, the Currency Warrants will be issued in the form of global Currency
Warrant Certificates, registered in the name of a depository or its nominee.
Holders will not be entitled to receive definitive certificates representing
Currency Warrants. A holder's ownership of a Currency Warrant will be recorded
on or through the records of the brokerage firm or other entity that maintains
such holder's account. In turn, the total number of Currency Warrants held by an
individual brokerage firm for its clients will be maintained on the records of
the depository in the name of such brokerage firm or its agent. Transfer of
ownership of any Currency Warrant will be effected only through the selling
holder's brokerage firm.
Each issue of Currency Warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale of
such issue of Currency Warrants. In the event that the Currency Warrants are
delisted from, or permanently suspended from trading on, such exchange, the
expiration date for such Currency Warrants will be the date such delisting or
trading suspension becomes effective, and Currency Warrants not previously
exercised will be deemed automatically exercised on such expiration date. The
applicable Currency Warrant Agreement will contain a covenant of the Company not
to seek delisting of the Currency Warrants, or suspension of their trading, on
such exchange unless the Company has concurrently arranged for listing on
another national securities exchange.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities being offered hereby (i)
through underwriters, (ii) through dealers, (iii) through agents and (iv)
directly to purchasers. The applicable Prospectus Supplements will set forth the
terms of the offerings of any Offered Securities, including the name or names of
the underwriters, dealers or agents, the purchase price of the Offered
Securities and the proceeds to the Company from the sale, any underwriting
discounts and other items constituting underwriters' compensation and any
discounts and commissions allowed or paid to dealers or agents. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The Company may also issue the Offered Securities to one or more persons in
exchange for outstanding securities of the Company acquired by such persons in
privately negotiated transactions or from third parties in open market
transactions. The newly issued Offered Securities in such cases may be offered
pursuant to this Prospectus and the applicable Prospectus Supplement by such
persons, acting as principal for their own accounts, at market prices prevailing
at the time of sale, at prices otherwise negotiated or at fixed prices. Unless
otherwise indicated in the applicable Prospectus Supplement, the Company will
only receive outstanding securities and will not receive cash proceeds in such
exchanges or resales. Dealer trading may take place in certain of the Offered
Securities, including Offered Securities not listed on any securities exchange.
If an underwriter or underwriters are utilized in the sale of the Offered
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached.
The underwriter or underwriters with respect to an underwritten offering of
Offered Securities will be set forth in the Prospectus Supplement relating to
such offering and, if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement. If any underwriter or underwriters are utilized in the sale of the
Offered Securities, the underwriting agreement will provide that the obligations
of the underwriters are subject to certain conditions precedent and that the
underwriters with respect to a sale of Offered Securities will be obligated to
purchase all such Offered Securities if any are purchased. In connection with
the sale of Offered Securities, underwriters 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 agent. 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.
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If an underwriter or underwriters are utilized in the sale of any Offered
Securities, the applicable Prospectus Supplement will contain a statement as to
the intention, if any, of such underwriters at the date of such Prospectus
Supplement to make a market in the Offered Securities.
If a dealer is utilized directly by the Company in the sale of the Offered
Securities in respect of which this Prospectus is delivered, the Company will
sell such Offered Securities to the dealer, as principal. The dealer may then
resell such Offered Securities to the public at varying prices to be determined
by such dealer at the time of resale. Any such dealer and the terms of any such
sale will be set forth in the Prospectus Supplement relating thereto.
Offered Securities may be offered and sold through agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Offered Securities in respect of which this Prospectus is delivered will be
named in, and any commissions payable by the Company to such agent will be set
forth in, the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
Underwriters, dealers or agents participating in the distribution of
Offered Securities 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 Securities Act.
Underwriters, dealers or agents who participate in the distribution of
Offered Securities may be entitled, under agreements which may be entered into
with the Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution by the
Company to payments such underwriters, dealers or agents may be required to make
in respect thereof.
The Offered Securities may be sold either at a fixed price or prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
Underwriters, dealers or agents may be customers of, engage in transactions
with, or perform services for the Company, Chemical Bank, Texas Commerce or
certain other subsidiaries of the Company in the ordinary course of business.
Offers to purchase Offered Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resale thereof. The terms of any such
sales will be described in the Prospectus Supplement relating thereto. Except as
set forth in the applicable Prospectus Supplement, no director, officer or
employee of the Company or its bank subsidiaries will solicit or receive a
commission in connection with direct sales by the Company of the Offered
Securities, although such persons may respond to inquiries by potential
purchasers and perform ministerial and clerical work in connection with any such
direct sales.
Under Schedule E to the By-Laws ("Schedule E") of the National Association
of Securities Dealers, Inc. (the "NASD"), when an NASD member, such as Chemical
Securities Inc. ("CSI"), participates in the distribution of an affiliated
company's securities, the offering must be conducted in accordance with the
applicable provisions of Schedule E. CSI is considered to be an "affiliate" (as
such term is defined in Schedule E) of the Company by virtue of the fact that
the Company is the parent of CSI. The offer and sale of any Offered Securities
by CSI or any other qualified affiliate of the Company will comply with the
requirements of Schedule E regarding the underwriting of securities of
affiliates and with any restrictions as may be imposed on CSI or such other
affiliate of the Company by the Federal Reserve Board.
This Prospectus and the related Prospectus Supplement may be used by direct
or indirect wholly-owned subsidiaries of the Company, including CSI, in
connection with offers and sales related to secondary market transactions in the
Offered Securities. Such subsidiaries 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.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase Offered Securities from the Company at the public
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<PAGE> 42
offering price set forth in the Prospectus Supplement pursuant to Delayed
Delivery Contracts (each a "Contract") providing for payment and delivery on the
date stated in the Prospectus Supplement. Each Contract will be for an amount
not less than, and unless the Company otherwise agrees the aggregate principal
amount of Debt Securities or number of shares of Preferred Stock or Common Stock
sold pursuant to Contracts shall be neither less nor more than, the respective
amounts stated in the Prospectus Supplement. Institutions with which Contracts,
when authorized, may be made include commercial and savings banks, insurance
companies, educational and charitable institutions and other institutions, but
shall in all cases be subject to the approval of the Company. The obligations of
any purchaser under any Contract will not be subject to any conditions except
that any related sale of Offered Securities to underwriters shall have occurred
and the purchase by an institution of the Offered Securities covered by its
Contract 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. A
commission indicated in the Prospectus Supplement will be paid to underwriters,
dealers and agents soliciting purchases of Offered Securities pursuant to
Contracts accepted by the Company.
The expected time of delivery of the Offered Securities in respect of which
this Prospectus is delivered will be set forth in the accompanying Prospectus
Supplement.
CERTAIN REGULATORY MATTERS
CAPITAL RATIOS
The Federal Reserve Board has issued risk-based capital guidelines, which
require banking organizations to maintain certain ratios of "qualifying capital"
to "risk-weighted assets". "Qualifying capital" is classified in two tiers,
referred to as Tier 1 capital and Tier 2 capital. Tier 1 capital consists of
common equity, qualifying perpetual preferred equity and minority interests in
the equity accounts of unconsolidated subsidiaries, less goodwill and certain
intangible assets. Tier 2 capital consists of perpetual preferred equity not
qualifying as Tier 1 capital, a portion of the allowance for losses, mandatory
convertible debt and subordinated and other qualifying securities. The amount of
Tier 2 capital may not exceed the amount of Tier 1 capital. In calculating
"risk-weighted assets", certain risk percentages specified by the Federal
Reserve Board are applied to particular categories of on-balance sheet assets
and off-balance sheet items. The guidelines require that banking organizations
maintain a minimum ratio of Tier 1 capital to risk-weighted assets of 4% and a
minimum ratio of total capital (Tier 1 capital plus Tier 2 capital) to
risk-weighted assets of 8%.
Another capital measure, the Tier 1 leverage ratio, is defined as Tier 1
capital (as defined under the risk-based capital guidelines) divided by average
total assets (net of allowance for losses, goodwill and certain intangible
assets). The minimum leverage ratio is 3% for banking organizations that do not
anticipate significant growth and that have well-diversified risk (including no
undue interest rate risk), excellent asset quality, high liquidity and good
earnings. Other banking organizations are expected to have ratios of at least
4%-5%, depending upon their particular condition and growth plans. Higher
capital ratios could be required if warranted by the particular circumstances or
risk profile of a given banking organization. The Federal Reserve Board has not
advised the Company of any specific minimum Tier 1 leverage ratio applicable to
it.
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The following table sets forth at December 31, 1994 a summary of certain
capital ratio information for the Company.
<TABLE>
<CAPTION>
AT DECEMBER 31,
1994
----------------
<S> <C>
Total Equity to Assets......................................... 6.25%(a)
Common Equity to Assets........................................ 5.40%(a)
Tier 1 Leverage Ratio.......................................... 5.95%(a)(b)
Tier 1 Risk-Based Capital Ratio................................ 8.20%(b)
Total Risk-Based Capital Ratio................................. 12.35%(b)
</TABLE>
- ---------------
(a) On January 1, 1994, the Company adopted FASB Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts," which increased total
assets by approximately $16.0 billion at December 31, 1994 and total average
assets by approximately $16.1 billion for the fiscal year ended December 31,
1994.
(b) In accordance with current regulatory guidelines, these ratios exclude the
impact on stockholders' equity resulting from the adoption by the Company on
December 31, 1993 of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
DIVIDENDS
Federal law imposes limitations on the payment of dividends by the
subsidiaries of the Company that are state member banks of the Federal Reserve
System (a "state member bank") or are national banks. Two different calculations
are performed to measure the amount of dividends that may be paid: a "recent
earnings" test and an "undivided profits" test. Non-bank subsidiaries of the
Company are not subject to such limitations.
Under the recent earnings test, a dividend may not be paid if the total of
all dividends declared by a bank in any calendar year is in excess of the
current year's net income combined with the retained net income of the two
preceding years unless the bank obtains the approval of its appropriate Federal
banking regulator (which, in the case of a state member bank, is the Federal
Reserve Board and, in the case of a national bank, is the Office of the
Comptroller of the Currency (the "Comptroller of the Currency")). "Retained net
income" means the net income of a specified period less any common or preferred
dividends declared for that period. The New York Banking Department regulations
restrict dividend payments by New York State-chartered banks, like Chemical
Bank, to be calculated in a similar manner. Under the undivided profits test, a
dividend may not be paid in excess of a bank's undivided profits.
In accordance with the foregoing restrictions, the Company's bank
subsidiaries could, during 1995, without the approval of their relevant banking
regulators, pay dividends estimated at approximately $700 million plus an
additional amount equal to their net profits from January 1, 1995 through the
date in 1995 of any such dividend payment.
In addition to the dividend restrictions described above, the Federal
Reserve Board, the Comptroller of the Currency and the FDIC have authority under
the Financial Institutions Supervisory Act to prohibit or to limit the payment
of dividends by the banking organizations they supervise, including the Company
and its subsidiaries that are banks or bank holding companies, if, in the
banking regulator's opinion, payment of a dividend would constitute an unsafe or
unsound practice in light of the financial condition of the banking
organization.
FDICIA
On December 19, 1991, the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") was enacted. Among other things, FDICIA requires the FDIC
to establish a risk-based assessment system for FDIC deposit insurance and
revises certain provisions of the Federal Deposit Insurance Act as well as
certain other Federal banking statutes. In general, FDICIA provides for expanded
regulation of depository institutions and their affiliates, including parent
holding companies, by such institutions' appropriate Federal banking regulators,
and requires the appropriate Federal banking regulator to take "prompt
corrective action" with respect to a depository institution if such institution
does not meet certain capital adequacy standards.
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Prompt Corrective Action. Pursuant to FDICIA, the Federal Reserve Board,
the FDIC and the Office of the Comptroller of the Currency adopted regulations,
effective December 19, 1992, setting forth a five-tier scheme for measuring the
capital adequacy of the depository institutions they supervise. Under the
regulations (commonly referred to as the "prompt corrective action" rules), an
institution would be placed in one of the following capital categories: (i) well
capitalized (an institution that has a Total risk-based capital ratio of at
least 10%, a Tier 1 risk-based capital ratio of at least 6% and a Tier 1
leverage ratio of at least 5%); (ii) adequately capitalized (an institution that
has a Total risk-based capital ratio of at least 8%, a Tier 1 risk-based capital
ratio of at least 4% and a Tier 1 leverage ratio of at least 4%); (iii)
undercapitalized (an institution that has Total risk-based capital ratio of
under 8% or a Tier 1 risk-based capital ratio under 4% or a Tier 1 leverage
ratio under 4%); (iv) significantly undercapitalized (an institution that has a
Total risk-based capital ratio of under 6% or a Tier 1 risk-based capital ratio
under 3% or a Tier 1 leverage ratio under 3%); and (v) critically
undercapitalized (an institution that has a ratio of tangible equity to total
assets of 2% or less).
Supervisory actions by the appropriate Federal banking regulator will
depend upon an institution's classification within the five categories. All
institutions are generally prohibited from declaring any dividends, making any
other capital distribution, or paying a management fee to any controlling
person, if such payment would cause the institution to become undercapitalized.
Additional supervisory actions are mandated for an institution falling into one
of the three "undercapitalized" categories, with the severity of supervisory
action increasing at greater levels of capital deficiency. For example,
critically undercapitalized institutions are, among other things, restricted
from making any principal or interest payments on subordinated debt without
prior approval of their appropriate Federal banking regulator. The regulations
apply only to banks and not to bank holding companies, such as the Company;
however, the Federal Reserve Board is authorized to take appropriate action at
the holding company level based on the undercapitalized status of such holding
company's subsidiary banking institution. In certain instances relating to an
undercapitalized banking institution, the bank holding company would be required
to guarantee the performance of the undercapitalized subsidiary and may be
liable for civil money damages for failure to fulfill its commitments on such
guarantee.
At December 31, 1994, Chemical Bank and Texas Commerce Bank National
Association were each "well capitalized".
Brokered Deposits. The FDIC issued a rule, effective June 16, 1992,
regarding the ability of depository institutions to accept brokered deposits.
Under the rule, the term "brokered deposits" is defined to include deposits that
are solicited by a bank's affiliates on its behalf. A significant portion of
Chemical Bank's wholesale deposits are solicited on its behalf by a
broker-dealer affiliate of Chemical Bank and are considered brokered deposits.
Under the rule, (i) an "undercapitalized" institution is prohibited from
accepting, renewing or rolling over brokered deposits, (ii) an "adequately
capitalized" institution must obtain a waiver from the FDIC before accepting,
renewing or rolling over brokered deposits and is not permitted to pay interest
on brokered deposits accepted in such institution's normal market area at rates
that "significantly exceed" rates paid on deposits of similar maturity in such
area, and (iii) a "well capitalized" institution may accept, renew or roll over
brokered deposits without restriction. The definitions of "well capitalized",
"adequately capitalized", and "undercapitalized" are the same as those utilized
in the "prompt corrective action" rules described above. As noted above, at
December 31, 1994, Chemical Bank and Texas Commerce Bank National Association
were each "well capitalized".
FDIC Insurance Assessments. The FDIC adopted, for assessment periods
commencing January 1, 1994, a risk-based insurance assessment system. Under the
assessment system, each depository institution is assigned to one of nine risk
classifications based upon certain capital and supervisory measures and,
depending upon its classification, is assessed premiums ranging from 23 basis
points to 31 basis points. On February 16, 1995, the FDIC proposed a new
assessment rate schedule with a spread of 4 to 31 basis points, which is
expected to take effect on September 30, 1995. The proposed rate schedule would
be subject to future adjustments by the FDIC. The Company expects that its FDIC
expense will be substantially reduced if the FDIC's current proposed rate
schedule is adopted.
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Other FDICIA Rules. Other rules that have been adopted pursuant to FDICIA
include: (i) real estate lending standards for banks, which would provide
guidelines concerning loan-to-value ratios for various types of real estate
loans; (ii) rules relating to consumer lending, including regulations governing
advertising and disclosures required for consumer deposit accounts; (iii) rules
requiring depository institutions to develop and implement internal procedures
to evaluate and control credit and settlement exposure to their correspondent
banks; (iv) rules implementing the FDICIA provision prohibiting, with certain
exceptions, FDIC-insured state banks from making equity investments of the types
and amount, or from engaging as principal in activities, not permissible for
national banks; (v) rules mandating enhanced financial reporting and audit
requirements; and (vi) notice provisions in the case of branch closings. Rules
proposed, but not yet adopted, include those addressing (i) various "safety and
soundness" issues, including operations and managerial standards, standards for
asset quality, earnings and stock valuations, and compensation standards for the
officers, directors, employees and principal stockholders of the depository
institution, and (ii) the degree to which the risk-based capital rules should be
revised to take into account interest-rate risk.
The Company expects the rules and regulations adopted and proposed to be
adopted pursuant to FDICIA will result in increased compliance costs for the
Company and its bank subsidiaries but does not expect such rules and regulations
to have a material impact on the operations of the Company or its bank
subsidiaries.
OTHER
Under Federal Reserve Board policy, the Company is expected to act as a
source of financial strength to each bank subsidiary and to commit resources to
support such bank subsidiary in circumstances where it might not do so absent
such policy. Any loans by a bank holding company to any of its subsidiary banks
are subordinate in right of payment to deposits and to certain other
indebtedness of the subsidiary banks. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a Federal bank
regulatory agency to maintain the capital of a subsidiary bank at a certain
level will be assumed by the bankruptcy trustee and entitled to a priority of
payment.
The bank subsidiaries of the Company are subject to certain restrictions
imposed by Federal law on extensions of credit to, and certain other
transactions with, the Company and certain other affiliates and on investments
in stock or securities thereof. Such restrictions prevent the Company and other
affiliates from borrowing from a bank subsidiary unless the loans are secured in
specified amounts. Without the prior approval of the Federal Reserve Board,
secured loans, other transactions and investments by any bank subsidiary are
generally limited in amount as to the Company and as to each of the other
affiliates to 10% of the bank's capital and surplus and as to the Company and
all such other affiliates to an aggregate of 20% of the bank's capital and
surplus. Federal law also requires that transactions between a bank subsidiary
and the Company or certain non-bank affiliates, including extensions of credit,
sales of securities or assets and the provision of services, be conducted on
terms at least as favorable to the bank subsidiary as those that apply or that
would apply to comparable transactions with unaffiliated parties.
EXPERTS
The financial statements of the Company incorporated in this Prospectus by
reference to the 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 LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL OPINIONS
The validity of the Offered Securities being offered hereby will be passed
upon for the Company by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), New York, New York, and for any underwriters by
Cravath, Swaine & Moore, New York, New York. Cravath, Swaine & Moore has
represented and continues to represent the Company and its subsidiaries in a
substantial number of matters on a regular basis.
31
<PAGE> 46
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT. THIS PROSPECTUS SUPPLEMENT,
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 TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Description of the Medium-Term Notes..... S-3
General................................ S-3
Interest and Interest Rates............ S-4
Floating Rate Notes.................... S-5
Fixed Rate Notes....................... S-6
Book-Entry Notes....................... S-6
Certain United States Federal Income Tax
Consequences........................... S-7
Payments of Interest................... S-8
Original Issue Discount................ S-8
Short-Term Notes....................... S-9
Market Discount........................ S-10
Acquisition Premium; Amortizable Bond
Premium.............................. S-10
Sale, Exchange and Retirement of
Notes................................ S-11
Non-United States Holders.............. S-11
Backup Withholding and Information
Reporting............................ S-12
Non-Dollar Denominated Notes...........
Plan of Distribution..................... S-13
Legal Opinions........................... S-14
PROSPECTUS
Available Information.................... 2
Incorporation of Certain Documents by
Reference.............................. 2
Chemical Banking Corporation............. 3
Consolidated Ratios of Earnings to Fixed
Charges................................ 4
Use of Proceeds.......................... 4
Description of Debt Securities........... 4
Description of Preferred Stock........... 15
Description of Common Stock.............. 22
Description of Securities Warrants....... 23
Risk Factors Relating to Currency
Warrants............................... 24
Description of Currency Warrants......... 25
Plan of Distribution..................... 26
Certain Regulatory Matters............... 28
Experts.................................. 31
Legal Opinions........................... 31
</TABLE>
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$500,000,000
(LOGO)CHEMICAL BANKING
CORPORATION
SENIOR MEDIUM-TERM NOTES, SERIES D
SUBORDINATED MEDIUM-TERM
NOTES, SERIES B
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PROSPECTUS SUPPLEMENT
MARCH 15, 1995
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SMITH BARNEY INC.
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