<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration Nos. 333-22437 and
333-22437-01
Prospectus Supplement (To Prospectus Dated February 28, 1997)
LOGO
CHASE CAPITAL III
$300,000,000
FLOATING RATE CAPITAL SECURITIES, SERIES C
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
The Floating Rate Capital Securities, Series C (the "Series C Capital
Securities"), offered hereby represent beneficial ownership interests in Chase
Capital III, a statutory business trust created under the laws of the State of
Delaware (the "Series C Issuer"). The Chase Manhattan Corporation, a Delaware
corporation (the "Corporation"), will be the owner of all the beneficial
ownership interests represented by common securities of the
(Continued on next page)
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SEE "RISK FACTORS" BEGINNING ON PAGE S-5 HEREOF FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE SERIES C CAPITAL SECURITIES.
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THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
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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 OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<S> <C> <C> <C>
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PROCEEDS TO THE SERIES
INITIAL PUBLIC UNDERWRITING C
OFFERING PRICE(1) COMMISSIONS(2) ISSUER(1)(3)(4)
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PER SERIES C CAPITAL
SECURITY $985.58 (3) $985.58
TOTAL $295,674,000 (3) $295,674,000
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</TABLE>
(1) Plus accrued distributions from March 1, 1997.
(2) The Series C Issuer and the Corporation have each agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Series C Capital
Securities will be invested in the Series C Subordinated Debentures, the
Corporation has agreed to pay to the Underwriters as compensation for their
arranging the investment therein of such proceeds $8.75 per Series C Capital
Security (or $2,625,000 in the aggregate). See "Underwriting."
(4) Expenses of the offering which are payable by the Corporation are estimated
to be $550,000.
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This Prospectus Supplement and the related Prospectus may be used by direct or
indirect wholly owned subsidiaries of the Corporation, including Chase
Securities Inc., in connection with offers and sales related to secondary market
transactions in the Series C Capital 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.
The Series C Capital Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that the Series C Capital Securities will be ready for delivery in book-entry
form only through the facilities of The Depository Trust Company in New York,
New York, on or about March 11, 1997, against payment therefor in immediately
available funds.
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus Supplement is March 4, 1997.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES C CAPITAL
SECURITIES, INCLUDING STABILIZING, SYNDICATE SHORT COVERING TRANSACTIONS,
PENALTY BIDS OR OTHERS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
------------------------
(cover page continued)
Series C Issuer (the "Series C Common Securities" and, collectively with the
Series C Capital Securities, the "Series C Securities"). The Bank of New York is
the Property Trustee of the Series C Issuer. The Series C Issuer exists for the
sole purpose of issuing the Series C Capital Securities and the Series C Common
Securities and investing the proceeds thereof in approximately $309.3 million of
Floating Rate Junior Subordinated Deferrable Interest Debentures, Series C (the
"Series C Subordinated Debentures"), to be issued by the Corporation. The Series
C Subordinated Debentures will mature on March 1, 2027 (which date may be
shortened to a date not earlier than March 1, 2012 in certain circumstances as
described under "Certain Terms of Series C Subordinated
Debentures -- Conditional Right to Shorten Maturity or Redeem upon a Tax Event
or Capital Treatment Event" upon the occurrence of a Tax Event or a Capital
Treatment Event (each as defined herein) if certain conditions are met). The
Corporation may not shorten the Stated Maturity (as defined herein) without
having received the prior approval of the Board of Governors of the Federal
Reserve System (the "Federal Reserve") to do so, if then required under
applicable capital guidelines or policies. The Series C Capital Securities will
have a preference under certain circumstances with respect to cash distributions
and amounts payable on liquidation or redemption over the Series C Common
Securities. See "Description of Preferred Securities -- Subordination of Common
Securities" in the accompanying Prospectus.
Holders of the Series C Capital Securities will be entitled to receive
cumulative cash distributions accruing from March 1, 1997 and payable quarterly
in arrears on the 1st day of March, June, September and December of each year,
commencing June 1, 1997, at a variable annual rate equal to LIBOR (as defined
herein) plus .55% on the Liquidation Amount (as defined in the accompanying
Prospectus) of $1,000 per Series C Capital Security ("Distributions"). The
Distribution rate for the initial Distribution Period (as defined below) will be
6.1047% per annum. Subject to certain exceptions, as described herein, the
Corporation has the right to defer payment of interest on the Series C
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarterly periods with respect to each deferral period
(each, an "Extension Period"), provided that no Extension Period may extend
beyond the Stated Maturity of the Series C Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at a variable annual rate
equal to LIBOR plus .55%, compounded quarterly, to the extent permitted by
applicable law), the Corporation may elect to begin a new Extension Period
subject to the requirements set forth herein. If interest payments on the Series
C Subordinated Debentures are so deferred, Distributions on the Series C Capital
Securities will also be deferred and the Corporation will not be permitted,
subject to certain exceptions described herein, to declare or pay any cash
distributions with respect to the Corporation's capital stock or debt securities
that rank pari passu with or junior to the Series C Subordinated Debentures
(including the 7.67% Junior Subordinated Deferrable Interest Debentures, Series
A (the "Series A Subordinated Debentures"), and the Global Floating Rate Junior
Subordinated Deferrable Interest Debentures, Series B (the "Series B
Subordinated Debentures"), of the Corporation). During an Extension Period,
interest on the Series C Subordinated Debentures will continue to accrue (and
the amount of Distributions to which holders of the Series C Capital Securities
are entitled will accumulate), at a variable annual rate equal to LIBOR plus
.55%, compounded quarterly from the relevant payment date for such interest, and
holders of Series C Capital Securities will be required to accrue interest
income for United States federal income tax purposes. See "Certain Terms of
Series C Subordinated Debentures -- Option to Defer Interest Payments" and
"Certain Federal Income Tax Consequences -- Interest Income and Original Issue
Discount."
The Series C Subordinated Debentures are unsecured and subordinated to all
Senior Debt (as defined in the accompanying Prospectus). Substantially all of
the Corporation's existing indebted-
S-2
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(cover page continued)
ness constitutes Senior Debt (other than approximately $1,134.1 million of the
Corporation's existing indebtedness evidenced by the Series A Subordinated
Debentures and Series B Subordinated Debentures). Because the Corporation is a
holding company, the right of the Corporation to participate in any distribution
of assets of any subsidiary, including The Chase Manhattan Bank, Chase Manhattan
Bank USA, National Association, and Texas Commerce Bank National Association,
upon such subsidiary's liquidation or reorganization or otherwise, is subject to
the prior claims of creditors of that subsidiary, except to the extent that the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Series C Subordinated Debentures (and therefore the Series C
Capital Securities) will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders thereof should only
look to the assets of the Corporation for payments on the Series C Subordinated
Debentures. See "Description of Junior Subordinated Debentures -- Subordination"
in the accompanying Prospectus.
The Corporation has, through the Series C Guarantee, the Series C Trust
Agreement, the Series C Subordinated Debentures and the Indenture (each as
defined herein), taken together, fully, irrevocably and unconditionally
guaranteed all of the Series C Issuer's obligations under the Series C Capital
Securities. See "Relationship Among the Preferred Securities, the Corresponding
Junior Subordinated Debentures and the Guarantee -- Full and Unconditional
Guarantee" in the accompanying Prospectus. The Series C Guarantee of the
Corporation guarantees the payment of Distributions and payments on liquidation
of the Series C Issuer or redemption of the Series C Capital Securities, but
only in each case to the extent of funds held by the Series C Issuer, as
described herein (the "Series C Guarantee"). See "Description of Guarantee" in
the accompanying Prospectus. If the Corporation does not make interest payments
on the Series C Subordinated Debentures held by the Series C Issuer, the Series
C Issuer will have insufficient funds to pay Distributions on the Series C
Capital Securities. The Series C Guarantee does not cover payment of
Distributions when the Series C Issuer has insufficient funds to pay such
Distributions. In such event, a holder of Series C Capital Securities may
institute a legal proceeding directly against the Corporation pursuant to the
terms of the Indenture to enforce payment of amounts equal to such Distributions
to such holder. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights By Holders of Preferred Securities"
in the accompanying Prospectus. The obligations of the Corporation under the
Series C Guarantee are subordinate and junior in right of payment to all Senior
Debt of the Corporation.
The Series C Capital Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series C Subordinated Debentures at
their Stated Maturity or earlier redemption. Subject to the Corporation having
received prior approval of the Federal Reserve to do so if then required under
applicable capital guidelines or policies, the Series C Subordinated Debentures
are redeemable prior to their Stated Maturity at the option of the Corporation
(i) on or after March 1, 2007, in whole at any time or in part from time to
time, or (ii) at any time in certain circumstances as described under "Certain
Terms of Series C Subordinated Debentures -- Conditional Right to Shorten
Maturity or Redeem upon a Tax Event or Capital Treatment Event", in whole (but
not in part), upon the occurrence of a Tax Event or a Capital Treatment Event.
See "Certain Terms of Series C Capital Securities -- Redemption" and "Certain
Terms of Series C Subordinated Debentures -- Redemption."
The Corporation will have the right at any time to terminate the Series C
Issuer, subject to the Corporation having received prior approval of the Federal
Reserve to do so if then required under applicable capital guidelines or
policies. See "Certain Terms of Series C Capital Securities -- Liquidation of
Series C Issuer and Distribution of Series C Subordinated Debentures to
Holders." In the event of the termination of the Series C Issuer, after
satisfaction of liabilities to creditors of the Series C Issuer as required by
applicable law, the holders of the Series C Capital Securities will be entitled
to receive a Liquidation Amount of $1,000 per Series C Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution
S-3
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(cover page continued)
of such amount in Series C Subordinated Debentures in exchange therefor, subject
to certain exceptions. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
The Series C Capital Securities will be represented by one or more global
certificates registered in the name of The Depository Trust Company ("DTC") or
its nominee. Beneficial interests in the Series C Capital Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described in the accompanying
Prospectus, Series C Capital Securities in certificated form will not be issued
in exchange for the global certificates. See "Certain Terms of Series C Capital
Securities -- Registration of Series C Capital Securities."
S-4
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The information in this Prospectus Supplement supplements, and should be
read in conjunction with, the information contained in the accompanying
Prospectus. As used herein, (i) the "Indenture" means the Junior Subordinated
Indenture, dated as of December 1, 1996, as amended and supplemented from time
to time, between the Corporation and The Bank of New York as trustee (the
"Debenture Trustee"), and (ii) the "Series C Trust Agreement" means the Amended
and Restated Trust Agreement relating to the Series C Issuer among the
Corporation, as Depositor, The Bank of New York, as Property Trustee (the
"Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee (the
"Delaware Trustee"), the Administrative Trustees named therein (collectively,
with the Property Trustee and Delaware Trustee, the "Issuer Trustees") and the
holders of the Series C Capital Securities from time to time. Each of the other
capitalized terms used in this Prospectus Supplement and not otherwise defined
in this Prospectus Supplement has the meaning set forth in the accompanying
Prospectus.
------------------
RISK FACTORS
Prospective purchasers of the Series C Capital Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and in
the accompanying Prospectus and should particularly consider the following
matters. In addition, because holders of Series C Capital Securities may receive
Series C Subordinated Debentures in exchange therefor upon liquidation of the
Series C Issuer, prospective purchasers of Series C Capital Securities are also
making an investment decision with regard to the Series C Subordinated
Debentures and should carefully review all the information regarding the Series
C Subordinated Debentures contained herein.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES C GUARANTEE AND THE SERIES
C SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series C Guarantee issued by
the Corporation for the benefit of the holders of Series C Securities and under
the Series C Subordinated Debentures are unsecured and rank subordinate and
junior in right of payment to all Senior Debt of the Corporation. Substantially
all of the Corporation's existing indebtedness constitutes Senior Debt (other
than approximately $1,134.1 million of the Corporation's existing indebtedness
evidenced by the Series A and Series B Subordinated Debentures). Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of the assets of any subsidiary, including The Chase Manhattan
Bank, Chase Manhattan Bank USA, National Association, and Texas Commerce Bank
National Association, upon such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent that the Corporation may itself be recognized as a creditor
of that subsidiary. There are various legal limitations on the extent to which
certain of the Corporation's subsidiaries may extend credit, pay dividends or
otherwise supply funds to, or engage in transactions with, the Corporation or
certain of its other subsidiaries. Accordingly, the Series C Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Series C
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Series C Subordinated Debentures. See "The Chase Manhattan
Corporation." None of the Indenture, the Series C Guarantee or the Series C
Trust Agreement places any limitation on the amount of secured or unsecured
debt, including Senior Debt, that may be incurred by the Corporation. See
"Description of Guarantee -- Status of the Guarantee" and "Description of Junior
Subordinated Debentures -- Subordination" in the accompanying Prospectus.
The ability of the Series C Issuer to pay amounts due on the Series C
Capital Securities is solely dependent upon the Corporation's making payments on
the Series C Subordinated Debentures as and when required.
S-5
<PAGE> 6
OPTION TO DEFER INTEREST PAYMENT; TAX CONSEQUENCES; MARKET PRICE CONSEQUENCES
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series C Subordinated Debentures at any time or from time to
time for a period not exceeding 20 consecutive quarterly periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series C Subordinated Debentures. As a consequence of any
such deferral, quarterly Distributions on the Series C Capital Securities by the
Series C Issuer will also be deferred (and the amount of Distributions to which
holders of the Series C Capital Securities are entitled will accumulate
additional Distributions thereon at a variable annual rate equal to LIBOR plus
.55%, compounded quarterly from the relevant payment date for such
Distributions) during any such Extension Period. During any such Extension
Period, the Corporation may not, and may not permit any subsidiary of the
Corporation to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Corporation (including other series of Junior Subordinated Debentures) that rank
pari passu with or junior in interest to the Series C Subordinated Debentures
(including, without limitation, the Series A and Series B Subordinated
Debentures) or (iii) make any guarantee payments with respect to any guarantee
by the Corporation of the debt securities of any subsidiary of the Corporation
if such guarantee ranks pari passu with or junior in interest to the Series C
Subordinated Debentures (other than (a) dividends or distributions in capital
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Series C
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Corporation's benefit plans for its directors,
officers or employees, related to the issuance of common stock or rights under a
dividend reinvestment and stock purchase plan, or related to the issuance of
common stock (or securities convertible into or exchangeable for common stock)
as consideration in an acquisition transaction that was entered into prior to
the commencement of such Extension Period). Prior to the termination of any such
Extension Period, the Corporation may further defer the payment of interest,
provided that no Extension Period may exceed 20 consecutive quarterly periods or
extend beyond the Stated Maturity of the Series C Subordinated Debentures. Upon
the termination of any Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at a variable annual rate
equal to LIBOR plus .55%, compounded quarterly from the interest payment date
for such interest, to the extent permitted by applicable law), the Corporation
may elect to begin a new Extension Period subject to the above requirements.
There is no limitation on the number of times that the Corporation may elect to
begin an Extension Period. See "Certain Terms of Series C Capital
Securities -- Distributions" and "Certain Terms of Series C Subordinated
Debentures -- Option to Defer Interest Payments."
Should an Extension Period occur, a holder of Series C Capital Securities
will be required to accrue income (in the form of original issue discount) in
respect of its pro rata share of the Series C Subordinated Debentures held by
the Series C Issuer for United States federal income tax purposes. As a result,
a holder of Series C Capital Securities will be required to include such income
in gross income for United States federal income tax purposes in advance of the
receipt of cash attributable to such income, and will not receive the cash
related to such income from the Series C Issuer if the holder disposes of the
Series C Capital Securities prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount" and "-- Sales or Redemption of Series C Capital
Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Series C Subordinated Debentures. However, should
the Corporation elect to exercise such right in the future, the market price of
the Series C Capital Securities is likely to be affected. A holder that disposes
of its Series C Capital Securities during an Extension Period, therefore, might
not receive the same return on its investment as a holder that continues to hold
its Series C Capital Securities.
S-6
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TAX EVENT OR CAPITAL TREATMENT EVENT -- EXCHANGE OF SERIES C CAPITAL SECURITIES
FOR SERIES C SUBORDINATED DEBENTURES, SHORTENING OF MATURITY OF SERIES C
SUBORDINATED DEBENTURES OR REDEMPTION
Upon the occurrence and continuation of a Tax Event or Capital Treatment
Event (whether occurring before or after March 1, 2007), the Corporation has the
right if certain conditions are met, (i) to shorten the maturity of the Series C
Subordinated Debentures to a date not earlier than March 1, 2012, or (ii) to
redeem the Series C Subordinated Debentures in whole (but not in part) within 90
days following the occurrence of such Tax Event or Capital Treatment Event and
thereby cause a mandatory redemption of the Series C Capital Securities. The
exercise of such right is subject to the Corporation's having received prior
approval of the Federal Reserve to do so if then required under applicable
capital guidelines or policies. See "Certain Terms of Series C Subordinated
Debentures -- Conditional Right to Shorten Maturity or Redeem upon a Tax Event
or Capital Treatment Event."
A "Tax Event" means the receipt by the Series C Issuer of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the Series C Capital Securities under the Series C Trust
Agreement, there is more than an insubstantial risk that (i) the Series C Issuer
is, or will be within 90 days of the date of such opinion, subject to United
States federal income tax with respect to income received or accrued on the
Series C Subordinated Debentures, (ii) interest payable by the Corporation on
the Series C Subordinated Debentures is not, or within 90 days of the date of
such opinion, will not be, deductible by the Corporation, in whole or in part,
for United States federal income tax purposes or (iii) the Series C Issuer is,
or will be within 90 days of the date of the opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges. With
respect to Series C Subordinated Debentures which are no longer held by the
Series C Issuer or another issuer, "Tax Event" means the receipt by the
Corporation of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement or decision is announced on or
after the date of issuance of the Series C Subordinated Debentures under the
Indenture, there is more than an insubstantial risk that interest payable by the
Corporation on the Series C Subordinated Debentures is not, or within 90 days of
the date of such opinion will not be, deductible by the Corporation, in whole or
in part, for United States federal income tax purposes (each of the
circumstances referred to in clauses (i), (ii) and (iii) of the preceding
sentence and the circumstances referred to in this sentence being referred to
herein as an "Adverse Tax Consequence").
See "Risk Factors -- Possible Tax Law Changes Affecting the Series C
Capital Securities" for a discussion of certain legislative proposals that, if
adopted, could give rise to a Tax Event, which may permit the Corporation to
shorten the maturity of the Series C Subordinated Debentures to a date not
earlier than March 1, 2012 or cause a redemption of the Series C Capital
Securities prior to March 1, 2007.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or
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<PAGE> 8
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement, action or decision is announced on or
after the date of issuance of the Series C Capital Securities under the Series C
Trust Agreement, there is more than an insubstantial risk that the Corporation
will not be entitled to treat an amount equal to the Liquidation Amount of the
Series C Capital Securities as "Tier 1 Capital" (or the then equivalent thereof)
for purposes of the capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to the Corporation.
EXCHANGE OF SERIES C CAPITAL SECURITIES FOR SERIES C SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series C
Issuer and, after satisfaction of liabilities to creditors of the Series C
Issuer as required by applicable law, cause the Series C Subordinated Debentures
to be distributed to the holders of the Series C Capital Securities in exchange
therefor upon liquidation of the Series C Issuer. The exercise of such right is
subject to the Corporation having received prior approval of the Federal Reserve
if then required under applicable capital guidelines or policies. See "Certain
Terms of Series C Capital Securities -- Liquidation of Series C Issuer and
Distribution of Series C Subordinated Debentures to Holders."
Under current United States federal income tax law and interpretations and
assuming, as expected, the Series C Issuer is classified as a grantor trust for
such purposes, a distribution of the Series C Subordinated Debentures upon a
liquidation of the Series C Issuer should not be a taxable event to holders of
the Series C Capital Securities. However, if a Tax Event were to occur which
would cause the Series C Issuer to be subject to United States federal income
tax with respect to income received or accrued on the Series C Subordinated
Debentures, a distribution of the Series C Subordinated Debentures by the Series
C Issuer could be a taxable event to the Series C Issuer and the holders of the
Series C Capital Securities. See "Certain Federal Income Tax Consequences --
Distribution of Series C Subordinated Debentures to Holders of Series C Capital
Securities."
SHORTENING OF STATED MATURITY OF SERIES C SUBORDINATED DEBENTURES
Upon the occurrence of a Tax Event or a Capital Treatment Event, the
Corporation in certain circumstances will have the right to shorten the maturity
of the Series C Subordinated Debentures to a date not earlier than March 1, 2012
and thereby cause the Series C Capital Securities to be redeemed on such earlier
date. See "Certain Terms of Series C Subordinated Debentures -- Conditional
Right to Shorten Maturity or Redeem upon a Tax Event or Capital Treatment
Event."
MARKET PRICES
There can be no assurance as to the market prices for Series C Capital
Securities or Series C Subordinated Debentures that may be distributed in
exchange for Series C Capital Securities upon liquidation of the Series C
Issuer. Accordingly, the Series C Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Series C Subordinated Debentures that a holder of Series C Capital
Securities may receive on liquidation of the Series C Issuer, may trade at a
discount to the price that the investor paid to purchase the Series C Capital
Securities offered hereby. As a result of the existence of the Corporation's
right to defer interest payments, the market price of the Series C Capital
Securities (which represent beneficial ownership interests in the Series C
Issuer) may be more volatile than the market prices of other securities that are
not subject to such optional deferrals. See "Certain Terms of Series C
Subordinated Debentures" and "Description of Junior Subordinated
Debentures -- Corresponding Junior Subordinated Debentures" in the accompanying
Prospectus.
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RIGHTS UNDER THE SERIES C GUARANTEE
The Series C Guarantee guarantees to the holders of the Series C Securities
the following payments, to the extent not paid by the Series C Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series C
Securities, to the extent that the Series C Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Series C
Securities called for redemption, to the extent that the Series C Issuer has
funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Series C Issuer
(unless the Series C Subordinated Debentures are distributed to holders of the
Series C Securities), the lesser of (a) the aggregate of the Liquidation Amount
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Series C Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series C Issuer remaining available
for distribution to holders of the Series C Securities after payment of
creditors of the Series C Issuer as required by applicable law. The Series C
Guarantee will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Bank of New York will act as
the indenture trustee under the Series C Guarantee (the "Guarantee Trustee") for
the purpose of compliance with the Trust Indenture Act and will hold the Series
C Guarantee for the benefit of the holders of the Series C Securities. The Bank
of New York will also act as Debenture Trustee for the Series C Subordinated
Debentures and as Property Trustee under the Indenture and The Bank of New York
(Delaware) will act as Delaware Trustee under the Series C Trust Agreement.
The Series C Guarantee is subordinate as described under "-- Ranking of
Subordinated Obligations Under the Series C Guarantee and the Series C
Subordinated Debentures."
The holders of not less than a majority in aggregate Liquidation Amount of
the Series C Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Series C Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series C Guarantee. Any holder of
the Series C Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Series C Guarantee without first
instituting a legal proceeding against the Series C Issuer, the Guarantee
Trustee or any other person or entity. If the Corporation were to default on its
obligation to pay amounts payable under the Series C Subordinated Debentures,
the Series C Issuer would lack funds for the payment of Distributions or amounts
payable on redemption of the Series C Securities or otherwise, and, in such
event, holders of the Series C Securities would not be able to rely upon the
Series C Guarantee for payment of such amounts. Instead, if an event of default
under the Indenture shall have occurred and be continuing and such event is
attributable to the failure of the Corporation to pay interest on or principal
of the Series C Subordinated Debentures on the applicable payment date, then a
holder of Series C Capital Securities may institute a legal proceeding directly
against the Corporation pursuant to the terms of the Indenture for enforcement
of payment to such holder of the principal of or interest on such Series C
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Series C Capital Securities of such holder (a "Direct
Action"). In connection with such Direct Action, the Corporation will have a
right of set-off under the Indenture to the extent of any payment made by the
Corporation to such holder of Series C Capital Securities in the Direct Action.
Except as described herein, holders of Series C Capital Securities will not be
able to exercise directly any other remedy available to the holders of the
Series C Subordinated Debentures or assert directly any other rights in respect
of the Series C Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities,"
"-- Debenture Events of Default" and "Description of Guarantee" in the
accompanying Prospectus. The Series C Trust Agreement provides that each holder
of Series C Securities by acceptance thereof agrees to the provisions of the
Series C Guarantee and the Indenture.
S-9
<PAGE> 10
LIMITED VOTING RIGHTS
Holders of Series C Capital Securities generally will have limited voting
rights relating only to the modification of the Series C Capital Securities and
the Series C Guarantee and the exercise of the Series C Issuer's rights as
holder of Series C Subordinated Debentures and the Series C Guarantee. Holders
of Series C Capital Securities will not be entitled to vote to appoint, remove
or replace the Property Trustee, the Delaware Trustee or any Administrative
Trustee, and such voting rights are vested exclusively in the holder of the
Series C Common Securities except, with respect to the Property Trustee and the
Delaware Trustee, upon the occurrence of certain events described in the
accompanying Prospectus. The Property Trustee, the Administrative Trustees and
the Corporation may amend the Series C Trust Agreement without the consent of
holders of Series C Capital Securities to ensure that the Series C Issuer will
not be classified for United States federal income tax purposes as an
association or publicly traded partnership subject to taxation as a corporation
unless such action materially and adversely affects the interests of such
holders. See "Description of Preferred Securities -- Voting Rights; Amendment of
Trust Agreement" and "-- Removal of Issuer Trustees" in the accompanying
Prospectus.
TRADING CHARACTERISTICS OF SERIES C CAPITAL SECURITIES
The Corporation does not intend to have the Series C Capital Securities
listed on The New York Stock Exchange or any other securities exchange. See
"Certain Federal Income Tax Consequences -- Interest Income and Original Issue
Discount" and "-- Sales or Redemption of Series C Capital Securities" for a
discussion of the United States federal income tax consequences that may result
from a taxable disposition of the Series C Capital Securities.
POSSIBLE TAX LAW CHANGES AFFECTING THE SERIES C CAPITAL SECURITIES
Legislation was proposed by the United States Department of the Treasury on
February 6, 1997 as part of President Clinton's Fiscal 1998 Budget Proposal (the
"Proposed Legislation") that contained a provision which generally would deny
the interest deduction for interest paid or accrued on an instrument issued by a
corporation that (i) has a maximum term of more than 15 years and (ii) is not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. This provision was
proposed to be effective generally for instruments issued on or after the date
of the first Congressional committee action on the Proposed Legislation (as of
March 4, 1997, no Congressional committee action had been taken). If this
provision were to apply to the Series C Subordinated Debentures, the Corporation
would not be able to deduct the interest on the Series C Subordinated
Debentures. There can be no assurance that the Proposed Legislation or future
legislative proposals or final legislation will not adversely affect the ability
of the Corporation to deduct interest on the Series C Subordinated Debentures or
otherwise affect the tax treatment of the transaction described herein. Such a
change could give rise to a Tax Event, which would permit the Corporation, upon
approval of the Federal Reserve if then required under applicable capital
guidelines or policies, to shorten the maturity of the Series C Subordinated
Debentures to a date not earlier than March 1, 2012 or to cause a redemption of
the Series C Capital Securities before March 1, 2007. See "Certain Terms of
Series C Subordinated Debentures -- Conditional Right to Shorten Maturity or
Redeem upon a Tax Event or Capital Treatment Event" and "-- Redemption" in this
Prospectus Supplement and "Description of Preferred Securities -- Redemption or
Exchange -- Tax Event or Capital Treatment Event Redemption" in the accompanying
Prospectus. See also "Certain Federal Income Tax Consequences -- Possible Tax
Law Changes."
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<PAGE> 11
CHASE CAPITAL III
Chase Capital III (the "Series C Issuer") is a statutory business trust
created under Delaware law pursuant to (i) the Trust Agreement executed by the
Corporation, as Depositor, The Bank of New York, as Property Trustee, The Bank
of New York (Delaware), as Delaware Trustee, and the Administrative Trustees
named therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on October 28, 1996, and a restated certificate of trust with
the Delaware Secretary of State on November 13, 1996. The Series C Issuer's
business and affairs are conducted by the Issuer Trustees: The Bank of New York,
as Property Trustee, and The Bank of New York (Delaware), as Delaware Trustee,
and two individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Series C Issuer exists for the exclusive
purposes of (i) issuing and selling the Series C Capital Securities and Series C
Common Securities, (ii) using the proceeds from the sale of Series C Capital
Securities and Series C Common Securities to acquire Series C Subordinated
Debentures issued by the Corporation and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer of
the Series C Securities). Accordingly, the Series C Subordinated Debentures will
be the sole assets of the Series C Issuer, and payments under the Series C
Subordinated Debentures will be the sole revenue of the Series C Issuer. All of
the Series C Common Securities will be owned by the Corporation. The Series C
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Series C Capital Securities, except that upon the occurrence and
continuance of an event of default under the Series C Trust Agreement resulting
from an event of default under the Indenture, the rights of the Corporation as
holder of the Series C Common Securities to payment in respect of Distributions
and payments upon liquidation, redemption or otherwise will be subordinated to
the rights of the holders of the Series C Capital Securities. See "Description
of Preferred Securities -- Subordination of Common Securities" in the
accompanying Prospectus. The Corporation will acquire Series C Common Securities
in an aggregate Liquidation Amount at least equal to 3% of the total capital of
the Series C Issuer. The Series C Issuer has a term of 55 years, but may
terminate earlier as provided in the Series C Trust Agreement. The principal
executive office of the Series C Issuer is 270 Park Avenue, New York, New York
10017 and its telephone number is (212) 270-6000. See "The Issuer" in the
accompanying Prospectus.
It is anticipated that the Series C Issuer will not be subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
THE CHASE MANHATTAN CORPORATION
GENERAL
The Corporation 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. On March 31, 1996, The Chase Manhattan Corporation ("Old Chase") merged
with and into Chemical Banking Corporation, and Chemical Banking Corporation,
which was the surviving corporation in the merger, changed its name to "The
Chase Manhattan Corporation." As a result of the merger, the Corporation has
become the largest banking institution in the United States, with over $300
billion in assets and $20 billion in stockholders' equity.
The principal bank subsidiaries of the Corporation are The Chase Manhattan
Bank, a New York banking corporation (the "Bank"), Chase Manhattan Bank USA,
National Association ("Chase USA"), headquartered in Wilmington, Delaware, and
Texas Commerce Bank National Association ("Texas Commerce").
The merger of Old Chase with and into Chemical Banking Corporation was
accounted for as a pooling-of-interests and, accordingly, the information
presented in this Prospectus Supplement reflects the combined results of Old
Chase and the Corporation as if the merger had been in effect for all periods
presented.
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<PAGE> 12
BUSINESS
The activities of the Corporation and its subsidiaries are internally
organized, for management information purposes, into five principal lines of
business. A brief description of each principal line of business is presented
below.
Global Bank
The Global Bank provides banking, financial advisory, trading and
investment services to corporations and public-sector clients worldwide through
a network of offices in 54 countries, including major operations in all key
international financial centers. The Global Bank includes: Global Client
Management (focusing on corporate clients, credit and general advisory); Global
Investment Banking (including acquisition finance, syndicated finance, high
yield finance, private placements, leasing, mergers and acquisitions, and other
global investment banking activities); Global Markets (foreign exchange dealing
and trading, derivatives (including equity and commodity derivatives) trading
and structuring, risk management, securities structuring, underwriting, trading
and sales, and the Corporation's funding and securities investment activities);
and Chase Capital Partners, a venture capital subsidiary of the Corporation
(venture capital and mezzanine finance). In addition, the Global Asset
Management and Private Banking group serves high net worth individuals worldwide
with banking and investment services, including the Vista family of mutual funds
and Vista unit trust funds.
Regional and Consumer Banking
Regional and Consumer Banking includes: Credit Cards (Chase cardmember
services); Deposits and Investments (consumer banking and commercial and
professional banking); Mortgage Banking; National Consumer Finance (home equity
secured lending, student lending and other consumer lending); International
Consumer (consumer activities in Asia and Latin America); Middle Market and
Community Development (regional commercial banking); and Texas Commerce. The
Corporation maintains a leading market share position in serving the financial
needs of consumers, middle market commercial enterprises and small businesses in
the tri-state New York metropolitan area. Texas Commerce is a leader in
providing financial products and services to businesses and individuals
throughout Texas and is the primary bank for more large corporations and middle
market companies than any other bank in Texas.
Global Services
Global Services includes custody, cash management, payments, trade
services, trust and other fiduciary services. At September 30, 1996, the
Corporation was custodian or trustee for approximately $3.6 trillion of assets.
Terminal Businesses; Corporate
Terminal Businesses represent discontinued portfolios, which are primarily
the refinancing country debt portfolio and the Corporation's nonperforming
commercial real estate problem asset and nonperforming portfolio, primarily at
the Bank. Corporate includes the management results attributed to the parent
company; the Corporation's investment in The CIT Group Holdings, Inc.; the
impact of credit card securitizations; and some effects remaining at the
corporate level after the implementation of management accounting policies.
The Corporation is a Delaware corporation with its principal executive
office at 270 Park Avenue, New York, New York 10017. Its telephone number is
(212) 270-6000.
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<PAGE> 13
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Corporation's consolidated ratios of
earnings to fixed charges and ratios of earnings to combined fixed charges and
preferred stock dividend requirements for each of the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits..... 1.59 1.90 1.86 1.62 1.50 1.20
Including Interest on Deposits..... 1.28 1.41 1.42 1.31 1.21 1.07
Earnings to Combined Fixed Charges
and Preferred Stock Dividend
Requirements:
Excluding Interest on Deposits..... 1.53 1.82 1.76 1.52 1.41 1.14
Including Interest on Deposits..... 1.26 1.38 1.38 1.27 1.18 1.05
</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
All of the proceeds from the sale of the Series C Capital Securities will
be invested by the Series C Issuer in Series C Subordinated Debentures. The
Corporation intends that the proceeds from the sale of the Series C Subordinated
Debentures will be added to its general corporate funds and will be used for
general corporate purposes, which may include (depending upon the Corporation's
capital requirements, market conditions and other factors) the repurchase or
redemption of shares of its outstanding common and preferred stock.
The Corporation is required by the Federal Reserve to maintain certain
levels of capital for bank regulatory purposes. On October 21, 1996, the Federal
Reserve announced that cumulative preferred securities having the
characteristics of the Series C Capital Securities could be included as Tier 1
Capital for bank holding companies. Such Tier 1 Capital treatment, together with
the Corporation's ability to deduct, for federal income tax purposes, interest
payable on the Series C Subordinated Debentures, will provide the Corporation
with a more cost-effective means of obtaining capital for bank regulatory
purposes than other Tier 1 Capital alternatives currently available to it.
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<PAGE> 14
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of September 30, 1996 and as adjusted to
give effect to (i) the issuance of $600 million of 7.67% Capital Securities,
Series A, by Chase Capital I on December 4, 1996, (ii) the issuance of $500
million of Global Floating Rate Capital Securities, Series B, by Chase Capital
II on January 24, 1997, and (iii) the consummation of the offering of the Series
C Capital Securities. The following data should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation and its
subsidiaries incorporated herein by reference.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN MILLIONS)
<S> <C> <C>
Total long-term debt................................. $ 12,379 $ 12,379
-------- --------
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures, Series A(a)................... -- 600
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures, Series B(b)................... -- 494
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures, Series C(c)................... -- 296
Preferred Stock of Subsidiary(d)..................... 550 550
-------- --------
Stockholders' Equity
Preferred Stock.................................... 2,650 2,650
Common Stock....................................... 440 440
Capital Surplus.................................... 10,444 10,444
Retained Earnings.................................. 8,091 8,091
Net Unrealized Loss on Securities Available for
Sale Net of Taxes............................... (480) (480)
Treasury Stock, At Cost............................ (5) (5)
-------- --------
Total Stockholders' Equity...................... $ 21,140 $ 21,140
-------- --------
Total Capitalization................................. $ 34,069 $ 35,459
======== ========
</TABLE>
- ---------------
(a) On December 4, 1996, Chase Capital I issued $600 million of guaranteed
preferred beneficial interests in a registered public offering. Chase Capital I
invested the proceeds of such offering, together with approximately $18.6
million paid by the Corporation for Chase Capital I's common securities, in
approximately $618.6 million principal amount of Series A Subordinated
Debentures. The Series A Subordinated Debentures bear interest at the rate of
7.67% per annum and mature on December 1, 2026. The Corporation owns all of the
common securities of Chase Capital I and the sole assets of Chase Capital I are
the Series A Subordinated Debentures.
(b) On January 24, 1997, Chase Capital II issued $500 million of guaranteed
preferred beneficial interests in a registered public offering. Chase Capital II
invested the proceeds of such offering (approximately $494.1 million), together
with approximately $15.3 million paid by the Corporation for Chase Capital II's
common securities, in approximately $515.5 million principal amount of Series B
Subordinated Debentures. The Series B Subordinated Debentures bear interest at
the floating rate of LIBOR plus .50% per annum and mature on February 1, 2027.
The Corporation owns all of the common securities of Chase Capital II and the
sole assets of Chase Capital II are the Series B Subordinated Debentures.
(c) As described herein, the sole assets of the Series C Issuer will be
approximately $309.3 million principal amount of Series C Subordinated
Debentures to be issued by the Corporation to the Series C Issuer. The Series C
Subordinated Debentures will bear interest at a variable rate equal to LIBOR
plus .55% on the Liquidation Amount of $1,000 per Series C Subordinated
Debenture and mature on March 1, 2027. The Corporation will own all of the
Series C common securities of the Series C Issuer.
It is anticipated that the Series C Issuer will not be subject to the
reporting requirements under the Exchange Act.
(d) Reflects the issuance of preferred stock in September 1996 by Chase
Preferred Capital Corporation, a wholly owned subsidiary of the Bank, which has
elected to be treated for federal income tax purposes as a real estate
investment trust.
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<PAGE> 15
ACCOUNTING TREATMENT
For financial reporting purposes, the Series C Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Series C
Issuer will be included in the consolidated financial statements of the
Corporation. The Series C Capital Securities will be presented as part of a
separate line item in the consolidated balance sheets of the Corporation under
the caption "Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures, Series A, Series B and Series C"
and appropriate disclosures about the Series C Capital Securities, the Series C
Guarantee and the Series C Subordinated Debentures will be included in the notes
to the consolidated financial statements. For financial reporting purposes, the
Corporation will record Distributions payable on the Series C Capital Securities
as an expense in the consolidated statements of income.
The Corporation has agreed that future financial reports of the Corporation
will: (i) present the Preferred Securities issued by other trusts created by the
Corporation on the Corporation's balance sheet as a separate line item entitled
"Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated
Deferrable Interest Debentures Series A, Series B and Series C"; (ii) include in
a footnote to the financial statements disclosure that the sole assets of the
trusts are the Junior Subordinated Debentures (specifying as to each trust the
principal amount, interest rate and maturity date of Junior Subordinated
Debentures held); and (iii) if Staff Accounting Bulletin 53 treatment is sought,
include, in an audited footnote to the financial statements, disclosure that (a)
the trusts are wholly owned, (b) the sole assets of the trusts are the Junior
Subordinated Debentures (specifying as to each trust the principal amount,
interest rate and maturity date of the Junior Subordinated Debentures held), and
(c) the obligations of the Corporation under the Junior Subordinated Debentures,
the relevant indenture, trust agreement and guarantee, in the aggregate,
constitute a full and unconditional guarantee by the Corporation of such trust's
obligations under the Preferred Securities issued by such trust.
CERTAIN TERMS OF SERIES C CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series C
Capital Securities supplements the description of the terms and provisions of
the Preferred Securities set forth in the accompanying Prospectus under the
heading "Description of Preferred Securities," to which description reference is
hereby made. This summary of certain terms and provisions of the Series C
Capital Securities, which describes the material provisions thereof, does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Series C Trust Agreement to which reference is hereby made.
The form of the Series C Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part.
DISTRIBUTIONS
The Series C Capital Securities represent beneficial ownership interests in
the Series C Issuer, and Distributions on the Series C Capital Securities will
be payable at a variable annual rate equal to LIBOR plus .55% on the stated
Liquidation Amount of $1,000, payable quarterly in arrears on March 1 , June 1,
September 1 and December 1 of each year (each, a "Distribution Date"), to the
holders of the Series C Capital Securities on the relevant record dates. The
Distribution rate for the initial Distribution Period will be 6.1047% per annum.
The record dates for the Series C Capital Securities will be, for so long as the
Series C Capital Securities remain in book-entry form, one Business Day (as
defined in the accompanying Prospectus) prior to the relevant Distribution Date
and, in the event the Series C Capital Securities are not in book-entry form,
the 15th day of the month preceding the month in which the relevant Distribution
Date occurs. Distributions will accumulate from March, 1, 1997. The first
Distribution Date for the Series C Capital Securities will be
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<PAGE> 16
June 1, 1997. The period beginning on and including March 1, 1997 and ending on
but excluding the first Distribution Date and each successive period beginning
on and including a Distribution Date and ending on but excluding the next
succeeding Distribution Date is herein called a "Distribution Period". The
amount of Distributions payable for any Distribution Period will be computed on
the basis of the actual number of days in such Distribution Period (which number
of actual days shall include the first day but exclude the last day of such
period) divided by 360. In the event that any Distribution Date would otherwise
fall on a day that is not a Business Day (as defined in the accompanying
Prospectus), such Distribution Date shall be postponed to the next day that is a
Business Day unless it would thereby fall in the next calendar month, in which
event the Distribution Date shall be brought forward to the immediately
preceding Business Day. See "Description of Preferred
Securities -- Distributions" in the accompanying Prospectus.
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series C Subordinated Debentures at any time or from time to
time for a period not exceeding 20 consecutive quarterly periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series C Subordinated Debentures. As a consequence of any
such deferral of interest payments by the Corporation, quarterly Distributions
on the Series C Capital Securities by the Series C Issuer will also be deferred
during any such Extension Period. Distributions to which holders of the Series C
Capital Securities are entitled will accumulate additional Distributions thereon
at a variable annual rate equal to LIBOR plus .55%, compounded quarterly from
the relevant payment date for such Distributions. The term "Distributions" as
used herein shall include any such additional Distributions. During any such
Extension Period, the Corporation may not, and may not permit any subsidiary of
the Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Corporation (including other series of Junior Subordinated Debentures) that rank
pari passu with or junior in interest to the Series C Subordinated Debentures
(including the Series A and Series B Subordinated Debentures) or (iii) make any
guarantee payments with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation if such guarantee ranks pari
passu with or junior in interest to the Series C Subordinated Debentures (other
than (a) dividends or distributions in capital stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Series C Guarantee and (d) purchases of
common stock related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees, related to
the issuance of common stock or rights under a dividend reinvestment and stock
purchase plan, or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest on the Series C
Subordinated Debentures, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the Series
C Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all interest then accrued and unpaid (together with interest
thereon at a variable annual rate equal to LIBOR plus .55%, compounded
quarterly, to the extent permitted by applicable law), the Corporation may elect
to begin a new Extension Period. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period. See "Certain Terms
of Series C Subordinated Debentures -- Option to Defer Interest Payments" and
"Certain Federal Income Tax Consequences -- Interest Income and Original Issue
Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series C
Subordinated Debentures.
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<PAGE> 17
DISTRIBUTION RATE
LIBOR and the amount of Distributions payable in respect of each
Distribution Period will be calculated by The Bank of New York, as Calculation
Agent, in the same manner as LIBOR and the interest payable in respect of each
Interest Period for the Series C Subordinated Debentures, as described under
"Certain Terms of Series C Subordinated Debentures -- Interest Rate."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series C
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined in
the accompanying Prospectus) of the Series C Securities, upon not less than 30
nor more than 60 days notice prior to the date fixed for redemption, at a
redemption price, with respect to the Series C Securities (the "Redemption
Price"), equal to the aggregate Liquidation Amount of such Series C Securities
plus accumulated and unpaid Distributions thereon to the date of redemption (the
"Redemption Date"). See "Description of Series C Subordinated
Debentures -- Redemption." If less than all of the Series C Subordinated
Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds
from such repayment or redemption shall be allocated to the redemption pro rata
of the Series C Capital Securities and the Series C Common Securities.
The Corporation has the right to redeem the Series C Subordinated
Debentures (i) on or after March 1 , 2007, in whole at any time or in part from
time to time, or (ii) at any time, in certain circumstances as described under
"Certain Terms of Series C Subordinated Debentures -- Conditional Right to
Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event," in
whole (but not in part) within 90 days following the occurrence of a Tax Event
or a Capital Treatment Event. A redemption of the Series C Subordinated
Debentures would cause a mandatory redemption of Series C Capital Securities and
Series C Common Securities.
LIQUIDATION OF SERIES C ISSUER AND DISTRIBUTION OF SERIES C SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to terminate the Series C
Issuer and cause the Series C Subordinated Debentures to be distributed to the
holders of the Series C Capital Securities in exchange therefor upon liquidation
of the Series C Issuer. Such right is subject to the Corporation's having
received prior approval of the Federal Reserve if then required under applicable
capital guidelines or policies.
Under current United States federal income tax law and interpretations and
assuming, as expected, the Series C Issuer is treated as a grantor trust, a
distribution of Series C Subordinated Debentures in exchange for the Series C
Capital Securities should not be a taxable event to holders of the Series C
Capital Securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or other circumstances, however, the distribution
could be a taxable event to holders of the Series C Capital Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Series C
Subordinated Debentures to Holders of Series C Capital Securities." If the
Corporation elects neither to redeem the Series C Subordinated Debentures prior
to maturity nor to liquidate the Series C Issuer and distribute the Series C
Subordinated Debentures to holders of the Series C Capital Securities in
exchange therefor, the Series C Capital Securities will remain outstanding until
the Stated Maturity of the Series C Subordinated Debentures.
If the Corporation elects to liquidate the Series C Issuer and thereby
causes the Series C Subordinated Debentures to be distributed to holders of the
Series C Capital Securities in exchange therefor upon liquidation of the Series
C Issuer, the Corporation shall continue to have the right to shorten the
maturity of or to redeem the Series C Subordinated Debentures in certain
circumstances upon the occurrence of a Tax Event or a Capital Treatment Event,
as described under "Certain
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Terms of Series C Subordinated Debentures -- Conditional Right to Shorten
Maturity or Redeem upon a Tax Event or Capital Treatment Event."
LIQUIDATION VALUE
The amount payable on the Series C Capital Securities in the event of any
liquidation of the Series C Issuer is $1,000 per Series C Capital Security plus
accumulated and unpaid Distributions, which amount may be paid in the form of a
distribution of a Like Amount of Series C Subordinated Debentures, subject to
certain exceptions. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
REGISTRATION OF SERIES C CAPITAL SECURITIES
The Series C Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the Series
C Capital Securities will be shown on, and transfers thereof will be effected
only through, records maintained by participants in DTC. Except as described
below and in the accompanying Prospectus, Series C Capital Securities in
certificated form will not be issued in exchange for the global certificates.
See "Book-Entry Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Series C Capital Securities
registered in the names of persons other than DTC or its nominee only if (i) DTC
notifies the Series C Issuer that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have been
appointed, or if at any time DTC ceases to be a clearing agency registered under
the Exchange Act at a time when DTC is required to be so registered to act as
such depositary, (ii) the Series C Issuer in its sole discretion determines that
such global security shall be so exchangeable or (iii) there shall have occurred
and be continuing an event of default under the Indenture with respect to the
Series C Subordinated Debentures. Any global security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for definitive
certificates registered in such names as DTC shall direct. It is expected that
such instructions will be based upon directions received by DTC from its
Participants (as defined in the accompanying Prospectus) with respect to
ownership of beneficial interests in such global security. In the event that
Series C Capital Securities are issued in definitive form, such Series C Capital
Securities will be in denominations of $1,000 and integral multiples thereof and
may be transferred or exchanged at the offices described below.
Payments on and any distributions of Series C Subordinated Debentures in
exchange for Series C Capital Securities represented by a global security will
be made to DTC, as the depositary for the Series C Capital Securities. In the
event Series C Capital Securities are issued in certificated form, the
Liquidation Amount and Distributions will be payable, the transfer of the Series
C Capital Securities will be registrable, Series C Subordinated Debentures will
be distributed in exchange for Series C Capital Securities following a
termination of the Series C Issuer and Series C Capital Securities will be
exchangeable for Series C Capital Securities of other denominations of a like
aggregate Liquidation Amount, at the corporate office of the Property Trustee in
New York, New York, or at the offices of any paying agent or transfer agent
appointed by the Administrative Trustees, provided that payment of any
Distribution may be made at the option of the Administrative Trustees by check
mailed to the address of the persons entitled thereto or by wire transfer. In
addition, if the Series C Capital Securities are issued in certificated form,
the record dates for payment of Distributions will be the 15th day of the month
preceding the month in which the relevant Distribution payment is scheduled to
be paid. For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Book-Entry Issuance" in the accompanying Prospectus.
The Series C Capital Securities have been assigned CUSIP No. 161478AA0.
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CERTAIN TERMS OF SERIES C SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series C
Subordinated Debentures supplements the description of the terms and provisions
of the Corresponding Junior Subordinated Debentures (as defined in the
accompanying Prospectus) set forth in the accompanying Prospectus under the
heading "Description of Junior Subordinated Debentures" to which description
reference is hereby made. The summary of certain terms and provisions of the
Series C Subordinated Debentures set forth below, which describes the material
provisions thereof, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Indenture, to which reference is
hereby made. The Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part.
Concurrently with the issuance of the Series C Capital Securities, the
Series C Issuer will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series C Common Securities, in the
Series C Subordinated Debentures issued by the Corporation. The Series C
Subordinated Debentures will bear interest at a variable annual rate equal to
LIBOR plus .55 % on the principal amount thereof, payable quarterly in arrears
on March 1, June 1, September 1 and December 1 of each year (each, an "Interest
Payment Date"), commencing June 1, 1997, and at maturity to the person in whose
name each Series C Subordinated Debenture is registered at the close of business
on the Business Day next preceding such Interest Payment Date. The interest rate
for the initial Interest Period (as defined below) will be 6.1047% per annum.
The period beginning on and including March 1, 1997 and ending on but excluding
the first Interest Payment Date and each successive period beginning on and
including an Interest Payment Date and ending on but excluding the next
succeeding Interest Payment Date is herein called an "Interest Period". It is
anticipated that, until the liquidation, if any, of the Series C Issuer, each
Series C Subordinated Debenture will be held by the Property Trustee in trust
for the benefit of the holders of the Series C Capital Securities. The amount of
interest payable for any Interest Period will be computed on the basis of the
actual number of days in such Interest Period (which number of actual days shall
include the first day but exclude the last day of such Interest Period) divided
by 360. In the event that any Interest Payment Date would otherwise fall on a
day that is not a Business Day, such Interest Payment Date shall be postponed to
the next day that is a Business Day unless it would thereby fall in the next
calendar month, in which event the Interest Payment Date shall be brought
forward to the immediately preceding Business Day. Accrued interest that is not
paid on the applicable Interest Payment Date will bear additional interest on
the amount thereof (to the extent permitted by law) at a variable annual rate
equal to LIBOR plus .55%, compounded quarterly from the relevant Interest
Payment Date. The term "interest" as used herein shall include quarterly
interest payments and interest on quarterly interest payments not paid on the
applicable Interest Payment Date, as applicable. Notwithstanding anything to the
contrary set forth above, if the maturity date falls on a day that is not a
Business Day, the payment of principal and interest will be paid on the next
succeeding Business Day, with the same force and effect as if made on such
maturity date and no interest on such payments will accrue from and after the
maturity date.
The Series C Subordinated Debentures will be issued as a series of junior
subordinated deferrable interest debentures under the Indenture.
The Series C Subordinated Debentures will mature on March 1, 2027 (such
date, as it may be shortened as hereinafter described, the "Stated Maturity").
Such date may be shortened by the Corporation in certain circumstances upon the
occurrence of a Tax Event or a Capital Treatment Event as described under
"-- Conditional Right to Shorten Maturity or Redeem upon a Tax Event or Capital
Treatment Event" to any date not earlier than March 1, 2012. The Corporation may
not shorten the Stated Maturity without having received the prior approval of
the Federal Reserve to do so, if then required under applicable capital
guidelines or policies. In the event that the Corporation elects to shorten the
maturity of the Series C Subordinated Debentures, it shall give notice to the
Debenture Trustee, and the Debenture Trustee shall give notice of such
shortening to the holders of
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the Series C Subordinated Debentures no less than 30 and no more than 60 days
prior to the effectiveness thereof.
The Series C Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt of the Corporation.
See "Description of Junior Subordinated Debentures -- Subordination" in the
accompanying Prospectus. Substantially all of the Corporation's existing
indebtedness constitutes Senior Debt (other than approximately $1,134.1 million
of the Corporation's existing indebtedness evidenced by the Series A and Series
B Subordinated Debentures). Because the Corporation is a holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary, including the Bank, Chase USA and Texas Commerce, upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of that subsidiary, except to the extent that the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Series C Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Series C Subordinated Debentures should look only
to the assets of the Corporation for payments on the Series C Subordinated
Debentures. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Debt, whether
under the Indenture, any other existing indenture or any other indenture that
the Corporation may enter into in the future or otherwise. See "Description of
Junior Subordinated Debentures -- Subordination" in the accompanying Prospectus.
INTEREST RATE
The interest rate for the initial Interest Period will be 6.1047% per
annum. Thereafter, The Bank of New York, as Calculation Agent (the "Calculation
Agent"), will calculate the interest rate for each Interest Period based on
LIBOR determined as of two London Banking Days (defined as any day on which
dealings in deposits in U.S. Dollars are transacted in the London interbank
market) prior to the first day of such Interest Period (each, a "Determination
Date"). "LIBOR" means, with respect to an Interest Period relating to an
Interest Payment Date (in the following order of priority):
(1) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page 3750
as of 11:00 a.m. (London time) on the related Determination Date;
(2) if such rate does not appear on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date, LIBOR will be the
arithmetic mean (if necessary, rounded upwards to the nearest whole
multiple of 0.00001%) of the rates (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity that appear on Reuters
Monitor Money Rates Page LIBO ("Reuters Page LIBO") as of 11:00 a.m.
(London time) on such Determination Date;
(3) if such rate does not appear on Reuters Page LIBO as of 11:00 a.m.
(London time) on the related Determination Date, the Calculation Agent will
request the principal London offices of four leading banks in the London
interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for
Eurodollar deposits having a three-month maturity as of 11:00 a.m. (London
time) on such Determination Date. If at least two quotations are provided,
LIBOR will be the arithmetic mean (if necessary, rounded upwards to the
nearest whole multiple of 0.00001%) of such quotations;
(4) if fewer than two such quotations are provided as requested in
clause (3) above, the Calculation Agent will request four major New York
City banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in Eurodollars
having a three-month maturity as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, LIBOR
will be the arithmetic mean (if necessary, rounded upwards to the nearest
whole multiple of 0.00001%) of such quotations; and
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(5) if fewer than two such quotations are provided as requested in
clause (4) above, LIBOR will be LIBOR as determined on the previous
Determination Date.
If the rate for Eurodollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 or Reuters Page LIBO, as the case may
be, as of 11:00 a.m. (London time) on the related Determination Date is
superseded on Telerate Page 3750 or Reuters Page LIBO, as the case may be, by a
corrected rate before 12:00 noon (London time) on such Determination Date, the
corrected rate as so substituted on the applicable page will be the applicable
LIBOR for such Determination Date.
The interest rate on the Series C Subordinated Debentures 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 present New York
law, the maximum rate of interest is 25% per annum on a simple interest basis.
This limit will not apply to Series C Subordinated Debentures in a principal
amount of $2,500,000 or more.
Absent manifest error, the Calculation Agent's determination of LIBOR and
its calculation of the applicable interest rate for each Interest Period will be
final and binding. Investors may obtain the interest rates for the current and
preceding Interest Period by writing or calling Corporate Trust Administration
at the Calculation Agent at The Bank of New York, 101 Barclay Street, Floor 21
West, New York, New York 10286 (telephone (800) 524-4458).
OPTION TO DEFER INTEREST PAYMENTS
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture at any time or
from time to time during the term of the Series C Subordinated Debentures to
defer payment of interest on the Series C Subordinated Debentures for a period
not exceeding 20 consecutive quarterly periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Series C Subordinated Debentures. At the end of such Extension Period,
the Corporation must pay all interest then accrued and unpaid on the Series C
Subordinated Debentures (together with interest on such unpaid interest at a
variable annual rate equal to LIBOR plus .55%, compounded quarterly from the
relevant Interest Payment Date, to the extent permitted by applicable law).
During an Extension Period, interest will accrue and holders of Series C
Subordinated Debentures (or holders of Series C Capital Securities while such
series is outstanding) will be required to accrue interest income for United
States federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not, and may not
permit any subsidiary of the Corporation to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including other series of Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Series C Subordinated Debentures (including the Series A and Series B
Subordinated Debentures) or (iii) make any guarantee payments with respect to
any guarantee by the Corporation of the debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in interest to the
Series C Subordinated Debentures (other than (a) dividends or distributions in
capital stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
redemption or repurchase of any such rights pursuant thereto, (c) payments under
the Series C Guarantee, and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees, related to the issuance of common
stock or rights under a dividend reinvestment and stock purchase plan, or
related to the issuance of common stock (or securities convertible into or
exchangeable for common stock as consideration in an acquisition transaction
that was entered into prior to the
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commencement of such Extension Period). Prior to the termination of any such
Extension Period, the Corporation may further defer the payment of interest on
the Series C Subordinated Debentures, provided that no Extension Period may
exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of
the Series C Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at a variable annual rate equal to LIBOR plus .55%, compounded
quarterly, to the extent permitted by applicable law), the Corporation may elect
to begin a new Extension Period subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Corporation must give the Property Trustee, the Administrative Trustees and
the Debenture Trustee notice of its election to begin such Extension Period at
least one Business Day prior to the earlier of (i) the date Distributions on the
Series C Securities would have been payable except for the election to begin
such Extension Period, (ii) the date the Administrative Trustees are required to
give notice to the New York Stock Exchange, the Nasdaq National Market or other
applicable stock exchange or automated quotation system on which the Series C
Capital Securities may then be listed or quoted or to holders of Series C
Subordinated Debentures of the record date for such Distributions or (iii) the
date such Distributions are payable, but in any event not less than one Business
Day prior to such record date. The Debenture Trustee shall give notice of the
Corporation's election to begin a new Extension Period to the holders of the
Series C Subordinated Debentures. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period. See "Description of
Junior Subordinated Debentures -- Option to Defer Interest Payments" in the
accompanying Prospectus.
TRUST COSTS AND EXPENSES
In the Indenture, the Corporation, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Series C Capital
Securities) and all costs and expenses of the Series C Issuer (including costs
and expenses relating to the organization of the Series C Issuer, the fees and
expenses of the Issuer Trustees and the costs and expenses relating to the
operation of the Series C Issuer) and to pay any and all taxes and all costs and
expenses with respect thereto (other than United States withholding taxes) to
which the Series C Issuer might become subject.
REDEMPTION
Subject to the Corporation's having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies, the
Series C Subordinated Debentures are redeemable prior to maturity at the option
of the Corporation (i) on or after March 1, 2007, in whole at any time or in
part from time to time or (ii) at any time, in certain circumstances as
described under "Certain Terms of Series C Subordinated
Debentures -- Conditional Right to Shorten Maturity or Redeem upon a Tax Event
or Capital Treatment Event," in whole (but not in part) within 90 days following
the occurrence of a Tax Event or Capital Treatment Event. The proceeds of any
such redemption will be used by the Series C Issuer to redeem the Series C
Securities.
The redemption price with respect to the Series C Subordinated Debentures
shall be equal to 100% of the principal amount of the Series C Subordinated
Debentures so redeemed plus accrued and unpaid interest thereon to the date of
redemption.
DISTRIBUTION OF SERIES C SUBORDINATED DEBENTURES
As described under "Certain Terms of Series C Capital
Securities -- Liquidation of Series C Issuer and Distribution of Series C
Subordinated Debentures to Holders," under certain circumstances involving the
termination of the Series C Issuer, Series C Subordinated Debentures may be
distributed to the holders of the Series C Capital Securities in exchange
therefor upon liquidation of the Series C Issuer after satisfaction of
liabilities to creditors of the Series C Issuer as provided by applicable law.
If distributed to holders of Series C Capital Securities, the Series C
Subordinated
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<PAGE> 23
Debentures will initially be issued in the form of one or more global securities
and DTC, or any successor depositary for the Series C Capital Securities, will
act as depositary for the Series C Subordinated Debentures. It is anticipated
that the depositary arrangements for the Series C Subordinated Debentures would
be substantially identical to those in effect for the Series C Capital
Securities. There can be no assurance as to the market price of any Series C
Subordinated Debentures that may be distributed to the holders of Series C
Capital Securities.
CONDITIONAL RIGHT TO SHORTEN MATURITY OR REDEEM UPON A TAX EVENT OR CAPITAL
TREATMENT EVENT
If a Tax Event or a Capital Treatment Event occurs and either (i) in the
opinion of counsel to the Corporation experienced in such matters, there would
in all cases, after effecting the termination of the Series C Issuer and the
distribution of the Series C Subordinated Debentures to the holders of the
Series C Capital Securities in exchange therefor upon liquidation of the Series
C Issuer, be more than an insubstantial risk that an Adverse Tax Consequence (as
defined in "Risk Factors -- Tax Event or Capital Treatment Event -- Exchange of
Series C Capital Securities for Series C Subordinated Debentures, Shortening of
Maturity of Series C Debentures or Redemption") would continue to exist, (ii) in
the reasonable determination of the Corporation, there would in all cases, after
effecting the termination of the Series C Issuer and the distribution of the
Series C Subordinated Debentures to the holders of the Series C Capital
Securities in exchange therefor upon liquidation of the Series C Issuer, be more
than an insubstantial risk that the Corporation will not be entitled to treat an
amount equal to the Liquidation Amount of the Series C Capital Securities as
"Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital
adequacy guidelines of the Federal Reserve, as then in effect and applicable to
the Corporation, or (iii) the Series C Subordinated Debentures are not held by
the Series C Issuer, then the Corporation shall have the right (a) to shorten
the Stated Maturity of the Series C Subordinated Debentures to the minimum
extent required, but in any event to a date not earlier than March 1, 2012 (the
action referred to in this clause (a) being referred to herein as a "Maturity
Advancement"), such that, in the opinion of counsel to the Corporation
experienced in such matters, after advancing the Stated Maturity, interest paid
on the Series C Subordinated Debentures will be deductible for federal income
tax purposes, or (b) if either (x) in the opinion of counsel to the Corporation
experienced in such matters, there would in all cases, after effecting a
Maturity Advancement, be more than an insubstantial risk that an Adverse Tax
Consequence would continue to exist or (y) in the reasonable determination of
the Corporation, there would in all cases, after effecting a Maturity
Advancement, be more than an insubstantial risk that the Corporation will not be
entitled to treat an amount equal to the Liquidation Amount of the Series C
Capital Securities as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Corporation, to redeem the Series C Subordinated
Debentures, in whole but not in part, at any time within 90 days following the
occurrence of a Tax Event or Capital Treatment Event at a redemption price equal
to 100% of the principal amount thereof plus accrued and unpaid interest thereon
to the date of redemption. See "Certain Terms of Series C Capital
Securities -- Liquidation of Series C Issuer and Distribution of Series C
Subordinated Debentures to Holders" and " -- Redemption" and "Certain Terms of
Series C Subordinated Debentures -- General."
Holders of Series C Capital Securities should consult their own tax
advisors regarding the tax consequences to them of a Maturity Advancement.
See "Certain Federal Tax Law Consequences -- Possible Tax Law Changes" for
a discussion of certain legislative proposals that, if adopted, could give rise
to a Tax Event, which may permit the Corporation to shorten the Stated Maturity
of the Series C Subordinated Debentures or cause a redemption of Series C
Capital Securities prior to March 1, 2007.
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REGISTRATION OF SERIES C SUBORDINATED DEBENTURES
The Series C Subordinated Debentures will be registered in the name of the
Series C Issuer. In the event that the Series C Subordinated Debentures are
distributed to holders of Series C Capital Securities, it is anticipated that
the depositary and other arrangements for the Series C Subordinated Debentures
will be substantially identical to those in effect for the Series C Capital
Securities as applicable. See "Certain Terms of Series C Capital
Securities -- Registration of Series C Capital Securities."
CERTAIN TERMS OF SERIES C GUARANTEE
The Series C Guarantee guarantees to the holders of the Series C Securities
the following payments, to the extent not paid by the Series C Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series C
Securities, to the extent that the Series C Issuer has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Series C
Securities called for redemption, to the extent that the Series C Issuer has
funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Series C Issuer
(unless the Series C Subordinated Debentures are distributed to holders of the
Series C Securities), the lesser of (a) the aggregate of the Liquidation Amount
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Series C Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series C Issuer remaining available
for distribution to holders of the Series C Securities after payment of
creditors of the Series C Issuer as required by applicable law. The Series C
Guarantee will be qualified as an indenture under the Trust Indenture Act. The
Bank of New York will act as the Guarantee Trustee for the purposes of
compliance with the Trust Indenture Act and will hold the Series C Guarantee for
the benefit of the holders of the Series C Securities. The Bank of New York will
also act as Debenture Trustee for the Series C Subordinated Debentures and as
Property Trustee.
The holders of not less than a majority in aggregate Liquidation Amount of
the Series C Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Series C Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series C Guarantee. Any holder of
the Series C Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Series C Guarantee without first
instituting a legal proceeding against the Series C Issuer, the Guarantee
Trustee or any other person or entity. If the Corporation were to default on its
obligation to pay amounts payable under the Series C Subordinated Debentures,
the Series C Issuer would lack funds for the payment of Distributions or amounts
payable on redemption of the Series C Securities or otherwise, and, in such
event, holders of the Series C Capital Securities would not be able to rely upon
the Series C Guarantee for payment of such amounts. Instead, if an event of
default under the Indenture shall have occurred and be continuing and such event
is attributable to the failure of the Corporation to pay interest on or
principal of the Series C Subordinated Debentures on the applicable payment
date, then a holder of Series C Securities may institute a Direct Action against
the Corporation pursuant to the terms of the Indenture for enforcement of
payment to such holder of the principal of or interest on such Series C
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Series C Capital Securities of such holder. In
connection with such Direct Action, the Corporation will have a right of set-off
under the Indenture to the extent of any payment made by the Corporation to such
holder of Series C Capital Securities in the Direct Action. Except as described
herein, holders of Series C Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Series C Subordinated
Debentures or assert directly any other rights in respect of the Series C
Subordinated Debentures. See "Description of Guarantee" in the accompanying
Prospectus. The Series C Trust Agreement provides that each holder of Series C
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Securities by acceptance thereof agrees to the provisions of the Series C
Guarantee and the Indenture.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Simpson Thacher & Bartlett, special tax counsel to the
Corporation and the Series C Issuer ("Tax Counsel"), the following summary
accurately describes the material United States federal income tax consequences
that may be relevant to the purchase, ownership and disposition of Series C
Capital Securities. Unless otherwise stated, this summary deals only with Series
C Capital Securities held as capital assets by United States Persons (defined
below) who purchase the Series C Capital Securities upon original issuance at
their original offering price. As used herein, a "United States Person" means a
person that is (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, (iii) an estate
the income of which is subject to United States federal income taxation
regardless of its source, or (iv) any trust if a court within the United States
is able to exercise primary supervision over the administration of such trust
and one or more United States fiduciaries have the authority to control all
substantial decisions of such trust. The tax treatment of a holder may vary
depending on his, her or its particular situation. This summary does not address
all the tax consequences that may be relevant to a particular holder or to
holders who may be subject to special tax treatment, such as banks, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax-exempt investors, or foreign investors. In
addition, this summary does not include any description of any alternative
minimum tax consequences or the tax laws of any state, local or foreign
government that may be applicable to a holder of Series C Capital Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury regulations promulgated thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis.
The authorities on which this summary is based are subject to various
interpretations and the opinions of Tax Counsel are not binding on the Internal
Revenue Service ("IRS") or the courts, either of which could take a contrary
position. Moreover, no rulings have been or will be sought from the IRS with
respect to the transactions described herein. Accordingly, there can be no
assurance that the IRS will not challenge the opinions expressed herein or that
a court would not sustain such a challenge. Nevertheless, Tax Counsel has
advised that it is of the view that, if challenged, the opinions expressed
herein would be sustained by a court with jurisdiction in a properly presented
case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES C
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN,
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE SERIES C
CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "CERTAIN TERMS
OF SERIES C CAPITAL SECURITIES -- REDEMPTION."
CLASSIFICATION OF THE SERIES C ISSUER
In connection with the issuance of the Series C Capital Securities, Tax
Counsel is of the opinion that, under current law and assuming compliance with
the terms of the Series C Trust Agreement, and based on certain facts and
assumptions contained in such opinion, the Series C Issuer will be classified as
a grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes. As a result, each beneficial owner of Series
C Capital Securities (a
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<PAGE> 26
"Securityholder") will be treated as owning an undivided beneficial interest in
the Series C Subordinated Debentures. Accordingly, each Securityholder will be
required to include in its gross income its pro rata share of the interest
income or original issue discount that is paid or accrued on the Series C
Subordinated Debentures. See "-- Interest Income and Original Issue Discount."
CLASSIFICATION OF THE SERIES C SUBORDINATED DEBENTURES
The Corporation, the Series C Issuer and the holders of the Series C
Securities (by acceptance of a beneficial interest in a Series C Security) will
agree to treat the Series C Subordinated Debentures as indebtedness for all
United States tax purposes. In connection with the issuance of the Series C
Subordinated Debentures, Tax Counsel is of the opinion that, under current law,
and based on certain representations, facts and assumptions set forth in such
opinion, the Series C Subordinated Debentures will be classified as indebtedness
for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the applicable Treasury regulations, the Series C Subordinated
Debentures will not be considered to have been issued with "original issue
discount" ("OID") within the meaning of Section 1273(a) of the Code.
Accordingly, except as set forth below, stated interest on the Series C
Subordinated Debentures generally will be included in income by a Securityholder
at the time such interest income is paid or accrued in accordance with such
Securityholder's regular method of tax accounting.
If, however, the Corporation exercises its right to defer payments of
interest on the Series C Subordinated Debentures, the Series C Subordinated
Debentures will become OID instruments at such time and all Securityholders will
be required to accrue the stated interest on the Series C Subordinated
Debentures on a daily basis during the Extension Period, even though the Company
will not pay such interest until the end of the Extension Period, and even
though some Securityholders may use the cash method of tax accounting. Moreover,
thereafter the Series C Subordinated Debentures will be taxed as OID instruments
for as long as they remain outstanding. Thus, even after the end of the
Extension Period, all Securityholders would be required to continue to include
the stated interest on the Series C Subordinated Debentures in income on a daily
economic accrual basis, regardless of their method of tax accounting and in
advance of receipt of the cash attributable to such interest income. Under the
OID economic accrual rules, a Securityholder would accrue an amount of interest
income each year that approximates the stated interest payments called for under
the terms of the Series C Subordinated Debentures, and actual cash payments of
interest on the Series C Subordinated Debentures would not be reported
separately as taxable income. Any amount of OID included in a Securityholder's
gross income (whether or not during an Extension Period) will increase such
Securityholder's tax basis in its Series C Capital Securities, and the amount of
Distributions received by a Securityholder with respect to such Series C Capital
Securities will reduce the tax basis of such Series C Capital Securities.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully that the
stated interest on the Series C Subordinated Debentures was OID regardless of
whether the Corporation exercises its right to defer payments of interest on
such debentures, all Securityholders would be required to include such stated
interest in income on a daily economic accrual basis as described above.
Corporate Securityholders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Series C
Capital Securities.
DISTRIBUTION OF SERIES C SUBORDINATED DEBENTURES TO HOLDERS OF SERIES C CAPITAL
SECURITIES
Under current law, a distribution by the Series C Issuer of the Series C
Subordinated Debentures as described under the caption "Certain Terms of Series
C Capital Securities --
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<PAGE> 27
Liquidation of Series C Issuer and Distribution of Series C Subordinated
Debentures to Holders" will be non-taxable and will result in the Securityholder
receiving directly its pro rata share of the Series C Subordinated Debentures
previously held indirectly through the Series C Issuer, with a holding period
and aggregate tax basis equal to the holding period and aggregate tax basis such
Securityholder had in its Series C Capital Securities before such distribution.
If, however, the liquidation of the Series C Issuer were to occur because the
Series C Issuer is subject to United States federal income tax with respect to
income accrued or received on the Series C Subordinated Debentures as a result
of a Tax Event or otherwise, the distribution of Series C Subordinated
Debentures to Securityholders by the Series C Issuer could be a taxable event to
the Series C Issuer and each Securityholder, and a Securityholder would
recognize gain or loss as if the Securityholder had exchanged its Series C
Capital Securities for the Series C Subordinated Debentures it received upon the
liquidation of the Series C Issuer. A Securityholder will accrue interest in
respect of Series C Subordinated Debentures received from the Series C Issuer in
the manner described above under "-- Interest Income and Original Issue
Discount."
SALES OR REDEMPTION OF SERIES C CAPITAL SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Series C
Capital Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized by the Securityholder on the sale or
redemption of the Series C Capital Securities (except to the extent that such
amount realized is characterized as a payment in respect of accrued but unpaid
interest on such Securityholder's allocable share of the Series C Subordinated
Debentures that such Securityholder had not included in income previously) and
the Securityholder's adjusted tax basis in the Series C Capital Securities sold
or redeemed. Such gain or loss generally will be taxable as long-term capital
gain or loss if the Securityholder held the Series C Capital Securities that it
sold or redeemed for more than one year. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for federal income
tax purposes.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any
Securityholder that is not a United States Person. As discussed above, the
Series C Capital Securities will be treated as evidence of an indirect
beneficial ownership interest in the Series C Subordinated Debentures. See
"-- Classification of the Trust." Thus, under present United States federal
income 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 Series C Issuer (or the
Corporation) or any paying agent of principal or interest (which for
purposes of this discussion includes any OID) on the Series C Capital
Securities (or the Series C Subordinated Debentures) to a Non-United States
Holder, provided (i) that the beneficial owner of the Series C Capital
Securities ("Beneficial Owner") does not actually or constructively own 10%
or more of the total combined voting power of all classes of stock of the
Corporation 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 Corporation through
stock ownership, (iii) the Beneficial Owner is not a bank whose receipt of
interest on the Series C Subordinated Debentures 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; and
(b) no withholding of United States federal income tax will be
required with respect to any gain realized by a Non-United States Holder
upon the sale or other disposition of the Series C Capital Securities (or
the Series C Subordinated Debentures).
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Series C Capital Securities on
behalf of such owner, must provide, in
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accordance with specified procedures, to the Series C Issuer or its paying
agent, a statement to the effect that the Beneficial Owner is not a United
States Person. 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 it is not a United
States Person (which certification may be made on an IRS Form W-8 (or successor
form)) or (2) a financial institution holding the Series C Capital Securities on
behalf of the Beneficial Owner certifies, under penalties of perjury, that such
statement has been received by it and furnishes the Series C Issuer or the
paying agent with a copy thereof.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of interest made
to such Non-United States Holder will be subject to a 30% United States federal
withholding tax unless the Beneficial Owner provides the Series C Issuer or its
paying agent, as the case may be, with a properly executed (1) IRS Form 1001 (or
a successor form) claiming an exemption from, or a reduction of, such
withholding tax under the benefit of a tax treaty or (2) IRS Form 4224 (or a
successor form) stating that interest paid on the Series C Capital Securities
(or the Series C Subordinated Debentures) is not subject to such withholding tax
because it is effectively connected with the Beneficial Owner's conduct of a
trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest on the Series C Capital Securities (or the Series C
Subordinated Debentures) is effectively connected with the conduct of such trade
or business, the Non-United States Holder, although exempt from the withholding
tax discussed above, will be subject to United States federal income tax on such
interest on a net income basis in the same manner as if it were a United States
Person. In addition, if such Non-United States Holder is a foreign corporation,
it may be subject to a branch profits tax equal to 30% of its effectively
connected earnings and profits for the taxable year, subject to adjustments. For
this purpose, such interest income would be included in such foreign
corporation's earnings and profits.
Any gain realized upon the sale or other disposition of the Series C
Capital Securities (or the Series C Subordinated Debentures) generally will not
be subject to United States federal income tax unless (i) such gain is
effectively connected with a United States trade or business of the Non-United
States Holder, (ii) in the case of a Non-United States Holder who is an
individual, such individual is present in the United States for 183 days or more
in the taxable year of such sale, exchange or retirement, and certain other
conditions are met, or (iii) in the case of any gain representing accrued
interest on the Series C Subordinated Debentures, the requirements described
above are not satisfied.
As discussed below, the Proposed Legislation would deny an interest
deduction to the Corporation for the interest payable on the Series C
Subordinated Debentures. The Proposed Legislation also may cause the Series C
Subordinated Debentures to be classified as equity (rather than indebtedness) of
the Corporation for United States federal income purposes and, thus, cause the
income derived from the Series C Subordinated Debentures to be characterized as
dividend, rather than interest, income for such purposes. Dividend income is not
eligible for the "portfolio interest" exception described in (a) above.
Therefore, if the Proposed Legislation is enacted, income derived by a
Non-United States Holder on the Series C Capital Securities may be subject to
the 30% United States federal withholding tax described above unless a reduction
or elimination of such tax was available under an applicable United States tax
treaty or such dividend income was effectively connected with a trade or
business carried on in the United States by such Non-United States Holder. There
can be no assurance that the Proposed Legislation or future legislative or
administrative proposals or final legislation will not adversely affect the
characterization of income paid on the Series C Capital Securities (or the
Series C Subordinated Debentures) or otherwise adversely affect a Non-United
States Holder. See "-- Possible Tax Law Changes."
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<PAGE> 29
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of OID accrued on the Series C Capital Securities held of record
by United States Persons (other than corporations and other exempt
Securityholders), if any, will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury Regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
Payment of the proceeds from the disposition of Series C Capital Securities
to or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the IRS.
It is anticipated that income on the Series C Capital Securities will be
reported to holders on Form 1099 and mailed to holders of the Series C Capital
Securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
The Proposed Legislation contained a provision which generally would deny
the interest deduction for interest paid or accrued on an instrument issued by a
corporation that (i) has a maximum term of more than 15 years and (ii) is not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. This provision was
proposed to be effective generally for instruments issued on or after the date
of the first Congressional committee action on the Proposed Legislation (as of
March 4, 1997, no Congressional committee action had been taken). If this
provision were to apply to the Series C Subordinated Debentures, the Corporation
would not be able to deduct the interest on the Series C Subordinated
Debentures. There can be no assurance that the Proposed Legislation or future
legislative proposals or final legislation will not adversely affect the ability
of the Corporation to deduct interest on the Series C Subordinated Debentures or
otherwise affect the tax treatment of the transaction described herein.
Moreover, such a change could give rise to a Tax Event, which would permit the
Corporation, upon approval of the Federal Reserve if then required under
applicable capital guidelines or policies, to shorten the maturity of the Series
C Subordinated Debentures to a date not earlier than March 1, 2012, or to cause
a redemption of the Series C Capital Securities before March 1 , 2007. See
"Certain Terms of Series C Subordinated Debentures -- Conditional Right to
Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event", and
"-- Redemption" in the Prospectus Supplement and "Description of Preferred
Securities -- Redemption or Exchange -- Tax Event or Capital Treatment Event
Redemption" in the accompanying Prospectus.
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Series C Capital Securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan.
S-29
<PAGE> 30
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code; however,
governmental plans may be subject to similar provisions under applicable state
laws.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Series C Issuer would be
deemed to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of
the Code if "plan assets" of the Plan were used to acquire an equity interest in
the Series C Issuer and no exception were applicable under the Plan Assets
Regulation. An "equity interest" is defined under the Plan Assets Regulation as
any interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features and specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Series C Issuer would not be deemed to be "plan assets" of
investing Plans if, at all times, less than 25% of the value of each class of
equity interests in the Series C Issuer were held by Plans, other employee
benefit plans not subject to ERISA or Section 4975 of the Code (such as
governmental, church and foreign plans), and entities holding assets deemed to
be "plan assets" of any Plan (collectively, "Benefit Plan Investors"), or if the
Series C Capital Securities were "publicly-offered securities" for purposes of
the Plan Assets Regulation. No assurance can be given that the Series C Capital
Securities held by Benefit Plan Investors will be less than 25% of the total
value of such Series C Capital Securities at the completion of the initial
offering or thereafter, and no monitoring or other measures will be taken with
respect to the satisfaction of the conditions to this exception. In addition, no
assurance can be given that the Series C Capital Securities would be considered
to be "publicly-offered securities" under the Plan Assets Regulation. All of the
Series C Common Securities will be purchased and initially held by the
Corporation.
Certain transactions involving the Series C Issuer could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Series C Capital Securities were
acquired with "plan assets" of such Plan and the assets of the Series C Issuer
were deemed to be "plan assets" of Plans investing in the Series C Issuer. For
example, if the Corporation were a Party in Interest with respect to a Plan
(either directly or by reason of its ownership of the Bank or other
subsidiaries), extensions of credit between the Corporation and the Series C
Issuer (as represented by the Series C Subordinated Debentures and the Series C
Guarantee) would likely be prohibited by Section 406(a)(1)(B) of ERISA and
Section 4975(c)(1)(B) of the Code, unless exemptive relief were available under
an applicable administrative exemption (see below). In addition, if the
Corporation were considered to be a fiduciary with respect to the Series C
Issuer as a result of certain powers it holds (such as the powers to remove and
replace the Property Trustee and the Administrative Trustees), it is possible
that the optional redemption or acceleration of the Series C Subordinated
Debentures would be considered to be prohibited transactions under Section
406(b) of ERISA and Section 4975(c)(1)(E) of the Code. IN ORDER TO AVOID SUCH
PROHIBITED TRANSACTIONS, EACH INVESTING PLAN, BY PURCHASING SERIES C CAPITAL
SECURITIES, WILL BE DEEMED TO HAVE DIRECTED THE SERIES C ISSUER TO INVEST IN THE
SERIES C SUBORDINATED DEBENTURES AND TO HAVE APPOINTED THE PROPERTY TRUSTEE.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect prohibited
transactions that may arise from the purchase or holding of the Series C Capital
Securities if assets of the Series C Issuer were deemed
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<PAGE> 31
to be "plan assets" of Plans investing in the Series C Issuer as described
above. Those class exemptions are PTCE 96-23 (for certain transactions
determined by in-house asset managers). PTCE 95-60 (for certain transactions
involving insurance company general accounts), PTCE 91-38 (for certain
transactions involving bank collective investment funds), PTCE 90-1 (for certain
transactions involving insurance company separate accounts), and PTCE 84-14 (for
certain transactions determined by independent qualified asset managers).
Because the Series C Capital Securities may be deemed to be equity
interests in the Series C Issuer for purposes of applying ERISA and Section 4975
of the Code, the Series C Capital Securities may not be purchased or held by any
Plan, any entity whose underlying assets include "plan assets" by reason of any
Plan's investment in the entity (a "Plan Asset Entity") or any person investing
"plan assets" of any Plan, unless such purchaser or holder is eligible for the
exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
another applicable exemption. Any purchaser or holder of the Series C Capital
Securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that it either (a) is not a Plan or a Plan Asset
Entity and is not purchasing such securities on behalf of or with "plan assets"
of any Plan or (b) is eligible for the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption with respect
to such purchase or holding. If a purchaser or holder of the Series C Capital
Securities that is a Plan or a Plan Asset Entity elects to rely on an exemption
other than PTCE 96-23, 95-60, 91-38, 90-1 or 84-14, the Corporation and the
Series C Issuer may require a satisfactory opinion of counsel or other evidence
with respect to the availability of such exemption for such purchase and
holding.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Series C
Capital Securities on behalf of or with "plan assets" of any Plan consult with
their counsel regarding the potential consequences if the assets of the Series C
Issuer were deemed to be "plan assets" and the availability of exemptive relief
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or any other applicable exemption.
UNDERWRITING
Subject to the terms and conditions set forth in the Chase Capital III
Standard Provisions and the Pricing Agreement dated March 4, 1997 (collectively,
the "Underwriting Agreement"), the Corporation and the Series C Issuer have
agreed that the Series C Issuer will sell to each of the Underwriters named
below, and each of such Underwriters has severally agreed to purchase from the
Series C Issuer, the respective number of Series C Capital Securities set forth
opposite its name below:
<TABLE>
<CAPTION>
NUMBER
OF
SERIES C
CAPITAL
NAME SECURITIES
---------------------------------------------------------------- --------
<S> <C>
Chase Securities Inc. .......................................... 75,000
Goldman, Sachs & Co. ........................................... 75,000
Lehman Brothers Inc. ........................................... 75,000
Morgan Stanley & Co. Incorporated............................... 75,000
--------
Total................................................. 300,000
========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Series C Capital
Securities if any are taken.
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<PAGE> 32
The Underwriters propose initially to offer the Series C Capital Securities
in part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus Supplement and in part to certain securities
dealers at such price less a concession not in excess of $5.00 per Series C
Capital Security. The Underwriters may allow, and such dealers may reallow, a
concession not to exceed $2.50 per Series C Capital Security to certain brokers
and dealers. After the Series C Capital Securities are released for sale to the
public, the initial public offering price and other selling terms may from time
to time be varied by the Underwriters.
In view of the fact that the proceeds from the sale of the Series C Capital
Securities will be used to purchase the Series C Subordinated Debentures issued
by the Corporation, the Underwriting Agreement provides that the Corporation
will pay as Underwriters' compensation for the Underwriters' arranging the
investment therein of such proceeds an amount of $8.75 per Series C Capital
Security for the accounts of the several Underwriters.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Series C Capital Securities offered hereby as interests in
a direct participation program, the offering is being made in compliance with
Rule 2810 of the NASD's Conduct Rules. Offers and sales of Series C Capital
Securities will be made only to (i) "qualified institutional buyers", as defined
in Rule 144A under the Securities Act of 1933, as amended (the "Act"); (ii)
institutional "accredited investors", as defined in Rule 501(a)(1)-(3) of
Regulation D under the Act or (iii) individual "accredited investors", as
defined in Rule 501(a)(4)-(6) of Regulation D under the Act, for whom an
investment in non-convertible investment grade preferred securities is
appropriate. The Underwriters may not confirm sales to any accounts over which
they exercise discretionary authority without the prior written approval of the
transaction by the customer.
The Corporation and the Series C Issuer have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing to and
including the earlier of (i) the termination of trading restrictions on the
Series C Capital Securities, as determined by the Underwriters, and (ii) the
closing date, they will not offer, sell, contract to sell or otherwise dispose
of any Preferred Securities, any other beneficial interests in the assets of the
Series C Issuer, or any preferred securities or any other securities of the
Series C Issuer or the Corporation which are substantially similar to the Series
C Capital Securities, including any guarantee of such securities, or any
securities convertible into or exchangeable for or representing the right to
receive preferred securities or any such substantially similar securities of
either the Series C Issuer or the Corporation, without the prior written consent
of the Underwriters, except for the Series C Capital Securities offered in
connection with this offering.
The Series C Capital Securities are a new issue of securities with no
established trading market. The Series C Issuer does not intend to apply for
listing of the Series C Capital Securities on a national securities exchange,
but has been advised by the Underwriters that they presently intend to make a
market in the Series C Capital Securities as permitted by applicable laws and
regulations. The Underwriters are not obligated, however, to make a market in
the Series C Capital Securities and any such market making may be discontinued
at any time at the sole discretion of the Underwriters. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Series C Capital Securities.
The Corporation and the Series C Issuer have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Act.
Chase Securities Inc., the managing underwriter, is a wholly owned
subsidiary of the Corporation. This Prospectus Supplement and the related
Prospectus may be used by direct or indirect wholly owned subsidiaries of the
Corporation, including Chase Securities Inc., in connection with offers and
sales related to secondary market transactions in the Series C Capital
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.
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Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
Chase Securities Inc., as the managing underwriter, on behalf of the
Underwriters, may engage in stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Rule 104 under the Exchange
Act. Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the Series C Capital Securities in
the open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit such managing underwriter to
reclaim a selling concession from a syndicate member when the Series C Capital
Securities originally sold by such syndicate member are purchased in a syndicate
covering transaction to cover syndicate short positions. Such stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
price of the Series C Capital Securities to be higher than it would otherwise be
in the absence of such transactions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series C
Capital Securities, the enforceability of the Series C Trust Agreement and the
formation of the Series C Issuer will be passed upon by Richards, Layton &
Finger, special Delaware counsel to the Corporation and the Series C Issuer. The
validity of the Series C Guarantee and the Series C Subordinated Debentures will
be passed upon for the Corporation by Simpson Thacher & Bartlett (a partnership
which includes professional corporations) and for the Underwriters by Cravath,
Swaine & Moore. Simpson Thacher & Bartlett and Cravath, Swaine & Moore will rely
on the opinion of Richards, Layton & Finger as to matters of Delaware law.
Cravath, Swaine & Moore from time to time has represented and continues to
represent the Corporation and its subsidiaries in a substantial number of
matters on a regular basis. Certain matters relating to United States federal
income tax considerations described in this Prospectus Supplement will be passed
upon for the Corporation by Simpson Thacher & Bartlett.
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<PAGE> 34
$300,000,000
THE CHASE MANHATTAN CORPORATION
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES
CHASE CAPITAL III
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
The Chase Manhattan Corporation, a Delaware corporation (the
"Corporation"), may from time to time offer in one or more series or issuances
its junior subordinated deferrable interest debentures (the "Junior Subordinated
Debentures"). The Junior Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to Senior Debt (as defined in
"Description of Junior Subordinated Debentures -- Subordination") of the
Corporation. If provided in an accompanying Prospectus Supplement, the
Corporation will have the right to defer payments of interest on any series of
Junior Subordinated Debentures by extending the interest payment period thereon
at any time or from time to time for up to such number of consecutive interest
payment periods (which shall not extend beyond the Stated Maturity (as defined
herein) of the Junior Subordinated Debentures) with respect to each deferral
period as may be specified in such Prospectus Supplement (each, an "Extension
Period"). In such circumstance, however, the Corporation would not be permitted,
subject to certain exceptions set forth herein, to declare or pay any dividends,
distributions or other payments with respect to, or repay, repurchase, redeem or
otherwise acquire, the Corporation's capital stock or debt securities that rank
pari passu with or junior to such series of Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Option to Defer Interest
Payments" and "-- Restrictions on Certain Payments."
Chase Capital III, a trust created under the laws of the State of Delaware
(the "Issuer"), may offer, from time to time, securities (the "Preferred
Securities") representing beneficial ownership interests in such Issuer. The
Corporation will be the owner of the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities")
representing common beneficial ownership interests in the Issuer. Holders of the
Preferred Securities will be entitled to receive cumulative cash distributions
("Distributions") accumulating from the date of original issuance and payable
periodically as specified in an accompanying Prospectus Supplement.
Concurrently with the issuance by the Issuer of its Preferred Securities,
the Issuer will invest the proceeds thereof and of contributions received in
respect of the Common Securities in a corresponding series of the Corporation's
Junior Subordinated Debentures (the "Corresponding Junior Subordinated
Debentures") with terms corresponding to the terms of that Issuer's Preferred
Securities (the "Related Preferred Securities"). Accordingly, if, as provided in
an accompanying Prospectus Supplement, the
(continued on next page)
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
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 February 28, 1997.
<PAGE> 35
(cover page continued)
Corporation has the right to defer the payment of interest on a series of
Corresponding Junior Subordinated Debentures, then, if interest payments are so
deferred, Distributions on the Related Preferred Securities would also be
deferred, but would continue to accumulate at the rate per annum set forth in
the related Prospectus Supplement. See "Description of Preferred Securities --
Distributions."
Taken together, the Corporation's obligations under each series of
Corresponding Junior Subordinated Debentures, the Indenture and the Trust
Agreement and the related Guarantee (each, as defined herein), in the aggregate,
provide a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Related Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantee -- Full and Unconditional Guarantee".
The payment of Distributions with respect to the Preferred Securities of the
Issuer and payments on liquidation of such Issuer or redemption of such
Preferred Securities, in each case out of funds held by such Issuer, are each
irrevocably guaranteed by the Corporation to the extent described herein (the
"Guarantee"). See "Description of Guarantee." The obligations of the Corporation
under the Guarantee will be unsecured and subordinate and junior in right of
payment to all Senior Debt of the Corporation.
The Corresponding Junior Subordinated Debentures will be the sole assets of
the Issuer, and payments under the Corresponding Junior Subordinated Debentures
will be the only revenue of the Issuer. If so provided in an accompanying
Prospectus Supplement, the Corporation may, upon receipt of approval of the
Federal Reserve (if such approval is then required under the applicable capital
guidelines or policies), redeem the Corresponding Junior Subordinated Debentures
(and thereby cause the redemption of the Trust Securities) or may terminate the
Issuer and, after satisfaction of liabilities to the creditors of such Issuer as
required by applicable law, cause the Corresponding Junior Subordinated
Debentures to be distributed to the holders of Preferred Securities in exchange
therefor upon liquidation of their interests in such Issuer. See "Description of
Preferred Securities -- Liquidation Distribution Upon Termination."
The Junior Subordinated Debentures and Preferred Securities may be offered
in amounts, at prices and on terms to be determined at the time of offering;
provided, however, that the aggregate initial public offering price of all
Junior Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of which
this Prospectus forms a part shall not exceed $300 million. Certain specific
terms of the Junior Subordinated Debentures or Preferred Securities in respect
of which this Prospectus is being delivered will be described in an accompanying
Prospectus Supplement, including without limitation and where applicable and to
the extent not set forth herein, (a) in the case of Junior Subordinated
Debentures, the specific designation, aggregate principal amount, denominations,
Stated Maturity (including any provisions for the shortening or extension
thereof), interest payment dates, interest rate (which may be fixed or variable)
or method of calculating interest, if any, applicable Extension Period or
interest deferral terms, if any, place or places where principal, premium, if
any, and interest, if any, will be payable, any terms of redemption, any sinking
fund provisions, terms for any conversion or exchange into other securities,
initial offering or purchase price, methods of distribution and any other
special terms, and (b) in the case of Preferred Securities, specific title,
aggregate stated liquidation amount, number of securities, Distribution rate or
method of calculating such rate, Distribution payment dates, applicable
Distribution deferral terms, if any, place or places where Distributions will be
payable, any terms of redemption, exchange, initial offering or purchase price,
methods of distribution and any other special terms.
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
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The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them will be set forth in a Prospectus Supplement. The
Prospectus Supplement will state whether the Junior Subordinated Debentures or
Preferred Securities will be listed on any national securities exchange or
automated quotation system. If the Junior Subordinated Debentures or Preferred
Securities are not listed on any national securities exchange or automated
quotation system, there can be no assurance that there will be a secondary
market for the Junior Subordinated Debentures or Preferred Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
AVAILABLE INFORMATION
The Corporation 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 public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, Suite 1300, New York,
New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov. In addition, such reports, proxy statements
and other information concerning the Corporation can be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Corporation and the Issuer have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Corporation and the securities offered hereby, reference is made
to the Registration Statement and the exhibits and the financial statements,
notes and schedules filed as a part thereof or incorporated by reference
therein, which may be inspected at the public reference facilities of the
Commission at the addresses set forth above or through the Commission's home
page on the Internet. Statements made in this Prospectus concerning the contents
of any documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such document
filed as an exhibit to the Registration Statement.
No separate financial statements of the Issuer have been included herein.
The Corporation and the Issuer do not consider that such financial statements
would be material to holders of the Preferred Securities because the Issuer is a
newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Corresponding Junior Subordinated
Debentures of the Corporation and issuing the Trust Securities. See "The
Issuer," "Description of Preferred Securities," "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated De-
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<PAGE> 37
bentures" and "Description of Guarantee." In addition, the Corporation does not
expect that the Issuer will be filing reports under the Exchange Act with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1995.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996,
June 30, 1996 and September 30, 1996.
3. Current Reports on Form 8-K dated January 12, 1996, January 18, 1996,
January 19, 1996, February 5, 1996, March 25, 1996, March 31, 1996,
April 16, 1996, July 17, 1996, September 30, 1996, October 7, 1996,
October 15, 1996, December 17, 1996 and January 23, 1997.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: The Chase
Manhattan Corporation, 270 Park Avenue, New York, New York 10017, Attention:
Office of the Secretary, telephone number (212) 270-4040.
THE CHASE MANHATTAN CORPORATION
The Corporation 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. On March 31, 1996, The Chase Manhattan Corporation ("Old Chase") merged
with and into Chemical Banking Corporation, and Chemical Banking Corporation
changed its name to "The Chase Manhattan Corporation."
The Corporation is a Delaware corporation with its principal office at 270
Park Avenue, New York, New York 10017. Its telephone number is (212) 270-6000.
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<PAGE> 38
THE ISSUER
The Issuer is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement executed by the Corporation, as Depositor of
the Issuer, and the Delaware Trustee and two Administrative Trustees (as defined
herein) of such Issuer and (ii) the filing of a certificate of trust and a
restated certificate of trust with the Delaware Secretary of State. The trust
agreement will be amended and restated in its entirety (as so amended and
restated, the "Trust Agreement") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. The Trust
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Issuer exists for the
exclusive purposes of (i) issuing and selling its Trust Securities, (ii) using
the proceeds from the sale of such Trust Securities to acquire a series of
Corresponding Junior Subordinated Debentures issued by the Corporation, and
(iii) engaging in only those other activities necessary or incidental thereto
(such as registering the transfer of Trust Securities). Accordingly, the
Corresponding Junior Subordinated Debentures will be the sole assets of the
Issuer, and payments under the Corresponding Junior Subordinated Debentures will
be the sole revenue of the Issuer.
All of the Common Securities of the Issuer will be owned by the
Corporation. The Common Securities of the Issuer will rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities of the
Issuer, except that upon the occurrence and continuance of an event of default
under the Trust Agreement resulting from an event of default under the
Indenture, the rights of the Corporation as holder of the Common Securities to
payment in respect of Distributions and payments upon liquidation or redemption
will be subordinated to the rights of the holders of the Preferred Securities of
the Issuer. See "Description of Preferred Securities -- Subordination of Common
Securities." The Corporation will acquire Common Securities in an aggregate
Liquidation Amount equal to not less than 3% of the total capital of the Issuer.
Unless otherwise specified in the applicable Prospectus Supplement, the
Issuer has a term of approximately 55 years, but may terminate earlier as
provided in the Trust Agreement. The Issuer's business and affairs are conducted
by its trustees, each appointed by the
Corporation as holder of the Common Securities. The trustees for the Issuer will
be The Bank of New York, as the Property Trustee (the "Property Trustee"), The
Bank of New York (Delaware), as the Delaware Trustee (the "Delaware Trustee"),
and two individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with the Corporation (collectively, the "Issuer
Trustees"). The Bank of New York, as Property Trustee, will act as sole trustee
under the Trust Agreement for purposes of compliance with the Trust Indenture
Act. The Bank of New York will also act as trustee under the Guarantee and the
Indenture. See "Description of Guarantee" and "Description of Junior
Subordinated Debentures." The holder of the Common Securities of the Issuer, or
the holders of a majority in Liquidation Amount of the Related Preferred
Securities if an event of default under the Trust Agreement for the Issuer has
occurred and is continuing, will be entitled to appoint, remove or replace the
Property Trustee and/or the Delaware Trustee for such Issuer. In no event will
the holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees; such voting rights are vested
exclusively in the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the Trust Agreement. The Corporation will
pay all fees and expenses related to the Issuer and the offering of the
Preferred Securities and will pay, directly or indirectly, all ongoing costs,
expenses and liabilities of the Issuer.
The principal executive office of the Issuer is located at 270 Park Avenue,
New York, New York 10017 and its telephone number is (212) 270-6000.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
Corporation intends to use the proceeds from the sale of its Junior Subordinated
Debentures (including Corresponding
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<PAGE> 39
Junior Subordinated Debentures issued to the Issuer in connection with the
investment by the Issuer of all of the proceeds from the sale of Trust
Securities) for general corporate purposes, including investments in or loans to
subsidiaries, refinancing of debt, including outstanding commercial paper and
other short-term indebtedness, redemption or repurchase of shares of its
outstanding common and preferred stock, the satisfaction of other obligations or
for such other purposes as may be specified in the applicable Prospectus
Supplement.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under a Junior Subordinated Indenture, as supplemented from time to time (as so
supplemented, the "Indenture"), between the Corporation and The Bank of New
York, as trustee (the "Debenture Trustee"). This summary of certain terms and
provisions of the Junior Subordinated Debentures, Corresponding Junior
Subordinated Debentures and the Indenture, which summarizes the material
provisions thereof, does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, the form of which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part, and to the Trust Indenture Act, to each of which reference is hereby
made. The Indenture is qualified under the Trust Indenture Act. Whenever
particular defined terms of the Indenture (as supplemented or amended from time
to time) are referred to herein or in a Prospectus Supplement, such defined
terms are incorporated herein or therein by reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu with all
other series of Junior Subordinated Debentures and will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth in the Indenture to all Senior Debt (as defined below) of the Corporation.
See "-- Subordination." Because the Corporation is a holding company, the right
of the Corporation to participate in any distribution of assets of any
subsidiary, including The Chase Manhattan Bank, Chase Manhattan Bank USA,
National Association, and Texas Commerce Bank National Association, upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of that subsidiary, except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of Junior
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Junior Subordinated Debentures. Except as otherwise provided in
the applicable Prospectus Supplement, the Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Debt, whether under the Indenture, any other existing indenture
or any other indenture that the Corporation may enter into in the future or
otherwise. See "-- Subordination" and the applicable Prospectus Supplement
relating to any offering of Preferred Securities or Junior Subordinated
Debentures.
The Junior Subordinated Debentures will be issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of the
Corporation's Board of Directors or a committee thereof.
The applicable Prospectus Supplement will describe the following terms of
the Junior Subordinated Debentures: (1) the title of the Junior Subordinated
Debentures; (2) any limit upon the aggregate principal amount of the Junior
Subordinated Debentures; (3) the date or dates on which the principal of the
Junior Subordinated Debentures is payable (the "Stated Maturity") or the method
of determination thereof; (4) the rate or rates, if any, at which the Junior
Subordinated Debentures shall bear interest, the dates on which any such
interest shall be payable (the "Interest Payment Dates"), the right, if any, of
the Corporation to defer or extend an Interest Payment Date, the record dates
for any interest payable on any Interest Payment Date (the "Regular Record
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<PAGE> 40
Dates") and the method by which any of the foregoing shall be determined; (5)
the place or places where, subject to the terms of the Indenture as described
below under "-- Payment and Paying Agents," the principal of and premium, if
any, and interest on the Junior Subordinated Debentures will be payable and
where, subject to the terms of the Indenture as described below under "--
Denominations, Registration and Transfer," the Junior Subordinated Debentures
may be presented for registration of transfer or exchange and the place or
places where notices and demands to or upon the Corporation in respect of the
Junior Subordinated Debentures and the Indenture may be made ("Place of
Payment"); (6) any period or periods within which, or date or dates on which,
the price or prices at which and the terms and conditions upon which Junior
Subordinated Debentures may be redeemed, in whole or in part, at the option of
the Corporation or a holder thereof; (7) the obligation or the right, if any, of
the Corporation or a holder thereof to redeem, purchase or repay the Junior
Subordinated Debentures and the period or periods within which, the price or
prices at which, the currency or currencies (including currency unit or units)
in which and the other terms and conditions upon which the Junior Subordinated
Debentures shall be redeemed, repaid or purchased, in whole or in part, pursuant
to such obligation or right; (8) the denominations in which any Junior
Subordinated Debentures shall be issuable if other than denominations of $25 and
any integral multiple thereof; (9) if other than in U.S. Dollars, the currency
or currencies (including currency unit or units) in which the principal of (and
premium, if any) and interest, if any, on the Junior Subordinated Debentures
shall be payable, or in which the Junior Subordinated Debentures shall be
denominated; (10) any additions, modifications or deletions in the events of
default under the Indenture or covenants of the Corporation specified in the
Indenture with respect to the Junior Subordinated Debentures; (11) if other than
the full principal amount thereof, the portion of the principal amount of Junior
Subordinated Debentures that shall be payable upon declaration of acceleration
of the maturity thereof; (12) any additions or changes to the Indenture with
respect to a series of Junior Subordinated Debentures as shall be necessary to
permit or facilitate the issuance of such series in bearer form, registrable or
not registrable as to principal, and with or without interest coupons; (13) any
index or indices used to determine the amount of payments of principal of and
premium, if any, on the Junior Subordinated Debentures and the manner in which
such amounts will be determined; (14) the terms and conditions relating to the
issuance of a temporary Global Security representing all of the Junior
Subordinated Debentures of such series and the exchange of such temporary Global
Security for definitive Junior Subordinated Debentures of such series; (15)
subject to the terms described herein under "-- Global Junior Subordinated
Debentures," whether the Junior Subordinated Debentures of the series shall be
issued in whole or in part in the form of one or more Global Securities and, in
such case, the depositary for such Global Securities, which depositary shall be
a clearing agency registered under the Exchange Act; (16) the appointment of any
paying agent or agents; (17) the terms and conditions of any obligation or right
of the Corporation or a holder to convert or exchange the Junior Subordinated
Debentures into Preferred Securities; (18) the form of Trust Agreement and
Guarantee Agreement, if applicable; (19) the relative degree, if any, to which
such Junior Subordinated Debentures of the series shall be senior to or be
subordinated to other series of such Junior Subordinated Debentures or other
indebtedness of the Corporation in right of payment, whether such other series
of Junior Subordinated Debentures or other indebtedness are outstanding or not;
and (20) any other terms of the Junior Subordinated Debentures not inconsistent
with the provisions of the Indenture.
Junior Subordinated Debentures may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain United States federal
income tax consequences and special considerations applicable to any such Junior
Subordinated Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, premium, if any, or interest on any
Junior Subordinated Debentures is payable in one or more foreign currencies or
currency units,
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the restrictions, elections, certain United States federal income tax
consequences, specific terms and other information with respect to such series
of Junior Subordinated Debentures and such foreign currency or currency units
will be set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debentures,
special United States federal income tax, accounting and other considerations
applicable thereto will be described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. Junior
Subordinated Debentures of any series will be exchangeable for other Junior
Subordinated Debentures of the same issue and series, of any authorized
denominations, of a like aggregate principal amount, of the same original issue
date and stated maturity and bearing the same interest rate.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the appropriate securities registrar or at the
office of any transfer agent designated by the Corporation for such purpose with
respect to any series of Junior Subordinated Debentures and referred to in the
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. The
Corporation will appoint the Debenture Trustee as securities registrar under the
Indenture. If the applicable Prospectus Supplement refers to any transfer agents
(in addition to the securities registrar) initially designated by the
Corporation with respect to any series of Junior Subordinated Debentures, the
Corporation may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent acts,
provided that the Corporation maintains a transfer agent in each place of
payment for such series. The Corporation may at any time designate additional
transfer agents with respect to any series of Junior Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of any series during a period beginning at the
opening of business 15 days before the day of selection for redemption of Junior
Subordinated Debentures of that series and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Junior Subordinated Debentures that will
be deposited with, or on behalf of, a depositary (the "Depositary") identified
in the Prospectus Supplement relating to such series. Global Junior Subordinated
Debentures may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual Junior Subordinated Debentures represented thereby, a Global Junior
Subordinated Debenture may not be transferred except as a whole by the
Depositary for such Global Junior Subordinated Debenture to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Junior Subordinated Debentures will be described in the Prospectus Supplement
relating to such series. The
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Corporation anticipates that the following provisions will generally apply to
depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, and the
deposit of such Global Junior Subordinated Debenture with or on behalf of the
Depositary, the Depositary for such Global Junior Subordinated Debenture or its
nominee will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture to the accounts of
persons that have accounts with such Depositary, which may include the account
of Morgan Guaranty Trust Company of New York, Brussels office, as operator of
the Euroclear System ("Euroclear"), and CEDEL Bank, societe anonyme ("Cedel")
("Participants"). Such accounts shall be designated by the dealers, underwriters
or agents with respect to such Junior Subordinated Debentures or by the
Corporation if such Junior Subordinated Debentures are offered and sold directly
by the Corporation. Ownership of beneficial interests in a Global Junior
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants including Cedel and Euroclear and their
participants. Ownership of beneficial interests in such Global Junior
Subordinated Debenture will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Junior Subordinated Debenture.
So long as the Depositary for a Global Junior Subordinated Debenture, or
its nominee, is the registered owner of such Global Junior Subordinated
Debenture, such Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture for all purposes under
the Indenture governing such Junior Subordinated Debentures. Except as provided
below, owners of beneficial interests in a Global Junior Subordinated Debenture
will not be entitled to have any of the individual Junior Subordinated
Debentures of the series represented by such Global Junior Subordinated
Debenture registered in their names, will not receive or be entitled to receive
physical delivery of any such Junior Subordinated Debentures of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner of
the Global Junior Subordinated Debenture representing such Junior Subordinated
Debentures. None of the Corporation, the Debenture Trustee, any Paying Agent, or
the Securities Registrar for such Junior Subordinated Debentures will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Junior
Subordinated Debenture representing such Junior Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Corporation expects that the Depositary for a series of Junior
Subordinated Debentures or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of a permanent Global Junior
Subordinated Debenture representing any of such Junior Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
such Global Junior Subordinated Debenture for such Junior Subordinated
Debentures as shown on the records of such Depositary or its nominee. The
Corporation also expects that payments by Participants to owners of beneficial
interests in such Global Junior Subordinated Debenture held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held
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for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Corporation within 90 days, the Corporation
will issue individual Junior Subordinated Debentures of such series in exchange
for the Global Junior Subordinated Debenture representing such series of Junior
Subordinated Debentures. In addition, the Corporation may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Junior Subordinated Debentures, determine not to
have any Junior Subordinated Debentures of such series represented by one or
more Global Junior Subordinated Debentures and, in such event, will issue
certificated Junior Subordinated Debentures of such series in exchange for the
Global Junior Subordinated Debenture. Further, if the Corporation so specifies
with respect to the Junior Subordinated Debentures of a series, an owner of a
beneficial interest in a Global Junior Subordinated Debenture representing
Junior Subordinated Debentures of such series may, on terms acceptable to the
Corporation, the Debenture Trustee and the Depositary for such Global Junior
Subordinated Debenture, receive certificated Junior Subordinated Debentures of
such series in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such Junior
Subordinated Debentures. In any such instance, an owner of a beneficial interest
in a Global Junior Subordinated Debenture will be entitled to physical delivery
of certificated Junior Subordinated Debentures of the series represented by such
Global Junior Subordinated Debenture equal in principal amount to such
beneficial interest and to have such Junior Subordinated Debentures registered
in its name. Individual Junior Subordinated Debentures of such series so issued
will be issued in denominations, unless otherwise specified by the Corporation,
of $25 and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Junior Subordinated
Debentures will be made at the office of the Debenture Trustee in The City of
New York or at the office of such paying agent or paying agents as the
Corporation may designate from time to time in the applicable Prospectus
Supplement, except that at the option of the Corporation payment of any interest
may be made (i) except in the case of Global Junior Subordinated Debentures, by
check mailed to the address of the person entitled thereto as such address shall
appear in the securities register or (ii) by transfer to an account maintained
by the person entitled thereto as specified in the securities register, provided
that proper transfer instructions have been received by the Regular Record Date.
Unless otherwise indicated in the applicable Prospectus Supplement, payment of
any interest on Junior Subordinated Debentures will be made to the person in
whose name such Junior Subordinated Debentures are registered at the close of
business on the Regular Record Date for such interest, except in the case of
defaulted interest. The Corporation may at any time designate additional paying
agents or rescind the designation of any paying agent; however, the Corporation
will at all times be required to maintain a paying agent in each place of
payment for each series of Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.
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OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Corporation will
have the right at any time and from time to time during the term of any series
of Junior Subordinated Debentures to defer payment of interest for up to such
number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided that such Extension Period may not extend beyond the Stated
Maturity of such series of Junior Subordinated Debentures. Certain United States
federal income tax consequences and special considerations applicable to any
such Junior Subordinated Debentures will be described in the applicable
Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, Junior
Subordinated Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation may, at its option and subject to receipt of prior approval by the
Board of Governors of the Federal Reserve System (the "Federal Reserve") if then
required under applicable capital guidelines or policies, redeem the Junior
Subordinated Debentures of any series in whole at any time or in part from time
to time. If the Junior Subordinated Debentures of any series are so redeemable
only on or after a specified date or upon the satisfaction of additional
conditions, the applicable Prospectus Supplement will specify such date or
describe such conditions. Junior Subordinated Debentures in denominations larger
than $25 may be redeemed in part but only in integral multiples of $25. Except
as otherwise specified in the applicable Prospectus Supplement, the redemption
price for any Junior Subordinated Debenture so redeemed shall equal any accrued
and unpaid interest thereon to the redemption date, plus 100% of the principal
amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Debenture Tax Event (as defined below) in respect of a series of Junior
Subordinated Debentures or a Capital Treatment Event (as defined herein) shall
occur and be continuing, the Corporation may, at its option and subject to
receipt of prior approval by the Federal Reserve if then required under
applicable capital guidelines or policies, redeem such series of Junior
Subordinated Debentures in whole (but not in part) at any time within 90 days
following the occurrence of such Debenture Tax Event or Capital Treatment Event,
at a redemption price equal to 100% of the principal amount of such Junior
Subordinated Debentures then outstanding plus accrued and unpaid interest to the
date fixed for redemption, except as otherwise specified in the applicable
Prospectus Supplement.
"Debenture Tax Event" means the receipt by the Corporation of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the applicable series of Junior Subordinated Debentures
under the Indenture, there is more than an insubstantial risk that interest
payable by the Corporation on such series of Junior Subordinated Debentures is
not, or within 90 days of the date of such opinion will not be, deductible by
the Corporation, in whole or in part, for United States federal income tax
purposes.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed
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change, pronouncement, action or decision is announced on or after the date of
issuance of the applicable Preferred Securities under the Trust Agreement, there
is more than an insubstantial risk that the Corporation will not be entitled to
treat an amount equal to the Liquidation Amount of the applicable Preferred
Securities as "Tier I Capital" (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Corporation.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Corporation
defaults in payment of the redemption price, on and after the redemption date,
interest ceases to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation will also covenant, as to each series of Junior
Subordinated Debentures, that it will not, and will not permit any subsidiary of
the Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Corporation (including other series of Junior Subordinated Debentures) that rank
pari passu with or junior in interest to the Junior Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in capital stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the redemption or repurchase
of any such rights pursuant thereto, (c) payments under any Guarantee with
respect to the Related Preferred Securities and (d) purchases of common stock
related to the issuance of common stock or rights under any of the Corporation's
benefit plans for its directors, officers or employees, related to the issuance
of common stock or rights under a dividend reinvestment and stock purchase plan,
or related to the issuance of common stock (or securities convertible into or
exchangeable for common stock) as consideration in an acquisition transaction
that was entered into prior to the commencement of such Extension Period) if at
such time (i) there shall have occurred any event of which the Corporation has
actual knowledge (a) that with the giving of notice or the lapse of time, or
both, would constitute an "Event of Default" under the Indenture with respect to
the Junior Subordinated Debentures of such series and (b) in respect of which
the Corporation shall not have taken reasonable steps to cure, (ii) if such
Junior Subordinated Debentures are held by the Issuer of a series of Related
Preferred Securities, the Corporation shall be in default with respect to its
payment of any obligations under the Guarantee relating to such Related
Preferred Securities or (iii) the Corporation shall have given notice of its
selection of an Extension Period as provided in the Indenture with respect to
the Junior Subordinated Debentures of such series and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing.
MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of any series of Junior Subordinated Debentures,
amend, waive or supplement the Indenture for specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies (provided
that any such action does not materially adversely affect the interests of the
holders of any series of Junior Subordinated Debentures or, in the case of
Corresponding Junior Subordinated Debentures, the holders of the Related
Preferred Securities so long as they remain outstanding) and qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act.
The Indenture contains provisions permitting the Corporation and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of each
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outstanding series of Junior Subordinated Debentures affected, to modify the
Indenture in a manner adversely affecting the rights of the holders of such
series of the Junior Subordinated Debentures in any material respect; provided,
that no such modification may, without the consent of the holder of each
outstanding Junior Subordinated Debenture so affected, (i) change the Stated
Maturity of any series of Junior Subordinated Debentures (except as otherwise
specified in the applicable Prospectus Supplement), or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon or (ii) reduce the percentage of principal amount of Junior Subordinated
Debentures of any series, the holders of which are required to consent to any
such modification of the Indenture, provided further that, in the case of
Corresponding Junior Subordinated Debentures, so long as any Related Preferred
Securities remain outstanding, (a) no such modification may be made that
adversely affects the holders of such Preferred Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
event of default or compliance with any covenant under the Indenture may be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount of all outstanding Related Preferred Securities
affected unless and until the principal of the Corresponding Junior Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions have been satisfied, and (b) where a consent under
the Indenture would require the consent of each holder of Corresponding Junior
Subordinated Debentures, no such consent shall be given by the Property Trustee
without the prior consent of each holder of Related Preferred Securities.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debentures, any supplemental
Indenture for the purpose of creating any new series of Junior Subordinated
Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on such series of Junior
Subordinated Debentures when due (subject to the deferral of any interest
payment in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series
of Junior Subordinated Debentures when due whether at maturity or upon
redemption; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Corporation from the Debenture Trustee or the holders of at least
25% in aggregate outstanding principal amount of such affected series of
outstanding Junior Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures of each series affected have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Debenture Trustee. The Debenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of Junior Subordinated Debentures
of each series affected may declare the principal due and payable immediately
upon a Debenture Event of Default, and, in the case of Corresponding Junior
Subordinated Debentures, should the Debenture Trustee or such holders of such
Corresponding Junior Subordinated Debentures fail to make such declaration, the
holders of at least 25% in aggregate Liquidation Amount of the Related Preferred
Securities shall have such right. The holders of a majority in aggregate
outstanding principal amount of Junior Subordinated Debentures of each series
affected may annul such declaration. In the case of Corresponding Junior
Subordinated Debentures, should the holders
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of such Corresponding Junior Subordinated Debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Related Preferred Securities affected shall have such
right.
The holders of a majority in aggregate outstanding principal amount of each
series of the Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures of such series, waive any
default, except a default in the payment of principal or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debenture. In the case of
Corresponding Junior Subordinated Debentures, should the holders of such
Corresponding Junior Subordinated Debentures fail to waive such default, the
holders of a majority in aggregate Liquidation Amount of the Related Preferred
Securities affected shall have such right. The Corporation is required to file
annually with the Debenture Trustee a certificate as to whether or not the
Corporation is in compliance with all the conditions and covenants applicable to
it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing as to a
series of Corresponding Junior Subordinated Debentures, the Property Trustee
will have the right to declare the principal of and the interest on such
Corresponding Junior Subordinated Debentures, and any other amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Corresponding Junior Subordinated
Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debentures has occurred and is continuing and such event is
attributable to the failure of the Corporation to pay interest or principal on
such Corresponding Junior Subordinated Debentures on the date such interest or
principal is due and payable, a holder of Preferred Securities may institute a
legal proceeding directly against the Corporation for enforcement of payment to
such holder of the principal of or interest on such Corresponding Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Related Preferred Securities of such holder (a "Direct
Action"). The Corporation may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Preferred Securities outstanding. If the right to bring a Direct
Action is removed, the Issuer may become subject to the reporting obligations
under the Exchange Act. The Corporation shall have the right under the Indenture
to set-off any payment made to such holder of Preferred Securities by the
Corporation in connection with a Direct Action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an event of default under the Trust Agreement. See "Description
of Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties and assets substantially as an entirety to the Corporation, unless
(i) in case the Corporation consolidates with or merges into another Person or
conveys or transfers its properties and assets substantially as an entirety to
any Person, the successor Person is organized under the laws of the United
States or any state or the District of Columbia, and such successor Person
expressly assumes the Corporation's obligations on the Junior Subordinated
Debentures issued
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under the Indenture; (ii) immediately after giving effect thereto, no Debenture
Event of Default, and no event which, after notice or lapse of time or both,
would become a Debenture Event of Default, shall have occurred and be
continuing; (iii) in the case of Corresponding Junior Subordinated Debentures,
such transaction is permitted under the Trust Agreement and Guarantee and does
not give rise to any breach or violation of the Trust Agreement or Guarantee,
and (iv) certain other conditions as prescribed by the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and the Corporation deposits or causes
to be deposited with the Debenture Trustee funds, in trust, for the purpose and
in an amount in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal (and premium, if any) and interest
to the date of the deposit or to the Stated Maturity, as the case may be, then
the Indenture will cease to be of further effect (except as to the Corporation's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Corporation will be deemed to have satisfied and discharged the Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or exchangeable
into Junior Subordinated Debentures of another series or into Preferred
Securities of another series. The specific terms on which Junior Subordinated
Debentures of any series may be so converted or exchanged will be set forth in
the applicable Prospectus Supplement. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the holder, or at the
option of the Corporation, in which case the number of shares of Preferred
Securities or other securities to be received by the holders of Junior
Subordinated Debentures would be calculated as of a time and in the manner
stated in the applicable Prospectus Supplement.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets of the Corporation upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Debt will first
be entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of Junior Subordinated
Debentures or, in the case of Corresponding Junior Subordinated Debentures, the
Property Trustee, on behalf of the holders of Trust Securities, will be entitled
to receive or retain any payment in respect of the principal of (and premium, if
any) or interest, if any, on the Junior Subordinated Debentures; provided,
however, that holders of Senior Debt shall not be entitled to receive payment of
any such amounts to the extent that such holders would be required by the
subordination provisions of such Senior Debt to pay such amounts over to the
obligees on trade accounts payable or other liabilities arising in the ordinary
course of the Corporation's business.
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In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon (including any amounts due upon acceleration) before the holders of
Junior Subordinated Debentures will be entitled to receive or retain any payment
in respect of the principal of (or premium, if any) or interest, if any, on the
Junior Subordinated Debentures; provided, however, that holders of Senior Debt
shall not be entitled to receive payment of any such amounts to the extent that
such holders would be required by the subordination provisions of such Senior
Debt to pay such amounts over to the obligees on trade accounts payable or other
liabilities arising in the ordinary course of the Corporation's business.
No payments on account of principal (or premium, if any) or interest in
respect of the Junior Subordinated Debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior Debt
or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) every
obligation of such Person for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; and (vii) and every obligation of the type referred to in clauses
(i) through (vi) of another Person and all dividends of another Person the
payment of which, in either case, such Person has guaranteed or is responsible
or liable, directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Corporation whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Junior Subordinated Debentures or to other
Debt which is pari passu with, or subordinated to, the Junior Subordinated
Debentures; provided, however, that Senior Debt shall not be deemed to include
(i) any Debt of the Corporation which when incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Corporation, (ii) any Debt of the
Corporation to any of its subsidiaries, (iii) Debt to any employee of the
Corporation, (iv) Debt which by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of such Debt by the holders of the
Junior Subordinated Debentures as a result of the subordination provisions of
the Indenture would be greater than such payments otherwise would have been as a
result of any obligation of such holders of such Debt to pay amounts over to the
obligees on such trade accounts payable or accrued liabilities arising in the
ordinary course of business as a result of subordination provisions to which
such Debt is subject, and (v) any other debt securities issued pursuant to the
Indenture.
The Indenture places no limitation on the amount of Senior Debt that may be
incurred by the Corporation. The Corporation expects from time to time to incur
additional indebtedness and other obligations constituting Senior Debt.
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The Indenture provides that the foregoing subordination provisions, insofar
as they relate to any particular issue of Junior Subordinated Debentures, may be
changed prior to such issuance. Any such change would be described in the
applicable Prospectus Supplement.
TRUST EXPENSES
Pursuant to the Indenture, the Corporation has irrevocably and
unconditionally agreed with the Issuer that the Corporation will pay to such
Issuer, and reimburse such Issuer for, the full amount of any costs, expenses or
liabilities of the Issuer, other than obligations of the Issuer to pay to the
holders of any Preferred Securities or other similar interests in the Issuer the
amounts due such holders pursuant to the terms of the Preferred Securities or
such other similar interests, as the case may be. Such payment obligation will
include any such costs, expenses or liabilities of the Issuer that are required
by applicable law to be satisfied in connection with a termination of such
Issuer.
GOVERNING LAW
The Indenture is, and the Junior Subordinated Debentures will be, governed
by and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In that
event, concurrently with the issuance of the Issuer's Preferred Securities, such
Issuer will invest the proceeds thereof and the consideration paid by the
Corporation for the Common Securities of the Issuer in such series of
Corresponding Junior Subordinated Debentures issued by the Corporation to such
Issuer. Each series of Corresponding Junior Subordinated Debentures will be in
the principal amount equal to the aggregate stated Liquidation Amount of the
Related Preferred Securities and the Common Securities of such Issuer and will
rank pari passu with all other series of Junior Subordinated Debentures. Holders
of the Related Preferred Securities for a series of Corresponding Junior
Subordinated Debentures will have the rights, in connection with modifications
to the Indenture or upon occurrence of Debenture Events of Default, as described
under "-- Modification of Indenture" and " -- Debenture Events of Default,"
unless provided otherwise in the Prospectus Supplement for such Related
Preferred Securities.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Tax Event in respect of the Issuer shall occur and be continuing, the
Corporation may, at its option and subject to prior approval of the Federal
Reserve if then so required under applicable capital guidelines or policies,
redeem the Corresponding Junior Subordinated Debentures at any time within 90
days of the occurrence of such Tax Event, in whole but not in part, subject to
the provisions of the Indenture and whether or not such Corresponding Junior
Subordinated Debentures are then otherwise redeemable at the option of the
Corporation. The redemption price for any Corresponding Junior Subordinated
Debentures shall be equal to 100% of the principal amount of such Corresponding
Junior Subordinated Debentures then outstanding plus accrued and unpaid interest
to the date fixed for
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redemption. For so long as the Issuer is the holder of all the outstanding
Corresponding Junior Subordinated Debentures of such series, the proceeds of any
such redemption will be used by the Issuer to redeem the corresponding Trust
Securities in accordance with their terms. The Corporation may not redeem a
series of Corresponding Junior Subordinated Debentures in part unless all
accrued and unpaid interest has been paid in full on all outstanding
Corresponding Junior Subordinated Debentures of such series for all interest
periods terminating on or prior to the Redemption Date.
The Corporation will covenant, as to each series of Corresponding Junior
Subordinated Debentures, (i) to maintain directly or indirectly 100% ownership
of the Common Securities of the Issuer to which such Corresponding Junior
Subordinated Debentures have been issued, provided that certain successors which
are permitted pursuant to the Indenture may succeed to the Corporation's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind up
or liquidate the Issuer, except (a) in connection with a distribution of
Corresponding Junior Subordinated Debentures to the holders of the Preferred
Securities in exchange therefor upon liquidation of such Issuer, or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the Trust Agreement, in either such case, if so specified in the applicable
Prospectus Supplement upon prior approval of the Federal Reserve if then so
required under applicable capital guidelines or policies, and (iii) to use its
reasonable efforts, consistent with the terms and provisions of the Trust
Agreement, to cause such Issuer to remain classified as a grantor trust and not
as an association taxable as a corporation for United States federal income tax
purposes.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement, the Issuer Trustees on behalf
of the Issuer will issue the Preferred Securities and the Common Securities. The
Preferred Securities of a particular issue will represent beneficial ownership
interests in the Issuer and the holders thereof will be entitled to a preference
in certain circumstances with respect to Distributions and amounts payable on
redemption or liquidation over the Common Securities of such Issuer, as well as
other benefits as described in the Trust Agreement. This summary of certain
provisions of the Preferred Securities and the Trust Agreement, which summarizes
the material terms thereof, does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all the provisions of the
Trust Agreement, including the definitions therein of certain terms, and the
Trust Indenture Act, to each of which reference is hereby made. Wherever
particular defined terms of the Trust Agreement (as amended or supplemented from
time to time) are referred to herein or in a Prospectus Supplement, such defined
terms are incorporated herein or therein by reference. The form of the Trust
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The Issuer is a legally separate entity and its
assets are not available to satisfy the obligations of any other statutory
business trust whose Common Securities are owned by the Corporation.
GENERAL
The Preferred Securities of the Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of the Issuer except
as described under "-- Subordination of Common Securities." Legal title to the
Corresponding Junior Subordinated Debentures will be held by the Property
Trustee in trust for the benefit of the holders of the related Preferred
Securities and Common Securities. The Guarantee Agreement executed by the
Corporation for the benefit of the holders of the Issuer's Trust Securities (the
"Guarantee") will be a guarantee on a subordinated basis with respect to the
related Trust Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of such Trust Securities when the
Issuer does not have funds on hand available to make such payments. See
"Description of Guarantee."
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DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. Unless otherwise stated in
the applicable Prospectus Supplement, in the event that any date on which
Distributions are payable on the Preferred Securities is not a Business Day (as
defined below), payment of the Distribution payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect to any such delay) except that, if such Business Day is
in the next succeeding calendar year, payment of such Distribution shall be made
on the immediately preceding Business Day, in either case with the same force
and effect as if made on such date (each date on which Distributions are payable
in accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed.
The Issuer's Preferred Securities represent beneficial ownership interests
in the Issuer, and the Distributions on each Preferred Security will be payable
at a rate specified in the applicable Prospectus Supplement for such Preferred
Securities. The amount of Distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months unless otherwise
specified in the applicable Prospectus Supplement. Distributions to which
holders of Preferred Securities are entitled will accumulate additional
Distributions at the rate per annum if and as specified in the applicable
Prospectus Supplement. The term "Distributions" as used herein includes any such
additional Distributions unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Corporation has
the right under the Indenture, pursuant to which it will issue the Corresponding
Junior Subordinated Debentures, to defer the payment of interest at any time or
from time to time on any series of the Corresponding Junior Subordinated
Debentures for up to such number of consecutive interest payment periods which
will be specified in such Prospectus Supplement relating to such series (each,
an "Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Corresponding Junior Subordinated Debentures. As a
consequence of any such deferral, Distributions on the Related Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the Issuer of such Preferred
Securities during any such Extension Period. During such Extension Period, the
Corporation may not, and may not permit any subsidiary of the Corporation to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Corporation's
capital stock, (ii) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Corporation that
rank pari passu with or junior in interest to the Corresponding Junior
Subordinated Debentures or (iii) make any guarantee payments with respect to any
guarantee by the Corporation of debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in interest to the
Corresponding Junior Subordinated Debentures (other than (a) dividends or
distributions in capital stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
the redemption or repurchase of any such rights pursuant thereto, (c) payments
under the Guarantee with respect to such Preferred Securities and (d) purchases
of common stock related to the issuance of common stock or rights under any of
the Corporation's benefit plans for its directors, officers or employees related
to the issuance of common stock or rights under a dividend reinvestment and
stock purchase plan, or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period).
The revenue of the Issuer available for distribution to holders of its
Preferred Securities will be limited to payments under the Corresponding Junior
Subordinated Debentures in which the Issuer
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will invest the proceeds from the issuance and sale of its Trust Securities. See
"Description of Junior Subordinated Debentures -- Corresponding Junior
Subordinated Debentures." If the Corporation does not make interest payments on
such Corresponding Junior Subordinated Debentures, the Property Trustee will not
have funds available to pay Distributions on the Related Preferred Securities.
The payment of Distributions (if and to the extent the Issuer has funds legally
available for the payment of such Distributions and cash sufficient to make such
payments) is guaranteed by the Corporation on the basis set forth herein under
"Description of Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of the Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day prior to the relevant Distribution Date. Subject to any
applicable laws and regulations and the provisions of the Trust Agreement, each
such payment will be made as described under "Book-Entry Issuance." In the event
any Preferred Securities are not in book-entry form, the relevant record date
for such Preferred Securities shall be the date at least 15 days prior to the
relevant Distribution Date, as specified in the applicable Prospectus
Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Corresponding Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30 or
more than 60 days notice, at a redemption price (the "Redemption Price") equal
to the aggregate Liquidation Amount of such Trust Securities plus accumulated
but unpaid Distributions thereon to the date of redemption (the "Redemption
Date") and the related amount of the premium, if any, paid by the Corporation
upon the concurrent redemption of such Corresponding Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures -- Redemption."
If less than all of any series of Corresponding Junior Subordinated Debentures
are to be repaid or redeemed on a Redemption Date, then the proceeds from such
repayment or redemption shall be allocated to the redemption pro rata of the
related Preferred Securities and the Common Securities. The amount of premium,
if any, paid by the Corporation upon the redemption of all or any part of any
series of any Corresponding Junior Subordinated Debentures to be repaid or
redeemed on a Redemption Date shall be allocated to the redemption pro rata of
the related Preferred Securities and the Common Securities.
The Corporation will have the right to redeem any series of Corresponding
Junior Subordinated Debentures (i) on or after such date as may be specified in
the applicable Prospectus Supplement, in whole at any time or in part from time
to time, or (ii) at any time, in whole (but not in part), upon the occurrence of
a Tax Event or Capital Treatment Event, in either case subject to receipt of
prior approval by the Federal Reserve if then required under applicable capital
guidelines or policies.
Distribution of Corresponding Junior Subordinated Debentures. Subject to
the Corporation's having received prior approval of the Federal Reserve to do so
if then required under applicable capital guidelines or policies, the
Corporation has the right at any time to liquidate the Issuer and, after
satisfaction of the liabilities of creditors of such Issuer as provided by
applicable law, cause such Corresponding Junior Subordinated Debentures in
respect of the Preferred Securities and Common Securities issued by the Issuer
to be distributed to the holders of such Preferred Securities and Common
Securities in exchange therefor upon liquidation of the Issuer.
Tax Event or Capital Treatment Event Redemption. If a Tax Event or Capital
Treatment Event in respect of a series of Preferred Securities and Common
Securities shall occur and be continuing, the Corporation has the right to
redeem the Corresponding Junior Subordinated Debentures in whole (but not in
part) and thereby cause a mandatory redemption of such Preferred Securities and
Common Securities in whole (but not in part) at the Redemption Price within 90
days following the occurrence of such Tax Event or Capital Treatment Event. In
the event a Tax Event or Capital
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Treatment Event in respect of a series of Preferred Securities and Common
Securities has occurred and is continuing and the Corporation does not elect to
redeem the Corresponding Junior Subordinated Debentures and thereby cause a
mandatory redemption of such Preferred Securities and Common Securities or to
liquidate the Issuer and cause the Corresponding Junior Subordinated Debentures
to be distributed to holders of such Preferred Securities and Common Securities
in exchange therefor upon liquidation of the Issuer as described above, such
Preferred Securities will remain outstanding.
Possible Tax Law Changes. Legislation was proposed by the United States
Department of the Treasury on February 6, 1997 as part of President Clinton's
Fiscal 1998 Budget Proposal (the "Proposed Legislation") that contained a
provision which generally would deny the interest deduction for interest paid or
accrued on an instrument issued by a corporation that (i) has a maximum term of
more than 15 years and (ii) is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. This provision was proposed to be effective
generally for instruments issued on or after the date of the first Congressional
committee action on the Proposed Legislation (as of February 25, 1997, no
Congressional committee action had been taken). If this provision were to apply
to the Series C Subordinated Debentures, the Corporation would not be able to
deduct the interest on the Series C Subordinated Debentures. There can be no
assurance that the Proposed Legislation or future legislative proposals or final
legislation will not adversely affect the ability of the Corporation to deduct
interest on the Junior Subordinated Debentures or otherwise affect the tax
treatment of the transaction described herein. Moreover, such a change could
give rise to a Tax Event, which may permit the Corporation to cause a redemption
of the Related Preferred Securities.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to that portion of the principal amount of Corresponding
Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Indenture, allocated to the Common Securities and to the Preferred
Securities pro rata based upon the relative Liquidation Amounts of such classes
and the proceeds of which will be used to pay the Redemption Price of such Trust
Securities, and (ii) with respect to a distribution of Corresponding Junior
Subordinated Debentures to holders of any series of Trust Securities in exchange
therefor in connection with a dissolution or liquidation of the related Issuer,
Corresponding Junior Subordinated Debentures having a principal amount equal to
the Liquidation Amount of the Trust Securities of the holder to whom such
Corresponding Junior Subordinated Debentures would be distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Tax Event" with respect to the Issuer means the receipt by the Issuer of a
series of Preferred Securities of an opinion of counsel experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced proposed change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of issuance of such
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) such Issuer is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the corresponding series of Corresponding
Junior Subordinated Debentures, (ii) interest payable by the Corporation on such
series of Corresponding Junior Subordinated Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Corporation, in
whole or in part, for United States federal income tax purposes, or (iii) such
Issuer is, or will be within 90 days of the date of such opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
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After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Preferred Securities (i) such
series of Preferred Securities will no longer be deemed to be outstanding, (ii)
the depository or its nominee, as the record holder of such series of Preferred
Securities, will receive a registered global certificate or certificates
representing the Corresponding Junior Subordinated Debentures to be delivered
upon such distribution and (iii) any certificates representing such series of
Preferred Securities not held by The Depository Trust Company ("DTC") or its
nominee will be deemed to represent the Corresponding Junior Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount of
such series of Preferred Securities, and bearing accrued and unpaid interest in
an amount equal to the accrued and unpaid Distributions on such series of
Preferred Securities until such certificates are presented to the Administrative
Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of the Issuer were to occur. Accordingly, the Preferred Securities
that an investor may purchase, or the Corresponding Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of the
Issuer, may trade at a discount to the price that the investor paid to purchase
the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Corresponding Junior Subordinated Debentures. Redemptions of
the Preferred Securities shall be made and the Redemption Price shall be payable
on each Redemption Date only to the extent that the Issuer has funds on hand
available for the payment of such Redemption Price. See also "-- Subordination
of Common Securities."
If the Issuer gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, the Property Trustee will deposit irrevocably
with DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price to the
holders of such Preferred Securities. See "Book-Entry Issuance." If such
Preferred Securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for such Preferred Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of such Preferred Securities so called for redemption will cease, except
the right of the holders of such Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price, and such Preferred
Securities will cease to be outstanding. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not paid
either by the Issuer or by the Corporation pursuant to the Guarantee as
described under "Description of Guarantee," Distributions on such Preferred
Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Issuer for such
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Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debentures to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the relevant record
date, which shall be one Business Day prior to the relevant Redemption Date or
liquidation date, as applicable; provided, however, that in the event that any
Preferred Securities are not in book-entry form, the relevant record date for
such Preferred Securities shall be a date at least 15 days prior to the
Redemption Date or liquidation date, as applicable, as specified in the
applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities issued
by the Issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property Trustee
from the outstanding Preferred Securities not previously called for redemption,
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or an
integral multiple of $25 in excess thereof) of the Liquidation Amount of
Preferred Securities of a denomination larger than $25. The Property Trustee
shall promptly notify the trust registrar in writing of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities selected
for partial redemption, the Liquidation Amount thereof to be redeemed. For all
purposes of the Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Securities redeemed or to be redeemed only in part, to
the portion of the aggregate Liquidation Amount of Preferred Securities which
has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Issuer's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Issuer's
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the Issuer's outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the Issuer's
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Issuer's Preferred Securities then due and payable.
In the case of any event of default under the Trust Agreement resulting
from a Debenture Event of Default, the Corporation as holder of such Issuer's
Common Securities will be deemed to have waived any right to act with respect to
any such event of default under the Trust Agreement until the effect of all such
events of default with respect to such Preferred Securities have been cured,
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waived or otherwise eliminated. Until all events of default under the Trust
Agreement with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of such Preferred Securities and not on behalf of the Corporation as
holder of the Issuer's Common Securities, and only the holders of such Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to the Trust Agreement, the Issuer shall automatically terminate
upon expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Corresponding Junior Subordinated
Debentures to the holders of its Trust Securities, if the Corporation, as
Depositor, has given written direction to the Property Trustee to terminate such
Issuer (subject to the Corporation having received prior approval of the Federal
Reserve if so required under applicable capital guidelines or policies); (iii)
redemption of all of the Issuer's Preferred Securities as described under
-- Redemption or Exchange -- Mandatory Redemption"; and (iv) the entry of an
order for the dissolution of the Issuer by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of such Issuer as provided by applicable law, to the
holders of such Trust Securities in exchange therefor a Like Amount of the
Corresponding Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Issuer available
for distribution to holders, after satisfaction of liabilities to creditors of
such Issuer as provided by applicable law, an amount equal to, in the case of
holders of Preferred Securities, the aggregate of the Liquidation Amount plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Distribution can be
paid only in part because such Issuer has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by such Issuer on its Preferred Securities shall be paid on a pro rata
basis. The holder(s) of such Issuer's Common Securities will be entitled to
receive distributions upon any such liquidation pro rata with the holders of its
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over the
Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 90 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Trustees by the
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holders of at least 25% in aggregate Liquidation Amount of the outstanding
Preferred Securities of the Issuer, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under such Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Corporation to
appoint a successor Property Trustee within 90 days thereof.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's Preferred
Securities, the Administrative Trustees and the Corporation, as Depositor,
unless such Event of Default shall have been cured or waived. The Corporation,
as Depositor, and the Administrative Trustees are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under the Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities as
described above. See "Subordination of Common Securities" and "-- Liquidation
Distribution Upon Termination." The existence of an Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Corporation, as the holder of the
Common Securities, and the Administrative Trustees shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the Trust Agreement. In case a Debenture Event of
Default has occurred and is continuing, the Property Trustee alone shall have
power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under the Trust Agreement,
provided such Person shall be otherwise qualified and eligible.
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MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER
The Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below or as otherwise described in the Trust Agreement. The Issuer
may, at the request of the Corporation, with the consent of the Administrative
Trustees and without the consent of the holders of the Preferred Securities,
merge with or into, consolidate, amalgamate, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an entirety to, a
trust organized as such under the laws of any State; provided, that (i) such
successor entity either (a) expressly assumes all of the obligations of such
Issuer with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Preferred Securities in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Corporation expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the
Corresponding Junior Subordinated Debentures, (iii) the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Preferred Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities to be downgraded by any nationally recognized statistical
rating organization which gives ratings on the Preferred Securities, (v) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the holders
of the Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of the Issuer, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Corporation has received an
opinion from independent counsel to the Issuer experienced in such matters to
the effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer nor such successor entity will be required to register as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and (viii) the Corporation or any permitted successor
or assignee owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, an Issuer shall not, except with the consent of holders of 100% in
Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Issuer or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of Guarantee -- Amendments
and Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under such Trust Agreement, which shall not be inconsistent
with the
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other provisions of such Trust Agreement, or (ii) to modify, eliminate or add to
any provisions of such Trust Agreement to such extent as shall be necessary to
ensure that the Issuer will be classified for United States federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Issuer will not be required to register as an
"investment company" under the Investment Company Act; provided, however, that
in the case of either clause (i) or clause (ii), such action shall not adversely
affect in any material respect the interests of any holder of Preferred
Securities, and any amendments of such Trust Agreement shall become effective
when notice thereof is given to the holders of Trust Securities. The Trust
Agreement may be amended by the Issuer Trustees and the Corporation with (i) the
consent of holders representing not less than a majority (based upon Liquidation
Amounts) of the outstanding Trust Securities, and (ii) receipt by the Issuer
Trustees of an opinion of counsel to the effect that such amendment or the
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not affect the Issuer's status as a grantor trust for United
States federal income tax purposes or the Issuer's exemption from status as an
"investment company" under the Investment Company Act, provided that without the
consent of each holder of Trust Securities, such Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as any Corresponding Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on the Property Trustee with
respect to such Corresponding Junior Subordinated Debentures, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or such Corresponding Junior
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Corresponding Junior Subordinated Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior consent of each
holder of the corresponding Preferred Securities. The Issuer Trustees shall not
revoke any action previously authorized or approved by a vote of the holders of
the Preferred Securities except by subsequent vote of the holders of the
Preferred Securities. The Property Trustee shall notify each holder of Preferred
Securities of any notice of default with respect to the Corresponding Junior
Subordinated Debentures. In addition to obtaining the foregoing approvals of the
holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Issuer Trustees shall obtain an opinion of counsel experienced in
such matters to the effect that such action would not cause the Issuer to be
classified as other than a grantor trust for United States federal income tax
purposes.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each holder of record of Preferred Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for the Issuer to redeem and cancel its Preferred Securities in accordance with
the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the
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Corporation, the Issuer Trustees or any affiliate of the Corporation or any
Issuer Trustees, shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited with,
or on behalf of, the Depositary identified in the Prospectus Supplement relating
to such series. Unless otherwise indicated in the applicable Prospectus
Supplement for such series, the Depositary will be DTC. Global Preferred
Securities may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual Preferred Securities represented thereby, a Global Preferred Security
may not be transferred except as a whole by the Depositary for such Global
Preferred Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series
of Preferred Securities will be described in the Prospectus Supplement relating
to such series. The Corporation anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-entry
registration and transfer system, the respective aggregate Liquidation Amounts
of the individual Preferred Securities represented by such Global Preferred
Securities to the accounts of Participants, which may include Euroclear and
Cedel. Such accounts shall be designated by the dealers, underwriters or agents
with respect to such Preferred Securities or by the Corporation if such
Preferred Securities are offered and sold directly by the Corporation. Ownership
of beneficial interests in a Global Preferred Security will be limited to
Participants or persons that may hold interests through Participants including
Euroclear and Cedel. Ownership of beneficial interests in such Global Preferred
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Preferred
Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Preferred Securities represented by such Global Preferred Security for all
purposes under the Indenture governing such Preferred Securities. Except as
provided below, owners of beneficial interests in a Global Preferred Security
will not be entitled to have any of the individual Preferred Securities of the
series represented by such Global Preferred Security registered in their names,
will not receive or be entitled to receive physical delivery of any such
Preferred Securities of such series in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Corporation, the
Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
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The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
Redemption Price, premium or Distributions in respect of a permanent Global
Preferred Security representing any of such Preferred Securities, immediately
will credit Participants' accounts with payments in amounts proportionate to
their respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security for such Preferred Securities as shown on the records
of such Depositary or its nominee. The Corporation also expects that payments by
Participants to owners of beneficial interests in such Global Preferred Security
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 in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling, unable
or ineligible to continue as depositary and a successor depositary is not
appointed by the Issuer within 90 days, the Issuer will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security representing such series of Preferred Securities. In addition, the
Issuer may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities,
determine not to have any Preferred Securities of such series represented by one
or more Global Preferred Securities and, in such event, will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security or Securities representing such series of Preferred Securities.
Further, if the Issuer so specifies with respect to the Preferred Securities of
a series, an owner of a beneficial interest in a Global Preferred Security
representing Preferred Securities of such series may, on terms acceptable to the
Issuer, the Property Trustee and the Depositary for such Global Preferred
Security, receive individual Preferred Securities of such series in exchange for
such beneficial interests, subject to any limitations described in the
Prospectus Supplement relating to such Preferred Securities. In any such
instance, an owner of a beneficial interest in a Global Preferred Security will
be entitled to physical delivery of individual Preferred Securities of the
series represented by such Global Preferred Security equal in principal amount
to such beneficial interest and to have such Preferred Securities registered in
its name. Individual Preferred Securities of such series so issued will be
issued in denominations, unless otherwise specified by the Issuer, of $25 and
integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if the Issuer's Preferred Securities are not
held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Corporation. In the event that the Property Trustee shall no longer be
the Paying Agent, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the Administrative Trustees and
the Corporation) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuer will not be required to register or cause to be
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registered the transfer of its Preferred Securities after such Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Preferred Securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is continuing
and the Property Trustee is required to decide between alternative causes of
action, construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of Preferred Securities are entitled under such Trust Agreement
to vote, then the Property Trustee shall take such action as is directed by the
Corporation and if not so directed, shall take such action as it deems advisable
and in the best interests of the holders of the Trust Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuer in such a way that the Issuer will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as other than a grantor trust for United
States federal income tax purposes and so that the Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the Corporation for
United States federal income tax purposes. In this connection, the Corporation
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Issuer or the
Trust Agreement, that the Corporation and the Administrative Trustees determine
in their discretion to be necessary or desirable for such purposes, as long as
such action does not materially adversely affect the interests of the holders of
the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Issuer may not borrow money or issue debt or mortgage or pledge any of
its assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred Securities
and the Junior Subordinated Debentures, unless otherwise referred to in the
Prospectus Supplement relating to an offering of Preferred Securities or Junior
Subordinated Debentures. The Preferred Securities and the Junior Subordinated
Debentures will be issued only as fully-registered securities registered in the
name of Cede & Co. (DTC's nominee). One or more fully-registered global
certificates will be issued for the Preferred Securities of the Issuer and the
Junior Subordinated Debentures, representing in the aggregate the total number
of such Issuer's Preferred Securities or aggregate principal balance of Junior
Subordinated Debentures, respectively, and will be deposited with the Property
Trustee as custodian for DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, 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 the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
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other organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated Debentures
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security and each Junior Subordinated Debenture ("Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records,
including Euroclear and Cedel. Beneficial Owners will not receive written
confirmation from DTC of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners purchased Preferred Securities or Junior
Subordinated Debentures. Transfers of ownership interests in the Preferred
Securities or Junior Subordinated Debentures are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Preferred Securities or Junior Subordinated Debentures, except in
the event that use of the book-entry system for the Preferred Securities of such
Issuer or Junior Subordinated Debentures is discontinued.
Transfers between Participants will be effected in accordance with DTC's
procedures and will be settled in same-day funds. Transfers between participants
in Euroclear and Cedel will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
Cross-market transfers between Participants, on the one hand, and Euroclear
participants or Cedel participants, on the other hand, will be effected in DTC
in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may
be, by its respective depositary; however, such cross-market transactions will
require delivery of instructions to Euroclear or Cedel, as the case may be, by
the counterparty in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system. Euroclear or
Cedel, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the Preferred Securities or the Junior Subordinated Debentures in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Cedel
participants may not deliver instructions directly to the depositaries for
Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Preferred Security or Junior
Subordinated Debenture from a Participant in DTC will be credited, and any such
crediting will be reported to the relevant Euroclear participant or Cedel
participant, during the securities settlement processing day (which must be a
business day for Euroclear and Cedel, as the case may be) immediately following
the DTC settlement date. Cash received in Euroclear or Cedel as a result of
sales of interests in a Preferred Security or Junior Subordinated Debenture by
or through a Euroclear or Cedel participant to a Participant in DTC will be
received with value on the DTC settlement date but will be available in the
relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following the DTC settlement date.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
or Junior Subordinated Debentures are credited, which may or
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may not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all of
an Issuer's Preferred Securities or the Junior Subordinated Debentures are being
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Preferred Securities or Junior Subordinated Debentures. Under its usual
procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts such Preferred Securities or Junior Subordinated Debentures are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and not of DTC, the relevant Trustee, the Issuer thereof or the
Corporation, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of Distributions to DTC is the responsibility
of the relevant Trustee, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursements of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities or the Junior Subordinated Debentures
at any time by giving reasonable notice to the relevant Trustee and the
Corporation. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Corporation, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through DTC. In any such event,
definitive certificates for such Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuer and the Corporation believe to be
accurate, but the Issuers and the Corporation assume no responsibility for the
accuracy thereof. Neither the Issuer nor the Corporation has any responsibility
for the performance by DTC or its Participants of their respective obligations
as described herein or under the rules and procedures governing their respective
operations.
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DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Corporation
concurrently with the issuance by the Issuer of its Preferred Securities for the
benefit of the holders from time to time of such Preferred Securities and Common
Securities. The Bank of New York will act as indenture trustee ("Guarantee
Trustee") under the Guarantee for the purposes of compliance with the Trust
Indenture Act and the Guarantee will be qualified as an indenture under the
Trust Indenture Act. This summary of certain provisions of the Guarantee, which
summarizes the material terms thereof, does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the provisions
of the Guarantee, including the definitions therein of certain terms, and the
Trust Indenture Act, to each of which reference is hereby made. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Reference in this summary to Preferred Securities
means that Issuer's Preferred Securities to which the Guarantee relates. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
related Issuer's Preferred Securities and Common Securities.
GENERAL
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Trust Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert
other than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of the Issuer (the
"Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and
unpaid Distributions required to be paid on such Trust Securities, to the extent
that such Issuer has funds on hand available therefor at such time, (ii) the
Redemption Price with respect to any Preferred Securities called for redemption,
to the extent that such Issuer has funds on hand available therefor at such
time, or (iii) upon a voluntary or involuntary dissolution, winding up or
liquidation of such Issuer (unless the Corresponding Junior Subordinated
Debentures are distributed to holders of such Preferred Securities in exchange
therefor), the lesser of (a) the Liquidation Distribution and (b) the amount of
assets of such Issuer remaining available for distribution to holders of Trust
Securities after satisfaction of liabilities to creditors of such Issuer as
required by applicable law. The Corporation's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Corporation to the holders of the applicable Trust Securities or by causing the
Issuer to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer's obligations under the Preferred Securities, but will apply only to
the extent that such Issuer has funds sufficient to make such payments, and is
not a guarantee of collection.
If the Corporation does not make interest payments on the Corresponding
Junior Subordinated Debentures held by the Issuer, the Issuer will not be able
to pay Distributions on the Preferred Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior Debt of the Corporation. See "-- Status of the Guarantee."
Because the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of that subsidiary, except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Corporation's obligations under the Guarantee will be effectively subordinated
to all existing and future liabilities of the Corporation's subsidiaries, and
claimants should look only to the assets of the Corporation for payments
thereunder. See "The Chase Manhattan Corporation." Except as otherwise provided
in the applicable Prospectus Supplement, the Guarantee does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Debt, whether under the Indenture, any other existing indenture
or any other indenture that the Corporation may enter into in
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<PAGE> 67
the future or otherwise. See the applicable Prospectus Supplement relating to
any offering of Preferred Securities.
The Corporation has, through the Guarantee, the Trust Agreement, the
applicable series of Corresponding Junior Subordinated Debentures and the
Indenture, taken together, fully, irrevocably and unconditionally guaranteed all
of the Issuer's obligations under the Preferred Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and unconditional
guarantee of the Issuer's obligations under the Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior Debt of
the Corporation in the same manner as the Junior Subordinated Debentures.
The Guarantee will rank pari passu with all other Guarantees issued by the
Corporation. The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the related Preferred
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer or upon
distribution to the holders of the Preferred Securities of the Corresponding
Junior Subordinated Debentures. The Guarantee does not limit the amount of
additional Senior Debt that may be incurred by the Corporation. The Corporation
expects from time to time to incur additional indebtedness constituting Senior
Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority of the aggregate Liquidation Amount
of such outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of Preferred
Securities -- Voting Rights; Amendment of the Trust Agreement." All guarantees
and agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Corporation and shall inure to
the benefit of the holders of the related Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
related Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Preferred Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under such Guarantee
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
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<PAGE> 68
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of any Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the amounts payable upon liquidation of the Issuer or upon
distribution of Corresponding Junior Subordinated Debentures to the holders of
the related Preferred Securities in exchange therefor. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the related Preferred Securities must restore payment of any
sums paid under such Preferred Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of Guarantee." Taken together, the
Corporation's obligations under the Corresponding Junior Subordinated
Debentures, the Indenture, the Trust Agreement and the Guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
distributions and other amounts due on the Related Preferred Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Issuer's obligations under the
Related Preferred Securities. If and to the extent that the Corporation does not
make payments on any series of Corresponding Junior Subordinated Debentures, the
Issuer will not pay Distributions or other amounts due on the Related Preferred
Securities. The Guarantee does not cover payment of Distributions when the
related Issuer does not have sufficient funds to pay such Distributions. In such
event, the remedy of a holder of a series of Preferred Securities is to
institute a legal proceeding directly against the Corporation pursuant to the
terms of the Indenture for enforcement of payment of amounts equal to such
Distributions to such holder. The obligations of the Corporation under the
Guarantee are subordinate and junior in right of payment to all Senior Debt of
the Corporation.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Subordinated Debentures, such payments will
be sufficient to cover Distribu-
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tions and other payments due on the Related Preferred Securities, primarily
because (i) the aggregate principal amount of each series of Corresponding
Junior Subordinated Debentures will be equal to the sum of the aggregate stated
Liquidation Amount of the Related Preferred Securities and related Common
Securities; (ii) the interest rate and interest and other payment dates on each
series of Corresponding Junior Subordinated Debentures will match the
Distribution rate and Distribution and other payment dates for the Related
Preferred Securities; (iii) the Corporation shall pay for all and any costs,
expenses and liabilities of such Issuer except the Issuer's obligations to
holders of its Preferred Securities under such Preferred Securities; and (iv)
the Trust Agreement further provides that the Issuer will not engage in any
activity that is not consistent with the limited purposes of such Issuer.
Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Corporation has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Related Preferred Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
Issuer or any other person or entity.
A default or event of default under any Senior Debt of the Corporation
would not constitute a default or Event of Default under the Indenture. However,
in the event of payment defaults under, or acceleration of, Senior Debt of the
Corporation, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Corresponding Junior Subordinated
Debentures until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on any
series of Corresponding Junior Subordinated Debentures would constitute an Event
of Default under the Indenture.
LIMITED PURPOSE OF ISSUER
The Issuer's Preferred Securities evidence a beneficial interest in such
Issuer, and the Issuer exists for the sole purpose of issuing its Preferred
Securities and Common Securities and investing the proceeds thereof in
Corresponding Junior Subordinated Debentures. A principal difference between the
rights of a holder of a Preferred Security and a holder of a Corresponding
Junior Subordinated Debenture is that a holder of a Corresponding Junior
Subordinated Debenture is entitled to receive from the Corporation the principal
amount of and interest accrued on Corresponding Junior Subordinated Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions from the Issuer (or from the Corporation under the Guarantee) if
and to the extent the Issuer has funds available for the payment of such
Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding up or liquidation of
the Issuer involving the liquidation of the Corresponding Junior Subordinated
Debentures, after satisfaction of liabilities to creditors of the Issuer as
required by applicable law, the holders of the related Preferred Securities will
be entitled to receive, out of the assets held by such Issuer, the Liquidation
Distribution in cash. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination." Upon any voluntary or involuntary liquidation or
bankruptcy of the Corporation, the Property Trustee, as holder of the
Corresponding Junior Subordinated Debentures, would be a subordinated creditor
of the Corporation, subordinated in right of payment to all Senior Debt as set
forth in the Indenture, but entitled to receive payment in full of principal and
interest, before any stockholders of the Corporation receive payments or
distributions. Since the Corporation is the guarantor under the Guarantee and
has agreed to pay for all costs, expenses and liabilities of the Issuer (other
than the Issuer's obligations to the holders of its Preferred Securities), the
positions
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<PAGE> 70
of a holder of such Preferred Securities and a holder of such Corresponding
Junior Subordinated Debentures relative to other creditors and to stockholders
of the Corporation in the event of liquidation or bankruptcy of the Corporation
are expected to be substantially the same.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures or the Preferred Securities may be sold
in a public offering to or through underwriters or dealers designated from time
to time. The Corporation and the Issuer may sell the Junior Subordinated
Debentures and Preferred Securities, respectively, as soon as practicable after
effectiveness of the Registration Statement of which this Prospectus forms a
part. The names of any underwriters or dealers involved in the sale of the
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is delivered, the amount or number of Junior Subordinated Debentures
and Preferred Securities to be purchased by any such underwriters and any
applicable commissions or discounts will be set forth in the applicable
Prospectus Supplement.
Underwriters may offer and sell Junior Subordinated Debentures or Preferred
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In connection with the sale of
Preferred Securities, underwriters may be deemed to have received compensation
from the Corporation and/or the Issuer in the form of underwriting discounts or
commissions and may also receive commissions. Underwriters may sell Junior
Subordinated Debentures or Preferred Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters.
Any underwriting compensation paid by the Corporation and/or the Issuer to
underwriters in connection with the offering of Junior Subordinated Debentures
or Preferred Securities, and any discounts, concessions or commissions allowed
by such underwriters to participating dealers, will be described in an
accompanying Prospectus Supplement. Underwriters and dealers participating in
the distribution of Junior Subordinated Debentures or Preferred Securities may
be deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of such Junior Subordinated Debentures
or Preferred Securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. Underwriters and dealers may be entitled,
under agreement with the Corporation and the Issuer, to indemnification against
and contribution toward certain civil liabilities, including liabilities under
the Securities Act, and to reimbursement by the Corporation for certain
expenses.
In connection with the offering of the Preferred Securities of the Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set forth
in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set forth
in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, the Corporation and/or the Issuer and/or any of their affiliates
in the ordinary course of business.
The Junior Subordinated Debentures and the Preferred Securities will be new
issues of securities and will have no established trading market. Any
underwriters to whom Junior Subordinated Debentures or Preferred Securities are
sold for public offering and sale may make a market in such Junior Subordinated
Debentures and Preferred Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. Such
Junior Subordinated Debentures or Preferred Securities may or may not be listed
on a national securities exchange or the Nasdaq National Market. No assurance
can be given as to the liquidity of or the existence of trading markets for any
Junior Subordinated Debentures or Preferred Securities.
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VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed upon for the Corporation by Simpson Thacher &
Bartlett (a partnership which includes professional corporations), counsel to
the Corporation, and for the Issuer by Richards, Layton & Finger, special
Delaware counsel to the Issuer and the Corporation. The validity of the
Guarantee and the Junior Subordinated Debentures will be passed upon for the
Underwriters by Cravath, Swaine & Moore. Simpson Thacher & Bartlett and Cravath,
Swaine & Moore will rely on the opinion of Richards, Layton & Finger as to
matters of Delaware law. Cravath, Swaine & Moore from time to time has
represented and continues to represent the Corporation and its subsidiaries in a
substantial number of matters on a regular basis.
EXPERTS
The consolidated financial statements and schedules of the Corporation and
subsidiaries appearing in the Corporation's 1995 Annual Report to stockholders
set forth in the Current Report on Form 8-K dated April 16, 1996 have been
audited by Price Waterhouse LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements and schedules are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE SERIES C ISSUER OR BY THE
UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS, NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THE INFORMATION HEREIN OR
THEREIN IS CURRENT AS OF ANY TIME SUBSEQUENT TO THE DATE HERETO OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR THE SERIES C ISSUER
SINCE THE DATE HEREOF.
------------------------------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Risk Factors.............................. S- 5
Chase Capital III......................... S-11
The Chase Manhattan Corporation........... S-11
Consolidated Ratios of Earnings to Fixed
Charges................................. S-13
Use of Proceeds........................... S-13
Capitalization............................ S-14
Accounting Treatment...................... S-15
Certain Terms of Series C Capital
Securities.............................. S-15
Certain Terms of Series C Subordinated
Debentures.............................. S-19
Certain Terms of Series C Guarantee....... S-24
Certain Federal Income Tax Consequences... S-25
Certain ERISA Considerations.............. S-29
Underwriting.............................. S-31
Validity of Securities.................... S-33
PROSPECTUS
Available Information..................... 3
Incorporation of Certain Documents by
Reference............................... 4
The Chase Manhattan Corporation........... 4
The Issuer................................ 5
Use of Proceeds........................... 5
Description of Junior Subordinated
Debentures.............................. 6
Description of Preferred Securities....... 18
Book-Entry Issuance....................... 30
Description of Guarantee.................. 33
Relationship Among the Preferred
Securities, the Corresponding Junior
Subordinated Debentures and the
Guarantee............................... 35
Plan of Distribution...................... 37
Validity of Securities.................... 38
Experts................................... 38
</TABLE>
Prospectus Supplement
CHASE CAPITAL III
$300,000,000
FLOATING RATE CAPITAL SECURITIES,
SERIES C
(LIQUIDATION AMOUNT $1,000
PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
LOGO
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
Dated March 4, 1997
