<PAGE> 1
Filed pursuant to Rule 424(b)(2)
Registration Nos. 333-37567
333-37567-01
Prospectus Supplement (To Prospectus Dated October 24, 1997)
[CHASE LOGO]
CHASE CAPITAL IV
$350,000,000
7.34% CAPITAL SECURITIES, SERIES D
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
The 7.34% Capital Securities, Series D (the "Series D Capital Securities"),
offered hereby represent beneficial ownership interests in Chase Capital IV, a
statutory business trust created under the laws of the State of Delaware (the
"Series D 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 Series D Issuer
(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 D 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 D
OFFERING PRICE(1) COMMISSIONS(2) ISSUER(1)(3)(4)
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PER SERIES D CAPITAL
SECURITY $25.00 (3) $25.00
TOTAL $350,000,000 (3) $350,000,000
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</TABLE>
(1) Plus accrued distributions, if any, from December 5, 1997 to the date of
delivery.
(2) The Series D 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 D Capital
Securities will be invested in the Series D Subordinated Debentures, the
Corporation has agreed to pay to the Underwriters as compensation for their
arranging the investment therein of such proceeds $0.7875 per Series D
Capital Security (or $11,025,000 in the aggregate). See "Underwriting."
(4) Expenses of the offering, which are payable by the Corporation, are
estimated to be $650,000.
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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 D 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 D 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 D 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 December 5, 1997, against payment therefor in immediately
available funds.
CHASE SECURITIES INC. SMITH BARNEY INC. SALOMON BROTHERS INC
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
The date of this Prospectus Supplement is November 24, 1997.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES D CAPITAL
SECURITIES, INCLUDING OVERALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING
SYNDICATE COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
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(the "Series D Common Securities" and, collectively with the Series D Capital
Securities, the "Series D Securities"). The Bank of New York is the Property
Trustee of the Series D Issuer. The Series D Issuer exists for the sole purpose
of issuing the Series D Capital Securities and the Series D Common Securities
and investing the proceeds thereof in approximately $360.8 million of 7.34%
Junior Subordinated Deferrable Interest Debentures, Series D (the "Series D
Subordinated Debentures"), to be issued by the Corporation. The Series D
Subordinated Debentures will mature on December 6, 2027. The Series D Capital
Securities will have a preference under certain circumstances with respect to
cash distributions and amounts payable on liquidation or redemption over the
Series D Common Securities. See "Description of Preferred
Securities -- Subordination of Common Securities" in the accompanying
Prospectus.
Holders of the Series D Capital Securities will be entitled to receive
cumulative cash distributions accruing from the date of original issuance and
payable quarterly in arrears on the last day of March, June, September and
December of each year, commencing March 31, 1998, at the annual rate of 7.34% on
the Liquidation Amount (as defined in the accompanying Prospectus) of $25 per
Series D Capital Security ("Distributions"). Subject to certain exceptions, as
described herein, the Corporation has the right to defer payment of interest on
the Series D 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 D 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 the rate of
7.34% per annum, 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 D Subordinated
Debentures are so deferred, Distributions on the Series D 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 D Subordinated Debentures (including the
7.67% Junior Subordinated Deferrable Interest Debentures, Series A (the "Series
A Subordinated Debentures"), the Global Floating Rate Junior Subordinated
Deferrable Interest Debentures, Series B (the "Series B Subordinated
Debentures"), and the Floating Rate Junior Subordinated Deferrable Interest
Debentures, Series C (the "Series C Subordinated Debentures") of the
Corporation). During an Extension Period, interest on the Series D Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of the Series D Capital Securities are entitled will accumulate), at the
rate of 7.34% per annum, compounded quarterly from the relevant payment date for
such interest, and holders of Series D Capital Securities will be required to
accrue interest income for United States federal income tax purposes. See
"Certain Terms of Series D Subordinated Debentures -- Option to Defer Interest
Payments" and "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
The Series D Subordinated Debentures are unsecured and subordinated to all
Senior Debt (as defined in the accompanying Prospectus). Substantially all of
the Corporation's existing indebtedness constitutes Senior Debt (other than an
aggregate of approximately $1,443.4 million of the Corporation's existing
indebtedness evidenced by the Series A Subordinated Debentures, Series B
Subordinated Debentures and Series C 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
(the "Bank"), Chase Manhattan Bank USA, National Association ("Chase USA"), and
Texas Commerce Bank National Association ("Texas Commerce"), upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the
S-2
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(cover page continued)
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 D Subordinated Debentures (and therefore the Series D
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 D Subordinated
Debentures. See "Description of Junior Subordinated Debentures -- Subordination"
in the accompanying Prospectus.
The Corporation has, through the Series D Guarantee, the Series D Trust
Agreement, the Series D Subordinated Debentures and the Indenture (each as
defined herein), taken together, fully, irrevocably and unconditionally
guaranteed all of the Series D Issuer's obligations under the Series D Capital
Securities. See "Relationship Among the Preferred Securities, the Corresponding
Junior Subordinated Debentures and the Guarantees -- Full and Unconditional
Guarantee" in the accompanying Prospectus. The Series D Guarantee of the
Corporation (the "Series D Guarantee") guarantees the payment of Distributions
and payments on liquidation of the Series D Issuer or redemption of the Series D
Capital Securities, but only in each case to the extent of funds held by the
Series D Issuer, as described herein. See "Description of Guarantees" in the
accompanying Prospectus. If the Corporation does not make interest payments on
the Series D Subordinated Debentures held by the Series D Issuer, the Series D
Issuer will have insufficient funds to pay Distributions on the Series D Capital
Securities. The Series D Guarantee does not cover payment of Distributions when
the Series D Issuer has insufficient funds to pay such Distributions. In such
event, a holder of Series D 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 D Guarantee are subordinate and
junior in right of payment to all Senior Debt of the Corporation.
The Series D Capital Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series D Subordinated Debentures at
their Stated Maturity or earlier redemption. Subject to the Corporation having
received 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 D Subordinated Debentures are redeemable
prior to their Stated Maturity at the option of the Corporation (i) on or after
December 5, 2002, 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 D
Subordinated Debentures -- Conditional Right to 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. See "Certain Terms of
Series D Capital Securities -- Redemption" and "Certain Terms of Series D
Subordinated Debentures -- Redemption."
The Series D Capital Securities have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance. If Series D
Subordinated Debentures are distributed to the holders of Series D Capital
Securities in exchange therefor upon the liquidation of the Series D Issuer, the
Corporation will use its best efforts to list the Series D Subordinated
Debentures on the New York Stock Exchange or such other stock exchanges or
automated quotation systems, if any, on which the Series D Capital Securities
are then listed or traded.
The Corporation will have the right at any time to terminate the Series D
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 D Capital Securities -- Liquidation of
Series D Issuer and Distribution of Series D Subordinated Debentures to
Holders." In the event of the termination of the Series D Issuer, after
satisfaction of liabilities to creditors of the Series D Issuer as required by
applicable law, the holders of the Series D Capital Securities will be
S-3
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entitled to receive a Liquidation Amount of $25 per Series D Capital Security
plus accumulated and unpaid Distributions thereon to the date of payment, which
may be in the form of a distribution of such amount in Series D Subordinated
Debentures in exchange therefor, subject to certain exceptions. See "Description
of Preferred Securities -- Liquidation Distribution Upon Termination" in the
accompanying Prospectus.
The Series D 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 D 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 D Capital Securities in certificated form will not be issued
in exchange for the global certificates. See "Certain Terms of Series D Capital
Securities -- Registration of Series D 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 D Trust Agreement" means the Amended
and Restated Trust Agreement relating to the Series D 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 D Capital Securities. 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.
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RISK FACTORS
Prospective purchasers of the Series D 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 D Capital Securities may receive
Series D Subordinated Debentures in exchange therefor upon liquidation of the
Series D Issuer, prospective purchasers of Series D Capital Securities are also
making an investment decision with regard to the Series D Subordinated
Debentures and should carefully review all the information regarding the Series
D Subordinated Debentures contained herein.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES D GUARANTEE AND THE SERIES
D SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series D Guarantee issued by
the Corporation for the benefit of the holders of Series D Securities and under
the Series D 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 $1,443.4 million of the Corporation's existing indebtedness
evidenced by the Series A, Series B and Series C 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
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. 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 D
Subordinated Debentures and the Series D Guarantee will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Series D Subordinated Debentures and beneficiaries
of the Series D Guarantee should look only to the assets of the Corporation for
payments on the Series D Subordinated Debentures or under the Series D
Guarantee, as the case may be. See "The Chase Manhattan Corporation." None of
the Indenture, the Series D Guarantee or the Series D 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
Guarantees -- Status of the Guarantees" and "Description of Junior Subordinated
Debentures -- Subordination" in the accompanying Prospectus.
The ability of the Series D Issuer to pay amounts due on the Series D
Capital Securities is solely dependent upon the Corporation's making payments on
the Series D Subordinated Debentures as and when required.
S-5
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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 D 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 D Subordinated Debentures. As a consequence of any
such deferral, quarterly Distributions on the Series D Capital Securities by the
Series D Issuer will also be deferred (and the amount of Distributions to which
holders of the Series D Capital Securities are entitled will accumulate
additional Distributions thereon at the rate of 7.34% per annum, 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 D Subordinated Debentures (including, without limitation,
the Series A, Series B and Series C 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 D 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 D 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 D Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all interest then accrued
and unpaid (together with interest thereon at the rate of 7.34% per annum,
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 D Capital Securities -- Distributions" and "Certain
Terms of Series D Subordinated Debentures -- Option to Defer Interest Payments."
Should an Extension Period occur, a holder of Series D 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 D Subordinated Debentures held by
the Series D Issuer for United States federal income tax purposes. As a result,
a holder of Series D 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 D Issuer if the holder disposes of the
Series D 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 D Capital
Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Series D Subordinated Debentures. However, should
the Corporation elect to exercise such right in the future, the market price of
the Series D Capital Securities is likely to be affected. A holder that disposes
of its Series D 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 D Capital Securities.
S-6
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REDEMPTION UPON TAX EVENT OR CAPITAL TREATMENT EVENT
Upon the occurrence and continuation of a Tax Event or Capital Treatment
Event (whether occurring before or after December 5, 2002), the Corporation has
the right if certain conditions are met, to redeem the Series D 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 D 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 D Subordinated Debentures -- Conditional
Right to Redeem upon a Tax Event or Capital Treatment Event" and "Description of
Preferred Securities -- Redemption or Exchange" in the accompanying Prospectus.
A "Tax Event" means the receipt by the Series D 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 D Capital Securities under the Series D Trust
Agreement, there is more than an insubstantial risk that (i) the Series D 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 D Subordinated Debentures, (ii) interest payable by the Corporation on
the Series D 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 D 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 D Subordinated Debentures which are no longer held by the
Series D 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 D Subordinated Debentures under the
Indenture, there is more than an insubstantial risk that interest payable by the
Corporation on the Series D 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").
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 change, pronouncement, action or decision is
announced on or after the date of issuance of the Series D Capital Securities
under the Series D 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 D 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.
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EXCHANGE OF SERIES D CAPITAL SECURITIES FOR SERIES D SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series D
Issuer and, after satisfaction of liabilities to creditors of the Series D
Issuer as required by applicable law, cause the Series D Subordinated Debentures
to be distributed to the holders of the Series D Capital Securities in exchange
therefor upon liquidation of the Series D 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 D Capital Securities -- Liquidation of Series D Issuer and
Distribution of Series D Subordinated Debentures to Holders" and "Description of
Preferred Securities -- Redemption or Exchange" in the accompanying Prospectus.
Under current United States federal income tax law and interpretations and
assuming, as expected, the Series D Issuer is classified as a grantor trust for
such purposes, a distribution of the Series D Subordinated Debentures upon a
liquidation of the Series D Issuer should not be a taxable event to holders of
the Series D Capital Securities. However, if a Tax Event were to occur which
would cause the Series D Issuer to be subject to United States federal income
tax with respect to income received or accrued on the Series D Subordinated
Debentures, a distribution of the Series D Subordinated Debentures by the Series
D Issuer could be a taxable event to the Series D Issuer and the holders of the
Series D Capital Securities. See "Certain Federal Income Tax Consequences --
Distribution of Series D Subordinated Debentures to Holders of Series D Capital
Securities."
MARKET PRICES
There can be no assurance as to the market prices for Series D Capital
Securities or Series D Subordinated Debentures that may be distributed in
exchange for Series D Capital Securities upon liquidation of the Series D
Issuer. Accordingly, the Series D Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Series D Subordinated Debentures that a holder of Series D Capital
Securities may receive on liquidation of the Series D Issuer, may trade at a
discount to the price that the investor paid to purchase the Series D 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 D Capital
Securities (which represent beneficial ownership interests in the Series D
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 D
Subordinated Debentures" and "Description of Junior Subordinated
Debentures -- Corresponding Junior Subordinated Debentures" in the accompanying
Prospectus.
RIGHTS UNDER THE SERIES D GUARANTEE
The Series D Guarantee guarantees to the holders of the Series D Securities
the following payments, to the extent not paid by the Series D Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series D
Securities, to the extent that the Series D Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Series D
Securities called for redemption, to the extent that the Series D 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 D Issuer
(unless the Series D Subordinated Debentures are distributed to holders of the
Series D 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 D Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series D Issuer remaining available
for distribution to holders of the Series D Securities after payment of
creditors of the Series D Issuer as required by applicable law. The Series D
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 D Guarantee (the "Guarantee Trustee") for
the purpose of compliance with the Trust Indenture Act
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and will hold the Series D Guarantee for the benefit of the holders of the
Series D Securities. The Bank of New York will also act as Debenture Trustee for
the Series D Subordinated Debentures and as Property Trustee under the Indenture
and The Bank of New York (Delaware) will act as Delaware Trustee under the
Series D Trust Agreement.
The Series D Guarantee is subordinate as described under "-- Ranking of
Subordinated Obligations Under the Series D Guarantee and the Series D
Subordinated Debentures."
The holders of not less than a majority in aggregate Liquidation Amount of
the Series D 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 D Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series D Guarantee. Any holder of
the Series D Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Series D Guarantee without first
instituting a legal proceeding against the Series D 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 D Subordinated Debentures,
the Series D Issuer would lack funds for the payment of Distributions or amounts
payable on redemption of the Series D Securities or otherwise, and, in such
event, holders of the Series D Securities would not be able to rely upon the
Series D 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 D Subordinated Debentures on the applicable payment date, then a
holder of Series D 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 D
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Series D 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 D Capital Securities in the Direct Action.
Except as described herein, holders of Series D Capital Securities will not be
able to exercise directly any other remedy available to the holders of the
Series D Subordinated Debentures or assert directly any other rights in respect
of the Series D Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities,"
"-- Debenture Events of Default" and "Description of Guarantees" in the
accompanying Prospectus. The Series D Trust Agreement provides that each holder
of Series D Securities by acceptance thereof agrees to the provisions of the
Series D Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series D Capital Securities generally will have limited voting
rights relating only to the modification of the Series D Capital Securities and
the Series D Guarantee and the exercise of the Series D Issuer's rights as
holder of Series D Subordinated Debentures. Holders of Series D 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 D 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 D Trust Agreement without the consent of
holders of Series D Capital Securities to ensure that the Series D 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 -- Removal of Issuer Trustees"
and "-- Voting Rights; Amendment of Each Trust Agreement" in the accompanying
Prospectus.
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<PAGE> 10
LISTING OF SERIES D CAPITAL SECURITIES -- TRADING CHARACTERISTICS
The Series D Capital Securities have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance. Trading of the
Series D Capital Securities on the New York Stock Exchange is expected to
commence within a 30-day period after the initial delivery of the Series D
Captial Securities. Although the Underwriters have indicated to the Corporation
and the Series D Issuer that they intend to make a market in the Series D
Capital Securities prior to commencement of trading on the New York Stock
Exchange as permitted by applicable laws and regulations, they are not obligated
to do so and may discontinue any such market-making activities at any time
without notice. No assurance can be given as to the liquidity of the trading
market for the Series D Capital Securities.
The Series D Capital Securities may trade at prices that do not fully
reflect the value of accrued and unpaid interest with respect to the underlying
Series D Subordinated Debentures. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" and "-- Sales or
Redemption of Series D Capital Securities" for a discussion of the United States
federal income tax consequences that may result from a taxable disposition of
the Series D Capital Securities.
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CHASE CAPITAL IV
Chase Capital IV (the "Series D 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 September 23, 1997. The Series D 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 D Issuer exists for the exclusive
purposes of (i) issuing and selling the Series D Capital Securities and Series D
Common Securities, (ii) using the proceeds from the sale of Series D Capital
Securities and Series D Common Securities to acquire Series D 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 D Securities). Accordingly, the Series D Subordinated Debentures will
be the sole assets of the Series D Issuer, and payments under the Series D
Subordinated Debentures will be the sole revenue of the Series D Issuer. All of
the Series D Common Securities will be owned by the Corporation. The Series D
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Series D Capital Securities, except that upon the occurrence and
continuance of an event of default under the Series D Trust Agreement resulting
from an event of default under the Indenture, the rights of the Corporation as
holder of the Series D 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 D Capital Securities. See "Description
of Preferred Securities -- Subordination of Common Securities" in the
accompanying Prospectus. The Corporation will acquire Series D Common Securities
in an aggregate Liquidation Amount at least equal to 3% of the total capital of
the Series D Issuer. The Series D Issuer has a term of 55 years, but may
terminate earlier as provided in the Series D Trust Agreement. The principal
executive office of the Series D Issuer is 270 Park Avenue, New York, New York
10017 and its telephone number is (212) 270-6000. See "The Issuers" in the
accompanying Prospectus.
It is anticipated that the Series D 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 ("Heritage 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 Bank, a New York
banking corporation, Chase USA, headquartered in Wilmington, Delaware, and Texas
Commerce.
The merger of Heritage 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
Heritage 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 operating purposes, into two principal lines of business. A brief
description of each principal line of business is presented below.
Global Wholesale Banking
Global Wholesale Banking provides financing, advisory, sales and trading,
trade finance, asset management, private banking and operating services. Clients
include corporations, institutions, governments and wealthy individuals located
around the world. Through its Global Wholesale Banking businesses, the
Corporation and its subsidiaries are utilizing a new model for the delivery of
global financial services, integrating product expertise, industry knowledge and
geographic reach to effect superior customer solutions. Global Wholesale Banking
operates in more than 50 countries, including major operations in all key
international financial centers. Terminal Businesses, representing discontinued
portfolios (primarily the remaining refinancing country debt and commercial real
estate problem asset and nonperforming portfolios), are also included in Global
Wholesale Banking.
Regional and Nationwide Consumer Banking (RNCB)
The Regional and Nationwide Consumer Banking franchise, as of September 30,
1997, included the fourth-largest bank credit card issuer in the U.S., the
third-largest originator and the second-largest servicer of residential
mortgages and a leading provider of auto financing and other consumer lending
products. The Corporation and its subsidiaries maintain a leading market share
position in the New York metropolitan tri-state area in serving the financial
needs of consumers, middle market commercial enterprises and small businesses.
They offer customers convenient access to financial services by telephone,
personal computer and the internet, and have the most branches and automated
teller machines in the New York metropolitan tri-state area. Also included
within RNCB is Texas Commerce, which is the second-largest bank in Texas and a
leader in providing financial products and services to businesses and
individuals throughout the state. RNCB also has a small international consumer
presence.
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.
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, --------------------------------------------
1997 1996 1995 1994 1993 1992
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits..... 1.86 1.66 1.90 1.86 1.62 1.50
Including Interest on Deposits..... 1.45 1.32 1.41 1.42 1.31 1.21
Earnings to Combined Fixed Charges
and Preferred Stock Dividend
Requirements:
Excluding Interest on Deposits..... 1.81 1.60 1.82 1.76 1.52 1.41
Including Interest on Deposits..... 1.43 1.30 1.38 1.38 1.27 1.18
</TABLE>
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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 D Capital Securities will
be invested by the Series D Issuer in Series D Subordinated Debentures. The
Corporation intends that the proceeds from the sale of the Series D Subordinated
Debentures will be added to its general corporate funds and will be used for
general corporate purposes.
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 D 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 D 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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CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of September 30, 1997 and as adjusted to
give effect to the consummation of the offering of the Series D Capital
Securities and the issuance of the Series D Subordinated Debentures. 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, 1997
----------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN MILLIONS)
<S> <C> <C>
Total long-term debt................................. $ 13,899 $ 13,899
-------- --------
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures, Series A(a)................... 600 600
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures, Series B(b)................... 494 494
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures, Series C(c)................... 296 296
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures, Series D(d)................... -- 350
Preferred Stock of Subsidiary(e)..................... 550 550
-------- --------
Stockholders' Equity
Preferred Stock.................................... 1,740 1,740
Common Stock....................................... 441 441
Capital Surplus.................................... 10,357 10,357
Retained Earnings.................................. 10,526 10,526
Net Unrealized Gain on Securities Available for
Sale Net of Taxes............................... 126 126
Treasury Stock, At Cost............................ (2,024) (2,024)
-------- --------
Total Stockholders' Equity...................... $ 21,166 $ 21,166
-------- --------
Total Capitalization................................. $ 37,005 $ 37,355
======== ========
</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 will 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 0.50% per annum and will 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) On March 11, 1997, Chase Capital III issued $300 million of guaranteed
preferred beneficial interests in a registered public offering. Chase Capital
III invested the proceeds of such offering (approximately $295.7 million),
together with approximately $9.2 million paid by the Corporation for Chase
Capital III's common securities, in approximately $309.3 million principal
amount of Series C Subordinated Debentures. The Series C Subordinated Debentures
bear interest at the floating rate of LIBOR plus 0.55% per annum and will mature
on March 1, 2027. The Corporation owns all of the common securities of Chase
Capital III and the sole assets of Chase Capital III are the Series C
Subordinated Debentures.
(d) As described herein, the sole assets of the Series D Issuer will be
approximately $360.8 million principal amount of Series D Subordinated
Debentures to be issued by the Corporation to the Series D Issuer. The Series D
Subordinated Debentures will bear interest at the rate of 7.34% per annum on the
Liquidation Amount of $25 per Series D Subordinated Debenture and will mature on
December 6, 2027. The Corporation will own all of the Series D Common Securities
of the Series D Issuer. It is anticipated that the Series D Issuer will not be
subject to the reporting requirements under the Exchange Act.
(e) 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 D Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Series D
Issuer will be included in the consolidated financial statements of the
Corporation. The Series D 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, Series C and
Series D" and appropriate disclosures about the Series D Capital Securities, the
Series D Guarantee and the Series D 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 D
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, Series C and Series D;" (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 D CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series D
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 D
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 D Trust Agreement to which reference is hereby made.
The form of the Series D 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 D Capital Securities represent beneficial ownership interests in
the Series D Issuer, and Distributions on the Series D Capital Securities will
be payable at the annual rate of 7.34% on the stated Liquidation Amount of $25,
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year (each, a "Distribution Date"), to the holders of the Series D
Capital Securities on the relevant record dates. The record dates for the Series
D Capital Securities will be, for so long as the Series D 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
D Capital Securities are not in book-entry form, the 15th day of the month in
which the relevant Distribution Date occurs. Distributions will accumulate from
the date of original issuance. The first Distribution Date for the Series D
Capital Securities will be March 31, 1998. The period beginning on and including
the date of original issuance and ending on but
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<PAGE> 16
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 a 360-day year of twelve 30-day months. In the event that any
Distribution Date would otherwise fall on a day that is not a Business Day, such
Distribution Date shall be postponed to the next day that is a Business Day
(without any additional Distributions or other payment in respect of such delay)
unless it would thereby fall in the next calendar year, 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 D 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 D Subordinated Debentures. As a consequence of any
such deferral of interest payments by the Corporation, quarterly Distributions
on the Series D Capital Securities by the Series D Issuer will also be deferred
during any such Extension Period. Distributions to which holders of the Series D
Capital Securities are entitled will accumulate additional Distributions thereon
at the rate of 7.34% per annum, 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 D Subordinated Debentures (including
the Series A, Series B and Series C 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 D 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 D 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 D
Subordinated Debentures, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the Series
D 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 the rate of 7.34% per annum, 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 D 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 D
Subordinated Debentures.
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<PAGE> 17
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series D
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 D 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 D Securities (the "Redemption
Price"), equal to the aggregate Liquidation Amount of such Series D Securities,
plus accumulated and unpaid Distributions thereon to the date of redemption (the
"Redemption Date"). See "Certain Terms of Series D Subordinated
Debentures -- Redemption." If less than all of the Series D 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 D Capital Securities and the Series D Common Securities.
The Corporation has the right to redeem the Series D Subordinated
Debentures (i) on or after December 5, 2002, 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 D Subordinated Debentures -- Conditional Right to
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. A redemption of the Series D Subordinated Debentures would cause a
mandatory redemption of the Series D Capital Securities and the Series D Common
Securities.
LIQUIDATION OF SERIES D ISSUER AND DISTRIBUTION OF SERIES D SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to terminate the Series D
Issuer and, after satisfaction of liabilities to creditors of the Series D
Issuer as required by applicable law, to cause the Series D Subordinated
Debentures to be distributed to the holders of the Series D Capital Securities
in exchange therefor upon liquidation of the Series D 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 D Issuer is treated as a grantor trust, a
distribution of Series D Subordinated Debentures in exchange for the Series D
Capital Securities should not be a taxable event to holders of the Series D
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 D Capital Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Series D
Subordinated Debentures to Holders of Series D Capital Securities." If the
Corporation elects neither to redeem the Series D Subordinated Debentures prior
to maturity nor to liquidate the Series D Issuer and distribute the Series D
Subordinated Debentures to holders of the Series D Capital Securities in
exchange therefor, the Series D Capital Securities will remain outstanding until
the Stated Maturity of the Series D Subordinated Debentures.
If the Corporation elects to liquidate the Series D Issuer and thereby
causes the Series D Subordinated Debentures to be distributed to holders of the
Series D Capital Securities in exchange therefor upon liquidation of the Series
D Issuer, the Corporation shall continue to have the right to redeem the Series
D Subordinated Debentures in certain circumstances upon the occurrence of a Tax
Event or Capital Treatment Event, as described under "Certain Terms of Series D
Subordinated Debentures -- Conditional Right to Redeem upon a Tax Event or
Capital Treatment Event."
LIQUIDATION VALUE
The amount payable on the Series D Capital Securities in the event of any
liquidation of the Series D Issuer is $25 per Series D Capital Security plus
accumulated and unpaid Distributions, which amount may be paid in the form of a
distribution of a Like Amount of Series D Subordinated
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<PAGE> 18
Debentures, subject to certain exceptions. See "Description of Preferred
Securities -- Liquidation Distribution Upon Termination" in the accompanying
Prospectus.
REGISTRATION OF SERIES D CAPITAL SECURITIES
The Series D Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the Series
D 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 D 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 D Capital Securities
registered in the names of persons other than DTC or its nominee only if (i) DTC
notifies the Series D 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 D 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 D 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 D Capital Securities are issued in definitive form, such Series D Capital
Securities will be in denominations of $25 and integral multiples thereof and
may be transferred or exchanged at the offices described below.
Payments on and any distributions of Series D Subordinated Debentures in
exchange for Series D Capital Securities represented by a global security will
be made to DTC, as the depositary for the Series D Capital Securities. In the
event Series D Capital Securities are issued in certificated form, the
Liquidation Amount and Distributions will be payable, the transfer of the Series
D Capital Securities will be registrable, Series D Subordinated Debentures will
be distributed in exchange for Series D Capital Securities following a
termination of the Series D Issuer and Series D Capital Securities will be
exchangeable for Series D 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 D 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.
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CERTAIN TERMS OF SERIES D SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series D
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 D 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 D Capital Securities, the
Series D Issuer will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series D Common Securities, in the
Series D Subordinated Debentures issued by the Corporation. The Series D
Subordinated Debentures will bear interest at the annual rate of 7.34% of the
principal amount thereof, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing March 31, 1998, and at maturity to the person in whose name each
Series D Subordinated Debenture is registered at the close of business on the
record date next preceding such Interest Payment Date. The period beginning on
and including the date of original issuance of the Series D Subordinated
Debentures 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 D Issuer, each Series D Subordinated Debenture will be held by the
Property Trustee in trust for the benefit of the holders of the Series D Capital
Securities. The amount of interest payable for any Interest Period will be
computed on the basis of a 360-day year of twelve 30-day months. 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 (without any interest or other payment in respect of any such
delay) unless it would thereby fall in the next calendar year, 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 the rate of 7.34% per annum, 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 D Subordinated Debentures will be issued as a series of junior
subordinated deferrable interest debentures under the Indenture.
The Series D Subordinated Debentures will mature on December 6, 2027.
The Series D 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 an aggregate of approximately
$1,443.4 million of the Corporation's existing indebtedness evidenced by the
Series A, Series B and Series C 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
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the extent that the Corporation may itself be recognized as a creditor of that
subsidiary. Accordingly, the Series D Subordinated Debentures and the Series D
Guarantee will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Series D
Subordinated Debentures and beneficiaries of the Series D Guarantee should look
only to the assets of the Corporation for payments on the Series D Subordinated
Debentures or under the Series D Guarantee. 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.
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 D Subordinated Debentures to
defer payment of interest on the Series D 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 D Subordinated Debentures. At the end of such Extension Period,
the Corporation must pay all interest then accrued and unpaid on the Series D
Subordinated Debentures (together with interest on such unpaid interest at the
rate of 7.34% per annum, 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 D Subordinated Debentures (or holders
of Series D 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 D Subordinated Debentures (including the Series A, Series B and Series C
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 D 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 D 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 D Subordinated Debentures, provided
that no Extension Period may exceed 20 consecutive quarterly periods or extend
beyond the Stated Maturity of the Series D 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 the rate of 7.34% per
annum, 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
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prior to the earlier of (i) the date Distributions on the Series D 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 D Capital Securities
may then be listed or quoted or to holders of Series D 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 D
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 D Capital
Securities) and all costs and expenses of the Series D Issuer (including costs
and expenses relating to the organization of the Series D Issuer, the fees and
expenses of the Issuer Trustees and the costs and expenses relating to the
operation of the Series D 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 D 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 D Subordinated Debentures are redeemable prior to maturity at the option
of the Corporation (i) on or after December 5, 2002, in whole at any time or in
part from time to time or (ii) at any time, in certain circumstances as
described under "-- Conditional Right to 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 D Issuer to redeem the Series D
Securities.
The redemption price with respect to the Series D Subordinated Debentures
shall be equal to 100% of the principal amount of the Series D Subordinated
Debentures so redeemed plus accrued and unpaid interest thereon to the date of
redemption.
DISTRIBUTION OF SERIES D SUBORDINATED DEBENTURES
As described under "Certain Terms of Series D Capital
Securities -- Liquidation of Series D Issuer and Distribution of Series D
Subordinated Debentures to Holders," under certain circumstances involving the
termination of the Series D Issuer, Series D Subordinated Debentures may be
distributed to the holders of the Series D Capital Securities in exchange
therefor upon liquidation of the Series D Issuer after satisfaction of
liabilities to creditors of the Series D Issuer as provided by applicable law.
If distributed to holders of Series D Capital Securities, the Series D
Subordinated Debentures will initially be issued in the form of one or more
global securities and DTC, or any successor depositary for the Series D Capital
Securities, will act as depositary for the Series D Subordinated Debentures. It
is anticipated that the depositary arrangements for the Series D Subordinated
Debentures would be substantially identical to those in effect for the Series D
Capital Securities. If Series D Subordinated Debentures are distributed to the
holders of Series D Capital Securities in exchange therefor upon the liquidation
of the Series D Issuer, the Corporation will use its best efforts to list the
Series D Subordinated Debentures on the New York Stock Exchange or such other
stock exchanges or automated quotation systems, if any, on which the Series D
Capital Securities are then listed or quoted. There can be no assurance as to
the market price of any Series D Subordinated Debentures that may be distributed
to the holders of Series D Capital Securities.
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CONDITIONAL RIGHT TO 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 D Issuer and the
distribution of the Series D Subordinated Debentures to the holders of the
Series D Capital Securities in exchange therefor upon liquidation of the Series
D 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 D Capital Securities for Series D Subordinated 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 D Issuer and the distribution of the Series D Subordinated Debentures to
the holders of the Series D Capital Securities in exchange therefor upon
liquidation of the Series D 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 D 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 D Subordinated Debentures are not held by the Series D Issuer, then
the Corporation shall have the right to redeem the Series D 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 D Capital Securities --
Redemption" and "-- Liquidation of Series D Issuer and Distribution of Series D
Subordinated Debentures to Holders" and "Certain Terms of Series D Subordinated
Debentures -- General."
REGISTRATION OF SERIES D SUBORDINATED DEBENTURES
The Series D Subordinated Debentures will be registered in the name of the
Series D Issuer. In the event that the Series D Subordinated Debentures are
distributed to holders of Series D Capital Securities, it is anticipated that
the depositary and other arrangements for the Series D Subordinated Debentures
will be substantially identical to those in effect for the Series D Capital
Securities, as applicable. See "Certain Terms of Series D Capital
Securities -- Registration of Series D Capital Securities."
CERTAIN TERMS OF SERIES D GUARANTEE
The Series D Guarantee guarantees to the holders of the Series D Securities
the following payments, to the extent not paid by the Series D Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series D
Securities, to the extent that the Series D Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Series D
Securities called for redemption, to the extent that the Series D 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 D Issuer
(unless the Series D Subordinated Debentures are distributed to holders of the
Series D 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 D Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series D Issuer remaining available
for distribution to holders of the Series D Securities after payment of
creditors of the Series D Issuer as required by applicable law. The Series D
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 D Guarantee for
the benefit of the holders of the Series D Securities. The Bank of New York will
also act as Debenture Trustee for the Series D Subordinated Debentures and as
Property Trustee.
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The holders of not less than a majority in aggregate Liquidation Amount of
the Series D 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 D Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series D Guarantee. Any holder of
the Series D Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Series D Guarantee without first
instituting a legal proceeding against the Series D 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 D Subordinated Debentures,
the Series D Issuer would lack funds for the payment of Distributions or amounts
payable on redemption of the Series D Securities or otherwise, and, in such
event, holders of the Series D Capital Securities would not be able to rely upon
the Series D 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 D Subordinated Debentures on the applicable payment
date, then a holder of Series D Capital 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 D
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Series D 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 D Capital Securities in the Direct Action. Except as described
herein, holders of Series D Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Series D Subordinated
Debentures or assert directly any other rights in respect of the Series D
Subordinated Debentures. See "Description of Guarantees" in the accompanying
Prospectus. The Series D Trust Agreement provides that each holder of Series D
Securities by acceptance thereof agrees to the provisions of the Series D
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 D 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 D
Capital Securities. Unless otherwise stated, this summary deals only with Series
D Capital Securities held as capital assets by United States Persons (defined
below) who purchase the Series D 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 D 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.
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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 D
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 D
CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "CERTAIN TERMS
OF SERIES D CAPITAL SECURITIES -- REDEMPTION."
CLASSIFICATION OF THE SERIES D ISSUER
In connection with the issuance of the Series D Capital Securities, Tax
Counsel is of the opinion that, under current law and assuming compliance with
the terms of the Series D Trust Agreement, and based on certain facts and
assumptions contained in such opinion, the Series D 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
D Capital Securities (a "Securityholder") will be treated as owning an undivided
beneficial interest in the Series D 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 D Subordinated Debentures. See "-- Interest Income and Original
Issue Discount."
CLASSIFICATION OF THE SERIES D SUBORDINATED DEBENTURES
The Corporation, the Series D Issuer and the holders of the Series D
Securities (by acceptance of a beneficial interest in a Series D Security) will
agree to treat the Series D Subordinated Debentures as indebtedness for all
United States tax purposes. In connection with the issuance of the Series D
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 D Subordinated Debentures will be classified as indebtedness
for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under applicable Treasury regulations, the Series D 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 D 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 D Subordinated Debentures, the Series D Subordinated
Debentures will become OID instruments at such time and all Securityholders will
be required to accrue the stated interest on the Series D Subordinated
Debentures on a daily basis during the Extension Period, even though the
Corporation 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 D Subordinated Debentures will be taxed as OID
instruments for as long as they remain outstanding. Thus,
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even after the end of the Extension Period, all Securityholders would be
required to continue to include the stated interest on the Series D 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 D Subordinated
Debentures, and actual cash payments of interest on the Series D 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 D Capital
Securities, and the amount of Distributions received by a Securityholder with
respect to such Series D Capital Securities will reduce the tax basis of such
Series D 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 D 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 D
Capital Securities.
DISTRIBUTION OF SERIES D SUBORDINATED DEBENTURES TO HOLDERS OF SERIES D CAPITAL
SECURITIES
Under current law, a distribution by the Series D Issuer of the Series D
Subordinated Debentures as described under the caption "Certain Terms of Series
D Capital Securities -- Liquidation of Series D Issuer and Distribution of
Series D Subordinated Debentures to Holders" will be non-taxable and will result
in the Securityholder receiving directly its pro rata share of the Series D
Subordinated Debentures previously held indirectly through the Series D Issuer,
with a holding period and aggregate tax basis equal to the holding period and
aggregate tax basis such Securityholder had in its Series D Capital Securities
before such distribution. If, however, the liquidation of the Series D Issuer
were to occur because the Series D Issuer is subject to United States federal
income tax with respect to income accrued or received on the Series D
Subordinated Debentures as a result of a Tax Event or otherwise, the
distribution of Series D Subordinated Debentures to Securityholders by the
Series D Issuer could be a taxable event to the Series D Issuer and each
Securityholder, and a Securityholder would recognize gain or loss as if the
Securityholder had exchanged its Series D Capital Securities for the Series D
Subordinated Debentures it received upon the liquidation of the Series D Issuer.
A Securityholder will accrue interest in respect of Series D Subordinated
Debentures received from the Series D Issuer in the manner described above under
"-- Interest Income and Original Issue Discount."
SALES OR REDEMPTION OF SERIES D CAPITAL SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Series D
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 D 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 D Subordinated
Debentures that such Securityholder had not included in income previously) and
the Securityholder's adjusted tax basis in the Series D 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 D Capital Securities that it
sold or redeemed for more than one year. Capital gains of individuals derived
with respect to capital assets held for more than one year are eligible for
reduced rates of taxation depending upon the holding period of such capital
assets. Securityholders should consult their own tax advisors regarding capital
gains rates applicable to them. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for federal income tax
purposes.
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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 D Capital Securities will be treated as evidence of an indirect
beneficial ownership interest in the Series D 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 D Issuer (or the
Corporation) or any paying agent of principal or interest (which for
purposes of this discussion includes any OID) on the Series D Capital
Securities (or the Series D Subordinated Debentures) to a Non-United States
Holder, provided (i) that the beneficial owner of the Series D 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 D 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 D Capital Securities (or
the Series D Subordinated Debentures).
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Series D Capital Securities on
behalf of such owner, must provide, in accordance with specified procedures, to
the Series D 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 D
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
D 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 D 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 D Capital Securities
(or the Series D 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 D Capital Securities (or the Series D
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.
S-26
<PAGE> 27
Any gain realized upon the sale or other disposition of the Series D
Capital Securities (or the Series D 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 D Subordinated Debentures, the requirements described
above are not satisfied.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of OID accrued on the Series D 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 D 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 D Capital Securities will be
reported to holders on Form 1099 and mailed to holders of the Series D Capital
Securities by January 31 following each calendar year.
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 D 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.
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 D 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
S-27
<PAGE> 28
an equity interest in the Series D 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 D 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 D 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 D Capital Securities were "publicly-offered securities" for purposes of
the Plan Assets Regulation. No assurance can be given that the Series D Capital
Securities held by Benefit Plan Investors will be less than 25% of the total
value of such Series D 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 D Capital Securities would be considered
to be "publicly-offered securities" under the Plan Assets Regulation. All of the
Series D Common Securities will be purchased and initially held by the
Corporation.
Certain transactions involving the Series D 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 D Capital Securities were
acquired with "plan assets" of such Plan and the assets of the Series D Issuer
were deemed to be "plan assets" of Plans investing in the Series D 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 D
Issuer (as represented by the Series D Subordinated Debentures and the Series D
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 D
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 D 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 D CAPITAL
SECURITIES, WILL BE DEEMED TO HAVE DIRECTED THE SERIES D ISSUER TO INVEST IN THE
SERIES D 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 D Capital
Securities if assets of the Series D Issuer were deemed to be "plan assets" of
Plans investing in the Series D 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 D Capital Securities may be deemed to be equity
interests in the Series D Issuer for purposes of applying ERISA and Section 4975
of the Code, the Series D 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 D 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
S-28
<PAGE> 29
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 D 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 D 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 D
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 D
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.
S-29
<PAGE> 30
UNDERWRITING
Subject to the terms and conditions set forth in the Chase Capital IV
Standard Provisions and the Pricing Agreement dated November 24, 1997
(collectively, the "Underwriting Agreement"), the Corporation and the Series D
Issuer have agreed that the Series D Issuer will sell to each of the
Underwriters named below, and each of such Underwriters has severally agreed to
purchase from the Series D Issuer, the respective number of Series D Capital
Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF SERIES D CAPITAL SECURITIES
-------------------------------------
<S> <C>
Chase Securities Inc. ....................... 1,852,000
Smith Barney Inc. ........................... 1,852,000
Salomon Brothers Inc......................... 1,852,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................... 1,852,000
Morgan Stanley & Co. Incorporated............ 1,852,000
PaineWebber Incorporated..................... 1,852,000
Prudential Securities Incorporated........... 1,852,000
Advest, Inc. ................................ 28,000
BT Alex. Brown & Sons, Inc. ................. 61,600
Bear, Stearns & Co. Inc. .................... 61,600
Cowen & Company.............................. 28,000
Credit Suisse First Boston Corporation....... 61,600
Dain Bosworth Incorporated................... 61,600
A.G. Edwards & Sons, Inc..................... 61,600
EVEREN Securities, Inc....................... 61,600
Fahnestock & Co. Inc. ....................... 28,000
Goldman, Sachs & Co. ........................ 61,600
Janney Montgomery Scott Inc. ................ 28,000
Legg Mason Wood Walker, Incorporated......... 28,000
McDonald & Company Securities, Inc........... 28,000
McGinn, Smith & Co., Inc. ................... 28,000
Morgan Keegan & Company, Inc. ............... 28,000
Olde Discount Corporation.................... 28,000
Piper Jaffray Inc. .......................... 61,600
Principal Financial Securities, Inc. ........ 28,000
Pryor, McClendon, Counts & Co., Inc. ........ 28,000
Rauscher Pierce Refsnes, Inc. ............... 28,000
Raymond James & Associates, Inc. ............ 61,600
The Robinson Humphrey Company, LLC .......... 61,600
U.S. Clearing Corp. ......................... 28,000
Utendahl Capital Partners, L.P. ............. 28,000
Wheat, First Securities, Inc. ............... 28,000
----------
Total.............................. 14,000,000
==========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Series D Capital
Securities if any are taken.
The Underwriters propose initially to offer the Series D 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 $0.50 per
S-30
<PAGE> 31
Series D Capital Security. The Underwriters may allow, and such dealers may
reallow, a concession not to exceed $0.35 per Series D Capital Security to
certain brokers and dealers. After the Series D 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 D Capital
Securities will be used to purchase the Series D Subordinated Debentures issued
by the Corporation, the Underwriting Agreement provides that the Corporation
will pay as Underwriters' compensation for the Underwriters' arranging the
investment in such Series D Subordinated Debentures of such proceeds an amount
of $0.7875 per Series D Capital Security for the accounts of the several
Underwriters.
The Corporation and the Series D 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 D 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 (as defined in the accompanying Prospectus), any
other beneficial interests in the assets of the Series D Issuer, or any
preferred securities or any other securities of the Series D Issuer or the
Corporation which are substantially similar to the Series D 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 D Issuer or the
Corporation, without the prior written consent of the Underwriters, except for
the Series D Capital Securities offered in connection with this offering.
Prior to this offering, there has been no public market for the Series D
Capital Securities. The Series D Capital Securities have been approved for
listing on the New York Stock Exchange, subject to official notice of issuance.
Trading of the Series D Capital Securities on the New York Stock Exchange is
expected to commence within a 30-day period after the initial delivery of the
Series D Capital Securities. Although the Underwriters have indicated to the
Corporation and the Series D Issuer that they intend to make a market in the
Series D Capital Securities prior to commencement of trading on the New York
Stock Exchange, they are not obligated to do so and may discontinue any such
market-making activities at any time without notice. No assurance can be given
as to the liquidity of the trading markets for the Series D Capital Securities.
In order to meet one of the requirements for listing the Series D Capital
Securities on the New York Stock Exchange, the Underwriters have undertaken to
sell lots of 100 or more of the Series D Capital Securities to a minimum of 400
beneficial holders.
The Corporation and the Series D Issuer have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Act.
It is expected that delivery of the Series D Capital Securities will be
made against payment therefor on or about December 5, 1997, as agreed upon by
the Corporation, the Series D Issuer and the Underwriters in accordance with
Rule 15c6-1 under the Exchange Act.
Chase Securities Inc., one of the Underwriters, 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 D 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.
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.
S-31
<PAGE> 32
In connection with this offering and in compliance with applicable law,
Smith Barney Inc., one of the Representatives of the Underwriters, may
over-allot (i.e., sell more Series D Capital Securities than the total amount
shown on the list of Underwriters and participations which appears above) and
may effect transactions which stabilize, maintain or otherwise affect the market
price of the Series D Capital Securities at levels above those which might
otherwise prevail in the open market. Such transactions may include placing bids
for the Series D Capital Securities or effecting purchases of the Series D
Capital Securities for the purpose of pegging, fixing or maintaining the price
of the Series D Capital Securities or for the purpose of reducing a syndicate
short position created in connection with the offering. In addition, the
contractual arrangements among the Underwriters include a provision whereby, if
Smith Barney Inc. purchases Series D Capital Securities in the open market for
the account of the underwriting syndicate and the securities purchased can be
traced to a particular Underwriter or member of the selling group, the
underwriting syndicate may require the Underwriter or selling group member in
question to purchase the Series D Capital Securities in question at the cost
price to the syndicate or may recover from (or decline to pay to) the
Underwriter or selling group member in question the selling concession
applicable to the securities in question. Smith Barney Inc. is not required to
engage in any of these activities and any such activities, if commenced, may be
discontinued at any time.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series D
Capital Securities, the enforceability of the Series D Trust Agreement and the
formation of the Series D Issuer will be passed upon by Richards, Layton &
Finger, special Delaware counsel to the Corporation and the Series D Issuer. The
validity of the Series D Guarantee and the Series D 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.
S-32
<PAGE> 33
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 D 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 HEREOF OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR THE SERIES D ISSUER
SINCE THE DATE HEREOF.
------------------------------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Risk Factors.............................. S- 5
Chase Capital IV.......................... S-11
The Chase Manhattan Corporation........... S-11
Consolidated Ratios of Earnings to Fixed
Charges................................. S-12
Use of Proceeds........................... S-13
Capitalization............................ S-14
Accounting Treatment...................... S-15
Certain Terms of Series D Capital
Securities.............................. S-15
Certain Terms of Series D Subordinated
Debentures.............................. S-19
Certain Terms of Series D Guarantee....... S-22
Certain Federal Income Tax Consequences... S-23
Certain ERISA Considerations.............. S-27
Underwriting.............................. S-30
Validity of Securities.................... S-32
PROSPECTUS
Available Information..................... 3
Incorporation of Certain Documents by
Reference............................... 4
The Chase Manhattan Corporation........... 5
The Issuers............................... 5
Use of Proceeds........................... 6
Description of Junior Subordinated
Debentures.............................. 6
Description of Preferred Securities....... 18
Book-Entry Issuance....................... 30
Description of Guarantees................. 33
Relationship Among the Preferred
Securities, the Corresponding Junior
Subordinated Debentures and the
Guarantees.............................. 35
Plan of Distribution...................... 37
Validity of Securities.................... 38
Experts................................... 38
</TABLE>
Prospectus Supplement
CHASE CAPITAL IV
$350,000,000
7.34% CAPITAL SECURITIES,
SERIES D
(LIQUIDATION AMOUNT $25
PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
[CHASE LOGO]
CHASE SECURITIES INC.
SMITH BARNEY INC.
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
November 24, 1997
