<PAGE> 1
As Filed Pursuant to Rule 424(b)(2)
Registration No. 33-64261
Prospectus Supplement
(To Prospectus Dated June 9, 1997)
[CHASE LOGO]
THE CHASE MANHATTAN CORPORATION
4,000,000 SHARES
FIXED/ADJUSTABLE RATE NONCUMULATIVE PREFERRED STOCK
Dividends on the Fixed/Adjustable Rate Noncumulative Preferred Stock, $50.00
stated value per share (the "Preferred Stock"), of The Chase Manhattan
Corporation ("Chase") will be noncumulative and, if declared, will be payable
quarterly on March 31, June 30, September 30 and December 31 of each year,
commencing September 30, 1998, at a rate of 4.96% per annum for dividend periods
ending on or prior to June 30, 2003. Thereafter, the dividend rate on the
Preferred Stock will be the Applicable Rate from time to time in effect. The
Applicable Rate per annum for each dividend period commencing on or after July
1, 2003 will be equal to the highest of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate and the Thirty Year Constant Maturity Rate (each as
defined herein), as determined in advance of such dividend period, less 0.20%.
The Applicable Rate per annum for each dividend period commencing on or after
July 1, 2003 will be not less than 5.46% nor greater than 11.46%. The amount of
dividends payable in respect of the Preferred Stock will be adjusted in the
event of certain amendments to the Internal Revenue Code of 1986, as amended
(the "Code"), in respect of the dividends received deduction. See "Description
of the Preferred Stock -- Dividends" in this Prospectus Supplement.
The Preferred Stock will be redeemable at any time on and after June 30, 2003,
at the option of Chase, in whole or in part, at $50.00 per share, plus accrued
and unpaid dividends (whether or not declared) from the immediately preceding
Dividend Payment Date (as defined herein) to the date fixed for redemption (but
without any accumulation for unpaid dividends for prior dividend periods). The
Preferred Stock may also be redeemed prior to June 30, 2003, in whole but not in
part, at the option of Chase, in the event of certain amendments to the Code in
respect of the dividends received deduction. See "Description of the Preferred
Stock -- Redemption" in this Prospectus Supplement. The Preferred Stock will not
be entitled to the benefits of any sinking fund.
The Preferred Stock will be represented by one or more global securities in
fully registered form, deposited with a custodian for, and registered in the
name of a nominee of, The Depositary Trust Company (the "Depositary"). See
"Description of the Preferred Stock -- Book Entry System" in this Prospectus
Supplement. Beneficial interests in the Preferred Stock will be shown on, and
transfers thereof will be effected only through records maintained by, the
Depositary and its participants.
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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. ANY
REPRESENTATION TO THE CONTRARY IN A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
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<S> <C> <C> <C>
PER SHARE $50.00 $0.625 $49.375
TOTAL $200,000,000 $2,500,000 $197,500,000
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</TABLE>
(1) Plus accrued dividends, if any, from May 21, 1998 to the date of delivery.
(2) Chase has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Underwriting" in this Prospectus Supplement.
(3) Before deducting expenses payable by Chase, estimated at $150,000.
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This Prospectus Supplement and the accompanying Prospectus may be used by
affiliates of Chase, including Chase Securities Inc., in connection with offers
and sales related to secondary market transactions in the Preferred Stock. Such
affiliates 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 shares of the Preferred Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued by Chase and accepted by the
several Underwriters and subject to certain other conditions. The Underwriters
reserve the right to withdraw, cancel or modify such offers and to reject orders
in whole or in part. It is expected that the delivery of the Preferred Stock
will be made in book-entry form through the facilities of the Depositary on or
about May 21, 1998 against payment therefor in immediately available funds.
CHASE SECURITIES INC. LEHMAN BROTHERS
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BEAR, STEARNS & CO. INC.
The date of this Prospectus Supplement is May 14, 1998.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED STOCK,
INCLUDING OVERALLOTMENT, STABILIZING TRANSACTIONS AND SYNDICATE SHORT COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
DESCRIPTION OF THE PREFERRED STOCK
The following description of the particular terms of the Preferred Stock
supplements and, to the extent inconsistent therewith, replaces the description
of the general terms and provisions of the Preferred Stock set forth under the
heading "Description of Preferred Stock" in the accompanying Prospectus, to
which description reference is hereby made. The Preferred Stock is a series of
the preferred stock of Chase. The description of certain provisions of the
Preferred Stock set forth below does not purport to be complete and is subject
to and qualified in its entirety by reference to the Certificate of Designations
relating to the Preferred Stock, a form of which will be filed with the
Securities and Exchange Commission at or prior to the time of issuance of the
Preferred Stock. Capitalized terms not defined herein have the meanings assigned
to such terms in the Prospectus.
GENERAL
The Preferred Stock is a single series consisting of 4,000,000 shares. The
Preferred Stock will be of the same class and rank equally as to dividends and
upon liquidation with all of Chase's currently outstanding series of preferred
stock.
The Preferred Stock will not be convertible into shares of Common Stock or
any other class or series of capital stock of Chase. The Preferred Stock will
not be subject to any sinking fund and will have no preemptive rights. The
Preferred Stock will be fully paid and nonassessable.
ChaseMellon Shareholder Services L.L.C. will be the transfer agent,
registrar and dividend disbursement agent for the Preferred Stock.
DIVIDENDS
General. Holders of shares of the Preferred Stock will be entitled to
receive cash dividends, payable quarterly in arrears on each share of the
Preferred Stock, when, as and if declared by Chase's Board of Directors or a
duly authorized committee thereof (the "Board of Directors") out of the assets
of Chase legally available therefor.
Dividends on the Preferred Stock will not be cumulative. If Chase fails to
declare a dividend with respect to a dividend period, the holders of the
Preferred Stock will have no right to receive a dividend with respect to such
dividend period, whether or not dividends are declared with respect to any
future dividend periods.
The initial dividend for the dividend period commencing on May 21, 1998 and
ending on and including September 30, 1998 will be $0.9024 per share and will be
payable, when, as and if declared by the Board of Directors, on September 30,
1998. Thereafter, dividends on the Preferred Stock will be payable quarterly,
when, as and if declared by the Board of Directors, on March 31, June 30,
September 30 and December 31 of each year (each a "Dividend Payment Date"), at
the annual rate of 4.96% (or in the annual amount of $2.48 per share) for each
dividend period ending on or prior to June 30, 2003. For each dividend period
commencing on or after July 1, 2003, dividends on the Preferred Stock will be
payable on each Dividend Payment Date, when, as and if declared by the Board of
Directors, at the Applicable Rate from time to time in effect.
A dividend period with respect to a Dividend Payment Date is the period
commencing on the day following the preceding Dividend Payment Date or the date
of original issuance of the Preferred Stock, as the case may be, and ending on
and including such Dividend Payment Date. Dividends will be payable to holders
of record as they appear on Chase's stock register on such record dates fixed
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by the Board of Directors, which record dates will be not more than 45 days
before the relevant Dividend Payment Dates.
The amount of dividends payable for any period shorter than a full dividend
period shall be computed on the basis of a 360-day year consisting of twelve
30-day months and, for any period less than one month, the actual number of days
elapsed in such period.
Applicable Rate. Except as provided below in this paragraph, the
"Applicable Rate" for each dividend period commencing on or after July 1, 2003
will be equal to the Effective Rate (as defined below) for such dividend period
less 0.20%, but not less than 5.46% per annum nor more than 11.46% per annum
(without taking into account any adjustments as described below under "Changes
in the Dividend Received Percentage"). The "Effective Rate" for any dividend
period commencing on or after July 1, 2003 will be equal to the highest of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year
Constant Maturity Rate (each as defined below) for such dividend period. In the
event that Chase determines in good faith that for any reason:
(i) any one of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate or the Thirty Year Constant Maturity Rate cannot be determined for any
dividend period, then the Effective Rate for such dividend period will be
equal to the higher of whichever two of such rates can be so determined; or
(ii) only one of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate can be determined
for any dividend period, then the Effective Rate for such dividend period
will be equal to whichever such rate can be so determined; or
(iii) none of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate or the Thirty Year Constant Maturity Rate can be determined for any
dividend period, then the Effective Rate for the preceding dividend period
will be continued for such dividend period.
Except as described below in this paragraph, the "Treasury Bill Rate" for
each applicable dividend period will be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate is published during the relevant
Calendar Period (as defined below)) for three-month U.S. Treasury bills, as
published weekly by the Federal Reserve Board (as defined below) during the
Calendar Period immediately preceding the last ten calendar days preceding the
dividend period for which the dividend rate on the Preferred Stock is being
determined. In the event that the Federal Reserve Board does not publish such a
weekly per annum market discount rate during any such Calendar Period, then the
Treasury Bill Rate for such dividend period will be the arithmetic average of
the two most recent weekly per annum market discount rates (or the one weekly
per annum market discount rate, if only one such rate is published during the
relevant Calendar Period) for three-month U.S. Treasury bills, as published
weekly during such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by Chase. In the event that a per annum
market discount rate for three-month U.S. Treasury bills is not published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Treasury Bill Rate
for such dividend period will be the arithmetic average of the two most recent
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate is published during the relevant Calendar
Period) for all of the U.S. Treasury bills then having remaining maturities of
not less than 80 nor more than 100 days, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board does not
publish such rates, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by Chase. In the event that Chase determines in
good faith that for any reason no such U.S. Treasury bill rates are published as
provided above during such Calendar Period, then the Treasury Bill Rate for such
dividend period will be the arithmetic average of the per annum market discount
rates based upon the closing bids during such Calendar Period for each of the
issues of marketable non-interest-bearing U.S. Treasury securities with a
remaining maturity of not less than 80 nor more than 100 days from the date of
each such
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quotation, as chosen and quoted daily for each business day in New York City (or
less frequently if daily quotations are not generally available) to Chase by at
least three recognized dealers in U.S. Government securities selected by Chase.
In the event that Chase determines in good faith that for any reason it cannot
determine the Treasury Bill Rate for any dividend period as provided above in
this paragraph, the Treasury Bill Rate for such dividend period will be the
arithmetic average of the per annum market discount rates based upon the closing
bids during such Calendar Period for each of the issues of marketable
interest-bearing U.S. Treasury securities with a remaining maturity of not less
than 80 nor more than 100 days from the date of each such quotation, as chosen
and quoted daily for each business day in New York City (or less frequently if
daily quotations are not generally available) to Chase by at least three
recognized dealers in U.S. Government securities selected by Chase.
Except as described below in this paragraph, the "Ten Year Constant
Maturity Rate" for each applicable dividend period will be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields (as
defined below) (or the one weekly per annum Ten Year Average Yield, if only one
such yield is published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period immediately
preceding the last ten calendar days preceding the dividend period for which the
dividend rate on the Preferred Stock is being determined. In the event that the
Federal Reserve Board does not publish such a weekly per annum Ten Year Average
Yield during any such Calendar Period, then the Ten Year Constant Maturity rate
for such dividend period will be the arithmetic average of the two most recent
weekly per annum Ten Year Average Yields (or the one weekly per annum Ten Year
Average Yield, if only one such yield is published during the relevant Calendar
Period), as published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by Chase. In the
event that a per annum Ten Year Average Yield is not published by the Federal
Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Ten Year Constant
Maturity Rate for such dividend period will be the arithmetic average of the two
most recent weekly per annum average yields to maturity (or the one weekly per
annum average yield to maturity, if only one such yield is published during the
relevant Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities (as
defined below)) then having remaining maturities of not less than eight nor more
than twelve years, as published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board does not publish such yields, by
any Federal Reserve Bank or by any U.S. Government department or agency selected
by Chase. In the event that Chase determines in good faith that for any reason
it cannot determine the Ten Year Constant Maturity Rate for any dividend period
as provided above in this paragraph, then the Ten Year Constant Maturity Rate
for such dividend period will be the arithmetic average of the per annum average
yields to maturity based upon the closing bids during such Calendar Period for
each of the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final maturity date not
less than eight nor more than twelve years from the date of each such quotation,
as chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to Chase by at least
three recognized dealers in U.S. Government securities selected by Chase.
Except as described below in this paragraph, the "Thirty Year Constant
Maturity Rate" for each applicable dividend period will be the arithmetic
average of the two most recent weekly per annum Thirty Year Average Yields (as
defined below) (or the one weekly per annum Thirty Year Average Yield, if only
one such yield is published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period immediately
preceding the last ten calendar days preceding the dividend period for which the
dividend rate on the Preferred Stock is being determined. In the event that the
Federal Reserve Board does not publish such a weekly per annum Thirty Year
Average Yield during any such Calendar Period, then the Thirty Year Constant
Maturity Rate for such dividend period will be the arithmetic average of the two
most recent weekly per annum Thirty Year Average Yields (or the one weekly per
annum Thirty Year Average Yield, if
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only one such yield is published during the relevant Calendar Period), as
published weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by Chase. In the event that a
per annum Thirty Year Average Yield is not published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, then the Thirty Year Constant Maturity Rate
for such dividend period will be the arithmetic average of the two most recent
weekly per annum average yields to maturity (or the one weekly per annum average
yield to maturity, if only one such yield is published during the relevant
Calendar Period) for all of the actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) then having remaining
maturities of not less than twenty-eight nor more than thirty years, as
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board does not publish such yields, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by Chase. In the event
that Chase determines in good faith that for any reason it cannot determine the
Thirty Year Constant Maturity Rate for any dividend period as provided above in
this paragraph, then the Thirty Year Constant Maturity Rate for such dividend
period will be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not less
than twenty-eight nor more than thirty years from the date of each such
quotation, as chosen and quoted daily for each business day in New York City (or
less frequently if daily quotations are not generally available) to Chase by at
least three recognized dealers in U.S. Government securities selected by Chase.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty
Year Constant Maturity Rate will each be rounded to the nearest five hundredths
of a percent.
The Applicable Rate with respect to each dividend period commencing on or
after July 1, 2003 will be calculated as promptly as practicable by Chase
according to the appropriate method described above. Chase will cause notice of
the Applicable Rate for the next dividend period to be sent to the holders of
the Preferred Stock.
As used above, the term "Calendar Period" means a period of fourteen
calendar days; the term "Federal Reserve Board" means the Board of Governors of
the Federal Reserve System; the term "Special Securities" means securities which
can, at the option of the holder, be surrendered at face value in payment of any
Federal estate tax or which provide tax benefits to the holder and are priced to
reflect such tax benefits or which were originally issued at a deep or
substantial discount; the term "Ten Year Average Yield" means the average yield
to maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of ten years); and the term "Thirty
Year Average Yield" means the average yield to maturity for actively traded
marketable U.S. Treasury fixed interest rate securities (adjusted to constant
maturities of thirty years).
Changes in the Dividends Received Percentage. In the past, legislation has
been proposed that would have affected certain corporate holders of the
Preferred Stock that own less than 20% (by vote and value) of the stock of
Chase. Such legislation would have reduced the dividends received deduction
applicable to the Preferred Stock. No such proposals are currently pending
before the United States Congress, but there can be no assurance that similar
legislation will not be enacted in the future or that other legislation will not
be enacted that would reduce the dividends received deduction available to
corporate holders of the Preferred Stock.
If, at any time prior to November 21, 1999, one or more amendments to the
Code are enacted which reduce the percentage of the dividends received deduction
(currently 70%) as specified in Section 243(a)(1) of the Code or any successor
provision (the "Dividends Received Percentage"), the amount of each dividend (if
declared) on each share of the Preferred Stock for dividend payments made on or
after the effective date of such change in the Code will be adjusted by
multiplying the amount of the dividend payable determined as described above
under "Dividends" (before adjustment) by a factor, which will be the number
determined in accordance with the
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following formula (the "DRD Formula"), and rounding the result to the nearest
cent (with one-half cent rounded up):
1 - [.35 (1 - .70)]
------------------------------
1 - [.35 (1 - DRP)]
For the purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage (expressed as a decimal) applicable to the dividend in question;
provided, however, that if the Dividends Received Percentage applicable to the
dividend in question shall be less than 50%, then the DRP shall equal .50. No
amendment to the Code, other than a change in the percentage of the dividends
received deduction set forth in Section 243(a)(1) of the Code, or any successor
provision thereto, will give rise to an adjustment. Notwithstanding the
foregoing provisions, in the event that, with respect to any such amendment,
Chase receives either an unqualified opinion of nationally recognized
independent tax counsel selected by Chase or a private letter ruling or similar
form of authorization from the Internal Revenue Service ("IRS") to the effect
that such an amendment does not apply to dividends payable on the Preferred
Stock, then any such amendment will not result in the adjustment provided for
pursuant to the DRD Formula. The opinion referenced in the previous sentence
will be based upon the legislation amending or establishing the DRP or upon a
published pronouncement of the IRS addressing such legislation.
If any such amendment to the Code is enacted after the dividend payable on
a Dividend Payment Date has been declared, the amount of the dividend payable on
such Dividend Payment Date will not be increased; instead, additional dividends
(the "Post Declaration Date Dividends") equal to the excess, if any, of (x) the
product of the dividend paid by Chase on such Dividend Payment Date and the DRD
Formula (where the DRP used in the DRD Formula would be equal to the greater of
the Dividend Received Percentage and .50) applicable to the dividend in question
over (y) the dividend paid by Chase on such Dividend Payment Date, will be
payable (if declared) to holders of Preferred Stock on the record date
applicable to the next succeeding Dividend Payment Date or, if the Preferred
Stock is called for redemption prior to such record date, to holders of
Preferred Stock on the redemption date, as the case may be, in addition to any
other amounts payable on such date. Notwithstanding the foregoing provisions,
if, with respect to any such amendment, Chase receives either an unqualified
opinion of nationally recognized independent tax counsel selected by Chase or a
private letter ruling or similar form of authorization from the IRS to the
effect that such amendment does not apply to a dividend so payable on the
Preferred Stock, then such amendment will not result in the payment of Post
Declaration Date Dividends. The opinion referenced in the previous sentence will
be based upon the legislation amending or establishing the DRP or upon a
published pronouncement of the IRS addressing such legislation.
If any such amendment to the Code is enacted and the reduction in the
Dividends Received Percentage retroactively applies to a Dividend Payment Date
as to which Chase previously paid dividends on the Preferred Stock (each, an
"Affected Dividend Payment Date"), Chase will pay (if declared) additional
dividends (the "Retroactive Dividends") to holders of Preferred Stock on the
Record Date applicable to the next succeeding Dividend Payment Date (or, if such
amendment is enacted after the dividend payable on such Dividend Payment Date
has been declared, to holders of Preferred Stock on the record date following
the date of enactment) or, if the Preferred Stock is called for redemption prior
to such record date, to holders of Preferred Stock on the redemption date, as
the case may be, in an amount equal to the excess of (x) the product of the sum
of the dividends paid by Chase on each Affected Dividend Payment Date and the
DRD Formula (where the DRP used in the DRD Formula would be equal to the greater
of the Dividends Received Percentage and .50) applied to each Affected Dividend
Payment Date over (y) the sum of the dividends paid by Chase on each Affected
Dividend Payment Date. Chase will only make one payment of Retroactive Dividends
for any such amendment. Notwithstanding the foregoing provisions, if, with
respect to any such amendment, Chase receives either an unqualified opinion of
nationally recognized independent tax counsel selected by Chase or a private
letter ruling or similar form of authorization from the IRS
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to the effect that such amendment does not apply to a dividend payable on an
Affected Dividend Payment Date for the Preferred Stock, then such amendment will
not result in the payment of Retroactive Dividends with respect to such Affected
Dividend Payment Date. The opinion referenced in the previous sentence will be
based upon the legislation amending or establishing the DRP or upon a published
pronouncement of the IRS addressing such legislation.
Notwithstanding the foregoing, no adjustment in the dividends payable by
Chase will be made, and no Post Declaration Date Dividends or Retroactive
Dividends will be payable by Chase, in respect of the enactment of any amendment
to the Code at any time on or after November 21, 1999 that reduces the Dividends
Received Percentage.
In the event that the amount of dividends payable per share of the
Preferred Stock is adjusted pursuant to the DRD Formula and/or Post Declaration
Date Dividends or Retroactive Dividends are to be paid, Chase will give notice
of each such adjustment and, if applicable, any Post Declaration Date Dividends
and Retroactive Dividends to the holders of Preferred Stock.
Unless the context otherwise requires, references to dividends in this
Prospectus Supplement include dividends as adjusted by the DRD Formula, Post
Declaration Date Dividends and Retroactive Dividends. Chase's calculation of the
dividends payable, as so adjusted and as certified accurate as to calculation
and reasonable as to method by the independent certified public accountants then
regularly engaged by Chase, will be final and not subject to review absent
manifest error.
If the Dividends Received Percentage is reduced to 50% or less prior to
November 21, 1999, Chase may, at its option, redeem the Preferred Stock as a
whole but not in part as described below. See "Redemption."
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Chase, the holders of the Preferred Stock at the time outstanding
will be entitled to receive out of assets of Chase available for distribution to
stockholders, before any distribution of assets is made to holders of Common
Stock or any other class of stock ranking junior to the Preferred Stock upon
liquidation, liquidating distributions in the amount of $50.00 per share, plus
accrued and unpaid dividends (whether or not declared and including any increase
in dividends payable due to changes in the Dividends Received Percentage) from
the immediately preceding Dividend Payment Date or the date of original issuance
of the Preferred Stock, as the case may be, to the date of the liquidating
distribution (but without any accumulation of any unpaid dividends for prior
dividend periods).
VOTING RIGHTS
The holders of the Preferred Stock will not be entitled to vote, except in
the limited circumstance hereinafter described, or as expressly required by
applicable law.
The Preferred Stock will provide that the affirmative vote or consent of
the holders of at least two-thirds of the outstanding shares of all series of
preferred stock, voting together as a single class without regard to series,
will be required to (a) create any class or series of stock which shall have
preference as to dividends or distribution of assets over any outstanding series
of preferred stock other than a series which shall not have any right to object
to such creation or (b) alter or change the provisions of the Charter so as to
adversely affect the voting powers, preferences or special rights of the holders
of a series of preferred stock; provided that if such amendment shall not
adversely affect all series of preferred stock, such amendment need only be
approved by the holders of at least two-thirds of the shares of all series of
preferred stock adversely affected thereby, voting together as a single class
without regard to series.
In addition, if at the time of any annual meeting of Chase's stockholders
the equivalent of six quarterly dividends payable on any outstanding series of
cumulative preferred stock is in default, the number of Chase's directors will
be increased by two and the holders of all outstanding series of
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preferred stock ranking on a parity as to dividends, voting as a single class
without regard to series, will be entitled to elect those additional two
directors at each such annual meeting. Each director elected by the holders of
shares of preferred stock as aforesaid shall continue to serve as such director
for the full term for which he or she shall have been elected, notwithstanding
that prior to the end of such term such default shall cease to exist. Because
the Preferred Stock is noncumulative, a failure to pay dividends on the
Preferred Stock for six quarterly dividend periods would not result in a
"default" with respect to the Preferred Stock within the meaning of the
foregoing voting rights provision. However, because the Preferred Stock ranks on
a parity with Chase's other currently outstanding series of preferred stock, in
the event of such a default with respect to any series of cumulative preferred
stock currently outstanding, the holders of the Preferred Stock would be
entitled to join with the holders of Chase's other series of preferred stock to
elect the two additional directors as described above.
REDEMPTION
Prior to June 30, 2003, the Preferred Stock is not redeemable, except under
certain limited circumstances as described below. On or after such date, each
share of the Preferred Stock will be redeemable, in whole or in part, at Chase's
option, at any time and from time to time upon not less than thirty nor more
than sixty days' notice, at $50.00 per share, plus accrued and unpaid dividends
(whether or not declared and including any increase in dividends payable due to
changes in the Dividends Received Percentage) from the immediately preceding
Dividend Payment Date to the date fixed for redemption (but without any
accumulation for unpaid dividends for prior dividend periods on the Preferred
Stock).
However, if at any time prior to November 21, 1999, one or more amendments
to the Code are enacted that reduce the Dividends Received Percentage to 50% or
less, and, as a result, the amount of dividends on the Preferred Stock payable
on any Dividend Payment Date may be adjusted upwards as described above under
"Changes in the Dividends Received Percentage," Chase, at its option, may redeem
all, but not less than all, of the outstanding shares of the Preferred Stock,
provided that, within sixty days of the date on which an amendment to the Code
is enacted that reduces the Dividends Received Percentage to 50% or less, Chase
sends notice to holders of the Preferred Stock of such redemption. Any
redemption of the Preferred Stock pursuant to this paragraph will take place on
the date specified in the notice, which will be not less than thirty nor more
than sixty days' from the date such notice is sent to holders of the Preferred
Stock. Any such redemption of the Preferred Stock will be at a redemption price
of $51.00 per share, plus accrued and unpaid dividends (whether or not declared
and including any increase in dividends payable due to changes in the Dividends
Received Percentage) from the immediately preceding Dividend Payment Date or the
date of original issuance of the Preferred Stock, as the case may be, to the
date fixed for redemption (but without any accumulation for unpaid dividends for
prior dividend periods on the Preferred Stock).
Under certain circumstances, prior approval of the Federal Reserve Board
may be required in order for Chase to exercise its right to redeem shares of the
Preferred Stock.
Holders of the Preferred Stock will have no right to require redemption of
the Preferred Stock.
BOOK-ENTRY SYSTEM
Upon issuance, the Preferred Stock will be represented by one or more
certificates in registered, global form (collectively, the "Global Security").
The Global Security will be deposited with, or on behalf of, the Depositary and
registered in the name of a nominee of the Depositary. Except under the limited
circumstances described below, beneficial interests in the Global Security will
not be exchangeable for Preferred Stock in certificated form.
Ownership of beneficial interests in the Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") or persons that may hold interests
S-8
<PAGE> 9
through participants. In addition, ownership of beneficial interests by
participants in the Global Security will be evidenced only by, and the transfer
of those ownership interests will be effected only through, records maintained
by the Depositary or its nominee. Ownership of beneficial interests in the
Global Security by persons that hold through participants will be evidenced only
by, and the transfer of those ownership interests within such participant will
be effected only through, records maintained by such participant. The Depositary
has no knowledge of the actual beneficial owners of the Preferred Stock.
Beneficial owners will not receive written confirmation from the Depositary of
their purchase, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the participants through which the beneficial
owners entered the transaction. The laws of some jurisdictions may require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in the Global Security.
Chase has been advised by the Depositary that upon the issuance of the
Global Security and its deposit with the Depositary, the Depositary will
immediately credit, on its book-entry registration and transfer system, the
respective beneficial interests represented by the Global Security to the
accounts of participants.
Payments in respect of shares of Preferred Stock represented by the Global
Security registered in the name of or held by the Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the registered
owner and holder of the Global Security representing such shares of Preferred
Stock. Chase has been advised by the Depositary that upon receipt of any payment
in respect of securities such as the Global Security, the Depositary will
immediately credit, on its book-entry registration and transfer system, accounts
of participants with payments in amounts proportionate to their respective
beneficial interests in the Global Security as shown in the records of the
Depositary. Payments by participants to owners of beneficial interests in the
Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name" and will be the sole
responsibility of such participants, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither Chase nor any of its agents will have any responsibility or
liability for any aspect of the records of the Depositary, any nominee or any
participant relating to, or payments made on account of, beneficial interests in
the Global Security or for maintaining, supervising or reviewing any of the
records of the Depositary, any nominee or any participant relating to such
beneficial interests.
The Global Security will be exchangeable for shares of Preferred Stock in
certificated form registered in the name of, and a transfer of the Global
Security may be registered to, any person other than the Depositary or its
nominee, only if:
(a) the Depositary notifies Chase that it is unwilling or unable to
continue as Depositary for the Global Security or if at any time the
Depositary ceases to be registered or in good standing under the Securities
Exchange Act of 1934 (the "Exchange Act"); or
(b) Chase in its sole discretion determines that the Global Security
shall be exchangeable for shares of Preferred Stock in certificated form.
If the Global Security becomes exchangeable pursuant to the preceding
sentence, it will be exchangeable in whole for shares of Preferred Stock in
certificated form, registered in the name or names of such persons as shall be
requested by or on behalf of the Depositary (in accordance with its customary
procedures).
Except as provided above, owners of beneficial interests in the Global
Security will not be entitled to shares of Preferred Stock in certificated form
and will not be considered the holders thereof for any purpose, and the Global
Security shall not be exchangeable except for another permanent global
certificate evidencing the Preferred Stock to be registered in the name of the
Depositary or its nominee. Accordingly, each person owning a beneficial interest
in the Global
S-9
<PAGE> 10
Security must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder of Preferred Stock.
Chase understands that, under existing industry practices, in the event
that Chase requests any action of holders, or an owner of a beneficial interest
in the Global Security desires to give or take any action that a holder is
entitled to give or take, the Depositary would authorize the participants
holding the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
The Depositary has advised Chase that the Depositary is a limited purpose
trust company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
Exchange Act. The Depositary was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depositary's participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. The Depositary is owned by a number of its participants and
by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. The rules applicable to the
Depositary and its participants are on file with the Securities and Exchange
Commission.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") between Chase and the Underwriters named below,
Chase has agreed to sell to the several Underwriters, and the several
Underwriters have agreed to purchase from Chase, the following respective number
of shares of the Preferred Stock set forth below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Chase Securities Inc. ...................................... 1,340,000
Lehman Brothers Inc. ....................................... 1,340,000
Bear, Stearns & Co. Inc. ................................... 1,320,000
---------
Total............................................. 4,000,000
=========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Preferred Stock
offered hereby if any of the Preferred Stock is purchased.
Chase has been advised that the Underwriters propose initially to offer the
Preferred Stock to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession of $0.40 per share. The Underwriters may allow and such
dealers may reallow to other dealers a concession not exceeding $0.20 per share.
After the initial public offering, the public offering price and such
concessions may be changed.
Chase has agreed to indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act of 1933, as amended, or to
contribute to payments which the Underwriters may be required to make in respect
thereof.
S-10
<PAGE> 11
Chase Securities Inc. is a wholly-owned subsidiary of Chase. The
underwriting arrangements for this offering comply with the requirements of Rule
2720 of the Conduct Rules of the National Association of Securities Dealers,
Inc. ("NASD") regarding an NASD member firm's underwriting securities of an
affiliate. In accordance with Rule 2720, no underwriter may make sales in this
offering to any discretionary account without the prior approval of the
customer.
Certain of the Underwriters engage in transactions with and perform
services for Chase and its subsidiaries in the ordinary course of business.
This Prospectus Supplement and the accompanying Prospectus may be used by
affiliates of Chase, including Chase Securities Inc., in connection with offers
and sales related to secondary market transactions in the Preferred Stock. Such
affiliates 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.
In connection with the offering of the Preferred Stock, Chase Securities
Inc., on behalf of the Underwriters, may engage in overallotment, stabilizing
transactions and syndicate covering transactions in accordance with Regulation M
under the Exchange Act. Overallotments involve sales in excess of the offering
size, which creates a short position for the Underwriters. Stabilizing
transactions involve bids to purchase the Preferred Stock in the open market for
the purpose of pegging, fixing or maintaining the price of the Preferred Stock.
Syndicate covering transactions involve purchases of the Preferred Stock in the
open market after the distribution has been completed in order to cover short
positions. Such stabilizing transactions and syndicate covering transactions may
cause the price of the Preferred Stock to be higher than it would otherwise be
in the absence of such transactions. Such activities, if commenced, may be
discontinued at any time
The Preferred Stock will not be listed on any securities exchange. The
Preferred Stock is a new series of Chase's preferred stock with no established
trading market. The Underwriters have informed Chase that they intend to make a
market in the Preferred Stock, but are under no obligation to do so and such
market making may be terminated at any time. Therefore, no assurance can be
given as to the liquidity of, or the trading market for, the Preferred Stock.
EXPERTS
Chase's financial statements incorporated in this Prospectus Supplement and
the accompanying Prospectus by reference to Chase's Annual Report on Form 10-K
for the year ended December 31, 1997 have been so incorporated in reliance on
the reports of Price Waterhouse LLP, independent accountants, given upon the
authority of said firm as experts in auditing and accounting.
LEGAL OPINIONS
The validity of the shares of Preferred Stock being offered hereby will be
passed upon for Chase by Simpson Thacher & Bartlett, New York, New York, and for
the Underwriters by Cravath, Swaine & Moore, New York, New York. Cravath, Swaine
& Moore has represented and continues to represent Chase and its subsidiaries in
a substantial number of matters on a regular basis.
S-11
<PAGE> 12
PROSPECTUS
[CHASE LOGO]
The Chase Manhattan Corporation
Debt Securities
Preferred Stock
Depositary Shares
Common Stock
Warrants
The Chase Manhattan Corporation (the "Company") intends to issue from time
to time in one or more series its (i) unsecured debt securities, which may
either be senior (the "Senior Securities") or subordinated (the "Subordinated
Securities"; the Senior Securities and the Subordinated Securities being
referred to herein collectively as the "Debt Securities"), (ii) warrants to
purchase the Debt Securities (the "Debt Warrants"), (iii) shares of preferred
stock, par value $1 per share (the "Preferred Stock"), which may be issued in
the form of depositary shares evidenced by depositary receipts (the "Depositary
Shares"), (iv) warrants to purchase the Preferred Stock or Depositary Shares
(the "Preferred Stock Warrants"), (v) shares of common stock, par value $1 per
share (the "Common Stock"), (vi) warrants to purchase shares of Common Stock
(the "Common Stock Warrants"; the Debt Warrants, Preferred Stock Warrants and
Common Stock Warrants being referred to herein collectively as the "Securities
Warrants"); and (vii) currency warrants entitling the holder to receive the cash
value in U.S. dollars of the right to purchase or the right to sell foreign
currencies or composite currencies, including European Currency Units ("ECU")
(the "Currency Warrants"), having an aggregate initial public offering price not
to exceed $4,060,617,500 or the equivalent thereof in one or more foreign
currencies or composite currencies, including ECU, on terms to be determined at
the time of sale. The Debt Securities, Preferred Stock, Depositary Shares,
Common Stock, Securities Warrants and Currency Warrants offered hereby
(collectively, the "Offered Securities") may be offered, separately or as units
with other Offered Securities, in separate series in amounts, at prices and on
terms to be determined at the time of sale and to be set forth in a supplement
to this Prospectus (a "Prospectus Supplement").
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Securities will be
subordinate to all existing and future Senior Indebtedness and, under certain
circumstances, Additional Senior Obligations (each as defined herein). The
holders of Subordinated Securities of any series may be obligated at maturity to
exchange such Subordinated Securities for Capital Securities of the Company (as
defined herein). Unless otherwise indicated in the applicable Prospectus
Supplement, the maturity of the Subordinated Securities will be subject to
acceleration only in the event of certain events of bankruptcy or reorganization
of the Company. See "Description of Debt Securities".
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, currency,
denomination, maturity, priority, interest rate (which may be variable or
fixed), time of payment of interest, terms for optional redemption or repayment
or for sinking fund payments, terms for conversion into or exchange for Capital
Securities or other Offered Securities, the designation of the Trustee acting
under the applicable Indenture and the initial public offering price; (ii) in
the case of Preferred Stock, the specific title and stated value, the number of
shares or fractional interests therein, and the dividend, liquidation,
redemption, conversion, voting and other rights, the initial public offering
price, and whether interests in the Preferred Stock will be represented by
Depositary Shares; (iii) in the case of Common Stock, the initial offering
price; (iv) in the case of Securities Warrants, the exercise period, offering
price, exercise price and detachability thereof; (v) in the case of Currency
Warrants, whether the Currency Warrants are call warrants or put warrants, the
currency to which U.S. dollars will be compared, the method of determining the
cash value payable upon exercise of such Currency Warrants, the aggregate
amount, offering price and exercise period of such Currency Warrants, the risks
associated with such Currency Warrants and the manner of and any restrictions on
the exercise of such Currency Warrants (see "Risk Factors Relating to Currency
Warrants"); and (vi) in the case of all Offered Securities, whether such Offered
Securities will be offered separately or as a unit with other Offered
Securities, will be set forth in the accompanying Prospectus Supplement. The
Prospectus Supplement will also contain information, where applicable, about
certain United States Federal income tax considerations relating to, and any
listing on a securities exchange of, the Offered Securities covered by the
Prospectus Supplement.
The Offered Securities may be sold for public offering to underwriters or
dealers, which may be a group of underwriters represented by one or more
managing underwriters. In addition, the Offered Securities may be sold directly
by the Company or through agents designated from time to time. See "Plan of
Distribution". The names of any such agents, dealers or managing underwriters,
and of any underwriters, involved in the sale of the Offered Securities in
respect of which this Prospectus is being delivered and the applicable agent's
commission, dealer's purchase price or underwriter's discount will be set forth
in the Prospectus Supplement. The net proceeds to the Company from such sale
will also be set forth in the Prospectus Supplement. Any underwriters, dealers
or agents participating in the offering of Offered Securities may be deemed
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). See "Plan of Distribution".
This Prospectus and the related Prospectus Supplement may be used by direct
or indirect wholly-owned subsidiaries of the Company, including Chase Securities
Inc., in connection with offers and sales related to secondary market
transactions in Offered Securities. Such sales will be made at prices related to
prevailing market prices at the time of sale.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF OFFERED SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. THE DEBT SECURITIES WILL BE UNSECURED
OBLIGATIONS OF THE COMPANY, WILL NOT BE OBLIGATIONS OF A DEPOSITORY INSTITUTION
AND WILL NOT BE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 9, 1997.
<PAGE> 13
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the offices of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the following regional offices of the
Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can also be obtained from the Commission's
Public Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Certain of the Company's securities
are listed on the New York Stock Exchange, and reports, proxy material and other
information concerning the Company may be inspected at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. The
Company is an electronic filer, and the Commission maintains a website (located
at http://www.sec.gov) that contains reports, proxy statements and other
information regarding registrants that file electronically.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(c) The Company's Current Reports on Form 8-K dated January 23, 1997,
March 18, 1997, March 18, 1997 and April 18, 1997; and
(d) The descriptions of the Common Stock and the Preferred Stock set
forth in the Company's Registration Statements filed pursuant to Section 12
of the Exchange Act and any amendment or report filed for the purpose of
updating those descriptions.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Offered Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in the accompanying Prospectus
Supplement, or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL
REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED
HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS SHOULD
BE DIRECTED TO: THE CHASE MANHATTAN CORPORATION, 270 PARK AVENUE, NEW YORK, NEW
YORK 10017, ATTENTION: OFFICE OF THE SECRETARY, TELEPHONE (212) 270-4040.
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$", "dollars", "U.S.
dollars" or "U.S.$").
2
<PAGE> 14
THE CHASE MANHATTAN CORPORATION
GENERAL
The Company is a bank holding company organized under the laws of Delaware
in 1968 and is registered under the Bank Holding Company Act of 1956, as
amended. On March 31, 1996, The Chase Manhattan Corporation ("Old Chase") merged
with and into the Company and the Company changed its name from "Chemical
Banking Corporation" to "The Chase Manhattan Corporation." At March 31, 1997,
the Company was the largest bank holding company in the United States in terms
of total assets.
The Company conducts domestic and international financial services
businesses through various bank and non-bank subsidiaries. The principal bank
subsidiaries of the Company are The Chase Manhattan Bank, a New York banking
corporation headquartered in New York City (the "Bank"), Texas Commerce Bank
National Association, a national bank headquartered in Texas ("Texas Commerce"),
and Chase Manhattan Bank USA, National Association, a national bank
headquartered in Delaware ("Chase USA"). The principal non-bank subsidiary of
the Company is Chase Securities Inc., which is engaged in securities
underwriting and dealing activities.
The merger of Old Chase with and into the Company was accounted for as a
pooling-of-interests and, accordingly, the information presented in this
Prospectus Supplement and the accompanying Prospectus reflects the combined
results of Old Chase and the Company as if the merger had been in effect for all
periods presented.
BUSINESS
The activities of the Company and its subsidiaries are internally
organized, for management reporting purposes, into two major business franchises
(Global Wholesale Banking and Regional and Nationwide Consumer Banking) and
Corporate.
Global Wholesale Banking
Global Wholesale Banking provides financing, advisory, sales and trading,
trade finance, asset management, private banking and operating services to
corporations, institutions, governments and wealthy individuals worldwide.
Global Wholesale Banking operates in more than 50 countries, including major
operations in all key international financial centers. Global Wholesale Banking
encompasses investment banking and corporate lending, global markets activities,
equity investing, private banking, asset management and information and
transaction services. 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
The Regional and Nationwide Consumer Banking franchise included, as of
March 31, 1997, the third largest bank credit card issuer in the U.S., the third
largest originator and second largest servicer of residential mortgages and a
leading provider of auto financing and other consumer lending products. The
Company maintains 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. Additionally, included in Regional
and Nationwide Consumer Banking is Texas Commerce, which, as of March 31, 1997,
was the second largest bank in Texas and a leader in providing financial
products and services to businesses and individuals throughout Texas.
Corporate
Corporate includes the management results attributed to the Company's
investment in The CIT Group Holdings, Inc. and some effects remaining at the
corporate level after the implementation of management
3
<PAGE> 15
accounting policies, including residual credit provisions and tax expenses.
Corporate also includes one-time unallocated special items, such as
merger-related restructuring charges and tax refunds.
The Company is a Delaware corporation with its principal office at 270 Park
Avenue, New York, New York 10017. Its telephone number is (212) 270-6000.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The following are the consolidated ratios of earnings to fixed charges and
the ratios of earnings to combined fixed charges and preferred stock dividend
requirements for each of the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ ------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits............ 1.92 1.66 1.90 1.86 1.62 1.50
Including Interest on Deposits............ 1.47 1.32 1.41 1.42 1.31 1.21
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements:
Excluding Interest on Deposits............ 1.86 1.60 1.82 1.76 1.52 1.41
Including Interest on Deposits............ 1.45 1.30 1.38 1.38 1.27 1.18
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and of
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income from continuing operations plus total taxes based
on income and fixed charges. Fixed charges, excluding interest on deposits,
include interest expense (other than on deposits), one-third (the proportion
deemed representative of the interest factor) of rents, net of income from
subleases, and capitalized interest. Fixed charges, including interest on
deposits, include all interest expense, one-third (the proportion deemed
representative of the interest factor) of rents, net of income from subleases,
and capitalized interest.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Offered
Securities offered hereby will be added to the general funds of the Company and
will be available for general corporate purposes, which may include the
reduction of short-term indebtedness, equity investments in or extensions of
credit to its bank and non-bank subsidiaries, the reduction of outstanding
long-term indebtedness of the Company, the redemption of certain of the
Company's outstanding preferred stock, or the financing of possible business
expansion. Pending specific application, the net proceeds will be invested
temporarily or applied to the reduction of short-term indebtedness. Except as
otherwise described in a Prospectus Supplement, specific application of the net
proceeds to such purposes will not have been made at the date of the applicable
Prospectus Supplement, although the management of the Company will have
determined that funds should be raised at that time in anticipation of the
future funding requirements of the Company or its subsidiaries or in
anticipation of repayments of borrowings or redemptions of preferred stock.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of any Debt Securities
and the extent, if any, to which such general provisions may apply to such Debt
Securities will be described in the Prospectus Supplement relating to such Debt
Securities.
4
<PAGE> 16
The Senior Securities will be issued from time to time in series under an
Indenture dated as of December 1, 1989, as amended, between the Company and
Bankers Trust Company, as Trustee (the "Senior Indenture"). The Subordinated
Securities will be issued from time to time in series under an Indenture dated
as of April 1, 1987, as amended and restated as of December 15, 1992, and as
further supplemented as of October 8, 1996, between the Company and First Trust
of New York, National Association, as Trustee (the "Subordinated Indenture").
The Senior Indenture and the Subordinated Indenture are herein referred to
collectively as the "Indentures".
The statements under this caption are brief summaries of certain provisions
contained in the Indentures, do not purport to be complete and are qualified in
their entirety by reference to the Indentures, copies of which are exhibits to
the Registration Statement of which this Prospectus is a part. Numerical
references in parentheses below are to sections of the applicable Indenture.
Wherever capitalized terms are used but not defined herein, such terms shall
have the meanings assigned to them in the applicable Indenture, it being
intended that such referenced sections of the Indentures and such defined terms
shall be incorporated herein by reference.
Neither Indenture limits the amount of Debt Securities which may be issued
thereunder and Debt Securities may be issued under either of the Indentures up
to the aggregate principal amount which may be authorized from time to time by
the Company. The Senior Securities will be unsecured and will rank on a parity
with all other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Securities will be unsecured and will be subordinated and junior to
all Senior Indebtedness (as defined below under "Subordinated
Securities -- Subordination") and, in certain circumstances relating to the
dissolution, winding-up, liquidation or reorganization of the Company, to all
Additional Senior Obligations (as defined below under "Subordinated
Securities -- Subordination") to the extent set forth below under "Subordinated
Securities". Because the Company is a holding company, the right of the Company
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 (and thus the ability of holders of the Debt
Securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary, except to the extent that the
Company may itself be recognized as a creditor of that subsidiary. Claims on the
Company's subsidiaries by creditors other than the Company include long-term
debt and substantial obligations with respect to deposit liabilities, Federal
funds purchased, securities sold under repurchase agreements, commercial paper,
and other short-term borrowings.
The Debt Securities may be issued in one or more separate series of Senior
Securities and/or one or more separate series of Subordinated Securities.
Reference is made to the Prospectus Supplement relating to the particular series
of Debt Securities offered thereby for the terms of such Debt Securities,
including, where applicable: (i) the specific title of such Debt Securities;
(ii) any limit on the aggregate principal amount or aggregate initial offering
price of such Debt Securities; (iii) the purchase price of such Debt Securities
(expressed as a percentage of the principal amount thereof); (iv) the date or
dates on which the principal of such Debt Securities will be payable and the
provisions, if any, for extension of such payment date or dates; (v) the rate or
rates per annum at which such Debt Securities will bear interest, if any,
including the rate of interest, if any, applicable to overdue payments of
principal, or the method by which any such rate or rates will be determined and
the dates on which such interest, if any, will be payable, the record dates for
such interest payment dates, and the date from which such interest, if any, will
accrue; (vi) the place or places where the principal of (and premium, if any)
and interest, if any, with respect to the Debt Securities will be payable; (vii)
the terms of any mandatory or optional redemption provisions applicable to the
Debt Securities; (viii) the terms of any sinking fund and analogous provisions
with respect to the Debt Securities; (ix) authorized denominations of the Debt
Securities (if other than denominations of $1,000 and integral multiples
thereof); (x) if other than the currency of the United States, the currency or
currencies, including ECU and other composite currencies, in which payment of
the principal of (and premium, if any) and interest, if any, on the Debt
Securities will be payable (which may be different for principal, premium and
interest); (xi) if the principal of (and premium, if any) or interest, if any,
on such Debt Securities are to be payable at the election of the Company or a
holder thereof in one or more currencies or composite currencies, the currencies
or composite currencies in which payment may be made and the manner of making
such
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<PAGE> 17
election; (xii) any provisions relating to the conversion or exchange of such
Debt Securities; (xiii) the index, if any, with reference to which the amount of
payments of principal of (and premium, if any) or interest, if any, on such Debt
Securities will be determined; (xiv) whether such Debt Securities are Senior
Securities or Subordinated Securities, or include both; (xv) the portion of the
principal amount of such Debt Securities which will be payable upon declaration
of acceleration of the maturity thereof, if other than the principal amount
thereof; (xvi) any Events of Default applicable to such Debt Securities (if not
set forth in the applicable Indenture); (xvii) if such Debt Securities are
Senior Securities, whether the provisions of the Senior Indenture relating to
"Defeasance and Covenant Defeasance" will be applicable to such Debt Securities;
(xviii) whether any of such Debt Securities are to be issuable in permanent
global form; (xix) the terms of any Currency Warrants or Securities Warrants
being offered with such Debt Securities; and (xx) any other specific terms of
such Debt Securities (including any covenants applicable to the Debt Securities
if not set forth in the applicable Indenture).
The Debt Securities offered hereby will be issued only in fully registered
form without coupons. The Indentures also provide that Debt Securities of a
series may be issued as permanent global Debt Securities. See "Permanent Global
Debt Securities" below. No service charge will be made for any transfer or
exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Unless otherwise provided in the applicable Prospectus Supplement,
principal of (and premium, if any) and interest, if any, on the Debt Securities
will be payable, and the Debt Securities offered hereby will be transferable or
exchangeable, at the corporate trust office of the Bank in New York City,
provided that payment of interest on any Debt Securities may be made at the
option of the Company by check mailed to the registered holders of the Debt
Securities at their registered addresses. The Company will have the right to
require a holder of any Debt Security, in connection with the payment of the
principal of (and premium, if any) and interest, if any, on such Debt Security,
to certify information to the Company or, in the absence of such certification,
the Company will be entitled to rely on any legal presumption to enable the
Company to determine its duties and liabilities, if any, to deduct or withhold
taxes, assessments or governmental charges from such payment.
If the principal of (and premium, if any) or interest, if any, on any Debt
Securities are to be payable in any currency other than U.S. dollars or, at the
election of the Company or a holder thereof, in one or more currencies or
composite currencies, or if any index is used to determine the amount of
payments of principal of (and premium, if any) or interest, if any, on any
series of Debt Securities, any special Federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus Supplement
relating thereto.
Some of the Debt Securities may be issued as original issue discount Debt
Securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates), to be sold at a discount below their stated
principal amount. Federal income tax, accounting and other special
considerations applicable to any such original issue discount Debt Securities
will be described in the Prospectus Supplement relating thereto.
Neither Indenture contains any restriction on the Company's ability to
enter into a highly leveraged transaction or any provision affording special
protection to holders of Debt Securities in the event the Company engages in a
highly leveraged transaction. Further, neither Indenture contains any provisions
that would provide protection to holders of Debt Securities upon a sudden and
dramatic decline in the credit quality of the Company resulting from a takeover,
recapitalization or similar restructuring of the Company.
The Debt Securities of certain series may be issued under the Indentures
upon the exercise of Debt Warrants issued with other Debt Securities or upon
exchange or conversion of exchangeable or convertible Debt Securities. The
specific terms of any such Debt Warrants, the specific terms of exchange or
conversion of any such Debt Securities and the specific terms of the Debt
Securities issuable upon the exercise of any such Debt Warrants or upon any such
exchange or conversion will be described in the Prospectus Supplement relating
to any Debt Securities issued with Debt Warrants or any such exchangeable or
convertible Debt Securities. See "Description of Securities Warrants" below.
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<PAGE> 18
SENIOR SECURITIES
The Senior Securities will be direct, unsecured obligations of the Company
and will constitute Senior Indebtedness issued on a parity with the other Senior
Indebtedness of the Company. As of March 31, 1997, Senior Indebtedness and
Additional Senior Obligations of the Company aggregated approximately $7.6
billion. See "Subordinated Securities -- Subordination" below.
Limitation on Disposition of Stock of the Bank. The Senior Indenture
contains a covenant by the Company that, so long as any of the Senior Securities
are outstanding, but subject to the rights of the Company in connection with its
consolidation with or merger into another person or a sale of the Company's
assets, neither the Company nor any Intermediate Subsidiary will sell, assign,
transfer, grant a security interest in or otherwise dispose of any shares of, or
securities convertible into, or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of the Bank (except to the Company or an
Intermediate Subsidiary), nor will the Company or any Intermediate Subsidiary
permit the Bank to issue any shares of, or securities convertible into, or
options, warrants or rights to subscribe for or purchase shares of, Voting Stock
of the Bank, nor will the Company permit any Intermediate Subsidiary that owns
any shares of, or securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of the Bank to cease to be an
Intermediate Subsidiary, unless (i) any such sale, assignment, transfer, grant
of a security interest or other disposition is made for fair market value, as
determined by the Board of Directors of the Company (the "Board of Directors")
or such Intermediate Subsidiary, and (ii) the Company and any one or more
Intermediate Subsidiaries will collectively own at least 80% of the issued and
outstanding Voting Stock of the Bank (or any successor to the Bank) free and
clear of any security interest after giving effect to such transaction. The
foregoing, however, shall not preclude the Bank from being consolidated with or
merged into another domestic banking corporation, if after such merger or
consolidation the Company, or any successor thereto in a permissible merger, and
any one or more Intermediate Subsidiaries own or owns at least 80% of the Voting
Stock of the resulting bank and, giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing. An Intermediate
Subsidiary is defined in the Senior Indenture as a Subsidiary (i) that is
organized under the laws of any domestic jurisdiction and (ii) of which all the
shares of each class of capital stock issued and outstanding, and all securities
convertible into, and options, warrants and rights to subscribe for or purchase
shares of, such capital stock, are owned directly by the Company, free and clear
of any security interest. The limitation on the disposition of the Voting Stock
of the Bank does not prevent the Bank from engaging in a sale of assets to the
extent otherwise permitted by the Senior Indenture. (Section 1006).
Events of Default. The Senior Indenture defines an Event of Default with
respect to any series of Senior Securities as any one of the following events:
(i) default in payment of interest on any Senior Security of that series and
continuance of such default for 30 days; (ii) default in the payment of
principal of (or premium, if any, on) any Senior Security of that series at
Maturity; (iii) default in the deposit of any sinking fund payment, when and as
due by the terms of a Senior Security of that series, and continuance of such
default for 5 days; (iv) failure by the Company for 60 days after due notice in
performance of any other of the covenants or warranties in the Senior Indenture
(other than a covenant or warranty included in the Senior Indenture solely for
the benefit of a series of Senior Securities other than that series); (v)(A)
failure by the Company to pay indebtedness for money borrowed, including Senior
Securities of other series, in an aggregate principal amount exceeding
$25,000,000, at the later of final maturity or upon the expiration of any
applicable period of grace with respect to such principal amount or (B)
acceleration of the maturity of any of the Company's indebtedness for money
borrowed, including Senior Securities of other series, in an aggregate principal
amount exceeding $25,000,000, if such failure to pay or acceleration results
from a default under the instrument giving rise to, or securing, such
indebtedness for money borrowed and is not rescinded or annulled within 30 days
after due notice, unless such default is contested in good faith by appropriate
proceedings; (vi) certain events of bankruptcy, insolvency or reorganization of
the Company or the Bank; and (vii) any other Event of Default provided with
respect to Senior Securities of that series. (Section 501).
If any Event of Default with respect to Senior Securities of any series at
the time Outstanding occurs and is continuing, either the Trustee or the holders
of not less than 25% in principal amount of the Outstanding Senior Securities of
that series may declare the principal amount (or, if the Senior Securities of
that series are
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<PAGE> 19
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all Senior Securities of that
series to be due and payable immediately (provided that no such declaration is
required upon certain events of bankruptcy); but upon certain conditions such
declaration may be annulled and past defaults (except, unless theretofore cured,
a default in payment of principal of (or premium, if any) or interest on the
Senior Securities of that series and certain other specified defaults) may be
waived by the holders of a majority in principal amount of the Outstanding
Senior Securities of that series on behalf of the holders of all Senior
Securities of that series. (Sections 502 and 513).
Reference is made to the Prospectus Supplement relating to each series of
Senior Securities that are Original Issue Discount Securities for the particular
provisions relating to acceleration of the Maturity of a portion of the
principal amount of such Original Issue Discount Securities upon the occurrence
of an Event of Default and the continuation thereof.
The Senior Indenture provides that the Trustee will, within 90 days after
the occurrence of a default known to it with respect to Senior Securities of any
series at the time Outstanding with respect to which it is trustee, give to the
holders of the Outstanding Senior Securities of that series notice of such
default if uncured or not waived, provided that, except in the case of default
in the payment of principal of (or premium, if any) or interest, if any, on any
Senior Security of that series, or in the payment of any sinking fund
installment which is provided for such series, such Trustee will be protected in
withholding such notice if such Trustee in good faith determines that the
withholding of such notice is in the interest of the holders of the Outstanding
Senior Securities of such series and, provided further, that such notice shall
not be given until 60 days after the occurrence of a default with respect to
outstanding Senior Securities of any series in the performance of a covenant in
the Senior Indenture other than for the payment of the principal of (or premium,
if any) or interest, if any, on any Senior Security of such series or the
deposit of any sinking fund payment with respect to the Senior Securities of
such series. The term "default" with respect to any series of Outstanding Senior
Securities for the purpose only of this provision means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Senior Securities of such series. (Section 602).
The Senior Indenture provides that, subject to the duty of the Trustee
during default to act with the required standard of care, the Trustee will not
be under any obligation to exercise any of its rights or powers under the Senior
Indenture at the request or direction of any of the holders, unless such holders
shall have offered to the Trustee reasonable security or indemnity. (Section
603). The Senior Indenture provides that the holders of a majority in principal
amount of Outstanding Senior Securities of any series may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee for that series, or exercising any trust or other power conferred on
such Trustee, provided that such Trustee may decline to act if such direction is
contrary to law or the Senior Indenture. (Section 512).
The Senior Indenture includes a covenant that the Company will file
annually with the Trustee a certificate of no default, or specifying any default
that exists. (Section 1007).
Defeasance and Covenant Defeasance. The Senior Indenture provides, if such
provision is made applicable to the Senior Securities of any series pursuant to
Section 301 of the Senior Indenture (which will be indicated in the Prospectus
Supplement applicable thereto), that the Company may elect (i) to defease and be
discharged from all of its obligations with respect to such Senior Securities
then outstanding (except for the obligations to register the transfer or
exchange of such Senior Securities, to replace temporary or mutilated,
destroyed, lost or stolen Senior Securities, to maintain an office or agency in
respect of the Senior Securities and to hold moneys for payment in trust)
("defeasance") and/or (ii) to be released from its obligations with respect to
such Senior Securities then outstanding under Section 1005 and Section 1006 (and
any other sections applicable to such Senior Securities that are determined
pursuant to Section 301 to be subject to covenant defeasance) and the
consequences of the occurrence of an event of default specified in Section
501(4) (insofar as it is with respect to Section 1005, Section 1006 or any other
section applicable to such Senior Securities that is determined pursuant to
Section 301 to be subject to covenant defeasance) or Section 501(5) of the
Senior Indenture (Section 1005 containing the covenant to pay taxes and other
claims, Section 1006 containing the restrictions described above under
"Limitation on Disposition of Stock of the Bank" and Sections 501(4) and 501(5)
containing the provisions described above under "Events of Default"
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<PAGE> 20
relating to covenant defaults and cross-defaults, respectively) ("covenant
defeasance"), in either case upon the deposit with the Trustee (or other
qualifying trustee), in trust for such purpose, of money, and/or U.S. Government
Obligations which through the payment of principal and interest in accordance
with their terms will provide money in an amount sufficient, without
reinvestment, to pay the principal of (and premium, if any) and interest, if
any, on such Senior Securities to maturity or redemption, as the case may be,
and any mandatory sinking fund or analogous payments thereon. As a condition to
defeasance or covenant defeasance, the Company must deliver to the Trustee an
Opinion of Counsel (as specified in the Senior Indenture) to the effect that the
holders of such Senior Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
or covenant defeasance had not occurred. Such opinion, in the case of defeasance
under clause (i) above, must refer to and be based upon a ruling of the Internal
Revenue Service issued to the Company or published as a revenue ruling or upon a
change in applicable Federal income tax law, in any such case after the date of
the Senior Indenture.
Under current Federal income tax law, defeasance would likely be treated as
a taxable exchange of such Senior Securities for interests in the defeasance
trust. As a consequence, a holder would recognize gain or loss equal to the
difference between the holder's cost or other tax basis for such Senior
Securities and the value of the holder's proportionate interest in the
defeasance trust, and thereafter would be required to include in income a
proportionate share of the income, gain or loss, as the case may be, of the
defeasance trust. Under current Federal income tax law, covenant defeasance
would ordinarily not be treated as a taxable exchange of such Senior Securities.
Purchasers of such Senior Securities should consult their own advisors with
respect to the tax consequences to them of such defeasance and covenant
defeasance, including the applicability and effect of tax laws other than the
Federal income tax law.
If the Company exercises its covenant defeasance option with respect to any
series of Senior Securities, payment of such Senior Securities may not be
accelerated by reference to the covenants relating to covenant defeasance
described above. The Company may exercise its defeasance option with respect to
such Senior Securities notwithstanding its prior exercise of its covenant
defeasance option. If the Company exercises its defeasance option, payment of
such Senior Securities may not be accelerated because of any Event of Default.
If the Company exercises its defeasance option or covenant defeasance option and
an acceleration were to occur, the realizable value at the acceleration date of
the money and U.S. Government Obligations in the defeasance trust could be less
than the principal and interest then due on such Senior Securities, in that the
required deposit in the defeasance trust is based upon scheduled cash flows
rather than market value, which will vary depending upon interest rates and
other factors.
The Prospectus Supplement may further describe the provisions, if any,
applicable to defeasance or covenant defeasance with respect to the Senior
Securities of a particular series.
Modification of the Indenture. Modifications and amendments of the Senior
Indenture may be made by the Company and the Trustee with the consent of the
holders of not less than a majority in principal amount of each series of
Outstanding Senior Securities affected thereby, by executing supplemental
indentures adding any provisions to or changing or eliminating any of the
provisions of the Senior Indenture or modifying the rights of the holders of
Outstanding Senior Securities of such series, except that no such supplemental
indenture may (i) change the Stated Maturity of any Senior Security of any
series, or reduce the principal amount thereof (or premium, if any, thereon), or
reduce the rate of payment of interest thereon, or change certain other
provisions relating to the yield of the Senior Securities or change the currency
or currencies in which the same is payable; (ii) reduce the aforesaid percentage
of Outstanding Senior Securities of any series, the consent of the holders of
which is required for any supplemental indenture, or reduce the percentage of
principal amount of Outstanding Senior Securities necessary for waiver of
compliance with certain provisions of the Senior Indenture or for waiver of
certain covenants and defaults; or (iii) modify the provisions of the Senior
Indenture relating to modification and amendment of the Senior Indenture. The
Senior Indenture provides, however, that each of the amendments and
modifications listed in clauses (i) through (iii) above may be made with the
consent of the holder of each Outstanding Senior Security affected thereby.
(Section 902).
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The Senior Indenture permits the Company and the Trustee to amend the
Senior Indenture in certain circumstances without the consent of the holders of
Senior Securities to evidence the merger of the Company or the replacement of
the Trustee and to effect modifications that do not affect any series of Senior
Securities already outstanding and for certain other purposes.
Consolidation, Merger and Sale of Assets. The Company, without the consent
of the holders of any of the Senior Securities under the Senior Indenture, may
consolidate with or merge into any other person or transfer or lease its assets
substantially as an entirety to any person or may permit any corporation to
merge into the Company, provided that: (i) the successor is a person organized
under the laws of any domestic jurisdiction; (ii) the successor person, if other
than the Company, assumes the Company's obligations on the Senior Securities and
under the Senior Indenture; (iii) after giving effect to the transaction, no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have occurred and be continuing; and
(iv) certain other conditions are met. (Section 801).
Outstanding Senior Securities. The Senior Indenture provides that, in
determining whether the holders of the requisite principal amount of Outstanding
Senior Securities have given any request, demand, authorization, direction,
notice, consent or waiver, (i) the portion of the principal amount of an
Original Issue Discount Security that shall be deemed to be Outstanding for such
purpose shall be that portion of the principal amount thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof; (ii) the portion of the principal amount of a Senior Security
denominated in a foreign or composite currency or currencies that shall be
deemed to be Outstanding for such purpose shall be the U.S. dollar equivalent,
determined on the date of original issuance of such Senior Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the date of original issuance of such Senior Security
of the amount determined as provided in (i) above) of such Senior Security;
(iii) the portion of the principal amount of a Senior Security for which the
amount of payments of principal of and any premium or interest on such Senior
Security may be determined with reference to an index that shall be deemed to be
Outstanding for such purpose shall be determined as of the date of original
issuance of such Senior Security; and (iv) Senior Securities owned by the
Company, any of its Affiliates or any other obligor upon the Senior Securities
shall not be deemed to be Outstanding. (Section 101).
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of the
Company. The obligations of the Company pursuant to the Subordinated Securities
will be subordinate in right of payment to all Senior Indebtedness and, in
certain circumstances relating to the dissolution, winding-up, liquidation or
reorganization of the Company, to all Additional Senior Obligations, whether
outstanding as of the date hereof or hereafter created, assumed or incurred, as
discussed below under "Subordination". The Subordinated Indenture does not
contain any restriction on the amount of Senior Indebtedness or Additional
Senior Obligations which the Company may incur.
Unless otherwise indicated in the applicable Prospectus Supplement, the
maturity of the Subordinated Securities will be subject to acceleration only in
the event of certain events of bankruptcy or reorganization of the Company. See
"Defaults and Waiver Thereof" below.
The holders of Subordinated Securities of a specified series that are
convertible into Common Stock ("Subordinated Convertible Securities") will be
entitled at certain times specified in the Prospectus Supplement relating to
such Subordinated Convertible Securities, subject to prior redemption, repayment
or repurchase, to convert any Subordinated Convertible Securities of such series
into Common Stock, at the conversion price set forth in such Prospectus
Supplement, subject to adjustment and to such other terms as are set forth in
such Prospectus Supplement.
The holders of Subordinated Securities of any series may be obligated at
maturity, or at any earlier time as set forth in the Prospectus Supplement
relating to such series, to exchange them for Capital Securities of the Company.
The terms of any such exchange and the Capital Securities issuable upon such
exchange will be described in the Prospectus Supplement relating to such series
of Subordinated Securities. (Article Seventeen). "Capital Securities" may
consist of Common Stock, perpetual preferred stock or other capital
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<PAGE> 22
securities of the Company acceptable to its primary Federal banking regulator.
Currently, the Company's primary Federal banking regulator is the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). Whenever
Subordinated Securities are exchangeable for Capital Securities, the Company
will be obligated to deliver Capital Securities with a market value equal to the
principal amount of such Subordinated Securities. In addition, the Company will
unconditionally undertake, at the expense of the Company, to sell the Capital
Securities in a sale (the "Secondary Offering") on behalf of any holders who
elect to receive cash for the Capital Securities. The Common Stock is described
below under "Description of Common Stock". A general description of the
preferred stock of the Company is set forth below under "Description of
Preferred Stock".
Subordination. The Subordinated Securities will be subordinate in right of
payment as provided in the Subordinated Indenture to all Senior Indebtedness
and, under certain circumstances, to all Additional Senior Obligations.
The Subordinated Indenture provides that "Senior Indebtedness" shall mean
the principal of (and premium, if any) and interest on (i) all indebtedness of
the Company for money borrowed, whether outstanding on the date of execution of
the Subordinated Indenture or thereafter created, assumed or incurred, except
(A) Subordinated Securities issued under the Subordinated Indenture, (B)
Antecedent CBC Subordinated Indebtedness (as hereinafter defined), (C) Assumed
MHC Subordinated Indebtedness (as hereinafter defined), (D) Assumed Old Chase
Subordinated Indebtedness (as hereinafter defined) and (E) such other
indebtedness of the Company which by its terms is expressly stated to be not
superior in right of payment to the Subordinated Securities or to rank pari
passu in right of payment with the Subordinated Securities (such other
indebtedness hereinafter referred to as "Other Subordinated Indebtedness") and
(ii) any deferrals, renewals or extensions of any such Senior Indebtedness. The
term "indebtedness of the Company for money borrowed" shall mean any obligation
of, or any obligation guaranteed by, the Company for the repayment of money
borrowed, whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for payment of the purchase price of
property or assets.
The Subordinated Indenture also provides that "Additional Senior
Obligations" shall mean all indebtedness of the Company, whether outstanding on
December 15, 1992 or thereafter created, assumed or incurred, for claims in
respect of derivative products such as interest and foreign exchange rate
contracts, commodity contracts and similar arrangements; provided, however, that
Additional Senior Obligations do not include claims in respect of Senior
Indebtedness or obligations which, by their terms, are expressly stated to be
not superior in right of payment to the Subordinated Securities or to rank pari
passu in right of payment with the Subordinated Securities. For purposes of this
definition, "claim" shall have the meaning assigned thereto in Section 101(4) of
the United States Bankruptcy Code of 1978, as amended and in effect on December
15, 1992.
At March 31, 1997, an aggregate principal amount of approximately $1.67
billion of securities issued pursuant to the Subordinated Indenture after
December 15, 1992 was outstanding and an aggregate principal amount of
approximately $100 million of Other Subordinated Indebtedness was outstanding.
Antecedent CBC Subordinated Indebtedness means all outstanding subordinated
indebtedness of the Company issued prior to December 15, 1992 (other than
Assumed MHC Subordinated Indebtedness and Assumed Old Chase Subordinated
Indebtedness). At March 31, 1997, an aggregate principal amount of approximately
$1.05 billion of Antecedent CBC Subordinated Indebtedness was outstanding.
Assumed MHC Subordinated Indebtedness means all outstanding subordinated
indebtedness of the Company which was assumed by the Company as a result of the
merger of Manufacturers Hanover Corporation into the Company on December 31,
1991. At March 31, 1997, an aggregate principal amount of approximately $243
million of Assumed MHC Subordinated Indebtedness was outstanding.
Assumed Old Chase Subordinated Indebtedness means all outstanding
subordinated indebtedness of Old Chase which was assumed by the Company as a
result of the merger of Old Chase into the Company. At March 31, 1997, an
aggregate principal amount of approximately $4.55 billion of Assumed Old Chase
Subordinated Indebtedness was outstanding.
The Subordinated Securities will be subordinate in right of payment as
provided in the Subordinated Indenture to all Senior Indebtedness. No payment
pursuant to the Subordinated Securities or exchange for
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<PAGE> 23
Capital Securities may be made, and no holder of the Subordinated Securities
shall be entitled to demand or receive any such payment or exchange, unless all
amounts of principal (and premium, if any) and interest, if any, then due with
respect to all Senior Indebtedness shall have been paid in full or duly provided
for, and unless at the time of such payment or exchange and immediately after
giving effect thereto, there shall not exist with respect to any such Senior
Indebtedness any event of default permitting the holders thereof to accelerate
the maturity thereof or any event which, with notice or lapse of time or both,
would become such an event of default. Such subordination will not prevent the
occurrence of any default in respect of the Subordinated Securities. See
"Defaults and Waivers Thereof " below for limitations on the rights of
acceleration. (Article Sixteen).
Upon any distribution of the assets of the Company upon dissolution,
winding-up, liquidation or reorganization, (i) the holders of Senior
Indebtedness will be entitled to receive payment in full of principal (and
premium, if any) and interest, if any, before any payment or distribution is
made on the Subordinated Securities, and (ii) if, after giving effect to the
operation of clause (i) above, (A) amounts remain available for payment or
distribution in respect of the Subordinated Securities and (B) creditors in
respect of Additional Senior Obligations have not received payment in full of
amounts due or to become due thereon or payment of such amounts has not been
duly provided for, then such amounts available for payment or distribution in
respect of the Subordinated Securities shall first be applied to pay or provide
for the payment in full of all such Additional Senior Obligations before any
payment may be made on the Subordinated Securities.
The Subordinated Securities will not be subordinated to indebtedness of the
Company which is not Senior Indebtedness or Additional Senior Obligations, and
the creditors of the Company who do not hold Senior Indebtedness or Additional
Senior Obligations will not benefit from the subordination provisions described
herein. In the event of the bankruptcy or reorganization of the Company before
or after maturity of the Subordinated Securities (and prior to any exchange or
conversion thereof), such other creditors would rank pari passu in right of
payment with holders of the Subordinated Securities, subject, however, to the
broad equity powers of a Federal bankruptcy court pursuant to which such court
may, among other things, reclassify the claims of holders of any series of
Subordinated Securities into a class of claims having a different relative
priority with respect to the claims of such other creditors or any other claims
against the Company.
No series of subordinated securities of the Company will be subordinated to
any other series of subordinated securities of the Company. However, Antecedent
CBC Subordinated Indebtedness is subordinated, by its terms, only to Senior
Indebtedness; Subordinated Securities and Other Subordinated Indebtedness will
be subordinated, by their terms, to Senior Indebtedness and, in certain
circumstances relating to the dissolution, winding-up, liquidation or
reorganization of the Company, to Additional Senior Obligations; Assumed MHC
Subordinated Indebtedness is subordinated, by its terms, to Senior Indebtedness,
Additional Senior Obligations and all other obligations of the Company to its
creditors other than any obligation of the Company as is by its terms expressly
stated to be not superior in right of payment to or to rank pari passu in right
of payment with such Assumed MHC Subordinated Indebtedness; and Assumed Old
Chase Subordinated Indebtedness is subordinated, by its terms, to Senior
Indebtedness, Additional Senior Obligations and all other obligations of the
Company to its creditors, except obligations ranking on a parity with or ranking
junior to such Assumed Old Chase Subordinated Indebtedness. As a result of the
differences between the subordination provisions applicable to the Subordinated
Securities, the Antecedent CBC Subordinated Indebtedness, the Other Subordinated
Indebtedness, the Assumed MHC Subordinated Indebtedness and the Assumed Old
Chase Subordinated Indebtedness, in the event of a dissolution, winding-up,
liquidation or reorganization of the Company, the holders of Subordinated
Securities and Other Subordinated Indebtedness may receive less, ratably, than
the holders of Antecedent CBC Subordinated Indebtedness, but more, ratably, than
the holders of Assumed MHC Subordinated Indebtedness and Assumed Old Chase
Subordinated Indebtedness.
Limitation on Disposition of Voting Stock of the Bank. With respect to
Subordinated Securities, the Subordinated Indenture contains no covenant that
the Company will not sell, transfer or otherwise dispose of any shares of, or
securities convertible into, or options, warrants or rights to subscribe for or
purchase shares of, voting stock of the Bank, nor does it prohibit the Bank from
issuing any shares of, securities convertible into,
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or options, warrants or rights to subscribe for or purchase shares of, voting
stock of the Bank. However, the Subordinated Indenture does contain a covenant
by the Company, for the exclusive benefit of the Antecedent CBC Subordinated
Indebtedness and subject to the provisions described below under "Consolidation,
Merger and Sale of Assets," that the Company will not sell, transfer or
otherwise dispose of any shares of, or securities convertible into, or options,
warrants or rights to subscribe for or purchase shares of, voting stock of the
Bank, nor will it permit the Bank to issue any shares of, securities convertible
into, or options, warrants or rights to subscribe for or purchase shares of,
voting stock of the Bank, with the following exceptions: (i) issuances or sales
of directors' qualifying shares; (ii) issuances or sales of shares to the
Company; (iii) sales or other dispositions or issuances for fair market value,
as determined by the Board of Directors, if after giving effect to such sales,
dispositions or issuances and to the issuance of any shares issuable upon
conversion of convertible securities or upon the exercise of options, warrants
or rights, the Company would own directly or indirectly through subsidiaries not
less than 80% of the issued and outstanding shares of voting stock of the Bank;
(iv) sales or other dispositions or issuances made in compliance with an order
or direction of a court or regulatory authority of competent jurisdiction; and
(v) sales of voting stock by the Bank to its shareholders if such sales do not
reduce the percentage of shares of voting stock owned by the Company. (Section
5.07).
Defaults and Waiver Thereof. The Subordinated Indenture defines an Event
of Default with respect to any series of Subordinated Securities as (i) any one
of certain events of bankruptcy or reorganization affecting the Company and (ii)
any other Event of Default specifically provided for by the terms of such series
of Subordinated Securities, as described in the Prospectus Supplement relating
thereto. (Section 7.01). In case an Event of Default shall have occurred and be
continuing with respect to any series of Subordinated Securities then
outstanding under the Subordinated Indenture, the Trustee or the holders of at
least 25% in aggregate principal amount of the Subordinated Securities of that
series which are then outstanding may declare the principal (or, in the case of
original issue discount Subordinated Securities, such lesser amount of principal
as may be provided therein) of all Subordinated Securities of that series to be
due and payable immediately in cash, but such declaration may be annulled, and
certain past defaults may be waived, by the holders of not less than a majority
in aggregate principal amount of the Subordinated Securities of that series,
upon the conditions provided in the Subordinated Indenture. (Section 7.01). The
right of the holders of Subordinated Securities of a series to demand payment in
cash would exist upon the occurrence and continuance of an Event of Default
before or after the stated maturity of the Subordinated Securities of such
series, so long as the Subordinated Securities of such series have not been
exchanged or converted as provided in the Subordinated Indenture. Any such right
to payment in cash would, in the event of the bankruptcy or reorganization of
the Company, be subject as to enforcement to the broad equity powers of a
Federal bankruptcy court and to the determination by that court of the nature
and status of the payment claims of the holders of the Subordinated Securities.
Prior to any declaration accelerating the maturity of the Subordinated
Securities of any series, the holders of a majority in aggregate principal
amount of the Subordinated Securities of that series at the time outstanding may
on behalf of the holders of all Subordinated Securities of that series waive any
past default or Event of Default and its consequences, except a default in the
payment of the principal of (or premium, if any) or interest, if any, on the
Subordinated Securities of that series. (Section 7.07).
Unless otherwise provided in the terms of a series of Subordinated
Securities, there will be no right of acceleration of the payment of principal
of the Subordinated Securities of such series upon a default in the payment of
principal or interest or a default in the performance of any covenant or
agreement in the Subordinated Securities or the Subordinated Indenture. In the
event of a default in the payment of interest or principal (including the
delivery of any Capital Securities in exchange for Subordinated Securities) or
the performance of any covenant or agreement in the Subordinated Securities or
the Subordinated Indenture, the Trustee may, subject to certain limitations and
conditions, seek to enforce payment of such interest or principal (including the
delivery of any Capital Securities in exchange for Subordinated Securities) or
the performance of such covenant or agreement.
The Subordinated Indenture provides that the Trustee shall, within 90 days
after the occurrence of a default with respect to the Subordinated Securities of
any series, give to the holders of the Subordinated Securities of that series
notice of all uncured defaults known to it (the term "default" being defined to
include
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the events specified above without grace periods or notice), provided, that
except in the case of an Event of Default that relates to the bankruptcy or
reorganization of the Company or a default in payment of principal (or premium,
if any) or interest, if any, in respect of the Subordinated Securities of that
series, or the obligation to deliver Capital Securities in exchange for such
Subordinated Securities, the Trustee shall be protected in withholding such
notice if and so long as the board of directors or trustees, the executive
committee or a trust committee of directors or responsible officers or both, of
the Trustee, in good faith determines that the withholding of such notice is in
the interest of such holders. (Section 7.08). The Company will be required to
furnish to the Trustee annually an officers' certificate as to the absence of
defaults under the Subordinated Indenture. (Section 5.06).
Subject to the provisions of the Subordinated Indenture relating to the
duties of the Trustee, the Trustee will be under no obligation to exercise any
of its rights or powers under the Subordinated Indenture at the request, order
or direction of any of the holders of the Subordinated Securities, unless such
holders shall have offered to the Trustee reasonable security or indemnity.
Subject to such provision for security or indemnification, the holders of a
majority in principal amount of the Subordinated Securities of any series then
outstanding under the Subordinated Indenture will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to,
or exercising any trust or power conferred on, the Trustee with respect to the
Subordinated Securities of such series. (Sections 7.07 and 8.02).
Modification of the Indenture. The Subordinated Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in principal amount of the Subordinated
Securities at the time outstanding of each series affected by such modification,
to modify the Subordinated Indenture or any supplemental indenture or the rights
of the holders of the Subordinated Securities, provided that no such
modification shall, without the consent of the holder of each Subordinated
Security affected thereby: (i) change the stated maturity date of the principal
of, or any installment of principal of or interest on, any such Subordinated
Security; (ii) reduce the principal amount of (or premium, if any) or interest,
if any, on any such Subordinated Security; (iii) reduce the portion of the
principal amount of an original issue discount Subordinated Security payable
upon acceleration of the maturity thereof; (iv) reduce any amount payable upon
redemption of any Subordinated Security; (v) change the place or places where,
or the coin or currency in which, any Subordinated Security or any premium or
the interest thereon is payable; (vi) change the definition of "Market Value";
(vii) impair the right of any holders of Subordinated Securities of any series
to receive on any Exchange Date for Subordinated Securities of such series
Capital Securities with a Market Value equal to that required by the terms of
the Subordinated Securities; (viii) impair the conversion rights of any holders
of Subordinated Securities of a series entitled to the conversion rights set
forth in Article Nineteen of the Subordinated Indenture; (ix) impair the right
of a holder to institute suit for the enforcement of any payment on or with
respect to any such Subordinated Security (including any right of redemption at
the option of the holder of such Subordinated Security) or impair any rights to
the delivery of Capital Securities in exchange for any Subordinated Security or
to require the Company to sell Capital Securities in a Secondary Offering or to
require the delivery of Common Stock, Debt Securities or other property upon
conversion of Subordinated Securities; (x) reduce the above-stated percentage of
Subordinated Securities of any series the consent of the holders of which is
necessary to modify or amend the Subordinated Indenture or reduce the percentage
of Subordinated Securities of any series the holders of which are required to
waive any past default or Event of Default; or (xi) modify the foregoing
requirements. (Section 11.02).
The Subordinated Indenture permits the Company and the Trustee to amend the
Subordinated Indenture in certain circumstances without the consent of the
holders of Subordinated Securities to evidence the merger of the Company or the
replacement of the Trustee, to effect modifications which do not affect any
series of Subordinated Securities already outstanding and for certain other
purposes. (Section 11.01).
Consolidation, Merger and Sale of Assets. The Company may not merge or
consolidate with any other corporation or sell or convey all or substantially
all of its assets as an entirety to any other corporation, unless (i) either the
Company shall be the continuing corporation or the successor corporation shall
expressly assume the payment of the principal of (including issuance and
delivery of Capital Securities) (and premium, if any) and interest, if any, on
the Subordinated Securities and the performance and observance of all the
covenants
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<PAGE> 26
and conditions of the Subordinated Indenture binding upon the Company, and (ii)
the Company or such successor corporation shall not, immediately after such
merger or consolidation or such sale or conveyance, be in default in the
performance of any such covenant or condition. (Article Twelve).
Outstanding Subordinated Securities. The Subordinated Indenture provides
that, in determining whether the holders of the requisite principal amount of
outstanding Subordinated Securities have given any request, demand,
authorization, direction, notice, consent or waiver, the portion of the
principal amount of a Discounted Security that shall be deemed to be outstanding
for such purpose shall be that portion of the principal amount thereof that
would be due and payable as of the date of such determination upon acceleration
of the maturity thereof and Subordinated Securities owned by the Company, any of
its affiliates or any other obligor upon the Subordinated Securities shall not
be deemed to be outstanding. (Sections 1.01 and 9.04).
PERMANENT GLOBAL DEBT SECURITIES
If any Debt Securities are to be issued in permanent global form, the
Prospectus Supplement relating thereto will describe the circumstances, if any,
under which beneficial owners of interests in any such permanent global Debt
Security may exchange such interests for Debt Securities of such series and like
tenor of any authorized form and denomination. Principal of (and premium, if
any) and interest, if any, on a permanent global Debt Security will be payable
in the manner described in the Prospectus Supplement relating thereto. Persons
holding beneficial interests in such a permanent global Debt Security will,
pursuant to arrangements between such persons and the depository (the record
holder of the global Debt Security), be treated as holders of the Debt Security
for other purposes to the extent specified in writing by such depository.
INFORMATION CONCERNING THE TRUSTEES
The Company, the Bank and certain other subsidiaries of the Company
maintain deposits with, and conduct other banking transactions with, the
Trustees under each of the Indentures in the ordinary course of business.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain terms of any series of the Preferred
Stock offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of the Preferred Stock. If so indicated in
the Prospectus Supplement, the terms of any such series may differ from the
terms set forth below. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Certificate of Designations relating to such series of the Preferred Stock,
which will be filed with the Commission promptly after the offering of such
series of Preferred Stock. A form of Certificate of Designations is filed as an
exhibit to the Registration Statement to which this Prospectus relates.
GENERAL
Under the Company's Restated Certificate of Incorporation (the "Charter"),
the Board of Directors of the Company (the "Board of Directors") is authorized,
without further stockholder action, to provide for the issuance of up to
200,000,000 shares of preferred stock, $1 par value per share, in one or more
series, with such voting powers and with such designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions, as shall be set forth in resolutions providing for
the issue thereof adopted by the Board of Directors or a duly authorized
committee thereof. The Company may amend from time to time the Charter to
increase the number of authorized shares of preferred stock in the manner
provided in the Charter and the Delaware General Corporation Law ("DGCL"). As of
the date of this Prospectus the Company had fourteen series of preferred stock
outstanding, which are described below under "Outstanding Preferred Stock".
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<PAGE> 27
Under regulations adopted by the Federal Reserve Board, if the holders of
any series of Preferred Stock become entitled to vote for the election of
directors because dividends on such series are in arrears as described below
under "Voting Rights", such series may then be deemed a "class of voting
securities" and a holder of 25% or more of such series (or a holder of 5% or
more if it otherwise exercises a "controlling influence" over the Company) may
then be subject to regulation as a bank holding company in accordance with the
BHCA. In addition, at such time as such series is deemed a class of voting
securities, (i) any other bank holding company may be required to obtain the
prior approval of the Federal Reserve Board under the BHCA to acquire or retain
5% or more of such series, and (ii) any person other than a bank holding company
may be required to obtain the approval of the Federal Reserve Board under the
Change in Bank Control Act to acquire or retain 10% or more of such series.
The Preferred Stock shall have the dividend, liquidation, redemption,
voting and conversion rights set forth below, except as otherwise provided in
the Prospectus Supplement relating to a particular series of the Preferred
Stock. Reference is made to the Prospectus Supplement relating to the particular
series of the Preferred Stock offered thereby for specific terms, including: (i)
the title and liquidation preference per share of such Preferred Stock and the
number of shares offered; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable, whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to accumulate; (iv) any redemption or sinking fund provisions of such Preferred
Stock; (v) any conversion provisions of such Preferred Stock; (vi) whether the
Company has elected to offer Depositary Shares with respect to such Preferred
Stock as described below under "Depositary Shares"; and (vii) any additional
dividend, liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations and restrictions of such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity as to dividends and distributions in the event of a liquidation with the
outstanding preferred stock of the Company and each other series of the
Preferred Stock. See "Outstanding Preferred Stock" below.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, out of assets of the Company
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. Such rate may be fixed or variable or both. Each such dividend
will be payable to the holders of record as they appear on the stock books of
the Company (or, if applicable, the records of the Depositary referred to below
under "Depositary Shares") on such record dates as will be fixed by the Board of
Directors or a duly authorized committee thereof. Dividends on any series of the
Preferred Stock may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating thereto. If the Board of Directors fails to
declare a dividend payable on a dividend payment date on any series of Preferred
Stock for which dividends are noncumulative, then the right to receive a
dividend in respect of the dividend period ending on such dividend payment date
will be lost, and the Company shall have no obligation to pay the dividend
accrued for that period, whether or not dividends are declared for any future
period.
No full dividends will be declared or paid or set apart for payment on the
Preferred Stock of any series ranking, as to dividends, on a parity with or
junior to any other series of preferred stock for any period unless full
dividends have been or contemporaneously are declared and paid, or declared and
a sum sufficient for the payment thereof set apart for such payment, on such
other series of preferred stock for the then-current dividend payment period
and, if such other preferred stock is cumulative, all other dividend payment
periods terminating on or before the date of payment of such full dividends.
When dividends are not paid in full upon any series of the Preferred Stock and
any other preferred stock ranking on a parity as to dividends with such series
of the Preferred Stock, all dividends declared upon such series of the Preferred
Stock and any other preferred stock ranking on a parity as to dividends will be
declared pro rata so that the amount of dividends declared per share on such
series of the Preferred Stock and such other preferred stock will in all cases
bear to
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<PAGE> 28
each other the same ratio that accrued dividends per share on such series of the
Preferred Stock and such other preferred stock bear to each other. Except as
provided in the preceding sentence, unless full dividends, including, in the
case of cumulative Preferred Stock, accumulations, if any, in respect of prior
dividend payment periods, on all outstanding shares of any series of the
Preferred Stock have been paid, no dividends (other than in shares of Common
Stock or another stock ranking junior to such series of the Preferred Stock as
to dividends and upon liquidation) will be declared or paid or set aside for
payment or other distributions made upon the Common Stock or any other stock of
the Company ranking junior to or on a parity with the Preferred Stock as to
dividends or upon liquidation, nor will any Common Stock or any other stock of
the Company ranking junior to or on a parity with such series of the Preferred
Stock as to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by the Company
(except by conversion into or exchange for stock of the Company ranking junior
to such series of the Preferred Stock as to dividends and upon liquidation). No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments which may be in arrears.
The amount of dividends payable for each dividend period will be computed
by annualizing the applicable dividend rate and dividing by the number of
dividend periods in a year, except that the amount of dividends payable for the
initial dividend period or any period shorter than a full dividend period shall
be computed on the basis of 30-day months, a 360-day year and the actual number
of days elapsed in the period.
Each series of Preferred Stock will be entitled to dividends as described
in the Prospectus Supplement relating to such series, which may be based upon
one or more methods of determination. Different series of the Preferred Stock
may be entitled to dividends at different dividend rates or based upon different
methods of determination.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of each series of Preferred Stock will be
entitled to receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of Common
Stock or any other class of stock ranking junior to such series of the Preferred
Stock upon liquidation, liquidating distributions in the amount set forth in the
Prospectus Supplement relating to such series of the Preferred Stock plus an
amount equal to accrued and unpaid dividends for the then-current dividend
period and, if such series of the Preferred Stock is cumulative, for all
dividend periods prior thereto. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Preferred Stock of any series and any other shares of stock of
the Company ranking as to any such distribution on a parity with such series of
the Preferred Stock are not paid in full, the holders of the Preferred Stock of
such series and of such other shares will share ratably in any such distribution
of assets of the Company in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount of the
liquidating distribution to which they are entitled, the holders of such series
of Preferred Stock will have no right or claim to any of the remaining assets of
the Company. Neither the sale of all or substantially all the property or
business of the Company nor the merger or consolidation of the Company into or
with any other corporation shall be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, of the Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or in part, at
the option of the Company, and may be subject to mandatory redemption pursuant
to a sinking fund, in each case upon terms, at the times and at the redemption
prices set forth in the Prospectus Supplement relating to such series.
The Prospectus Supplement relating to a series of Preferred Stock which is
subject to mandatory redemption shall specify the number of shares of such
series of Preferred Stock which shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of
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redemption. The redemption price may be payable in cash, capital stock or in
cash received from the net proceeds of the issuance of capital stock of the
Company, as specified in the Prospectus Supplement relating to such series of
Preferred Stock. If the redemption price is payable only from the net proceeds
of the issuance of capital stock of the Company, the terms of such series may
provide that, if no such capital stock shall have been issued or to the extent
the net proceeds from any issuances are insufficient to pay in full the
aggregate redemption price then due, the applicable shares of such series of
Preferred Stock shall automatically and mandatorily be converted into shares of
the applicable capital stock of the Company pursuant to conversion provisions
specified in the Prospectus Supplement relating to such series of Preferred
Stock.
If fewer than all the outstanding shares of any series of the Preferred
Stock are to be redeemed, whether by mandatory or optional redemption, the
selection of the shares to be redeemed shall be determined by lot or pro rata as
may be determined by the Board of Directors or a duly authorized committee
thereof, or by any other method which may be determined by the Board of
Directors or such committee to be equitable. From and after the date of
redemption (unless default shall be made by the Company in providing for the
payment of the redemption price), dividends shall cease to accrue on the shares
of Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price) shall cease.
In the event that full dividends, including accumulations in the case of
cumulative Preferred Stock, on any series of the Preferred Stock have not been
paid, such series of the Preferred Stock may not be redeemed in part and the
Company may not purchase or acquire any shares of such series of the Preferred
Stock otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of such series of the Preferred Stock.
CONVERSION RIGHTS
The Prospectus Supplement for any series of the Preferred Stock will state
the terms, if any, on which shares of that series are convertible into shares of
Common Stock or another series of preferred stock of the Company. As described
under "Redemption" above, under certain circumstances, the Preferred Stock may
be mandatorily converted into Common Stock or another series of preferred stock
of the Company. The Preferred Stock will have no preemptive rights.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will not be entitled to vote.
Except as indicated in the Prospectus Supplement relating to a particular series
of Preferred Stock, in the event the Company issues full shares of any series of
Preferred Stock, each such share will be entitled to one vote on matters on
which holders of such series of the Preferred Stock are entitled to vote.
However, as more fully described below under "Depositary Shares", if the Company
elects to issue Depositary Shares representing a fraction of a share of a series
of Preferred Stock, each such Depositary Share will, in effect, be entitled to
such fraction of a vote, rather than a full vote. Because each full share of any
series of Preferred Stock shall be entitled to one vote, the voting power of
such series, on matters on which holders of such series and holders of other
series of preferred stock are entitled to vote as a single class, shall depend
on the number of shares in such series, not the aggregate liquidation preference
or initial offering price of the shares of such series of Preferred Stock.
If at the time of any annual meeting of the Company's stockholders the
equivalent of six quarterly dividends payable on any series of the Preferred
Stock or any other series of preferred stock is in default, the number of
directors of the Company will be increased by two and the holders of all
outstanding series of preferred stock, voting as a single class without regard
to series, will be entitled to elect those additional two directors at each such
annual meeting. Each director elected by the holders of shares of the preferred
stock shall continue to serve as such director for the full term for which he or
she shall have been elected, notwithstanding that prior to the end of such term
such default shall cease to exist.
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Preferred Stock will provide that the affirmative vote or consent of
the holders of at least two-thirds of the outstanding shares of all
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series of preferred stock (including all series of Preferred Stock), voting
together as a single class, will be required to (a) create any class or series
of stock which shall have preference as to dividends or distribution of assets
over any outstanding series of preferred stock other than a series which shall
not have any right to object to such creation or (b) alter or change the
provisions of the Charter so as to adversely affect the voting powers,
preferences or special rights of the holders of a series of preferred stock;
provided that if such amendment shall not adversely affect all series of
preferred stock, such amendment need only be approved by holders of at least
two-thirds of the shares of all series of preferred stock adversely affected
thereby, voting together as a single class without regard to series.
OUTSTANDING PREFERRED STOCK
As of March 31, 1997, there were issued and outstanding: (i) 4,000,000
shares of 10.96% Preferred Stock (the "10.96% Preferred"); (ii) 14,000,000
shares of 8 3/8% Preferred Stock (the "8 3/8% Preferred"); (iii) 2,000,000
shares of 7.92% Cumulative Preferred Stock (the "7.92% Preferred"); (iv)
2,000,000 shares of 7.58% Cumulative Preferred Stock (the "7.58% Preferred");
(v) 2,000,000 shares of 7 1/2% Cumulative Preferred Stock (the "7 1/2%
Preferred"); (vi) 2,000,000 shares of Adjustable Rate Cumulative Preferred
Stock, Series L (the "Series L Preferred"); (vii) 5,600,000 shares of 10 1/2%
Cumulative Preferred Stock (the "10 1/2% Preferred"); (viii) 4,000,000 shares of
9.76% Cumulative Preferred Stock (the "9.76% Preferred"); (ix) 8,000,000 shares
of 10.84% Cumulative Preferred Stock (the "10.84% Preferred"); (x) 6,800,000
shares of 8 1/2% Cumulative Preferred Stock (the "8 1/2% Preferred"); (xi)
9,600,000 shares of 8.32% Cumulative Preferred Stock (the "8.32% Preferred");
(xii) 6,900,000 shares of 8.40% Cumulative Preferred Stock (the "8.40%
Preferred"); and (xiii) 9,100,000 shares of Adjustable Rate Preferred Stock,
Series N (the "Series N Preferred"). The shares of 7.92% Preferred, 7.58%
Preferred and 7 1/2% Preferred are represented by Depositary Shares each
representing 0.25 of a share. The series of preferred stock referred to in
clauses (i) through (vi) are sometimes referred to below as the "Pre-Merger
Preferred Stock", and the series of preferred stock listed in clauses (vii)
through (xiii) are sometimes referred to below as the "Merger Preferred Stock".
All series of outstanding preferred stock rank on a parity with each other
such series and all have preference over the Common Stock with respect to the
payment of dividends and the distribution of assets in the event of the
liquidation or dissolution of the Company. Unless otherwise specified in the
Prospectus Supplement relating to a particular series of the Preferred Stock,
all such series of outstanding preferred stock will rank on a parity with the
Preferred Stock as to dividends and liquidation.
Dividends. Dividends on all outstanding series of preferred stock are
cumulative. The amounts of the cumulative dividends on the Series L Preferred
and the Series N Preferred vary with the interest rates on certain U.S.
Government obligations.
Rights Upon Liquidation; Redemption. In the event of a liquidation,
dissolution or winding-up of the Company, the holders of each series of
outstanding preferred stock will be entitled to receive out of the assets of the
Company available for distribution to stockholders, before any distribution of
assets is made to holders of Common Stock or any other class of stock ranking
junior to such series of outstanding preferred stock upon liquidation,
liquidating distributions, in the amount set forth opposite such series in the
table below, plus accrued and unpaid dividends, if any. Each series of
outstanding preferred stock is redeemable at the option of the Company, in each
case at a redemption price equal to its liquidation value, plus accrued and
unpaid dividends thereon, if any, to the date fixed for redemption, as set forth
in the table below.
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<PAGE> 31
<TABLE>
<CAPTION>
LIQUIDATION
VALUE/REDEMPTION
PRICE PER SHARE
(PLUS, IN EACH CASE, ACCRUED
SERIES OF PREFERRED STOCK REDEEMABLE ON OR AFTER AND UNPAID DIVIDENDS, IF ANY)
------------------------- ---------------------- -----------------------------
<S> <C> <C>
10.96% Preferred June 30, 2000 $ 25
8 3/8% Preferred June 1, 1997* $ 25
7.92% Preferred October 1, 1997 $100
7.58% Preferred April 1, 1998 $100
7 1/2% Preferred June 1, 1998 $100
Series L Preferred June 30, 1999 $100
10 1/2% Preferred September 30, 1998 $ 25
9.76% Preferred September 30, 1999 $ 25
10.84% Preferred June 30, 2001 $ 25
8 1/2% Preferred June 30, 1997* $ 25
8.32% Preferred September 30, 1997 $ 25
8.40% Preferred March 31, 1998 $ 25
Series N Preferred June 30, 1999 $ 25
</TABLE>
- ---------------
* Called for redemption on June 30, 1997.
Voting Rights. If at the time of any annual meeting of the Company's
stockholders the equivalent of six quarterly dividends payable on any series of
preferred stock is in default, the number of directors of the Company will be
increased by two and the holders of all outstanding series of preferred stock,
voting as a single class without regard to series, will be entitled to elect
those additional two directors at each such annual meeting. Each director
elected by the holders of shares of preferred stock shall continue to serve as
such director for the full term for which he or she shall have been elected,
notwithstanding that prior to the end of such term such default shall cease to
exist.
The affirmative vote or consent of the holders of at least two-thirds of
the outstanding shares of any series of Pre-Merger Preferred Stock, voting as a
separate class, is required for any amendment of the Charter that would
adversely affect the powers, preferences, privileges or rights of such series of
Pre-Merger Preferred Stock. The affirmative vote or consent of the holders of
shares representing at least two-thirds of the voting power of the outstanding
shares of any series of Pre-Merger Preferred Stock and any other series of
preferred stock ranking on a parity with such series of Pre-Merger Preferred
Stock as to dividends or upon liquidation, voting as a single class without
regard to series, is required to create, authorize or issue, or reclassify any
stock of the Company into, any additional class or series of stock ranking prior
to such series of Pre-Merger Preferred Stock as to dividends or upon
liquidation, or to create, authorize or issue any obligation or security
convertible into or exercisable for any such prior ranking preferred stock.
Each series of Merger Preferred Stock provides that the affirmative vote or
consent of the holders of at least two-thirds of the outstanding shares of all
series of preferred stock, voting together as a single class without regard to
series, will be required to (a) create any class or series of stock which shall
have preference as to dividends or distribution of assets over any outstanding
series of preferred stock other than a series which shall not have any right to
object to such creation or (b) alter or change the provisions of the Charter so
as to adversely affect the voting powers, preferences or special rights of the
holders of a series of preferred stock; provided that if such amendment shall
not adversely affect all series of preferred stock, such amendment need only be
approved by the holders of at least two-thirds of the shares of all series of
preferred stock adversely affected thereby, voting together as a single class
without regard to series.
Miscellaneous. No series of outstanding preferred stock is convertible
into shares of Common Stock or other securities. No series of outstanding
preferred stock is subject to preemptive rights.
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<PAGE> 32
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C. will be the transfer agent,
registrar and dividend disbursement agent for the Preferred Stock and any
Depositary Shares representing an interest therein. The registrar for shares of
Preferred Stock will send notices to shareholders of any meetings at which
holders of the Preferred Stock have the right to elect directors of the Company
or to vote on any other matter.
DEPOSITARY SHARES
General. The Company may, at its option, elect to offer fractional shares
of Preferred Stock, rather than full shares of Preferred Stock. In the event
such option is exercised, the Company will issue to the public receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock) of
a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense. In
addition, subject to the terms of the Deposit Agreement, holders of Depositary
Shares are entitled to withdraw and receive, upon surrender of Depositary
Receipts, certificates evidencing the fractional number of shares of Preferred
Stock represented by such Depositary Receipts.
Dividends and Other Distributions. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the Preferred Stock
to the record holders of Depositary Shares relating to such Preferred Stock in
proportion to the number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
Redemption of Depositary Shares. If a series of Preferred Stock
represented by Depositary Shares is subject to redemption, the Depositary Shares
will be redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of such series of Preferred Stock held by the
Depositary. The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price per share payable with respect to
such series of the Preferred Stock. Whenever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing the shares of
Preferred Stock so redeemed. If fewer than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or pro
rata as may be determined by the Depositary.
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<PAGE> 33
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of the Preferred Stock are entitled to vote, the Depositary will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each record holder of
such Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Depositary
as to the exercise of the voting rights pertaining to the amount of the
Preferred Stock represented by such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the amount of the Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Company will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of the Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Shares representing
such Preferred Stock.
Amendment and Termination of the Depositary Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Depositary. However, any amendment that materially and adversely alters
the rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
the Company or the Depositary only if (i) all outstanding Depositary Shares have
been redeemed or (ii) there has been a final distribution in respect of the
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Receipts.
Charges of Depositary. The Company will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. The Company will pay charges of the Depositary in connection with
the initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges, including a fee for the
withdrawal of shares of Preferred Stock upon surrender of Depositary Receipts,
as are expressly provided in the Deposit Agreement to be for their accounts.
Miscellaneous. The Depositary will forward to holders of Depository
Receipts all reports and communications from the Company that are delivered to
the Depositary and which the Company is required to furnish to the holders of
the Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or upon information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Receipts or other
persons believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering to the Company notice of its election to do so, and the
Company may at any time remove the Depositary, any such resignation or removal
to take effect upon the appointment of a successor Depositary and its acceptance
of such appointment. Such successor Depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank or
trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
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<PAGE> 34
DESCRIPTION OF COMMON STOCK
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the DGCL and the Charter, including the
Certificates of Designations pursuant to which the outstanding series of
preferred stock were issued.
General. The Company is authorized to issue up to 750,000,000 shares of
Common Stock. At March 31, 1997, the Company had outstanding 440,746,231 shares
of Common Stock (including 12,397,918 shares held in its treasury) and had
reserved approximately 73,934,663 shares of Common Stock for issuance under
various employee or non-employee director incentive, compensation and option
plans and under the Company's Dividend Reinvestment Plan.
Dividends. Holders of Common Stock are entitled to receive dividends when,
as and if declared by the Board of Directors out of funds legally available
therefor, provided that, so long as any shares of preferred stock are
outstanding, no dividends (other than dividends payable in Common Stock) or
other distributions (including redemptions and purchases) may be made with
respect to the Common Stock unless full dividends on the shares of preferred
stock, including accumulations in the case of cumulative preferred stock, have
been paid.
Voting Rights. Subject to the rights, if any, of the holders of any series
of preferred stock, all voting rights are vested in the holders of shares of
Common Stock, each share being entitled to one vote on all matters presented for
a vote, including the election of directors. Holders of shares of Common Stock
have noncumulative voting rights, which means that the holders of more than 50%
of the shares voting for the election of directors can elect 100% of the
directors, and, in such event, the holders of the remaining shares voting for
the election of directors will not be able to elect any directors.
Rights Upon Liquidation. In the event of the liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, after there have
been paid to or set aside for the holders of all series of preferred stock the
full preferential amounts to which such holders are entitled, the holders of
Common Stock will be entitled to share equally and ratably in any assets
remaining after the payment of all debts and liabilities of the Company.
Miscellaneous. The issued and outstanding shares of Common Stock are fully
paid and nonassessable. Holders of shares of Common Stock are not entitled to
preemptive rights. Shares of Common Stock are not convertible into shares of any
other class of capital stock. ChaseMellon Shareholder Services, L.L.C. is the
transfer agent, registrar and dividend disbursement agent for the Common Stock.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Common Stock. Securities Warrants may be issued
independently or together with Debt Securities, Preferred Stock or Common Stock
offered by any Prospectus Supplement and may be attached to or separate from any
such Offered Securities. Each series of Securities Warrants will be issued under
a separate warrant agreement (a "Securities Warrant Agreement") to be entered
into between the Company and the Bank or another bank or trust company, as
warrant agent (the "Securities Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant Agent will act solely as an agent of the
Company in connection with the Securities Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders of
Securities Warrants or beneficial owners of Securities Warrants. Copies of the
forms of Securities Warrant Agreements, including the forms of Securities
Warrant Certificates representing the Securities Warrants, are filed as exhibits
to the Registration Statement of which this Prospectus is a part. The following
summary of certain provisions of the Securities Warrants does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Securities Warrant Agreements.
Reference is made to the Prospectus Supplement relating to the particular
issue of Securities Warrants offered thereby for the terms of such Securities
Warrants, including, where applicable: (i) the designation,
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<PAGE> 35
aggregate principal amount, currencies, denominations and terms of the series of
Debt Securities purchasable upon exercise of Debt Warrants and the price at
which Debt Securities may be purchased upon such exercise; (ii) the designation,
number of shares, stated value and terms (including, without limitation,
liquidation, dividend, conversion and voting rights) of the series of Preferred
Stock purchasable upon exercise of Preferred Stock Warrants and the price at
which such number of shares of Preferred Stock of such series may be purchased
upon such exercise; (iii) the number of shares of Common Stock purchasable upon
the exercise of Common Stock Warrants and the price at which such number of
shares of Common Stock may be purchased upon such exercise; (iv) the date on
which the right to exercise such Securities Warrants shall commence and the date
(the "Expiration Date") on which such right shall expire; (v) United States
Federal income tax consequences applicable to such Securities Warrants; and (vi)
any other terms of such Securities Warrants. Preferred Stock Warrants and Common
Stock Warrants will be offered and exercisable for U.S. dollars only.
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or such number of shares of Preferred Stock
or Common Stock at such exercise price as shall in each case be set forth in, or
calculable from, the Prospectus Supplement relating to the offered Securities
Warrants, which exercise price may be subject to adjustment upon the occurrence
of certain events as set forth in such Prospectus Supplement. After the close of
business on the Expiration Date (or such later date to which such Expiration
Date may be extended by the Company), unexercised Securities Warrants will
become void. The place or places where, and the manner in which, Securities
Warrants may be exercised shall be specified in the Prospectus Supplement
relating to such Securities Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, Preferred Stock or Common Stock, holders of such Securities Warrants
will not have any of the rights of holders of the Debt Securities, Preferred
Stock or Common Stock, as the case may be, purchasable upon such exercise,
including the right to receive payments of principal of (and premium, if any) or
interest, if any, on the Debt Securities purchasable upon such exercise or to
enforce covenants in the applicable Indenture, or to receive payments of
dividends, if any, on the Preferred Stock or Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
RISK FACTORS RELATING TO CURRENCY WARRANTS
THE CURRENCY WARRANTS INVOLVE A HIGH DEGREE OF RISK, INCLUDING RISKS
ARISING FROM FLUCTUATIONS IN THE PRICE OF THE UNDERLYING CURRENCY, FOREIGN
EXCHANGE RISKS AND THE RISK OF EXPIRING WORTHLESS. FURTHER, THE CASH SETTLEMENT
VALUE OF THE CURRENCY WARRANTS AT ANY TIME PRIOR TO EXERCISE OR EXPIRATION MAY
BE LESS THAN THE TRADING VALUE OF THE CURRENCY WARRANTS. THE TRADING VALUE OF
THE CURRENCY WARRANTS WILL FLUCTUATE BECAUSE SUCH VALUE IS DEPENDENT, AT ANY
TIME, ON A NUMBER OF FACTORS, INCLUDING THE TIME REMAINING TO EXERCISE THE
CURRENCY WARRANTS, THE RELATIONSHIP BETWEEN THE EXERCISE PRICE OF THE CURRENCY
WARRANTS AND THE PRICE AT SUCH TIME OF THE DESIGNATED CURRENCY AND THE EXCHANGE
RATE ASSOCIATED WITH THE DESIGNATED CURRENCY. BECAUSE THE CURRENCY WARRANTS ARE
UNSECURED OBLIGATIONS OF THE COMPANY, CHANGES IN THE PERCEIVED CREDITWORTHINESS
OF THE COMPANY MAY ALSO BE EXPECTED TO AFFECT THE TRADING PRICES OF THE CURRENCY
WARRANTS. FINALLY, THE AMOUNT OF ACTUAL CASH SETTLEMENT OF A CURRENCY WARRANT
MAY VARY AS A RESULT OF FLUCTUATIONS IN THE PRICE OF THE DESIGNATED CURRENCY
BETWEEN THE TIME INSTRUCTIONS ARE GIVEN TO EXERCISE THE CURRENCY WARRANT AND THE
TIME SUCH EXERCISE IS ACTUALLY EFFECTED.
PURCHASERS SHOULD BE PREPARED TO SUSTAIN A LOSS OF SOME OR ALL OF THE
PURCHASE PRICE OF THEIR CURRENCY WARRANTS. PROSPECTIVE PURCHASERS OF CURRENCY
WARRANTS SHOULD BE EXPERIENCED WITH RESPECT TO OPTIONS AND OPTION TRANSACTIONS
AND SHOULD REACH AN INVESTMENT DECISION ONLY AFTER CAREFUL CONSIDERATION WITH
THEIR ADVISERS OF THE SUITABILITY OF THE CURRENCY WARRANTS IN LIGHT OF THEIR
PARTICULAR FINANCIAL CIRCUMSTANCES, THE INFORMATION SET FORTH UNDER "DESCRIPTION
OF CURRENCY WARRANTS" BELOW, THE INFORMATION SET FORTH UNDER "RISK FACTORS" IN
THE PROSPECTUS SUPPLEMENT RELATING TO THE PARTICULAR ISSUE OF CURRENCY WARRANTS
AND TO THE OTHER INFORMATION REGARDING THE CURRENCY WARRANTS AND THE DESIGNATED
CURRENCY SET FORTH IN SUCH PROSPECTUS SUPPLEMENT.
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<PAGE> 36
DESCRIPTION OF CURRENCY WARRANTS
The following description of the terms of the Currency Warrants sets forth
certain general terms and provisions of the Currency Warrants to which any
Prospectus Supplement may relate. The particular terms of the Currency Warrants
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions do not apply to the Currency Warrants so offered will be
described in the Prospectus Supplement relating to such Currency Warrants.
Each issue of Currency Warrants will be issued under a warrant agreement
(each, a "Currency Warrant Agreement") to be entered into between the Company
and the Bank or another bank or trust company, as warrant agent (the "Currency
Warrant Agent"), all as described in the Prospectus Supplement relating to such
Currency Warrants. The Currency Warrant Agent will act solely as the agent of
the Company under the applicable Currency Warrant Agreement and will not assume
any obligation or relationship of agency or trust for or with any holders of
such Currency Warrants. A copy of the form of Currency Warrant Agreement,
including the form of warrant certificate, is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following summary
of certain provisions of the Currency Warrants does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the particular Currency Warrants and Currency Warrant Agreement.
The Company may issue Currency Warrants either in the form of currency put
warrants entitling the holders thereof to receive from the Company the cash
settlement value in U.S. dollars of the right to sell a specified amount of a
specified foreign currency or composite currency (the "Designated Currency") for
a specified amount of U.S. dollars (each, a "Currency Put Warrant"), or in the
form of currency call warrants entitling the holders thereof to receive from the
Company the cash settlement value in U.S. dollars of the right to purchase a
specified amount of a Designated Currency for a specified amount of U.S. dollars
(each, a "Currency Call Warrant").
Reference is hereby made to the Prospectus Supplement relating to the
particular issue of Currency Warrants offered thereby for the terms of such
Currency Warrants, including, where applicable: (i) whether such Currency
Warrants shall be Currency Put Warrants, Currency Call Warrants or both; (ii)
the aggregate amount of such Currency Warrants; (iii) the offering price of such
Currency Warrants; (iv) the Designated Currency, which currency may be a foreign
currency or a composite currency, including ECU, and information regarding such
currency or composite currency; (v) the date on which the right to exercise such
Currency Warrants commences and the date on which such right expires; (vi) the
manner in which such Currency Warrants may be exercised; (vii) the circumstances
which will cause the Currency Warrants to be deemed automatically exercised;
(viii) the minimum number, if any, of such Currency Warrants exercisable at any
one time and any other restrictions on exercise; (ix) the method of determining
the amount payable in connection with the exercise of such Currency Warrants;
(x) the national securities exchange on which such Currency Warrants will be
listed; (xi) whether such Currency Warrants will be represented by certificates
or issued in book-entry form; (xii) the place or places at which payment of the
cash settlement value of such Currency Warrants is to be made by the Company, if
applicable; (xiii) information with respect to book-entry procedures, if any;
(xiv) the plan of distribution of such Currency Warrants; and (xv) any other
terms of such Currency Warrants.
Prospective purchasers of Currency Warrants should be aware of special
United States Federal income tax considerations applicable to instruments such
as the Currency Warrants. The Prospectus Supplement relating to each issue of
Currency Warrants will describe such tax considerations.
Except as may otherwise be provided in the applicable Prospectus
Supplement, the Currency Warrants will be issued in the form of global Currency
Warrant Certificates, registered in the name of a depositary or its nominee.
Holders will not be entitled to receive definitive certificates representing
Currency Warrants. A holder's ownership of a Currency Warrant will be recorded
on or through the records of the brokerage firm or other entity that maintains
such holder's account. In turn, the total number of Currency Warrants held by an
individual brokerage firm for its clients will be maintained on the records of
the depositary in the name of such brokerage firm or its agent. Transfer of
ownership of any Currency Warrant will be effected only through the selling
holder's brokerage firm.
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<PAGE> 37
Each issue of Currency Warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale of
such issue of Currency Warrants. In the event that the Currency Warrants are
delisted from, or permanently suspended from trading on, such exchange, the
expiration date for such Currency Warrants will be the date such delisting or
trading suspension becomes effective, and Currency Warrants not previously
exercised will be deemed automatically exercised on such expiration date. The
applicable Currency Warrant Agreement will contain a covenant of the Company not
to seek delisting of the Currency Warrants, or suspension of their trading, on
such exchange unless the Company has concurrently arranged for listing on
another national securities exchange.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities being offered hereby (i)
through underwriters, (ii) through dealers, (iii) through agents or (iv)
directly to purchasers. The applicable Prospectus Supplements will set forth the
terms of the offerings of any Offered Securities, including the name or names of
the underwriters, dealers or agents, the purchase price of the Offered
Securities and the proceeds to the Company from the sale, any underwriting
discounts and other items constituting underwriters' compensation and any
discounts and commissions allowed or paid to dealers or agents. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
If an underwriter or underwriters are utilized in the sale of the Offered
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached.
The underwriter or underwriters with respect to an underwritten offering of
Offered Securities will be set forth in the Prospectus Supplement relating to
such offering and, if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement. If any underwriter or underwriters are utilized in the sale of the
Offered Securities, the underwriting agreement will provide that the obligations
of the underwriters are subject to certain conditions precedent and that the
underwriters with respect to a sale of Offered Securities will be obligated to
purchase all such Offered Securities if any are purchased. In connection with
the sale of Offered Securities, underwriters may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
If an underwriter or underwriters are utilized in the sale of any Offered
Securities, the applicable Prospectus Supplement will contain a statement as to
the intention, if any, of such underwriters at the date of such Prospectus
Supplement to make a market in the Offered Securities.
If a dealer is utilized directly by the Company in the sale of the Offered
Securities in respect of which this Prospectus is delivered, the Company will
sell such Offered Securities to the dealer, as principal. The dealer may then
resell such Offered Securities to the public at varying prices to be determined
by such dealer at the time of resale. Any such dealer and the terms of any such
sale will be set forth in the Prospectus Supplement relating thereto.
Offered Securities may be offered and sold through agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Offered Securities in respect of which this Prospectus is delivered will be
named in, and any commissions payable by the Company to such agent will be set
forth in, the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
Underwriters, dealers or agents participating in the distribution of
Offered Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions,
under the Securities Act.
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<PAGE> 38
Underwriters, dealers or agents who participate in the distribution of
Offered Securities may be entitled, under agreements which may be entered into
with the Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution by the
Company to payments such underwriters, dealers or agents may be required to make
in respect thereof.
The Offered Securities may be sold either at a fixed price or prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
Underwriters, dealers or agents may be customers of, engage in transactions
with, or perform services for, the Company, the Bank, Chase USA, Texas Commerce
or certain other subsidiaries of the Company in the ordinary course of business.
Offers to purchase Offered Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resale thereof. The terms of any such
sales will be described in the Prospectus Supplement relating thereto. Except as
set forth in the applicable Prospectus Supplement, no director, officer or
employee of the Company or its bank subsidiaries will solicit or receive a
commission in connection with direct sales by the Company of the Offered
Securities, although such persons may respond to inquiries by potential
purchasers and perform ministerial and clerical work in connection with any such
direct sales.
Under Section 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), when an NASD member, such as Chase
Securities Inc. ("CSI"), participates in the distribution of an affiliated
company's securities, the offering must be conducted in accordance with the
applicable provisions of Section 2720. CSI is considered to be an "affiliate"
(as such term is defined in Section 2720) of the Company by virtue of the fact
that the Company is the parent of CSI. The offer and sale of any Offered
Securities by CSI or any other qualified affiliate of the Company will comply
with the requirements of Section 2720 regarding the underwriting of securities
of affiliates and with any restrictions as may be imposed on CSI or such other
affiliate of the Company by the Federal Reserve Board.
This Prospectus and the related Prospectus Supplement may be used by direct
or indirect wholly-owned subsidiaries of the Company, including CSI, in
connection with offers and sales related to secondary market transactions in the
Offered Securities. Such subsidiaries may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase Offered Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts (each
a "Contract") providing for payment and delivery on the date stated in the
Prospectus Supplement. Each Contract will be for an amount not less than, and
unless the Company otherwise agrees the aggregate principal amount of Debt
Securities or number of shares of Preferred Stock or Common Stock sold pursuant
to Contracts shall be neither less nor more than, the respective amounts stated
in the Prospectus Supplement. Institutions with which Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, educational and charitable institutions and other institutions, but
shall in all cases be subject to the approval of the Company. The obligations of
any purchaser under any Contract will not be subject to any conditions except
that any related sale of Offered Securities to underwriters shall have occurred
and the purchase by an institution of the Offered Securities covered by its
Contract shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject. A
commission indicated in the Prospectus Supplement will be paid to underwriters,
dealers and agents soliciting purchases of Offered Securities pursuant to
Contracts accepted by the Company.
The expected time of delivery of the Offered Securities in respect of which
this Prospectus is delivered will be set forth in the accompanying Prospectus
Supplement.
27
<PAGE> 39
EXPERTS
The financial statements of the Company incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 have been so incorporated in reliance on the reports of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
LEGAL OPINIONS
The validity of the Offered Securities being offered hereby will be passed
upon for the Company by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), New York, New York, and for any underwriters by
Cravath, Swaine & Moore, New York, New York. Cravath, Swaine & Moore has
represented and continues to represent the Company and its subsidiaries in a
substantial number of matters on a regular basis.
28
<PAGE> 40
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY CHASE OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF CHASE SINCE SUCH DATE.
- ---------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
Description of the Preferred Stock S- 2
Underwriting S-10
Experts S-11
Legal Opinions S-11
PROSPECTUS
Available Information 2
Incorporation of Certain Documents by
Reference 2
The Chase Manhattan Corporation 3
Consolidated Ratios of Earnings to
Fixed Charges and Preferred Stock
Dividend Requirements 4
Use of Proceeds 4
Description of Debt Securities 4
Description of Preferred Stock 15
Description of Common Stock 23
Description of Securities Warrants 23
Risk Factors Relating to Currency
Warrants 24
Description of Currency Warrants 25
Plan of Distribution 26
Experts 28
Legal Opinions 28
</TABLE>
Prospectus Supplement
THE CHASE MANHATTAN
CORPORATION
4,000,000 SHARES
FIXED/ADJUSTABLE RATE
NONCUMULATIVE PREFERRED STOCK
[CHASE LOGO]
CHASE SECURITIES INC.
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
Dated May 14, 1998
