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As Filed Pursuant to Rule 424(b)(3)
Registration Nos. 333-56573; 33-64261
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 21, 1998)
LOGO
The Chase Manhattan Corporation
270 Park Avenue, New York, New York 10017 - (212) 270-6000
Senior Medium-Term Notes, Series C
Subordinated Medium-Term Notes, Series A
The Chase Manhattan Corporation (the "Company", which may be referred to as "we"
or "us") may offer its Medium-Term Notes, Series A or Series C (the "Notes"), at
one or more times. The specific terms of the particular Notes being offered will
be contained in an attached pricing supplement.
The following terms may apply to particular Notes being offered:
- They may be Senior Medium-Term Notes, Series C, which are "Senior
Securities", as described in the attached prospectus, or Subordinated
Medium-Term Notes, Series A, which are "Subordinated Securities", as
described in the attached prospectus.
- They may mature between nine months and 100 years after issuance.
- They may bear interest at a fixed or floating rate (or both). Certain
Notes issued at a discount may not bear interest. Floating interest rates
may be based on any of the following formulas or on other interest rate
formulas specified in the attached pricing supplement.
<TABLE>
<S> <C> <C> <C> <C>
- CD Rate - Treasury Rate - Prime Rate
- Federal Funds Effective Rate - Commercial Paper Rate - CMT Rate
- LIBOR
</TABLE>
Any floating interest rate may be adjusted by adding or subtracting a
specified spread or margin or by applying a spread multiplier.
- They may be denominated in foreign or composite currencies, if specified
in the attached pricing supplement.
- They will not be redeemable prior to maturity and will not be subject to
a sinking fund, unless otherwise specified in the attached pricing
supplement.
- They may be issued in certificated or book-entry form.
The Company may offer the Notes as follows:
- Through agents (the "Agents") who have agreed to use reasonable efforts
to solicit offers to purchase the Notes. Unless otherwise specified in
the attached pricing supplement, the Company will pay the Agents
commissions ranging from 0.125% to 0.750% of the principal amount of the
Notes offered.
- Through one or more Agents purchasing the Notes as principal and acting
as underwriter or dealer. The Company will pay those Agents an
underwriting discount or commission to be negotiated at the time of sale.
- Directly to investors. The Company will not pay a discount or commission
to any Agent for a direct sale of Notes by the Company.
The Notes will not be listed on any securities exchange.
THE NOTES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. THE
NOTES ARE NOT SECURED.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS
SUPPLEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus supplement and the attached prospectus and pricing supplement
may be used by affiliates of the Company, including Chase Securities Inc., in
connection with offers and sales of the Notes in the secondary market. These
affiliates may act as principal or agent in those transactions. Secondary market
sales by these affiliates will be made at prices related to market prices at the
time of sale.
The date of this prospectus supplement is August 21, 1998.
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ABOUT THIS PROSPECTUS SUPPLEMENT; PRICING SUPPLEMENTS
The Company may use this prospectus supplement, together with the attached
prospectus and an attached pricing supplement, to offer our Senior Medium-Term
Notes, Series C (the "Senior Notes"), or our Subordinated Medium-Term Notes,
Series A (the "Subordinated Notes"), from time to time. The Senior Notes and
Subordinated Notes are referred to together as the "Notes." The total initial
public offering price of Notes that may be offered by use of this prospectus
supplement is $4,201,882,414 (or the equivalent in foreign or composite
currencies). That amount will be reduced by the amount of any securities issued
under our shelf registration statement (nos. 333-56573; 33-64261) (the
"Registration Statement").
This prospectus supplement sets forth certain terms of the Notes that we
may offer. It supplements the description of the Debt Securities, Senior
Securities and Subordinated Securities contained in the attached prospectus. If
information in this prospectus supplement is inconsistent with the prospectus,
this prospectus supplement will apply and will supersede that information in the
prospectus.
Each time we issue Notes, we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the Notes being offered and the terms of the offering. The
pricing supplement may also add, update or change information in this prospectus
supplement or the attached prospectus. Any information in the pricing
supplement, including any changes in the method of calculating interest on any
Note, that is inconsistent with this prospectus supplement will apply and will
supersede that information in this prospectus supplement.
It is important for you to read and consider all information contained in
this prospectus supplement and the attached prospectus and pricing supplement in
making your investment decision. You should also read and consider the
information in the documents we have referred you to in "Where You Can Find More
Information About the Company" on page 5 of the attached prospectus.
DESCRIPTION OF THE NOTES
GENERAL
The following summary of certain terms of the Notes is not complete. You
should refer to the Indentures under which the Notes will be issued, copies of
which are exhibits to the Registration Statement. The definitions of certain
capitalized terms used in this prospectus supplement are provided in the
Glossary beginning on page S-17. Capitalized terms used in this prospectus
supplement but not defined in this prospectus supplement (including the
Glossary), have the meanings assigned in the attached prospectus and/or the
applicable Indenture.
The Senior Notes will be "Senior Securities," as described in the attached
prospectus. The Subordinated Notes will be "Subordinated Securities," as
described in the attached prospectus. The Senior Notes will constitute one
series of Senior Securities issued under the Senior Indenture. They will have
the same rank as all other Senior Securities of the Company. See "Description of
Debt Securities -- Senior Securities" in the attached prospectus.
The Subordinated Notes will constitute one series of Subordinated
Securities issued under the Subordinated Indenture. They will have the same rank
as all other Subordinated Securities of the Company. The Subordinated Notes will
be subordinated to Senior Indebtedness and, under the circumstances described in
the attached prospectus, to Additional Senior Obligations. See "Description of
Debt Securities -- Subordinated Securities -- Subordination" in the attached
prospectus. As of June 30, 1998, the aggregate principal amount of Senior
Indebtedness and Additional Senior Obligations outstanding was approximately
$12.1 billion.
Payment of the Subordinated Notes may be accelerated only in the event of
our bankruptcy or reorganization. Holders of Subordinated Notes are not entitled
to accelerate the maturity of the Subordinated Notes upon a payment default or a
default by us in the performance of any covenant contained in the Subordinated
Indenture. See "Description of Debt Securities -- Subordinated
Securities -- Defaults and Waivers" in the attached prospectus. Unless otherwise
specified in the attached pricing supplement, the Subordinated Notes are not
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convertible into any other securities and are not exchangeable for Capital
Securities.
The Notes are being offered on a continuing basis. Each Note will mature on
a Business Day from 9 months to 100 years from its date of issue, as agreed
between us and the purchaser. Unless otherwise specified in the attached pricing
supplement, the Notes will not be subject to redemption or repayment prior to
maturity and will not be subject to any sinking fund.
The Notes may bear interest at (i) a fixed rate (a "Fixed Rate Note"), or
(ii) a floating rate (a "Floating Rate Note"). Interest on Floating Rate Notes
will be determined, and adjusted periodically, by reference to an interest rate
basis or formula, adjusted by a Spread or Spread Multiplier, if any. See
"Interest and Interest Rates" below. We may issue Notes at prices less than
their stated principal amount. Certain of such discounted Notes will be
considered Original Issue Discount Notes (as defined below under "Certain United
States Federal Income Tax Consequences -- Original Issue Discount"). Original
Issue Discount Notes may or may not bear periodic interest. Unless otherwise
specified in the attached pricing supplement, the amount payable to the holder
of an Original Issue Discount Note upon an acceleration of its maturity will
equal its adjusted issue price (which will be less than the amount payable at
maturity). For a discussion of the United States federal income tax consequences
relating to Original Issue Discount Notes, see "Certain United States Federal
Income Tax Consequences" below.
Unless otherwise specified in the attached pricing supplement, the Notes
will be denominated in U.S. dollars and payments of principal of and interest on
the Notes will be made in U.S. dollars. Except as otherwise specified in the
attached pricing supplement, the authorized denominations of the Notes
denominated in U.S. dollars will be U.S. $1,000 and integral multiples of U.S.
$1,000 in excess of $1,000.
Each Note will be issued in fully registered form without coupons. Each
Note will be issued initially either in definitive form (a "Certificated Note")
or in global form and deposited with, or on behalf of, DTC, as depository (a
"Book-Entry Note"), as described in the attached prospectus under the caption
"Description of Debt Securities -- Permanent Global Debt Securities". Beneficial
interests in a Book-Entry Note will be shown on, and transfers of those
interests will be effected only through, records maintained by DTC or its
participants. Except under limited circumstances, Book-Entry Notes will not be
issuable in certificated form. Payments of principal and interest on Book-Entry
Notes will be made to DTC or its nominee. Payments to beneficial owners of
interests in Book-Entry Notes will be made through DTC and its participants. See
"Description of Debt Securities -- Permanent Global Debt Securities" in the
attached prospectus.
Certificated Notes may be presented for registration of transfer or
exchange at the corporate trust office of The Chase Manhattan Bank in the
Borough of Manhattan, The City of New York. Unless otherwise specified in the
attached pricing supplement, interest on Certificated Notes (other than interest
payable upon maturity, or upon earlier redemption or repayment) will be payable
by check to the person in whose name a Certificated Note is registered at the
close of business on the applicable Record Date before each Interest Payment
Date. However, a holder of $10,000,000 or more in aggregate principal amount of
Certificated Notes of like tenor and terms will be entitled to receive payment
in U.S. dollars by wire transfer of immediately available funds if appropriate
payment instructions have been received in writing by the Paying Agent not less
than 15 calendar days prior to the applicable Interest Payment Date. Interest
payable on Certificated Notes at maturity, or upon earlier redemption or
repayment of principal, will be payable to the person to whom principal is
payable. At maturity, or upon earlier redemption or repayment, payments of
principal and interest will be made only upon presentment of the Certificated
Note to the Paying Agent.
The Paying Agent for the Notes will initially be The Chase Manhattan Bank.
INTEREST AND INTEREST RATES
Unless otherwise specified in the attached pricing supplement, each Note
will accrue interest from and including its date of issue. The attached pricing
supplement will designate whether a particular Note is a Fixed Rate Note or a
Floating Rate Note. In the case of a Floating
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Rate Note, the attached pricing supplement will also specify whether the Note
will bear interest based on the CD Rate (a "CD Rate Note"), the Commercial Paper
Rate (a "Commercial Paper Rate Note"), the Federal Funds Effective Rate (a
"Federal Funds Effective Rate Note"), LIBOR (a "LIBOR Note"), the Treasury Rate
(a "Treasury Rate Note"), the Prime Rate (a "Prime Rate Note"), the CMT Rate (a
"CMT Rate Note") or on another interest rate basis set forth in the attached
pricing supplement.
The rate of interest on Floating Rate Notes will reset daily, weekly,
monthly, quarterly, semi-annually or annually. The Reset Dates will be specified
in the attached pricing supplement and on the face of each Note. In addition,
the pricing supplement will specify the Spread or Spread Multiplier, if any, and
the Maximum Interest Rate or Minimum Interest Rate, if any, applicable to each
Floating Rate Note. The pricing supplement relating to an offering of Notes may
also specify, to the extent applicable, the Calculation Agent, Calculation
Dates, Index Maturity, Initial Interest Rate, Interest Determination Dates,
Interest Payment Dates and Record Dates with respect to each Note. The interest
rate on the Notes will in no event be higher than the maximum rate permitted by
applicable law. Under New York law as in effect on the date of this prospectus
supplement, the maximum rate of interest is 25% per annum on a simple interest
basis. This limit does not apply to Notes in a principal amount of $2,500,000 or
more.
Interest on a Note will be payable on the first Interest Payment Date
following its date of issue. However, if the date of a Note's issue is on or
after the Record Date for that Interest Payment Date, interest will be payable
beginning on the second Interest Payment Date following the Note's issue. If any
Interest Payment Date with respect to any Floating Rate Note, other than an
Interest Payment Date that is also the maturity date of that Note, falls on a
day that is not a Business Day (or, in the case of a LIBOR Note, a day that is
not a London Business Day), that Interest Payment Date will be postponed to the
next day that is a Business Day or London Business Day, as the case may be, and
interest will continue to accrue. However, in the case of a LIBOR Note, if the
next London Business Day is in the following calendar month, the Interest
Payment Date will be the preceding London Business Day. If the maturity date of
any Floating Rate Note or Fixed Rate Note or an Interest Payment Date for any
Fixed Rate Note falls on a day that is not a Business Day (or London Business
Day, in the case of the maturity date of a LIBOR Note), payment of principal,
premium, if any, and interest with respect to that Note will be paid on the next
Business Day (or London Business Day, as the case may be), and no interest on
that payment will accrue from and after that maturity date or Interest Payment
Date.
FIXED RATE NOTES
The pricing supplement relating to an offering of Fixed Rate Notes will
designate a fixed rate of interest per year payable on the Notes (which may be
zero). Fixed Rate Notes may bear one or more annual rates of interest as
specified in the attached pricing supplement. Interest payments, if any, on
Fixed Rate Notes will be made on the Interest Payment Dates specified in the
attached pricing supplement. Interest, if any, on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Unless otherwise specified in the attached pricing supplement, The Chase
Manhattan Bank will be the "Calculation Agent" with respect to the calculation
of rates of interest payable on Floating Rate Notes. Upon the request of a
registered holder of a Floating Rate Note, the Calculation Agent will provide
the interest rate then in effect and, if different, the interest rate which will
become effective as a result of a determination made on the most recent Interest
Determination Date with respect to that Floating Rate Note. The holder of any
Floating Rate Note as to which The Chase Manhattan Bank is the Calculation Agent
may call 212-946-3481 for interest rate information.
Unless otherwise specified in the attached pricing supplement, each
interest payment on any Floating Rate Note will include interest accrued from
and including the date of issue or the last date to which interest has been
paid, as the case may be, to but excluding the applicable Interest Payment Date
or the date of maturity, as the case may be.
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Accrued interest on a Floating Rate Note will be calculated by multiplying
the principal amount of the Note by an accrued interest factor. The accrued
interest factor will be computed by adding the interest factors calculated for
each day in the period for which accrued interest is being calculated. Unless
otherwise specified in the attached pricing supplement, the interest factor for
each day is computed by dividing the interest rate in effect on that day by (i)
the actual number of days in the year, in the case of Treasury Rate Notes and
CMT Rate Notes or (ii) 360, in the case of all other Floating Rate Notes.
The interest rate on a Floating Rate Note in effect on any day will be (i)
if the day is a Reset Date, the interest rate with respect to the Interest
Determination Date relating to that Reset Date, or (ii) if the day is not a
Reset Date, the interest rate with respect to the Interest Determination Date
relating to the preceding Reset Date. The interest rate is subject to adjustment
by a Spread or a Spread Multiplier, if any, and to any Maximum Interest Rate or
Minimum Interest Rate limitation. However, the interest rate in effect for the
ten calendar days prior to the date of maturity will be that in effect on the
tenth calendar day prior to the date of maturity.
Except as otherwise specified in the attached pricing supplement, all
percentages and decimals resulting from any calculation of interest on Floating
Rate Notes will be rounded, if necessary, to the nearest ten thousandth of a
percentage point, with five one-hundred thousandths of a percentage point
rounded upwards. For example, 6.55545% (or .0655545) will be rounded to 6.5555%
(or .065555) and 6.55544% (or .0655544) will be rounded to 6.5554% (or
.065554)). All dollar amounts used in or resulting from any such calculation
will be rounded to the nearest cent (with one-half cent being rounded upwards).
CD Rate Notes
A CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in the attached pricing supplement.
Unless otherwise specified in the attached pricing supplement, the "CD
Rate" for any Interest Determination Date is the rate on that date for
negotiable certificates of deposit having the Index Maturity specified in the
pricing supplement, as published in H.15(519) prior to 9:00 a.m., New York City
time, on the Calculation Date pertaining to that Interest Determination Date
under the heading "CDs (Secondary Market)".
The following procedures will be followed if the CD Rate cannot be
determined as described above:
- If the above rate is not published in H.15(519) by 9:00 A.M., New York
City time, on the Calculation Date, the CD Rate will be the rate on that
Interest Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the pricing supplement as published in
Composite Quotations under the heading "Certificates of Deposit".
- If that rate is not published in Composite Quotations by 3:00 P.M., New
York City time, on the Calculation Date, then the Calculation Agent will
determine the CD Rate to be the average of the secondary market offered
rates as of 10:00 A.M., New York City time, on that Interest
Determination Date, quoted by three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in New York City for negotiable
certificates of deposit in a denomination of $5,000,000 of major United
States money-center banks of the highest credit standing (in the market
for negotiable certificates of deposit) with a remaining maturity closest
to the Index Maturity designated in the pricing supplement. The
Calculation Agent will select the three dealers referred to above.
- If fewer than three dealers are quoting as mentioned above, the CD Rate
will be the CD Rate in effect on that Interest Determination Date.
Commercial Paper Rate Notes
A Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in the attached pricing supplement.
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Unless otherwise specified in the attached pricing supplement, the
"Commercial Paper Rate" for any Interest Determination Date is the Money Market
Yield of the rate on that date for commercial paper having the Index Maturity
specified in the pricing supplement, as published in H.15(519) prior to 9:00
a.m., New York City time, on the Calculation Date pertaining to that Interest
Determination Date under the heading "Commercial Paper -- Nonfinancial".
The following procedures will be followed if the Commercial Paper Rate
cannot be determined as described above:
- If the above rate is not published in H.15(519) by 9:00 A.M., New York
City time, on the Calculation Date, the Commercial Paper Rate will be the
Money Market Yield of the rate on that Interest Determination Date for
commercial paper having the Index Maturity designated in the pricing
supplement, as published in Composite Quotations under the heading
"Commercial Paper".
- If that rate is not published in Composite Quotations by 3:00 P.M., New
York City time, on the Calculation Date, then the Calculation Agent will
determine the Commercial Paper Rate to be the Money Market Yield of the
average of the offered rates of three leading dealers of commercial paper
in New York City as of 11:00 A.M., New York City time, on that Interest
Determination Date for commercial paper having the Index Maturity
specified in the pricing supplement placed for an nonfinancial issuer
whose bond rating is "Aa", or the equivalent, from a nationally
recognized statistical rating organization. The Calculation Agent will
select the three dealers referred to above.
- If fewer than three dealers selected by the Calculation Agent are quoting
as mentioned above, the Commercial Paper Rate will be the Commercial
Paper Rate in effect on that Interest Determination Date.
Federal Funds Effective Rate Notes
A Federal Funds Effective Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Effective Rate and the Spread or
Spread Multiplier, if any) specified in the attached pricing supplement.
Unless otherwise specified in the attached pricing supplement, the "Federal
Funds Effective Rate" for any Interest Determination Date is the rate on that
date for Federal Funds, as published in H.15(519) prior to 9:00 A.M., New York
City time, on the Calculation Date pertaining to that Interest Determination
Date under the heading "Federal Funds (Effective)".
The following procedures will be followed if the Federal Funds Effective
Rate cannot be determined as described above:
- If the above rate is not published in H.15(519) by 9:00 A.M., New York
City time, on the Calculation Date, the Federal Funds Effective Rate will
be the rate on that Interest Determination Date, as published in
Composite Quotations under the heading "Federal Funds/Effective Rate".
- If that rate is not published in Composite Quotations by 3:00 P.M., New
York City time, on the Calculation Date, then the Calculation Agent will
determine the Federal Funds Effective Rate to be the average of the rates
for the last transaction in overnight Federal funds arranged by three
leading brokers of Federal funds transactions in New York City as of 9:00
A.M., New York City time, on that Interest Determination Date. The
Calculation Agent will select the three brokers referred to above.
- If fewer than three brokers selected by the Calculation Agent are quoting
as mentioned above, the Federal Funds Effective Rate will be the Federal
Funds Effective Rate in effect on that Interest Determination Date.
LIBOR Notes
A LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in the
attached pricing supplement.
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Unless otherwise specified in the attached Pricing Supplement, the
Calculation Agent will determine LIBOR as follows:
On each Interest Determination Date:
- If "LIBOR Telerate" is specified in the attached pricing supplement,
LIBOR will be the rate for deposits in the Index Currency having the
Index Maturity specified in the pricing supplement beginning on the
second London Business Day immediately following the applicable Interest
Determination Date, as such rate appears on the Designated LIBOR Page as
of 11:00 a.m., London time, on that Interest Determination Date.
- If "LIBOR Reuters" is specified in the attached pricing supplement, LIBOR
will be the average of the offered rates for deposits in the Index
Currency having the Index Maturity specified in the pricing supplement
beginning on the second London Business Day immediately following the
applicable Interest Determination Date, as such rates appear on the
Designated LIBOR Page as of 11:00 a.m., London time, on that Interest
Determination Date, if at least two such offered rates appear on the
Designated LIBOR Page.
If the Designated LIBOR Page by its terms provides only for a single rate, that
single rate will be used regardless of the foregoing provisions requiring more
than one rate.
On any Interest Determination Date on which fewer than the required number
of applicable rates appear or no rate appears on the applicable Designated LIBOR
Page, the Calculation Agent will determine LIBOR as follows:
- LIBOR will be determined on the basis of the offered rates at which
deposits in the Index Currency having the Index Maturity designated in
the pricing supplement beginning on the second London Business Day
immediately following the Interest Determination Date and in a principal
amount that is representative of a single transaction in that market at
that time are offered by four major banks in the London interbank market
at approximately 11:00 A.M., London time, on the Interest Determination
Date to prime banks in the London interbank market. The Calculation Agent
will select the four banks and request the principal London office of
each of those banks to provide a quotation of its rate. If at least two
quotations are provided, LIBOR for that Interest Determination Date will
be the average of those quotations.
- If fewer than two quotations are provided as mentioned above, LIBOR will
be the average of the rates quoted by three major banks in New York City
at approximately 11:00 A.M., New York City time, on the Interest
Determination Date for loans to leading European banks in the Index
Currency having the Index Maturity designated in the pricing supplement
beginning on the second London Business Day immediately following the
Interest Determination Date and in a principal amount that is
representative for a single transaction in that market at that time. The
Calculation Agent will select the three banks referred to above.
- If fewer than three banks selected by the Calculation Agent are quoting
as mentioned above, LIBOR will be LIBOR in effect on the Interest
Determination Date.
Treasury Rate Notes
A Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in the attached pricing supplement.
Unless otherwise specified in the attached pricing supplement, the
"Treasury Rate" for any Interest Determination Date is the rate set at the most
recent auction of direct obligations of the United States ("Treasury bills")
having the Index Maturity designated in the pricing supplement, as published in
H.15(519) by 9:00 A.M., New York City time, on the Calculation Date pertaining
to the Interest Determination Date under the heading "U.S. Government
Securities -- Treasury bills -- auction average".
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The following procedures will be followed if the Treasury Rate cannot be
determined as described above:
- If the above rate is not published in H.15(519) by 9:00 A.M., New York
City time, on the Calculation Date, the Treasury Rate will be the auction
average rate (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury.
- If the results of the most recent auction of Treasury bills having the
Index Maturity designated in the pricing supplement are not published or
announced as described above by 3:00 P.M., New York City time, on the
Calculation Date, or if no auction is held in a particular week, then the
Calculation Agent will determine the Treasury Rate to be a yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) of the average
of the secondary market bid rates, as of approximately 3:30 P.M., New
York City time, on the Interest Determination Date of three leading
primary United States government securities dealers selected by the
Calculation Agent for the issue of Treasury bills with a remaining
maturity closest to the Index Maturity specified in the pricing
supplement. The Calculation Agent will select the three dealers referred
to above.
- If fewer than three dealers selected by the Calculation Agent are quoting
as mentioned above, the Treasury Rate will be the Treasury Rate in effect
on that Interest Determination Date.
Prime Rate Notes
A Prime Rate Note will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the Note and the attached pricing supplement.
Unless otherwise specified in the Note and the attached pricing supplement,
the "Prime Rate" for any Interest Determination Date is the prime rate or base
lending rate on that date, as published in H.15(519) by 9:00 A.M., New York City
time, on the Calculation Date pertaining to the Interest Determination Date
under the heading "Bank Prime Loan".
The following procedures will be followed if the Prime Rate cannot be
determined as described above:
- If the above rate is not published in H.15(519) by 9:00 a.m., New York
City time, on the Calculation Date, then the Calculation Agent will
determine the Prime Rate to be the average of the rates of interest
publicly announced by each bank that appears on the Reuters Screen US
Prime 1 as that bank's prime rate or base lending rate as in effect for
that Interest Determination Date.
- If fewer than four rates appear on the Reuters Screen US Prime 1 on the
Interest Determination Date, then the Prime Rate will be the average of
the prime rates or base lending rates quoted (on the basis of the actual
number of days in the year divided by a 360-day year) as of the close of
business on the Interest Determination Date by three major banks in The
City of New York selected by the Calculation Agent.
- If fewer than three banks selected by the Calculation Agent are quoting
as mentioned above, the Prime Rate will be the Prime Rate in effect on
the Interest Determination Date.
CMT Rate Notes
A CMT Rate Note will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any) specified
in the attached pricing supplement.
Unless otherwise specified in the attached pricing supplement, the "CMT
Rate" for any Interest Determination Date is the rate displayed on the
Designated CMT Telerate Page by 3:00 P.M., New York City time, on the
Calculation Date pertaining to the Interest Determination Date under the caption
". . . Treasury Constant Maturities. . . Federal Reserve Board
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Release H.15. . . Mondays Approximately 3:45 P.M.," under the column for the
Index Maturity specified in the pricing supplement for:
(i) if the Designated CMT Telerate Page is 7055, such Interest
Determination Date; or
(ii) if the Designated CMT Telerate Page is 7052, the week, or the
month, as applicable, ended immediately preceding the week in which the
related Interest Determination Date occurs.
The following procedures will be used if the CMT Rate cannot be determined
as described above:
- If the above rate is not displayed on the relevant page by 3:00 P.M., New
York City time, on the Calculation Date, then the CMT Rate will be the
Treasury constant maturity rate for the Index Maturity, as published in
H.15(519).
- If that rate is not published in H.15(519) by 3:00 P.M., New York City
time, on the Calculation Date, then the CMT Rate will be the Treasury
constant maturity rate (or other United States Treasury rate) for the
Index Maturity for the Interest Determination Date as may then be
published by either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in H.15(519).
- If that information is not provided by 3:00 P.M., New York City time, on
the Calculation Date, then the Calculation Agent will determine the CMT
Rate to be a yield to maturity based on the average of the secondary
market offered rates as of approximately 3:30 P.M., New York City time,
on the Interest Determination Date reported, according to their written
records, by three leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of New York selected by
the Calculation Agent as described in the following sentence. The
Calculation Agent will select five Reference Dealers and will eliminate
the highest quotation (or, in the event of equality, one of the highest
quotations) and the lowest quotation (or, in the event of equality, one
of the lowest quotations), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Index Maturity and
a remaining term to maturity of not less than the Index Maturity minus
one year.
- If the Calculation Agent cannot obtain three Treasury Note quotations,
the Calculation Agent will determine the CMT Rate to be a yield to
maturity based on the average of the secondary market offered rates as of
approximately 3:30 P.M., New York City time, on the Interest
Determination Date of three Reference Dealers in New York City (selected
using the same method described above) for Treasury Notes with an
original maturity of the number of years that is the next highest to the
Index Maturity and a remaining term to maturity closest to the Index
Maturity and in an amount of at least U.S. $100 million.
- If three or four but not five Reference Dealers are quoting as described
above, then the CMT Rate will be based on the average of the offered
rates obtained and neither the highest nor the lowest of those quotations
will be eliminated.
- If fewer than three Reference Dealers selected by the Calculation Agent
are quoting as described above, the CMT Rate will be the CMT Rate in
effect on the Interest Determination Date.
OTHER PROVISIONS; ADDENDA
Any provisions relating to the calculation of the interest rate applicable
to a Note or any other related matter may be modified as specified in the
attached pricing supplement.
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CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the ownership of Notes as of the date of this prospectus
supplement. Except where noted, this summary deals only with Notes held as
capital assets and does not deal with special situations, such as those of
dealers in securities or currencies, financial institutions, tax-exempt
entities, life insurance companies, persons holding Notes as part of a hedging,
constructive sale or conversion transaction or a straddle or to holders of Notes
whose "functional currency" is not the U.S. dollar. Furthermore, the discussion
below is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations, rulings and judicial decisions as of the
date of this prospectus supplement. Those authorities may be repealed, revoked
or modified so as to result in United States federal income tax consequences
different from those discussed below. Any special United States federal tax
considerations relevant to a particular issue of the Notes will be provided in
the attached pricing supplement. Persons considering the purchase, ownership or
disposition of Notes should consult their own tax advisors concerning the United
States federal income tax consequences to them in light of their particular
situations as well as any consequences arising under the laws of any other
taxing jurisdiction.
PAYMENTS OF INTEREST
Except as set forth below, interest on a Note will generally be taxable to
a United States Holder (as defined below) as ordinary income from domestic
sources at the time it is paid or accrued in accordance with the United States
Holder's method of accounting for tax purposes. As used in this prospectus
supplement, a "United States Holder" means a beneficial owner of a Note that is
(i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in or under the laws of the United States or
any political subdivision of the United States, (iii) an estate the income of
which is subject to United States federal income taxation regardless of its
source or (iv) a trust that is subject to the supervision of a court within the
United States and the control of one or more United States persons as described
in section 7701(a)(30) of the Code. A "Non-United States Holder" is a holder
that is not a United States Holder.
ORIGINAL ISSUE DISCOUNT
United States Holders of Notes issued with original issue discount ("OID")
will be subject to special tax accounting rules, as described in greater detail
below. United States Holders of those Notes should be aware that they generally
must include OID in gross income in advance of the receipt of cash attributable
to that income. However, United States Holders of those Notes generally will not
be required to include separately in income cash payments received on the Notes,
even if denominated as interest, to the extent those payments do not constitute
qualified stated interest (as defined below). Notes issued with OID will be
referred to as "Original Issue Discount Notes." Notice will be given in the
attached pricing supplement when the Company determines that a particular Note
will be an Original Issue Discount Note.
This summary is based upon final Treasury regulations addressing debt
instruments with OID. A Note with an "issue price" that is less than its stated
redemption price at maturity (the sum of all payments to be made on the Note
other than "qualified stated interest") generally will be issued with original
issue discount if that difference is at least 0.25% of the stated redemption
price at maturity multiplied by the number of complete years to maturity. The
"issue price" of each Note in a particular offering will be the first price at
which a substantial amount of that particular offering is sold (other than to an
underwriter, placement agent or wholesaler). The term "qualified stated
interest" means stated interest that is unconditionally payable in cash or in
property (other than debt instruments of the issuer) at least annually at a
single fixed rate or, subject to certain conditions, based on one or more
interest indices. Interest is payable at a single fixed rate only if the rate
appropriately takes into account the length of the interval between payments.
Notice will be given in the attached pricing supplement when the Company
determines that a particular Note will bear interest that is not qualified
stated interest.
In the case of a Note issued with de minimis OID (i.e., discount that is
not OID because it is
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less than 0.25% of the stated redemption price at maturity multiplied by the
number of complete years to maturity), the United States Holder generally must
include the de minimis OID in income at the time payments (other than qualified
stated interest) on the Notes are made in proportion to the amount paid. Any
amount of de minimis OID that has been included in income will be treated as
capital gain.
Certain of the Notes may contain provisions permitting them to be redeemed
prior to their stated maturity at the option of the Company and/or at the option
of the holder. Original Issue Discount Notes containing those features may be
subject to rules that differ from the general rules discussed in this prospectus
supplement. Persons considering the purchase of Original Issue Discount Notes
with those features should carefully examine the applicable pricing supplement
and should consult their own tax advisors with respect to those features since
the tax consequences with respect to OID will depend, in part, on the particular
terms and features of the Notes.
United States Holders of Original Issue Discount Notes with a maturity upon
issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments using the
"constant yield method" described in this paragraph. The amount of OID
includible in income by the initial United States Holder of an Original Issue
Discount Note is the sum of the "daily portions" of OID with respect to the Note
for each day during the taxable year or portion of the taxable year in which
that United States Holder held such Note ("accrued OID"). The daily portion is
determined by allocating to each day in any "accrual period" a pro rata portion
of the OID allocable to that accrual period. The "accrual period" for an
Original Issue Discount Note may be of any length and may vary in length over
the term of the Note, provided that each accrual period is no longer than one
year and each scheduled payment of principal or interest occurs on the first day
or the final day of an accrual period. The amount of OID allocable to any
accrual period is an amount equal to the excess, if any, of (a) the product of
the Note's adjusted issue price at the beginning of the accrual period and its
yield to maturity (determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the accrual period) over
(b) the aggregate of all qualified stated interest allocable to the accrual
period. OID allocable to a final accrual period is the difference between the
amount payable at maturity (other than a payment of qualified stated interest)
and the adjusted issue price at the beginning of the final accrual period.
Special rules apply for calculating OID for an initial short accrual period. The
"adjusted issue price" of a Note at the beginning of any accrual period is equal
to its issue price increased by the accrued OID for each prior accrual period
(determined without regard to the amortization of any acquisition or bond
premium, as described below) and reduced by any payments made on the Note (other
than qualified stated interest) on or before the first day of the accrual
period. Under these rules, a United States Holder will have to include in income
increasingly greater amounts of OID in successive accrual periods. The Company
is required to provide information returns stating the amount of OID accrued on
Notes held of record by persons other than corporations and other exempt
holders.
In the case of an Original Issue Discount Note that is a Floating Rate
Note, both the "yield to maturity" and "qualified stated interest" will be
determined solely for purposes of calculating the accrual of OID as though the
Note will bear interest in all periods at a fixed rate generally equal to the
rate that would be applicable to interest payments on the Note on its date of
issue or, in the case of certain Floating Rate Notes, the rate that reflects the
yield to maturity that is reasonably expected for the Note. Additional rules may
apply if interest on a Floating Rate Note is based on more than one interest
index. Persons considering the purchase of Floating Rate Notes should carefully
examine the attached pricing supplement and should consult their own tax
advisors regarding the United States federal income tax consequences of the
holding and disposition of those Notes.
United States Holders may elect to treat all interest on any Note as OID
and calculate the amount includible in gross income under the constant yield
method described above. For the purposes of this election, interest includes
stated interest, acquisition discount, OID, de minimis OID, market discount, de
minimis market dis-
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count and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium. The election is to be made for the taxable year in which
the United States Holder acquired the Note, and may not be revoked without the
consent of the Internal Revenue Service (the "IRS"). United States Holders
should consult with their own tax advisors about this election.
SHORT-TERM NOTES
In the case of Notes having a term of one year or less ("Short-Term
Notes"), all payments (including all stated interest) will be included in the
stated redemption price at maturity, will not be qualified stated interest and,
thus, United States Holders will generally be taxed on the discount in lieu of
stated interest. The discount will be equal to the excess of the stated
redemption price at maturity over the issue price of a Short-Term Note, unless
the United States Holder elects to compute this discount using tax basis instead
of issue price. In general, individuals and certain other cash method United
States Holders of Short-Term Notes are not required to include accrued discount
in their income currently unless they elect to do so (but may be required to
include stated interest in income as the income is received). United States
Holders that report income for United States federal income tax purposes on the
accrual method and certain other United States Holders are required to accrue
discount on these Short-Term Notes (as ordinary income) on a straight-line
basis, unless an election is made to accrue the discount according to a constant
yield method based on daily compounding. In the case of a United States Holder
that is not required, and does not elect, to include discount in income
currently, any gain realized on the sale, exchange or retirement of the
Short-Term Note will generally be ordinary income to the extent of the discount
accrued through the date of sale, exchange or retirement. In addition, a United
States Holder that does not elect to currently include accrued discount in
income may be required to defer deductions for a portion of the United States
Holder's interest expense with respect to any indebtedness attributable to the
Notes.
MARKET DISCOUNT
If a United States Holder purchases a Note (other than an Original Issue
Discount Note) for an amount that is less than its stated redemption price at
maturity or, in the case of an Original Issue Discount Note, its adjusted issue
price, the amount of the difference will be treated as "market discount" for
United States federal income tax purposes, unless such difference is less than a
specified de minimis amount. Under the market discount rules, a United States
Holder will be required to treat any payment (other than qualified stated
interest) on, or any gain on the sale, exchange, retirement or other disposition
of, a Note as ordinary income to the extent of the market discount which has not
previously been included in income and is treated as having accrued on the Note
at the time of its payment or disposition. In addition, the United States Holder
may be required to defer, until the maturity of the Note or its earlier
disposition in a taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness attributable to the Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue on a constant interest method. A United States
Holder of a Note may elect to include market discount in income currently as it
accrues (on either a ratable or constant interest method), in which case the
rule described above regarding deferral of interest deductions will not apply.
This election to include market discount in income currently, once made, applies
to all market discount obligations acquired on or after the first taxable year
to which the election applies and may not be revoked without the consent of the
IRS.
ACQUISITION PREMIUM; AMORTIZABLE BOND
PREMIUM
A United States Holder that purchases an Original Issue Discount Note for
an amount that is greater than its adjusted issue price but equal to or less
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest will be considered to have purchased
that Note at an "acquisition premium." Under the acquisition premium rules, the
amount of OID which the United States Holder must include in its gross income
with respect to the Note for any taxable year will be reduced by the portion of
the
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acquisition premium properly allocable to that year.
A United States Holder that purchases a Note (including an Original Issue
Discount Note) for an amount in excess of the sum of all amounts payable on the
Note after the purchase date other than qualified stated interest will be
considered to have purchased the Note at a "premium" and, if it is an Original
Issue Discount Note, will not be required to include any OID in income. A United
States Holder generally may elect to amortize the premium over the remaining
term of the Note on a constant yield method as an offset to interest when
includible in income under the United States Holder's regular accounting method.
In the case of instruments that provide for alternative payment schedules, bond
premium is calculated by assuming that (i) the holder will exercise or not
exercise options in a manner that maximizes the holder's yield and (ii) the
issuer will exercise or not exercise options in a manner that minimizes the
holder's yield except with respect to call options for which the issuer is
assumed to exercise the call options in a manner that maximizes the holder's
yield. Bond premium on a Note held by a United States Holder that does not make
an election to amortize the premium will decrease the gain or increase the loss
otherwise recognized on disposition of the Note. The election to amortize
premium on a constant yield method once made applies to all debt obligations
held or subsequently acquired by the electing United States Holder on or after
the first day of the first taxable year to which the election applies and may
not be revoked without the consent of the IRS.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A United States Holder's tax basis in a Note will, in general, be the
United States Holder's cost for that Note, increased by OID, market discount or
any discount with respect to a Short-Term Note previously included in income by
the United States Holder and reduced by any amortized premium and any cash
payments on the Note other than qualified stated interest. Upon the sale,
exchange, retirement or other disposition of a Note, a United States Holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange, retirement or other disposition (less any accrued qualified
stated interest, which will be taxable as such) and the adjusted tax basis of
the Note. Except as described above with respect to certain Short-Term Notes or
with respect to market discounts, that gain or loss will be capital gain or
loss. Capital gains of individuals derived in respect of capital assets held for
more than one year are eligible for reduced rates of taxation. The deductibility
of capital losses is subject to limitations.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any paying agent of
principal or interest (which for purposes of this discussion includes OID)
on a Note owned by a Non-United States Holder, provided that (i) the
beneficial owner does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled
to vote within the meaning of section 871(h)(3) of the Code and the
regulations thereunder, (ii) the beneficial owner is not a controlled
foreign corporation that is related to the Company through stock ownership,
(iii) the beneficial owner is not a bank whose receipt of interest on a
Note is described in section 881(c)(3)(A) of the Code and (iv) the
beneficial owner satisfies the statement requirement (described generally
below) set forth in section 871(h) and section 881(c) of the Code and the
regulations thereunder;
(b) no withholding of United States federal income tax will be
required with respect to any gain or income realized by a Non-United States
Holder upon the sale, exchange or other disposition of a Note; and
(c) a Note beneficially owned by an individual who at the time of
death is a Non-United States Holder will not be subject to United States
federal estate tax as a result of such individual's death, provided that
such individual does not actually or constructively own 10% or more of the
total
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combined voting power of all classes of stock of the Company entitled to
vote within the meaning of section 871(h)(3) of the Code and provided that
the interest payments with respect to the Note would not have been, if
received at the time of such individual's death, effectively connected with
the conduct of a United States trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of a Note, or a financial institution holding the Note on behalf of that
owner, must provide, in accordance with specified procedures, a paying agent of
the Company with a statement to the effect that the beneficial owner is not a
United States Holder. Pursuant to current temporary Treasury regulations, these
requirements will be met if (1) the beneficial owner provides his name and
address, and certifies, under penalties of perjury, that he is not a United
States person (which certification may be made on an IRS Form W-8 (or successor
form)) or (2) a financial institution holding the Note on behalf of the
beneficial owner certifies, under penalties of perjury, that the above statement
has been received by it and furnishes a paying agent with a copy of the
statement. Under recently finalized Treasury regulations (the "Final
Regulations"), the statement requirement referred to above may be satisfied with
other documentary evidence for interest paid after December 31, 1999 with
respect to an offshore account or through certain foreign intermediaries.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of premium, if
any, and interest (including OID) made to that Non-United States Holder will be
subject to a 30% withholding tax unless the beneficial owner of the Note
provides the Company or its paying agent, as the case may be, with a properly
executed (1) IRS Form 1001 (or successor form) claiming an exemption from or
reduced rate of withholding under the benefit of a tax treaty or (2) IRS Form
4224 (or successor form) stating that interest paid on the Note is not subject
to withholding tax because it is effectively connected with the beneficial
owner's conduct of a trade or business in the United States. Under the Final
Regulations, Non-U.S. Holders will generally be required to provide IRS Form W-8
in lieu of IRS Form 1001 and IRS Form 4224, although alternative documentation
may be applicable in certain situations.
If a Non-United States Holder is engaged in a trade or business in the
United States and premium, if any, or interest (including OID) on the Note is
effectively connected with the conduct of that trade or business, the Non-United
States Holder, although exempt from the withholding tax discussed above, will be
subject to United States federal income tax on that income on a net income basis
in the same manner as if it were a United States Holder. In addition, if the
holder is a foreign corporation, it may be subject to a branch profits tax equal
to 30% of its effectively connected earnings and profits for the taxable year,
subject to adjustments. For this purpose, the premium, if any, and interest
(including OID) on a Note will be included in that foreign corporation's
earnings and profits.
Any gain or income realized by a Non-United States Holder upon the sale,
exchange, retirement or other disposition of a Note generally will not be
subject to United States federal income tax, unless (i) that gain or income is
effectively connected with a trade or business in the United States of the
Non-United States Holder, or (ii) in the case of a Non-United States Holder who
is an individual, that individual is present in the United States for 183 days
or more in the taxable year of the sale, exchange, retirement or other
disposition, and certain other conditions are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on Notes and to the
proceeds of sale of a Note made to United States Holders other than certain
exempt recipients (such as corporations). A 31% backup withholding tax will
apply to those payments if the United States Holder fails to provide a taxpayer
identification number or certification of foreign or other exempt status or
fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying
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agent to Non-United States Holders if a statement satisfying the requirements of
(a)(iv) under "Non-United States Holders" has been received and the payor does
not have actual knowledge that the beneficial owner is a United States person.
In addition, backup withholding and information reporting may apply to the
proceeds of the sale of a Note within the United States or conducted through
certain U.S. related financial intermediaries unless the statement satisfying
the requirements of (a)(iv) under "Non-United States Holders" has been received
(and the payor does not have actual knowledge that the beneficial owner is a
United States person) or the holder otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against the holder's United States federal income tax
liability provided the required information is furnished to the IRS.
NON-DOLLAR DENOMINATED NOTES
A discussion of the United States federal income tax consequences with
respect to Notes denominated in other than U.S. dollars will be contained in the
applicable pricing supplement.
PLAN OF DISTRIBUTION
We may sell the Notes (i) through agents, (ii) through underwriters or
dealers or (iii) directly to purchasers.
DISTRIBUTION THROUGH AGENTS
We may sell the Notes on a continuing basis through agents that become
parties to a Master Agency Agreement (each an "Agent"), a form of which is filed
as an exhibit to the Registration Statement (the "Master Agency Agreement").
Each Agent's obligations are separate and several from those of any other Agent.
Each Agent will use reasonable efforts when requested by us to solicit purchases
of the Notes. We will pay each Agent a commission to be negotiated at the time
of sale. Unless otherwise specified in the attached pricing supplement, the
commission may range from .125% to .750% of the principal amount of each Note
sold through that Agent, depending on its stated maturity. As of the date of
this prospectus supplement, the Agents include Chase Securities Inc., Bear,
Stearns & Co. Inc., Credit Suisse First Boston Corporation, Goldman, Sachs &
Co., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Morgan Stanley & Co. Incorporated, PaineWebber Incorporated, Prudential
Securities Incorporated, Salomon Brothers Inc and Warburg Dillon Read LLC. Chase
Securities Inc. is a wholly owned subsidiary of the Company.
DISTRIBUTION THROUGH UNDERWRITERS
We may also sell Notes to any Agent, acting as principal, for its own
account or for resale to one or more investors or other purchasers, including
other broker-dealers.
The Agents may sell any Notes they have purchased as principal to any
dealer at a discount. Unless otherwise specified in the attached pricing
supplement, the discount allowed to any dealer will not be in excess of the
discount to be received by the Agent from the Company. Unless otherwise
specified in the attached pricing supplement, any Note sold to an Agent as
principal will be purchased by that Agent at a price equal to 100% of the
principal amount of that Note less a percentage ranging from .125% to .750% of
that principal amount, depending upon the Note's stated maturity. The Notes may
be resold by the Agent to investors and other purchasers from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale, or the Notes
may be resold to certain dealers as described above. After the initial public
offering of any Notes, the public offering price and discount may be changed.
DIRECT SALES
We may sell Notes directly to investors, without the involvement of any
Agent or underwriter. In this case, we would not be obligated to pay any
commission or discount in connection with the sale.
GENERAL INFORMATION
The name of any Agents or other persons through which we sell any Notes, as
well as any commissions or discounts payable to those Agents or other persons,
will be set forth in the attached pricing supplement.
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The Company will have the sole right to accept offers to purchase Notes and
may, in its absolute discretion, reject any proposed purchase of Notes in whole
or in part. Each Agent will have the right, in its discretion reasonably
exercised, to reject in whole or in part any proposed purchase of Notes through
it.
Any Agent, underwriter or dealer that participates in the offering of the
Notes may be an "underwriter" within the meaning of the Securities Act of 1933.
The Company has agreed to indemnify each Agent and certain other persons against
certain liabilities, including liabilities under the Securities Act.
The Company may also accept (but not solicit) offers to purchase Notes
through additional agents on substantially the same terms and conditions
(including commissions) as would apply to purchases by Agents under the Master
Agency Agreement.
The Notes will not be listed on any securities exchange. The Agents have
advised the Company that they may from time to time purchase and sell the Notes
in the secondary market. However, no Agent is obligated to do so and any Agent
may discontinue making a market in the Notes at any time without notice. No
assurance can be given as to the existence or liquidity of any secondary market
for the Notes.
The Agents, as well as other agents to or through which we may sell Notes,
may engage in transactions with us and perform services for us in the ordinary
course of business.
Chase Securities Inc. is a wholly owned subsidiary of the Company. The
offer and sale of any Notes by Chase Securities Inc. will comply with the
requirements of Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. regarding a member firm's underwriting securities of an
affiliate. As required by Rule 2720, any such offer and sale will not be made to
any discretionary account without the prior approval of the customer. See "Plan
of Distribution" in the attached prospectus.
This prospectus supplement, the attached prospectus and any attached
pricing supplement may be used by affiliates of the Company, including Chase
Securities Inc., in connection with offers and sales of the Notes in the
secondary market. These affiliates may act as principal or agent in those
transactions. Secondary market sales by these affiliates will be made at prices
related to market prices at the time of sale.
In connection with certain offerings of the Notes, the Agents may engage in
overallotment, stabilizing transactions and syndicate covering transactions in
accordance with Regulation M under the Securities Exchange Act of 1934.
Overallotment involves sales in excess of the offering size, which create a
short position for the Agents. Stabilizing transactions involve bids to purchase
the Notes in the open market for the purpose of pegging, fixing or maintaining
the price of the Notes. Syndicate covering transactions involve purchases of the
Notes in the open market after the distribution has been completed in order to
cover short positions. Stabilizing transactions and syndicate covering
transactions may cause the price of the Notes to be higher than it would
otherwise be in the absence of those transactions. Those activities, if
commenced, may be discontinued at any time.
LEGAL OPINIONS
Opinions regarding the validity of the Notes being offered will be issued
for us by Simpson Thacher & Bartlett, New York, New York, counsel for the
Company, and for the Agents by Cravath, Swaine & Moore, New York, New York.
Cravath, Swaine & Moore has represented and continues to represent us and our
subsidiaries in a substantial number of matters on a regular basis.
In the opinions described above, certain assumptions will be made regarding
future action required to be taken by the Company and the appropriate Trustee in
connection with the issuance and sale of any particular Notes, the specific
terms of those Notes and other matters which may affect the validity of those
Notes but which cannot be ascertained on the date of the relevant opinion.
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GLOSSARY
Set forth below are definitions of some of the terms used in this
prospectus supplement and not defined in the attached prospectus.
"Business Day" means any day that is not a Saturday or Sunday and that, in
New York City, is not a day on which banking institutions generally are
authorized or required by law or executive order to close.
"Calculation Agent" means the agent appointed by the Company to calculate
interest rates for Floating Rate Notes. Unless otherwise specified in the
pricing supplement, the Calculation Agent will be The Chase Manhattan Bank.
"Calculation Date" means, with respect to any Interest Determination Date,
the date on which the Calculation Agent is to calculate an interest rate for a
Floating Rate Note. Unless otherwise specified in the Note and the applicable
pricing supplement, the Calculation Date pertaining to an Interest Determination
Date for a Floating Rate Note will be the first to occur of (a) the tenth
calendar day after that Interest Determination Date or, if that day is not a
Business Day, the next succeeding Business Day or (b) the Business Day preceding
the applicable Interest Payment Date or date of maturity (or the date of
redemption or repayment, if any) of that Note, as the case may be. However,
LIBOR will be calculated on the Interest Determination Date.
"Composite Quotations" means the daily statistical release entitled
"Composite 3:30 P.M. Quotations for U.S. Government Securities", or any
successor publication, published by the Federal Reserve Bank of New York.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified in the pricing
supplement (or any other page that replaces that page on that service for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519)) or,
if no such page is specified, page 7052.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is designated in the
pricing supplement, the display on the Reuters Monitor Money Rates Service for
the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency, or (b) if "LIBOR Telerate" is designated in the
pricing supplement, the display on the Dow Jones Telerate Service for the
purpose of displaying the London interbank rates of major banks for the
applicable Index Currency. If neither LIBOR Reuters nor LIBOR Telerate is
specified, LIBOR for the applicable Index Currency will be determined as if
LIBOR Telerate had been specified.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication, published by the Board
of Governors of the Federal Reserve System.
"Index Currency" means the currency (including composite currencies)
specified in the pricing supplement as the currency for which LIBOR shall be
calculated. If no currency is specified, the Index Currency will be U.S.
dollars.
"Index Maturity" means the period of time designated as the representative
maturity of the certificates of deposit, the commercial paper, the Index
Currency or the Treasury bills, respectively, by reference to transactions in
which the CD Rate, the Commercial Paper Rate, LIBOR, the Treasury Rate and the
CMT Rate, respectively, are to be calculated, as set forth in the pricing
supplement.
"Initial Interest Rate" means the rate at which a Floating Rate Note will
bear interest from and including the date of issue to but excluding the first
Reset Date, as set forth in the pricing supplement.
"Interest Determination Date" means the date as of which the interest rate
for a Floating Rate Note is to be calculated, to be effective as of the
following Reset Date and calculated on the related Calculation Date. However,
LIBOR will be calculated on the Interest Determination Date. Unless otherwise
specified in the pricing supplement, (i) the Interest Determination Date
pertaining to a Reset Date for a CD Rate Note, Commercial Paper Rate Note,
Federal Funds Effective Rate Note, Prime Rate Note or CMT Rate Note will be the
second Business Day preceding that Reset Date, (ii) the Interest Determination
Date pertaining to a Reset Date for a LIBOR Note will be the second London Busi-
S-17
<PAGE> 18
ness Day preceding that Reset Date and (iii) the Interest Determination Date
pertaining to a Reset Date for a Treasury Rate Note will be the day of the week
during which that Reset Date falls on which Treasury bills of the Index Maturity
designated in the pricing supplement are auctioned. Treasury bills are usually
sold at auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is usually held on the following Tuesday or may be held
on the preceding Friday. If, as the result of a legal holiday, an auction is
held on the preceding Friday, that Friday will be the Interest Determination
Date pertaining to the Reset Date occurring in the following week.
"Interest Payment Date" means the date on which payment of interest on a
Note (other than payment at maturity) is to be made.
"London Business Day" means a Business Day on which dealings in deposits in
U.S. dollars are transacted in the London interbank market.
"Maximum Interest Rate" means, with respect to any Floating Rate Note, a
maximum numerical interest rate limitation, or ceiling, on the rate at which
interest may accrue on that Note during any interest period.
"Minimum Interest Rate" means, with respect to any Floating Rate Note, a
minimum numerical interest rate limitation, or floor, on the rate at which
interest may accrue on that Note during any interest period.
"Money Market Yield" means a yield calculated in accordance with the
following formula:
<TABLE>
<C> <C> <S>
D X 360
Money Market Yield = 360 - (D X M) X 100
</TABLE>
where "D" refers to the annual rate for the commercial paper, quoted on a bank
discount basis and expressed as a decimal, and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
"Paying Agent" means the agent appointed by the Company to make payments of
principal, premium, if any, and interest on the Notes. Unless otherwise
specified in the pricing supplement, the Paying Agent will be The Chase
Manhattan Bank.
"Record Date" means the date on which a Note must be held in order for the
holder to receive an interest payment on the next Interest Payment Date. Unless
otherwise specified in the pricing supplement, the Record Date for any Interest
Payment Date will be the fifteenth day (whether or not a Business Day or a
London Business Day) prior to that Interest Payment Date.
"Reset Date" means the date on which a Floating Rate Note will begin to
bear interest at the interest rate determined as of any Interest Determination
Date. Unless otherwise specified in the applicable Note and pricing supplement,
the Reset Dates will be:
(i) in the case of Floating Rate Notes that reset daily, each Business
Day;
(ii) in the case of Floating Rate Notes (other than Treasury Rate
Notes) that reset weekly, Wednesday of each week;
(iii) in the case of Treasury Rate Notes that reset weekly, Tuesday of
each week;
(iv) in the case of Floating Rate Notes that reset monthly, the third
Wednesday of each month;
(v) in the case of Floating Rate Notes that reset quarterly, the third
Wednesday of March, June, September and December of each year;
(vi) in the case of Floating Rates Notes that reset semi-annually, the
third Wednesday of each of two months of each year specified in the pricing
supplement; and
(vii) in the case of Floating Rate Notes that reset annually, the
third Wednesday of one month of each year specified in the pricing
supplement.
If a Reset Date for any Floating Rate Note would otherwise be a day that is not
a Business Day (or, in the case of a LIBOR Note, a day that is not a London
Business Day), that Reset Date will be postponed to the next Business Day or
London Business Day, as the case may be, (except that, in the case of a LIBOR
Note, if that London Business Day is in the following calendar month, that Reset
Date will be the preceding London Business Day). If a Treasury bill auction (as
described in the definition of "Interest Determination Date") will be held on
any day that would otherwise be a Reset Date for a Treasury Rate Note, then that
Reset Date
S-18
<PAGE> 19
will instead be the Business Day immediately following that auction date.
"Reuters Screen US Prime 1 Page" means the display on the Reuters Monitor
Money Rates Service on the page designated as "US Prime 1" (or any other page
that replaces that page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
"Spread" means the constant amount, if any, to be added to the CD Rate, the
Commercial Paper Rate, the Federal Funds Effective Rate, LIBOR, the Treasury
Rate, the Prime Rate, the CMT Rate or any other interest rate index in effect
from time to time with respect to a Note, which amount will be set forth in the
pricing supplement.
"Spread Multiplier" means the percentage by which the CD Rate, the
Commercial Paper Rate, the Federal Funds Effective Rate, LIBOR, the Treasury
Rate, the Prime Rate, the CMT Rate or any other interest rate index in effect
from time to time with respect to a Note is to be multiplied, which percentage
will be set forth in the pricing supplement.
S-19
<PAGE> 20
[Chase Manhattan Logo]
THE CHASE MANHATTAN CORPORATION
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
WARRANTS
------------------------
WE WILL PROVIDE SPECIFIC TERMS OF THESE SECURITIES IN SUPPLEMENTS TO THIS
PROSPECTUS.
YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT CAREFULLY BEFORE YOU INVEST.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THIS PROSPECTUS IS DATED AUGUST 21, 1998
<PAGE> 21
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the terms
of our securities, you should carefully read this document with the attached
prospectus supplement that together give the specific terms of the securities we
are offering. You should also read the documents we have referred you to in
"Where You Can Find More Information About The Company" on page 5 for
information on our company and our financial statements. Certain capitalized
terms used in this summary are defined elsewhere in this prospectus.
THE CHASE MANHATTAN CORPORATION
Our company is a registered bank holding company. Through various
subsidiaries, we conduct domestic and international financial services
businesses. At June 30, 1998, we were the largest banking institution in the
United States, with $367 billion in assets and $23 billion in stockholders'
equity.
Our principal bank subsidiaries are The Chase Manhattan Bank, headquartered
in New York, Chase Manhattan Bank USA, National Association, headquartered in
Delaware, and Chase Bank of Texas, National Association, headquartered in Texas.
Our principal non-bank subsidiary is Chase Securities Inc., which is engaged in
securities underwriting and dealing.
On March 31, 1996, The Chase Manhattan Corporation merged into Chemical
Banking Corporation, which changed its name to "The Chase Manhattan
Corporation." The merger was accounted for as a pooling-of-interests. Therefore,
the information in this prospectus, the accompanying prospectus supplement and
the other documents we file with the SEC is stated on a combined basis as if the
merger had been in effect for all periods presented.
THE SECURITIES WE MAY OFFER
This prospectus is part of a registration statement (No. 333-56573) (the
"Registration Statement") that we filed with the SEC utilizing a "shelf"
registration process. Under this shelf process, we may offer from time to time
up to $4,201,882,414 of any of the following securities, either separately or in
units: debt, preferred stock, depositary shares, common stock and warrants. This
prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add, update or
change information contained in this prospectus.
DEBT SECURITIES
We may offer unsecured general obligations of our company, which may be
senior (the "Senior Securities") or subordinated (the "Subordinated
Securities"). The Senior Securities and the Subordinated Securities are together
referred to in this prospectus as the "Debt Securities". The Senior Securities
will have the same rank as all of our other unsecured, unsubordinated debt. The
Subordinated Securities will be entitled to payment only after payment on our
Senior Indebtedness (as described below). In addition, under certain
circumstances relating to our insolvency or a similar event, the Subordinated
Securities will be entitled to payment only after the payment of claims relating
to Additional Senior Obligations (as described below).
The Senior Securities will be issued under an indenture between us and
Bankers Trust Company, as trustee. The Subordinated Securities will be issued
under an indenture between us and U.S. Bank Trust National Association, as
trustee. We have summarized certain general features of the Debt Securities from
the indentures. We encourage you to read the indentures (which are exhibits to
the Registration Statement) and our recent periodic and current reports that we
file with the SEC. Directions on how you can get copies of these reports are
provided on page 5.
We are a holding company that conducts substantially all of our operations
through subsidiaries. As a result, claims of the holders of the Debt Securities
will generally have a junior position to claims of creditors of our subsidiaries
(except to the extent that our company is recognized as a creditor of those
subsidiaries). Claims
2
<PAGE> 22
of creditors of our subsidiaries other than our company include substantial
amounts of long-term debt, deposit liabilities, federal funds purchased,
securities sold under repurchase agreements, commercial paper and other
short-term borrowings.
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED SECURITIES
- Neither indenture limits the amount of debt that we may issue or provides
holders any protection should there be a highly leveraged transaction,
recapitalization or restructuring involving our company.
- The indentures allow us to merge or consolidate with another company, or
to sell all or substantially all of our assets to another company. If
these events occur, the other company will be required to assume our
responsibilities relating to the Debt Securities, and we will be released
from all liabilities and obligations.
- The indentures provide that holders of a majority of the total principal
amount of outstanding Debt Securities of any series may vote to change
certain of our obligations or certain of your rights concerning the Debt
Securities of that series. However, to change the amount or timing of
principal, interest or other payments under the Debt Securities, every
holder in the series must consent.
- If an Event of Default (as described below) occurs with respect to any
series of Debt Securities, the trustee or holders of 25% of the
outstanding principal amount of that series may declare the principal
amount of the series immediately payable. However, holders of a majority
of the principal amount may rescind this action.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SENIOR SECURITIES
We have agreed in the indenture relating to the Senior Securities that we
and our subsidiaries will not sell voting stock of The Chase Manhattan Bank, and
that The Chase Manhattan Bank will not issue its voting stock, unless the sale
or issuance is for fair market value and we and our subsidiaries would own at
least 80% of the voting stock of The Chase Manhattan Bank following the sale or
issuance. This covenant would not prevent us from completing a merger,
consolidation or sale of substantially all of our assets. In addition, this
covenant would not prevent the merger or consolidation of The Chase Manhattan
Bank into another domestic bank if our company and its subsidiaries would own at
least 80% of the voting stock of the successor entity after the merger or
consolidation.
If we satisfy certain conditions in the indenture relating to the Senior
Securities, we may discharge that indenture at any time by depositing with the
trustee sufficient funds or government obligations to pay the Senior Securities
when due.
Events of Default. The indenture relating to the Senior Securities
provides that the following are events of default:
- Interest not paid for 30 days after due date.
- Principal or premium not paid when due.
- Sinking fund payment not paid for 5 days after due date.
- Covenant breach continues for 60 days after notice.
- Principal payment default on debt (including Senior Securities of other
series) having an aggregate principal amount of more than $25,000,000 is
not rescinded within 30 days after notice.
- Acceleration of more than $25,000,000 aggregate principal amount of debt
(including Senior Securities of other series) is not rescinded within 30
days after notice.
- Occurrence of certain bankruptcy or insolvency events.
- Occurrence of any other event of default specified in the prospectus
supplement.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SUBORDINATED SECURITIES
The Subordinated Securities will be subordinated to all "Senior
Indebtedness", which includes all indebtedness for money borrowed by us, except
indebtedness that is stated to be not superior to, or to have the same rank as,
the Subordinated Securities. At June 30, 1998, approximately $9.7 billion of
Senior Indebtedness was outstanding.
3
<PAGE> 23
In an insolvency of or similar event relating to our company, creditors
holding "Additional Senior Obligations" would also be entitled to full payment
before any amounts could be distributed to holders of the Subordinated
Securities. Additional Senior Obligations include indebtedness for claims under
derivative products, including interest, foreign exchange and commodity
contracts, but excluding claims under Senior Indebtedness or claims under
obligations having the same rank as, or ranking junior to, the Subordinated
Securities. At June 30, 1998, approximately $2.4 billion of Additional Senior
Obligations were outstanding.
Events of Default. The indenture relating to the Subordinated Securities
provides that the following are events of default:
- Occurrence of certain bankruptcy or insolvency events.
- Occurrence of any other event of default specified in the prospectus
supplement.
PREFERRED STOCK AND DEPOSITARY SHARES
We may issue our preferred stock, par value $1 per share in one or more
series (the series being offered are referred to as "Preferred Stock"). We will
determine the dividend, voting, conversion and other rights of the series being
offered and the terms and conditions relating to its offering and sale at the
time of the offer and sale. We may also issue fractional shares of Preferred
Stock that will be represented by Depositary Shares and Depositary Receipts.
COMMON STOCK
We may issue our common stock, par value $1 per share (the "Common Stock").
Holders of Common Stock are entitled to receive dividends when declared by the
Board of Directors (subject to rights of preferred stock holders). Each holder
of Common Stock is entitled to one vote per share. The holders of Common Stock
have no preemptive rights or cumulative voting rights.
WARRANTS
We may issue warrants for the purchase of Debt Securities, Preferred Stock
or Common Stock ("Securities Warrants"). We may also issue warrants for the cash
value in U.S. dollars of the right to purchase or sell foreign or composite
currencies ("Currency Warrants"). We may issue warrants independently or
together with other securities.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The consolidated ratios of earnings to fixed charges and the ratios of
earnings to combined fixed charges and preferred stock dividend requirements are
as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------- ------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits............ 1.78 1.82 1.66 1.90 1.86 1.62
Including Interest on Deposits............ 1.39 1.43 1.32 1.41 1.42 1.31
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements:
Excluding Interest on Deposits............ 1.75 1.77 1.60 1.82 1.76 1.52
Including Interest on Deposits............ 1.38 1.41 1.30 1.38 1.38 1.27
</TABLE>
For purposes of computing the above ratios, 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.
4
<PAGE> 24
WHERE YOU CAN FIND MORE INFORMATION
ABOUT THE COMPANY
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
later information filed with the SEC will update and supersede this information.
We incorporate by reference the documents listed below and any future filings
made with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until our offering is completed:
(a) Annual Report on Form 10-K for the year ended December 31, 1997;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998
and June 30, 1998;
(c) Current Reports on Form 8-K filed on January 21, 1998, January 28,
1998, March 17, 1998, April 24, 1998, May 20, 1998, June 15, 1998, July 24, 1998
and July 30, 1998;
(d) The descriptions of our Common Stock and Preferred Stock contained in
our Registration Statements filed under Section 12 of the Securities Exchange
Act of 1934.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Office of the Secretary
The Chase Manhattan Corporation
270 Park Avenue
New York, NY 10017
212-270-4040
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT. WE HAVE AUTHORIZED NO
ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF
THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT
ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
5
<PAGE> 25
THE CHASE MANHATTAN CORPORATION
GENERAL
The Chase Manhattan Corporation (the "Company", which may be referred to as
"we" or "us") is a bank holding company registered under the Bank Holding
Company Act of 1956. We were organized as a Delaware corporation in 1968. As of
June 30, 1998, we were the largest banking institution in the United States,
with $367 billion in assets and $23 billion in stockholders' equity.
We conduct domestic and international financial services businesses through
various bank and non-bank subsidiaries. Our principal bank subsidiaries are The
Chase Manhattan Bank, a New York banking corporation (the "Bank"), Chase
Manhattan Bank USA, National Association, headquartered in Delaware ("Chase
USA"), and Chase Bank of Texas, National Association, headquartered in Texas
("Chase Texas"). Our principal non-bank subsidiary is Chase Securities Inc.
("CSI"), which is engaged in securities underwriting and dealing activities.
On March 31, 1996, The Chase Manhattan Corporation ("heritage Chase")
merged into Chemical Banking Corporation, which changed its name to "The Chase
Manhattan Corporation." The merger was accounted for as a pooling-of-interests.
Therefore, the information in this prospectus, the accompanying prospectus
supplement and the other documents we file with the SEC are stated on a combined
basis as if the merger had been in effect for all periods presented.
BUSINESS
Our activities are internally organized, for operating purposes, into three
major business franchises. A brief description of these business franchises is
presented below.
Global Banking
Global Banking provides financing, advisory, sales and trading, trade
finance, asset management and private banking services. Clients include
corporations, institutions, governments and wealthy individuals located around
the world. Global Banking operates in more than 50 countries, including major
operations in all key international financial centers. Chase Texas (other than
its consumer and global services businesses) is also included in Global Banking.
Chase Technology Solutions
Chase Technology Solutions combines the Company's global services
businesses, information technology and operations, and electronic commerce
initiatives into a single group. Global services is a leading provider of
information and transaction services globally and includes custody, cash
management, trust and other fiduciary services.
National Consumer Services
National Consumer Services included, as of June 30, 1998, the
fourth-largest bank credit card issuer in the U.S., the third-largest originator
and servicer of residential mortgages in the U.S., and a leading provider of
auto financing and other consumer lending products. The Company and its
subsidiaries maintain a leading market share position in the New York
metropolitan tri-state area in serving the financial needs of consumers. We
offer customers convenient access to financial services by telephone, personal
computer and the internet and have the most branches and automated teller
machines in the New York metropolitan tri-state area. National Consumer Services
also has a small international consumer presence.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the net
proceeds we receive from the sale of the securities offered by this prospectus
and the accompanying prospectus supplement will be used for general corporate
purposes. General corporate purposes may include the repayment of debt,
investments in or extensions of credit to our subsidiaries, redemption of
preferred stock, or the financing of possible acquisitions or business
expansion. The net proceeds may be invested temporarily or applied to repay
short-term debt until they are used for their stated purpose.
6
<PAGE> 26
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description of the terms of the Debt Securities sets forth
certain general terms that may apply to the Debt Securities. The particular
terms of any Debt Securities will be described in the prospectus supplement
relating to those Debt Securities.
The Debt Securities will be either our senior debt securities (the "Senior
Securities") or our subordinated debt securities (the "Subordinated
Securities"). The Senior Securities will be issued under an Indenture dated as
of December 1, 1989, as amended (the "Senior Indenture"), between us and Bankers
Trust Company, as Trustee. The Subordinated Securities will be issued under an
Indenture dated as of April 1, 1987, as amended and restated as of December 15,
1992, and as further amended (the "Subordinated Indenture"), between us and U.S.
Bank Trust National Association, as Trustee. The Senior Indenture and the
Subordinated Indenture are together called the "Indentures".
The following summary of certain provisions of the Indentures is not
complete. You should refer to the Indentures, copies of which are exhibits to
the registration statement of which this prospectus is a part (Registration
Statement File No. 333-56573; the "Registration Statement"). Section references
below are to the section in the applicable Indenture. Capitalized terms have the
meanings assigned to them in the applicable Indenture. The referenced sections
of the Indentures and the definitions of capitalized terms are incorporated by
reference.
Neither Indenture limits the amount of Debt Securities that we may issue.
Each Indenture provides that Debt Securities may be issued up to the principal
amount authorized by us from time to time. The Senior Securities will be
unsecured and will have the same rank as all of our other unsecured and
unsubordinated debt. The Subordinated Securities will be unsecured and will be
subordinated and junior to all Senior Indebtedness (as defined below under
"Subordinated Securities -- Subordination"). In addition, under certain
circumstances relating to the dissolution, winding-up, liquidation or
reorganization of the Company, the Subordinated Securities will be junior to all
Additional Senior Obligations (as defined and to the extent set forth below
under "Subordinated Securities -- Subordination").
We are a holding company that conducts substantially all of our operations
through subsidiaries. As a result, claims of the holders of the Debt Securities
will generally have a junior position to claims of creditors of our
subsidiaries, except to the extent that the Company may be recognized as a
creditor of those subsidiaries. Claims of creditors of our subsidiaries other
than the Company include substantial amounts of long-term debt, 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 Subordinated Securities. The prospectus supplement relating to
the particular series of Debt Securities being offered will specify the
particular amounts, prices and terms of those Debt Securities. These terms may
include:
- the title and type of the Debt Securities;
- any limit on the aggregate principal amount or aggregate initial offering
price of the Debt Securities and the amount payable upon acceleration;
- the purchase price of the Debt Securities;
- the dates on which the principal of the Debt Securities will be payable;
- the interest rates (including the interest rates, if any, applicable to
overdue payments) of the Debt Securities, or the method for determining
those rates, and the interest payment dates for the Debt Securities;
- the places where payments may be made on the Debt Securities;
- any mandatory or optional redemption provisions applicable to the Debt
Securities;
- any sinking fund or analogous provisions applicable to the Debt
Securities;
- the authorized denominations of the Debt Securities (if other than $1,000
and integral multiples of $1,000);
- if other than U.S. dollars, the currency or currencies, including
European Currency Units ("ECU"), the euro and other composite currencies,
in which payments on
7
<PAGE> 27
the Debt Securities will be payable (which currencies may be different
for principal, premium and interest payments);
- any conversion or exchange provisions applicable to the Debt Securities;
- any Events of Default applicable to the Debt Securities (if not set forth
in the applicable Indenture); and
- any other specific terms of the Debt Securities.
Some of the Debt Securities may be issued as original issue discount Debt
Securities (the "Original Issue Discount Securities"). Original Issue Discount
Securities bear no interest or bear interest at below-market rates and will be
sold at a discount below their stated principal amount. The prospectus
supplement will also contain any special tax, accounting or other information
relating to Original Issue Discount Securities or relating to certain other
kinds of Debt Securities that may be offered, including Debt Securities linked
to an index or payable in currencies other than U.S. dollars.
The Debt Securities 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 Debt Securities, but we may require payment of any taxes or other
governmental charges.
Unless otherwise specified in the prospectus supplement, principal of (and
premium, if any) and interest, if any, on the Debt Securities will be payable at
the corporate trust office of the Bank in New York City. Transfers or exchanges
of Debt Securities may be made at the same location. Payment of interest on any
Debt Securities may be made at our option by check mailed to the registered
holders of the Debt Securities at their registered addresses. In connection with
any payment on a Debt Security, we may require the holder to certify information
to the Company. In the absence of such certification, we may rely on any legal
presumption to enable us to determine our responsibilities, if any, to deduct or
withhold taxes, assessments or governmental charges from such payment.
Neither Indenture limits our ability to enter into a highly leveraged
transaction or provides special protection to holders of Debt Securities in the
event of such a transaction. In addition, neither Indenture provides special
protection in the event of a sudden and dramatic decline in the credit quality
of the Company resulting from a takeover, recapitalization or similar
restructuring of the Company.
We may issue Debt Securities upon the exercise of warrants ("Debt
Warrants") issued with other Debt Securities or upon exchange or conversion of
exchangeable or convertible Debt Securities. The prospectus supplement will
describe the specific terms of any Debt Warrants or of any exchangeable or
convertible securities. It will also describe the specific terms of the Debt
Securities issuable upon the exercise, exchange or conversion of those
securities. See "Description of Securities Warrants" below.
SENIOR SECURITIES
The Senior Securities will be direct, unsecured general obligations of the
Company, will constitute Senior Indebtedness (as defined below) of the Company,
and will have the same rank as our other Senior Indebtedness.
Limitation on Disposition of Stock of the Bank. The Senior Indenture
contains a covenant by us that, so long as any of the Senior Securities are
outstanding (but subject to our rights in connection with our consolidation or
merger with or into another person or a sale of our assets), neither we nor any
Intermediate Subsidiary (as defined below) will dispose of any shares of Voting
Stock of the Bank (or any securities convertible into, or options, warrants or
rights to purchase shares of Voting Stock of the Bank), except to the Company or
an Intermediate Subsidiary. In addition, the covenant provides that neither we
nor any Intermediate Subsidiary will permit the Bank to issue any shares of its
Voting Stock (or securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of its Voting Stock), nor will we permit any
Intermediate Subsidiary to cease to be an Intermediate Subsidiary. These
restrictions will not apply if (i) any disposition of Voting Stock of the Bank
(or any securities convertible into, or options, warrants or rights to purchase
shares of Voting
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Stock of the Bank) is made for fair market value, as determined by our Board of
Directors of the Company or the Intermediate Subsidiary, and (ii) after giving
effect to the transaction, we and any one or more of our 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. The above covenant also does not restrict the Bank from being
consolidated with or merged into another domestic banking corporation, if after
the merger or consolidation the Company, or its successor, and any one or more
Intermediate Subsidiaries own at least 80% of the Voting Stock of the resulting
bank and 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 capital stock, and all securities convertible
into, and options, warrants and rights to purchase shares of such capital stock,
are owned directly by the Company, free and clear of any security interest. The
above covenant 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 that 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 and
continuance of that default for 5 days;
(iv) failure by the Company for 60 days after notice to perform any of
the other covenants or warranties in the Senior Indenture applicable to
that series;
(v)(A) failure by the Company to pay indebtedness for borrowed money,
including Senior Securities of other series, in an aggregate principal
amount exceeding $25,000,000, at the date of final maturity or the
expiration of any applicable grace period or (B) acceleration of the
maturity of any of the Company's indebtedness for borrowed money, including
Senior Securities of other series, in an aggregate principal amount
exceeding $25,000,000, if that failure to pay or acceleration results from
a default under the instrument giving rise to, or securing, the
indebtedness for money borrowed and is not rescinded or annulled within 30
days after due notice, unless the 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 specified with respect to Senior
Securities of that series. (Section 501).
If any Event of Default with respect to Senior Securities of any series
occurs and is continuing, either the Trustee or the holders of not less than 25%
in principal amount of the Outstanding Senior Securities of that series may
declare the principal amount (or, if the Senior Securities of that series are
Original Issue Discount Securities, a specified portion of the principal amount)
of all Senior Securities of that series to be due and payable immediately. No
such declaration is required upon certain events of bankruptcy. Subject to
certain conditions, the declaration may be annulled and past defaults (except
uncured payment defaults 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. (Sections 502 and 513).
The prospectus supplement will describe any particular provisions relating
to the acceleration of the Maturity of a portion of the principal amount of
Original Issue Discount Securities upon an Event of Default.
The Senior Indenture requires the Trustee to, within 90 days after the
occurrence of a default known to it with respect to any outstanding series of
Senior Securities, give the holders of that series notice of the default if
uncured or not waived. However, the Trustee may withhold
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<PAGE> 29
this notice if it determines in good faith that the withholding of this notice
is in the interest of those holders, except that the Senior Trustee may not
withhold this notice in the case of a payment default. The above notice shall
not be given until 60 days after the occurrence of a default in the performance
of a covenant in the Senior Indenture other than a covenant to make payment. The
term "default" for the purpose of this provision means any event that is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Senior Securities of that series. (Section 602).
Other than the duty to act with the required standard of care during a
default, the Trustee is not obligated to exercise any of its rights or powers
under the Senior Indenture at the request or direction of any of the holders of
Senior Securities, unless the holders 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, or exercising any trust or other power
conferred on the Trustee. However, the Trustee may decline to act if the
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 contains a
provision that, if made applicable to any series of Senior Securities, permits
the Company to elect (i) to defease and be discharged from all of our
obligations (subject to limited exceptions) with respect to any series of Senior
Securities then outstanding ("defeasance") and/or (ii) to be released from our
obligations under certain covenants and from the consequences of an event of
default resulting from a breach of those covenants or a cross-default ("covenant
defeasance"). To make either of the above elections, we must deposit in trust
with the Trustee money and/or U.S. Government Obligations which through the
payment of principal and interest in accordance with their terms will provide
sufficient money, without reinvestment, to repay in full those Senior
Securities. As a condition to defeasance or covenant defeasance, we must deliver
to the Trustee an Opinion of Counsel that the holders of the Senior Securities
will not recognize income, gain or loss for Federal income tax purposes as a
result of the defeasance or covenant defeasance. That opinion, in the case of
defeasance under clause (i) above, must refer to and be based upon a ruling
received by us from the Internal Revenue Service or published as a revenue
ruling or upon a change in applicable Federal income tax law.
Under Federal income tax law as of the date of this prospectus, defeasance
would likely be treated as a taxable exchange of Senior Securities for interests
in the defeasance trust. As a result, a holder would recognize gain or loss
equal to the difference between the holder's cost or other tax basis for the
Senior Securities and the value of the holder's proportionate interest in the
defeasance trust. That holder would thereafter 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 Federal income tax law as of the date of this
prospectus, covenant defeasance would ordinarily not be treated as a taxable
exchange of Senior Securities. Purchasers of Senior Securities should consult
their own advisors as to the tax consequences to them of defeasance and covenant
defeasance, including the applicability and effect of tax laws other than the
Federal income tax law.
If we exercise our covenant defeasance option with respect to a particular
series of Senior Securities, then even if there were a default under the related
covenant, payment of those Senior Securities could not be accelerated. We may
exercise our defeasance option with respect to a particular series of Senior
Securities even if we previously had exercised our covenant defeasance option.
If we exercise our defeasance option, payment of those Senior Securities may not
be accelerated because of any Event of Default. If we exercise our 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 those Senior Securities. This is because the required
deposit of money and/or U.S. Govern-
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ment obligations in the defeasance trust is based upon scheduled cash flows
rather than market value, which will vary depending upon interest rates and
other factors.
Modification of the Senior Indenture. We and the Trustee may make
modifications and amendments to the Senior Indenture with the consent of the
holders of not less than a majority in principal amount of each series of
Outstanding Senior Securities affected by the modification or amendment.
However, without the consent of each affected holder, no such modification may
(i) change the Stated Maturity of any Senior Security of any series, (ii) reduce
the principal amount of (or premium, if any, on) any Senior Security, (iii)
reduce the rate of payment of interest on any Senior Security or change certain
other provisions relating to the yield of the Senior Securities, (iv) change the
currency or currencies in which any Senior Security is payable, (v) reduce the
percentage of holders of Outstanding Senior Securities of any series required to
consent to any modification, amendment or waiver under the Senior Indenture, or
(vi) change the provisions in the Senior Indenture that relate to its
modification or amendment. (Section 902).
We and the Trustee may amend the Senior Indenture in certain circumstances
without the consent of the holders of Senior Securities in the event we merge
with another person, to replace the Trustee, to effect modifications that do not
affect any outstanding series of Senior Securities, and for certain other
purposes.
Consolidation, Merger and Sale of Assets. We may, without the consent of
the holders of any Senior Securities, consolidate or merge with any other person
or transfer or lease all or substantially all of our assets to another person or
permit another corporation to merge into the Company, provided that: (i) the
successor is a person organized under U.S. law; (ii) the successor person, if
not us, assumes our 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).
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured general obligations
of the Company. The Subordinated Securities will be subordinate in right of
payment to all Senior Indebtedness and, in certain circumstances described below
relating to our dissolution, winding-up, liquidation or reorganization, to all
Additional Senior Obligations. The Subordinated Indenture does not limit the
amount of debt (including Senior Indebtedness) or Additional Senior Obligations
which we may incur. As of June 30, 1998, Senior Indebtedness and Additional
Senior Obligations (as defined below) of the Company aggregated approximately
$12.1 billion.
Unless otherwise specified in the prospectus supplement, the maturity of
the Subordinated Securities will be subject to acceleration only upon our
bankruptcy or reorganization. See "Defaults and Waivers" below.
The holders of Subordinated Securities of a series that is specified to be
convertible into Common Stock ("Subordinated Convertible Securities") will be
entitled at certain times specified in the prospectus supplement to convert any
Subordinated Convertible Securities of that series into Common Stock, at the
conversion price set forth in the prospectus supplement.
The holders of Subordinated Securities of any series may be obligated at
maturity, or at any earlier time specified in the prospectus supplement, to
exchange that series of Subordinated Securities for Capital Securities (as
defined below). The terms of any such exchange and of the Capital Securities
that will be issued upon such exchange will be described in the prospectus
supplement. (Article Seventeen). "Capital Securities" may consist of our Common
Stock, perpetual preferred stock or other capital securities of the Company
acceptable to our primary Federal banking regulator. Currently, our 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, we will be obligated to deliver Capital
Securities with a market value equal to the principal amount of those
Subordinated Securities. In addition, we will unconditionally undertake, at our
expense, to sell the Capital Securities in a sale (the "Secondary Of-
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fering") 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 our preferred stock is set forth below under
"Description of Preferred Stock".
Subordination. The Subordinated Securities will be subordinate in right of
payment to all Senior Indebtedness and, under certain circumstances described
below, to all Additional Senior Obligations.
The Subordinated Indenture defines "Senior Indebtedness" to mean the
principal of (and premium, if any) and interest on all indebtedness for money
borrowed by us, whether outstanding on the date the Subordinated Indenture
became effective or created, assumed or incurred after that date (including all
indebtedness of another person for money borrowed that we guarantee). However,
Senior Indebtedness does not include (A) Subordinated Securities issued under
the Subordinated Indenture, (B) Antecedent Company Subordinated Indebtedness (as
defined below), (C) Assumed MHC Subordinated Indebtedness (as defined below),
(D) Assumed Old Chase Subordinated Indebtedness (as defined below) and (E) other
debt of ours which is expressly stated to have the same rank as the Subordinated
Securities or to rank not senior to the Subordinated Securities (such other debt
is referred to as "Other Subordinated Indebtedness").
The Subordinated Indenture defines "Additional Senior Obligations" to mean
all indebtedness of the Company for claims in respect of derivative products,
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements, except for Senior Indebtedness and except for obligations
which are expressly stated to have the same rank as or to be junior to the
Subordinated Securities.
At June 30, 1998, we had approximately $2.8 billion of Subordinated
Securities issued and outstanding under the Subordinated Indenture and we had
approximately $436 million of Other Subordinated Indebtedness outstanding that
ranked equally with the Subordinated Securities.
Antecedent Company 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 June 30, 1998, we had approximately $1.0 billion
of Antecedent Company Subordinated Indebtedness outstanding.
Assumed MHC Subordinated Indebtedness means all outstanding subordinated
indebtedness of the Company which was assumed by us as a result of the merger of
Manufacturers Hanover Corporation into the Company on December 31, 1991. At June
30, 1998, we had approximately $150 million of Assumed MHC Subordinated
Indebtedness outstanding.
Assumed Old Chase Subordinated Indebtedness means all outstanding
subordinated indebtedness of heritage Chase which was assumed by us as a result
of the merger of heritage Chase into the Company. At June 30, 1998, we had
approximately $3.6 billion of Assumed Old Chase Subordinated Indebtedness
outstanding.
Under the Subordinated Indenture, no payment may be made on the
Subordinated Securities and no exchange for Capital Securities may be made in
the event:
- we have failed to pay all amounts of principal (and premium, if any) and
interest, if any, due on all Senior Indebtedness; or
- there shall exist any event of default or any event which, with notice or
lapse of time or both, would become such an event of default on any
Senior Indebtedness.
In addition, upon our dissolution, winding-up, liquidation or
reorganization: (i) the holders of Senior Indebtedness will be paid the full
amounts 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 such payments on the Senior Indebtedness have been made, (A) there are
amounts available for payment on the Subordinated Securities and (B) creditors
in respect of Additional Senior Obligations have not received their full
payments, then amounts available for payment on the Subordinated Securities will
first be used to pay in full all such Additional Senior Obliga-
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tions before any payment will be made on the Subordinated Securities.
No series of our subordinated securities will be subordinated to any of our
other series of subordinated securities. However, Antecedent Company
Subordinated Indebtedness is subordinated only to Senior Indebtedness;
Subordinated Securities and Other Subordinated Indebtedness are subordinated to
Senior Indebtedness and, in certain circumstances relating to our dissolution,
winding-up, liquidation or reorganization, to Additional Senior Obligations;
Assumed MHC Subordinated Indebtedness is subordinated to Senior Indebtedness,
Additional Senior Obligations and all of our other obligations to our creditors,
except any obligation which is expressly stated to have the same rank as, or to
rank not senior to, the Assumed MHC Subordinated Indebtedness; and Assumed Old
Chase Subordinated Indebtedness is subordinated to Senior Indebtedness,
Additional Senior Obligations and all of our other obligations to our creditors,
except any obligation which is expressly stated to have the same rank as, or to
rank junior to, the Assumed Old Chase Subordinated Indebtedness. As a result of
the differences between the subordination provisions applicable to the
Subordinated Securities, the Antecedent Company Subordinated Indebtedness, the
Other Subordinated Indebtedness, the Assumed MHC Subordinated Indebtedness and
the Assumed Old Chase Subordinated Indebtedness, in the event of our
dissolution, winding-up, liquidation or reorganization, the holders of
Subordinated Securities and Other Subordinated Indebtedness may receive less,
ratably, than the holders of Antecedent Company 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. Except as noted
below, the Subordinated Indenture does not contain a covenant prohibiting us
from selling or otherwise disposing of any shares of, or securities convertible
into, or options, warrants or rights to purchase shares of, voting stock of the
Bank. The Subordinated Indenture also does not prohibit the Bank from issuing
any shares of, securities convertible into, or options, warrants or rights to
purchase shares of, its voting stock. However, the Subordinated Indenture does
contain a covenant, which is for the exclusive benefit of holders of the
Antecedent Company Subordinated Indebtedness and which is subject to the
provisions described below under "Consolidation, Merger and Sale of Assets",
that we will not sell or otherwise dispose of any shares of, or securities
convertible into, or options, warrants or rights to purchase shares of, voting
stock of the Bank, nor will we permit the Bank to issue any shares of,
securities convertible into, or options, warrants or rights to purchase shares
of, voting stock of the Bank. However, the covenant does not prohibit: (i)
issuances or sales of directors' qualifying shares; (ii) issuances or sales of
shares to us; (iii) sales or other dispositions or issuances for fair market
value, as determined by our Board of Directors, so long as we would continue to
own directly or indirectly not less than 80% of the issued and outstanding
shares of the 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 us. (Section 5.07).
Defaults and Waivers. 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 specified with respect to Subordinated Securities of
that series. (Section 7.01). If an Event of Default occurs and is continuing
with respect to any outstanding series of Subordinated Securities, the Trustee
or the holders of at least 25% in aggregate principal amount of that outstanding
series of Subordinated Securities may declare the principal (or, in the case of
original issue discount Subordinated Securities, a specified amount of
principal) of all Subordinated Securities of that series to be due and payable
immediately in cash. Subject to certain conditions, any 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. (Section 7.01). The right of the holders of Subordinated Securities
of a series to demand payment in cash upon the occurrence and continuance of
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<PAGE> 33
an Event of Default continues to exist so long as the Subordinated Securities of
that series have not been exchanged or converted. Any such right to enforce such
payment in cash would, in the event of the bankruptcy or reorganization of the
Company, be subject to the broad equity powers of a Federal bankruptcy court and
to its determination of the nature and status of the payment claims of the
holders of the Subordinated Securities. Prior to any declaration of
acceleration, the holders of a majority in aggregate principal amount of the
applicable series of Subordinated Securities may waive any past default or Event
of Default, except a payment default. (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 that 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 a default
in the delivery of any Capital Securities in exchange for Subordinated
Securities) or in 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 that payment (or
delivery) or the performance of that covenant or agreement.
The Subordinated Indenture requires the Trustee, within 90 days after the
occurrence of a default with respect to the Subordinated Securities of any
series, to give the holders of that series notice of all uncured defaults known
to it (the term "default" being defined to include the events specified above
without grace periods or notice). However, except in certain cases (involving
the bankruptcy or reorganization of the Company, a payment default or a default
in the obligation to deliver Capital Securities in exchange for Subordinated
Securities), the Trustee may withhold the notice if it determines in good faith
that the withholding of the notice is in the interest of those holders. (Section
7.08). We are required to furnish to the Trustee annually an officers'
certificate as to the absence of defaults under the Subordinated Indenture.
(Section 5.06).
Other than the duties of the Trustee to act with the required standard of
care during a default, the Trustee is not obligated to exercise any of its
rights or powers under the Subordinated Indenture at the request or direction of
any of the holders of the Subordinated Securities, unless those holders shall
have offered to the Trustee reasonable security or indemnity. Subject to that
provision for security or indemnification, the holders of a majority in
principal amount of the Subordinated Securities of any series then outstanding
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 that
series. (Sections 7.07 and 8.02).
Modification of the Subordinated Indenture. The Subordinated Indenture
contains provisions permitting us and the Trustee to modify the Subordinated
Indenture or the rights of the holders of the Subordinated Securities with the
consent of the holders of not less than a majority in principal amount of each
outstanding series of the Subordinated Securities affected by the modification.
However, no such modification may, without the consent of each holder of the
Subordinated Security affected by the modification: (i) change the stated
maturity date of the principal of, or any installment of principal of or
interest on, any Subordinated Security; (ii) reduce the principal amount of (or
premium, if any) or interest, if any, on any 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 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
that series Capital Securities with a Market Value equal to that required by the
terms of the Subordinated Securities; (viii) impair the conversion rights (if
any) of any holders; (ix) impair the right of a holder to institute suit for the
enforcement of any payment on or with respect to any Subordinated
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<PAGE> 34
Security (including any right of redemption at the option of the holder of that
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 us and the Trustee to amend the
Subordinated Indenture in certain circumstances without the consent of the
holders of Subordinated Securities in the event of the merger of the Company,
the replacement of the Trustee, to effect modifications which do not affect any
outstanding series of Subordinated Securities and for certain other purposes.
(Section 11.01).
Consolidation, Merger and Sale of Assets. We may not merge or consolidate
with any other corporation or sell or convey all or substantially all of our
assets as an entirety to any other corporation, unless (i) we are the continuing
corporation or the successor corporation expressly assumes the payment of the
principal of (including issuance and delivery of Capital Securities) and
premium, if any, and interest, if any, on the Subordinated Securities and the
performance and observance of all the covenants and conditions of the
Subordinated Indenture binding upon us, and (ii) we or the successor corporation
shall not, immediately after such merger or consolidation or such sale or
conveyance, be in default in the performance of any such covenant or condition.
(Article Twelve).
PERMANENT GLOBAL DEBT SECURITIES
Certain series of the Debt Securities may be issued as permanent global
Debt Securities to be deposited with a depositary with respect to that series.
Unless otherwise indicated in the prospectus supplement, the following is a
summary of the depository arrangements applicable to Debt Securities issued in
permanent global form and for which The Depositary Trust Company ("DTC") acts as
depositary (the "Global Debt Securities").
Each Global Debt Security will be deposited with, or on behalf of, DTC, as
depositary, or its nominee and registered in the name of a nominee of DTC.
Except under the limited circumstances described below, Global Debt Securities
are not exchangeable for definitive certificated Debt Securities.
Ownership of beneficial interests in a Global Debt Security is limited to
institutions that have accounts with DTC or its nominee ("participants") or
persons that may hold interests through participants. In addition, ownership of
beneficial interests by participants in a Global Debt Security will be evidenced
only by, and the transfer of that ownership interest will be effected only
through, records maintained by DTC or its nominee for a Global Debt Security.
Ownership of beneficial interests in a Global Debt Security by persons that hold
through participants will be evidenced only by, and the transfer of that
ownership interest within that participant will be effected only through,
records maintained by that participant. DTC has no knowledge of the actual
beneficial owners of the Debt Securities. Beneficial owners will not receive
written confirmation from DTC 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 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 a Global Debt Security.
We have been advised by DTC that upon the issuance of a Global Debt
Security and the deposit of that Global Debt Security with DTC, DTC will
immediately credit, on its book-entry registration and transfer system, the
respective principal amounts represented by that Global Debt Security to the
accounts of its participants.
Payment of principal of, and interest on, Debt Securities represented by a
Global Debt Security registered in the name of or held by
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DTC or its nominee will be made to DTC or its nominee, as the case may be, as
the registered owner and holder of the Global Debt Security representing those
Debt Securities. We have been advised by DTC that upon receipt of any payment of
principal of, or interest on, a Global Debt Security, DTC will immediately
credit accounts of participants on its book-entry registration and transfer
system with payments in amounts proportionate to their respective beneficial
interests in the principal amount of that Global Debt Security as shown in the
records of DTC. Payments by participants to owners of beneficial interests in a
Global Debt Security held through those participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the sole responsibility of those participants,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
Neither we, the Trustees nor any of our respective agents will be
responsible for any aspect of the records of DTC, any nominee or any participant
relating to, or payments made on account of, beneficial interests in a permanent
Global Debt Security or for maintaining, supervising or reviewing any of the
records of DTC, any nominee or any participant relating to such beneficial
interests.
A Global Debt Security is exchangeable for definitive Debt Securities
registered in the name of, and a transfer of a Global Debt Security may be
registered to, any person other than DTC or its nominee, only if:
(a) DTC notifies us that it is unwilling or unable to continue as
depositary for that Global Debt Security or at any time DTC ceases to be
registered under the Exchange Act;
(b) we determine in our discretion that the Global Debt Security shall
be exchangeable for definitive Debt Securities in registered form; or
(c) there shall have occurred and be continuing an Event of Default or
an event which, with notice or the lapse of time or both, would constitute
an Event of Default under the Debt Securities.
Any Global Debt Security that is exchangeable pursuant to the preceding
sentence will be exchangeable in whole for definitive Debt Securities in
registered form, of like tenor and of an equal aggregate principal amount as the
Global Debt Security, in denominations specified in the applicable prospectus
supplement (if other than $1,000 and integral multiples of $1,000). The
definitive Debt Securities will be registered by the registrar in the name or
names instructed by DTC. We expect that these instructions may be based upon
directions received by DTC from its participants with respect to ownership of
beneficial interests in the Global Debt Security. Any principal and interest
will be payable, the transfer of the definitive Debt Securities will be
registerable and the definitive Debt Securities will be exchangeable at the
corporate trust office of the Bank in the Borough of Manhattan, The City of New
York, provided that payment of interest may be made at the option of the Company
by check mailed to the address of the person entitled to that interest payment
as of the record date and as shown on the register for the Debt Securities.
Except as provided above, owners of the beneficial interests in a Global
Debt Security will not be entitled to receive physical delivery of Debt
Securities in definitive form and will not be considered the holders of Debt
Securities for any purpose under the Indentures. No Global Debt Security shall
be exchangeable except for another Global Debt Security of like denomination and
tenor to be registered in the name of DTC or its nominee. Accordingly, each
person owning a beneficial interest in a Global Debt Security must rely on the
procedures of DTC and, if that person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights of a holder under the Global Debt Security or the Indentures.
The Company understands that, under existing industry practices, in the
event that we request any action of holders, or an owner of a beneficial
interest in a Global Debt Security desires to give or take any action that a
holder is entitled to give or take under the Debt Securities or the Indentures,
DTC would authorize the participants holding the relevant beneficial interests
to give or take that action, and those participants would authorize beneficial
owners
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<PAGE> 36
owning through those participants to give or take that action or would otherwise
act upon the instructions of beneficial owners owning through them.
DTC has advised us that DTC 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. DTC was created
to hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants in those securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC 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 DTC'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 DTC and its participants are on file with the SEC.
INFORMATION CONCERNING THE TRUSTEES
We, the Bank and certain other of our subsidiaries 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
GENERAL
Our Restated Certificate of Incorporation (the "Charter") authorizes our
Board of Directors or a committee of our Board of Directors (the "Board of
Directors") to cause preferred stock to be issued in one or more series, without
stockholder action. The Board of Directors is authorized to issue up to
200,000,000 shares of preferred stock, $1 par value per share ("preferred
stock"), and can determine the number of shares of each series, and the rights,
preference and limitations of each series. We may amend the Charter to increase
the number of authorized shares of preferred stock in a manner permitted by the
Charter and the Delaware General Corporation Law ("DGCL"). As of the date of
this prospectus, we have seven series of preferred stock outstanding, which are
described below under "Outstanding Preferred Stock".
Under regulations adopted by the Federal Reserve Board, if the holders of
any series of our preferred stock become entitled to vote for the election of
directors because dividends on that series are in arrears (as described below
under "Voting Rights"), that series may then be deemed a "class of voting
securities." In that case, a holder of 25% or more of the series (or a holder of
5% or more if that holder would also be considered to exercise a "controlling
influence" over the Company) may then be subject to regulation as a bank holding
company in accordance with the Bank Holding Company Act of 1956. In addition,
(i) any other bank holding company may be required to obtain the prior approval
of the Federal Reserve Board to acquire or retain 5% or more of that series, and
(ii) any person other than a bank holding company may be required to obtain the
approval of the Federal Reserve Board to acquire or retain 10% or more of that
series.
The particular terms of any series of preferred stock being offered by us
under this shelf registration (the "Preferred Stock") will be described in the
prospectus supplement relating to that series of Preferred Stock. Those terms
may include:
- the number of shares of the series of Preferred Stock being offered;
- the title and liquidation preference per share of that series of the
Preferred Stock;
- the purchase price of the Preferred Stock;
- the dividend rate (or method for determining such rates);
- the dates on which dividends will be paid;
- whether dividends on that series of Preferred Stock will be cumulative or
noncumulative and, if cumulative, the
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<PAGE> 37
dates from which dividends shall commence to accumulate;
- any redemption or sinking fund provisions applicable to that series of
Preferred Stock;
- any conversion provisions applicable to that series of Preferred Stock;
- whether the Company has elected to offer Depositary Shares with respect
to that series of Preferred Stock;
- any additional dividend, liquidation, redemption, sinking fund and other
rights and restrictions applicable to that series of Preferred Stock.
If the terms of any series of Preferred Stock being offered differ from the
terms set forth below, those terms will also be disclosed in the prospectus
supplement relating to that series of Preferred Stock. The following summary is
not complete. You should refer to the Certificate of Designations relating to
the series of the Preferred Stock for the complete terms of that Preferred
Stock. That Certificate of Designations will be filed with the SEC promptly
after the offering of the Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the prospectus supplement, in the event we
liquidate, dissolve or wind-up our business, each series of Preferred Stock will
have the same rank as to dividends and distributions as our currently
outstanding preferred stock and each other series of the Preferred Stock we may
issue in the future. The Preferred Stock will have no preemptive rights.
DIVIDEND RIGHTS
Holders of Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, cash dividends at the rates
and on the dates set forth in the prospectus supplement. Dividend rates may be
fixed or variable or both. Different series of Preferred Stock may be entitled
to dividends at different dividend rates or based upon different methods of
determination. Each 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 record dates
determined by the Board of Directors. Dividends on any series of the Preferred
Stock may be cumulative or noncumulative, as specified in the prospectus
supplement. If the Board of Directors fails to declare a dividend on any series
of Preferred Stock for which dividends are noncumulative, then the right to
receive that dividend will be lost, and we will have no obligation to pay the
dividend for that dividend period, whether or not dividends are declared for any
future dividend period.
No full dividends will be declared or paid on any series of Preferred
Stock, unless full dividends for the dividend period commencing after the
immediately preceding dividend payment date (and cumulative dividends still
owing, if any) have been or contemporaneously are declared and paid on all other
series of Preferred Stock which have the same rank as, or rank senior to, that
Preferred Stock. When those dividends are not paid in full, dividends will be
declared pro rata, so that the amount of dividends declared per share on that
series of Preferred Stock and on each other series of preferred stock having the
same rank as, or ranking senior to, that series of Preferred Stock will in all
cases bear to each other the same ratio that accrued dividends per share on that
series of Preferred Stock and the other preferred stock bear to each other. In
addition, generally, unless full dividends, including cumulative dividends still
owing, if any, on all outstanding shares of any series of Preferred Stock have
been paid, no dividends will be declared or paid on the Common Stock and
generally we may not redeem or purchase any Common Stock. No interest, or sum of
money in lieu of interest, will be paid in connection with 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 a 360-day year consisting of twelve 30-day months
and, for any period less than a full month, the actual number of days elapsed in
the period.
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RIGHTS UPON LIQUIDATION
In the event we liquidate, dissolve or wind-up our affairs, either
voluntarily or involuntarily, the holders of each series of Preferred Stock will
be entitled to receive liquidating distributions in the amount set forth in the
prospectus supplement relating to each series of Preferred Stock, plus an amount
equal to accrued and unpaid dividends, if any, before any distribution of assets
is made to the holders of Common Stock. If the amounts payable with respect to
Preferred Stock of any series and any stock having the same rank as that series
of Preferred Stock are not paid in full, the holders of Preferred Stock and of
such other stock will share ratably in any such distribution of assets in
proportion to the full respective preferential amounts to which they are
entitled. After the holders of each series of Preferred Stock and any stock
having the same rank as the Preferred Stock are paid in full, they will have no
right or claim to any of our remaining assets. Neither the sale of all or
substantially all our property or business nor a merger or consolidation by us
with any other corporation will be considered a dissolution, liquidation or
winding up by us of our business or affairs.
REDEMPTION
Any series of Preferred Stock may be redeemable, in whole or in part, at
our option. In addition, any series of Preferred Stock may be subject to
mandatory redemption pursuant to a sinking fund. The redemption provisions that
may apply to a series of Preferred Stock, including the redemption dates and the
redemption prices for that series, will be set forth in the prospectus
supplement.
If a series of Preferred Stock is subject to mandatory redemption, the
prospectus supplement will specify the year we can begin to redeem shares of the
Preferred Stock, the number of shares of the Preferred Stock we can redeem each
year, and the redemption price per share. We may pay the redemption price in
cash, stock or in cash that we have received specifically from the sale of our
capital stock, as specified in the prospectus supplement. If the redemption
price is to be paid only from the proceeds of the sale of our capital stock, the
terms of the series of Preferred Stock may also provide that, if no such capital
stock is sold or if the amount of cash received is insufficient to pay in full
the redemption price then due, the series of Preferred Stock will automatically
be converted into shares of the applicable capital stock pursuant to conversion
provisions specified in the prospectus supplement.
If fewer than all the outstanding shares of any series of Preferred Stock
are to be redeemed, whether by mandatory or optional redemption, the Board of
Directors will determine the method for selecting the shares to be redeemed,
which may be by lot or pro rata or by any other method determined to be
equitable. From and after the redemption date, dividends will cease to accrue on
the shares of Preferred Stock called for redemption and all rights of the
holders of those shares (except the right to receive the redemption price) will
cease.
In the event that full dividends, including accrued but unpaid dividends,
if any, have not been paid on any series of Preferred Stock, we may not redeem
that series in part and we may not purchase or acquire any shares of that series
of Preferred Stock, except by an offer made on the same terms to all holders of
that series of Preferred Stock.
CONVERSION RIGHTS
The prospectus supplement will state the terms, if any, on which shares of
a series of Preferred Stock are convertible into shares of Common Stock or
another series of our preferred stock. As described under "Redemption" above,
under certain circumstances, Preferred Stock may be mandatorily converted into
Common Stock or another series of our preferred stock.
VOTING RIGHTS
Except as indicated below or in the prospectus supplement, or except as
expressly required by applicable law, the holders of Preferred Stock will not be
entitled to vote. Except as indicated in the prospectus supplement, in the event
we issue full shares of any series of Preferred Stock, each share will be
entitled to one vote on matters on which holders of that series of Preferred
Stock are entitled to vote. However, as more fully described below under
"Depositary Shares", if we issue Depositary Shares representing a fraction of a
share of
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a series of Preferred Stock, each Depositary Share will, in effect, be entitled
to that fraction of a vote, rather than a full vote. Because each full share of
any series of Preferred Stock will be entitled to one vote, the voting power of
that series will depend on the number of shares in that series, and not on the
aggregate liquidation preference or initial offering price of the shares of that
series of Preferred Stock.
If, at the time of any annual meeting of our stockholders, the equivalent
of six quarterly dividends payable on any series of Preferred Stock is in
default, the number of directors constituting our Board of Directors will be
increased by two and the holders of all outstanding series of preferred stock,
voting together as a single class, will be entitled to elect those additional
two directors at that annual meeting. Each director elected by the holders of
shares of the outstanding preferred stock will continue to serve as director for
the full term for which he or she shall have been elected, even if prior to the
end of that term we have paid in full the amount of dividends that had been in
arrears. For purposes of this paragraph "default" means that accrued and unpaid
dividends on the applicable series shall be equal to or greater than the
equivalent of six quarterly dividends.
Unless otherwise specified in the prospectus supplement, the terms of each
series of Preferred Stock will state that the approval of at least two-thirds of
the outstanding shares of preferred stock will be required to (a) create any
class or series of stock having a preference over any outstanding series of
preferred stock or (b) change the provisions of the Charter in a manner that
would adversely affect the voting powers or other rights of the holders of a
series of preferred stock. The terms of the Preferred Stock will also state that
if the amendment will not adversely affect all series of outstanding preferred
stock, then the amendment will only need to be approved by holders of at least
two-thirds of the shares of the series of preferred stock adversely affected.
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OUTSTANDING PREFERRED STOCK
As of the date of this prospectus, we have eight series of preferred stock
issued and outstanding, as described in the following table:
<TABLE>
<CAPTION>
STATED VALUE AND OUTSTANDING AT EARLIEST RATE IN EFFECT AT
REDEMPTION PRICE JUNE 30, REDEMPTION JUNE 30,
PER SHARE(a) SHARES 1998 DATE 1998
---------------- ------------- -------------- ---------- -----------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C>
10.50% Cumulative............. $ 25.00 5.6 $140 9/30/1998(b) 10.500%
Adjustable Rate, Series L
Cumulative.................. 100.00 2.0 200 6/30/1999 5.040(c)
Adjustable Rate, Series N
Cumulative.................. 25.00 9.1 228 6/30/1999 5.100(c)
9.76% Cumulative.............. 25.00 4.0 100 9/30/1999 9.760
10.96% Cumulative............. 25.00 4.0 100 6/30/2000 10.960
10.84% Cumulative............. 25.00 8.0 200 6/30/2001 10.840
Fixed/Adjustable Rate
Noncumulative............... 50.00 4.0 200 6/30/2003 4.96(d)
</TABLE>
- ---------------
(a) Redemption price is price indicated in table, plus accrued but unpaid
dividends, if any.
(b) This series will be redeemed on September 30, 1998.
(c) Floating rates are based on certain money market rates. The minimum and
maximum rates are 4.50% and 10.50%, respectively, for each of Adjustable
Rate, Series L Cumulative Preferred Stock and the Adjustable Rate, Series N
Cumulative Preferred Stock.
(d) Dividends on this series for dividend periods commencing on or after July 1,
2003 will be at a floating rate based on certain money market rates (but
subject to a minimum rate of 5.46% and a maximum rate of 11.46%). The amount
of dividends payable may be adjusted, and the stock may be redeemed earlier
than June 30, 2003 in the event of certain amendments to the Internal
Revenue Code of 1986, as amended, relating to the dividends received
deduction.
Ranking. All the outstanding series of preferred stock have the same rank.
All the outstanding series of preferred stock have preference over the Common
Stock with respect to the payment of dividends and the distribution of assets in
the event of our liquidation or dissolution.
Dividends. Dividends payable on each series of outstanding preferred stock
are payable quarterly, when and as declared by the Board of Directors, on each
March 31, June 30, September 30 and December 31. Dividends on all the
outstanding preferred stock, other than the Fixed/Adjustable Rate Noncumulative
Preferred Stock, are cumulative. If we fail to declare a dividend on the
Fixed/Adjustable Noncumulative Preferred Stock for any dividend period, holders
of that series will have no right to receive a dividend for that dividend
period, whether or not we declare dividends on that series for any future
dividend periods.
Rights Upon Liquidation; Redemption. In the event of our liquidation,
dissolution or winding-up, the holders of each outstanding series of preferred
stock will be entitled to receive liquidating distributions, in the amount set
forth opposite such series in the table above, plus accrued and unpaid
dividends, if any, before any distribution of our assets is made to the holders
of our Common Stock. Each of the outstanding series of preferred stock is
redeemable at our option at a redemption price equal to the redemption price set
forth opposite that series in the table above, plus accrued but unpaid
dividends, if any. In addition, the shares of the Fixed/Adjustable Rate
Noncumulative Preferred Stock may be redeemed earlier than June 30, 2003 in the
event of certain amendments to the Internal Revenue Code of 1986, as amended,
relating to the dividends received deduction.
Voting Rights. All currently outstanding series of preferred stock provide
that if, at the time of any annual meeting of our stockholders, the equivalent
of six quarterly dividends payable on any series of outstanding preferred stock
is in default, the number of directors constituting our
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Board of Directors will be increased by two and the holders of all the
outstanding preferred stock, voting together as a single class, will be entitled
to elect those additional two directors at that annual meeting. Each director
elected by the holders of shares of the outstanding preferred stock will
continue to serve as director for the full term for which he or she shall have
been elected, even if prior to the end of that term we have paid in full the
amount of dividends that had been in arrears. For purposes of this paragraph,
"default" means that accrued and unpaid dividends on the applicable series shall
be equal to or greater than the equivalent of six quarterly dividends.
Each series of the outstanding preferred stock other than the 10.96%
Cumulative Preferred Stock and Adjustable Rate, Series L Cumulative Preferred
Stock provides (and, unless otherwise specified in the prospectus supplement,
each series of Preferred Stock issued after the date of this prospectus will
provide) that the affirmative vote of the holders of at least two-thirds of the
shares of all outstanding series of preferred stock, voting together as a single
class without regard to series, will be required to:
- create any class or series of stock having a preference over any
outstanding series of preferred stock; or
- alter or change the provisions of our Charter in a manner that would
adversely affect the voting powers or other rights of the holders of a
series of preferred stock.
The 10.96% Cumulative Preferred Stock and Adjustable Rate, Series L
Cumulative Preferred Stock each provide as follows:
- the consent of holders of at least two-thirds of the outstanding shares
of the particular series, voting as a separate class, is required for any
amendment of the Charter that would adversely affect the powers,
preferences, privileges or rights of that series; and
- the consent of the holders of at least two-thirds of the voting power of
that series and each other series of preferred stock having the same
rank, voting together as a single class without regard to series, is
required to create, authorize, issue, or reclassify any stock into, any
additional class or series of stock ranking prior to that series as to
dividends or upon liquidation, or any other security or obligation
convertible into or exercisable for any such prior-ranking stock.
Miscellaneous. No series of outstanding preferred stock is convertible
into shares of our Common Stock or other of our securities. No series of
outstanding preferred stock is subject to preemptive rights.
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 (see the description of Depositary Shares below). The
registrar for the Preferred Stock will send notices to the holders of the
Preferred Stock of any meetings at which such holders will have the right to
elect directors or to vote on any other matter.
DEPOSITARY SHARES
General. We may, at our option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. If we do, we will
issue to the public receipts for Depositary Shares, and each of these Depositary
Shares will represent a fraction (to be set forth in the prospectus supplement)
of a share of a particular series of Preferred Stock.
The shares of any series of Preferred Stock underlying the Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between us and a bank or trust company selected by us (the "Depositary"). The
Depositary will have its principal office in the United States and a combined
capital and surplus of at least $50,000,000. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fractional interest in shares of Preferred Stock underlying that
Depositary Share, to all the rights and preferences of the Preferred Stock
underlying that Depositary Share. Those rights include dividend, voting,
redemption, conversion and liquidation rights.
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be issued to those persons who purchase the fractional interests in the
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Preferred Stock underlying the Depositary Shares, 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. The following summary of
the Deposit Agreement, the Depositary Shares and the Depositary Receipts is not
complete. You should refer to the forms of the Deposit Agreement and Depositary
Receipts that are filed as exhibits to the Registration Statement.
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 that Preferred Stock in
proportion to the number of Depositary Shares owned by those holders.
If there is a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
that are entitled to receive the distribution, unless the Depositary determines
that it is not feasible to make the distribution. If this occurs, the Depositary
may, with our approval, sell the property and distribute the net proceeds from
the sale to the applicable holders.
Redemption of Depositary Shares. If a series of Preferred Stock underlying
the 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 that 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
that series of the Preferred Stock. Whenever we redeem shares of Preferred Stock
that are 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 determined by the Depositary.
After the date fixed for redemption, the Depositary Shares called for
redemption will no longer be outstanding, and all rights of the holders of those
Depositary Shares will cease, except the right to receive any money, securities,
or other property upon surrender to the Depositary of the Depositary Receipts
evidencing those Depositary Shares.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of Preferred Stock are entitled to vote, the Depositary will mail
the information contained in the notice of meeting to the record holders of the
Depositary Shares underlying that Preferred Stock. Each record holder of those
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 underlying that holder's Depositary Shares. The Depositary will try, as
far as practicable, to vote the number of shares of Preferred Stock underlying
those Depositary Shares in accordance with such instructions, and we 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 not vote the shares of
Preferred Stock to the extent it does not receive specific instructions from the
holders of Depositary Shares underlying the 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 be amended at any time by agreement between us and the
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Shares will not be effective unless the
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
us or by the Depositary only if (i) all outstanding Depositary Shares have been
redeemed or (ii) there has been a final distribution of the underlying Preferred
Stock in connection with our liquidation, dissolution or winding up and the
Preferred Stock has been distributed to the holders of Depositary Receipts.
Charges of Depositary. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. We will also pay charges of the Depositary in connection with the
initial deposit of the Preferred Stock and any
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<PAGE> 43
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.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering a notice to us of its election to do so. We may remove the
Depositary at any time. Any such resignation or removal will take effect upon
the appointment of a successor Depositary and its acceptance of its appointment.
The 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.
Miscellaneous. The Depositary will forward to holders of Depository
Receipts all reports and communications from us that we deliver to the
Depositary and that we are required to furnish to the holders of the Preferred
Stock.
Neither we nor the Depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond our control in performing our
respective obligations under the Deposit Agreement. Our obligations and those of
the Depositary will be limited to the performance in good faith of our
respective duties under the Deposit Agreement. Neither we nor the Depositary
will be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished.
We and the Depositary 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.
PERMANENT GLOBAL PREFERRED SECURITIES
Certain series of the Preferred Stock or Depositary Shares may be issued as
permanent global securities to be deposited with a depositary with respect to
that series. Unless otherwise indicated in the prospectus supplement, the
following is a summary of the depositary arrangements applicable to Preferred
Stock or Depositary Receipts issued in permanent global form and for which DTC
acts as the depositary ("Global Preferred Securities").
Each Global Preferred Security will be deposited with, or on behalf of, DTC
or its nominee and registered in the name of a nominee of DTC. Except under the
limited circumstances described below, Global Preferred Securities are not
exchangeable for definitive certificated Preferred Stock or Depositary Receipts.
Ownership of beneficial interests in a Global Preferred Security is limited
to institutions that have accounts with DTC or its nominee ("participants") or
persons that may hold interests through participants. In addition, ownership of
beneficial interests by participants in a Global Preferred Security will be
evidenced only by, and the transfer of that ownership interest will be effected
only through, records maintained by DTC or its nominee for a Global Preferred
Security. Ownership of beneficial interests in a Global Preferred Security by
persons that hold through participants will be evidenced only by, and the
transfer of that ownership interest within that participant will be effected
only through, records maintained by that participant. DTC has no knowledge of
the actual beneficial owners of the Preferred Stock or Depositary Shares, as the
case may be, represented by a Global Preferred Security. Beneficial owners will
not receive written confirmation from DTC 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 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 a Global Preferred Security.
We have been advised by DTC that upon the issuance of a Global Preferred
Security and the deposit of that Global Preferred Security with DTC, DTC will
immediately credit, on its book-entry registration and transfer system, the
respective principal amounts represented by
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that Global Preferred Security to the accounts of its participants.
Payments on Preferred Stock and Depositary Shares represented by a Global
Preferred Security registered in the name of or held by DTC or its nominee will
be made to DTC or its nominee, as the case may be, as the registered owner and
holder of the Global Preferred Security representing the Preferred Stock or
Depositary Shares. We have been advised by DTC that upon receipt of any payment
on a Global Preferred Security, DTC will immediately credit accounts of
participants on its book-entry registration and transfer system with payments in
amounts proportionate to their respective beneficial interests in that Global
Preferred Security as shown in the records of DTC. Payments by participants to
owners of beneficial interests in a Global Preferred Security held through those
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name", and will be the sole responsibility of
those participants, subject to any statutory or regulatory requirements as may
be in effect from time to time.
Neither we nor any of our agents will be responsible for any aspect of the
records of DTC, any nominee or any participant relating to, or payments made on
account of beneficial interests in a Global Preferred Security or for
maintaining, supervising or reviewing any of the records of DTC, any nominee or
any participant relating to such beneficial interests.
A Global Preferred Security is exchangeable for definitive certificated
Preferred Stock or Depositary Receipts, as the case may be, registered in the
name of, and a transfer of a Global Preferred Security may be registered to, a
person other than DTC or its nominee, only if:
(a) DTC notifies us that it is unwilling or unable to continue as
Depositary for the Global Preferred Security or at any time DTC ceases to
be registered under the Exchange Act; or
(b) We determine in our discretion that the Global Preferred Security
shall be exchangeable for definitive Preferred Stock or Depositary
Receipts, as the case may be, in registered form.
Any Global Preferred Security that is exchangeable pursuant to the
preceding sentence will be exchangeable in whole for definitive certificated
Preferred Stock or Depositary Receipts, as the case may be, registered by the
registrar in the name or names instructed by DTC. We expect that those
instructions may be based upon directions received by DTC from its participants
with respect to ownership of beneficial interests in that Global Preferred
Security.
Except as provided above, owners of the beneficial interests in a Global
Preferred Security will not be entitled to receive physical delivery of
certificates representing shares of Preferred Stock or Depositary Shares, as the
case may be, and will not be considered the holders of Preferred Stock or
Depositary Shares, as the case may be. No Global Preferred Security shall be
exchangeable except for another Global Preferred Security to be registered in
the name of DTC or its nominee. Accordingly, each person owning a beneficial
interest in a Global Preferred Security must rely on the procedures of DTC and,
if that person is not a participant, on the procedures of the participant
through which that person owns its interest, to exercise any rights of a holder
of Preferred Stock or Depositary Shares, as the case may be.
The Company understands that, under existing industry practices, in the
event that we request any action of holders, or an owner of a beneficial
interest in a Global Preferred Security desires to give or take any action that
a holder of Preferred Stock or Depositary Shares, as the case may be, is
entitled to give or take, DTC would authorize the participants holding the
relevant beneficial interests to give or take that action and those participants
would authorize beneficial owners owning through those participants to give or
take that action or would otherwise act upon the instructions of beneficial
owners owning through them.
A brief description of DTC is set forth above under "Permanent Global Debt
Securities."
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DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
1,500,000,000 shares of Common Stock. As of June 30, 1998, we had 881,534,410
shares of Common Stock issued (including 28,620,557 shares held in treasury) and
had reserved approximately 148,209,447 shares of Common Stock for issuance under
various employee or director incentive, compensation and option plans.
The following summary is not complete. You should refer to the applicable
provisions of the Charter, including the Certificates of Designations pursuant
to which the outstanding series of preferred stock were issued, and to the DGCL
for a complete statement of the terms and rights of the Common Stock.
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 for
their payment (subject to the rights of holders of the preferred stock).
Voting Rights. Each holder of Common Stock is entitled to one vote per
share. Subject to the rights, if any, of the holders of any series of preferred
stock pursuant to applicable law or the provision of the Certificate of
Designations creating that series, all voting rights are vested in the holders
of shares of Common Stock. 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 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 our voluntary or involuntary
liquidation, dissolution or winding up, the holders of Common Stock will be
entitled to share equally in any of our assets available for distribution after
the payment in full of all debts and distributions and after the holders of all
series of outstanding preferred stock have received their liquidation
preferences in full.
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
We 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 and may be
attached to or separate from any offered securities. Each series of Securities
Warrants will be issued under a separate warrant agreement (a "Securities
Warrant Agreement") to be entered into between us and the Bank or another bank
or trust company, as warrant agent (the "Securities Warrant Agent"). The
Securities Warrant Agent will act solely as our agent in connection with the
Securities Warrants and will not assume any obligation or relationship of agency
or trust for or with any registered holders or beneficial owners of Securities
Warrants. This summary of certain provisions of the Securities Warrants and the
Securities Warrant Agreement is not complete. You should refer to the Securities
Warrant Agreement, including the forms of Securities Warrant Certificate
representing the Securities Warrants, relating to the specific Securities
Warrants being offered for the complete terms of the Securities Warrant
Agreement and the Securities Warrants. That Securities Warrant Agreement,
together with the terms of Securities Warrant Certificate and Securities
Warrants, will be filed with the SEC promptly after the offering of the specific
Securities Warrants.
Each Securities Warrant will entitle the holder to purchase the principal
amount of Debt Securities or the number of shares of Preferred Stock or Common
Stock at the exercise price set forth in, or calculable as set forth in, the
prospectus supplement. The exercise price may be subject to adjustment upon the
occurrence of certain events, as set forth in the prospectus supplement. After
the close of business on the expiration date of the Securities Warrant,
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.
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Prior to the exercise of any Securities Warrants to purchase Debt
Securities, Preferred Stock or Common Stock, holders of the 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, (i) in the case of Securities Warrants for the purchase of Debt
Securities, 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 (ii) in the case of Securities
Warrants for the purchase of Preferred Stock or Common Stock, the right 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.
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 that we may offer.
The particular terms of the Currency Warrants and the extent, if any, to which
general provisions described below do not apply to the Currency Warrants
offered, will be described in the prospectus supplement. The following summary
is not complete. You should refer to the Currency Warrants and the Currency
Warrant Agreement relating to the specific Currency Warrants being offered for
the complete terms of those Currency Warrants. The Currency Warrant and Currency
Warrant Agreement will be filed with the SEC promptly after the offering of the
specific Currency Warrants.
Each issue of Currency Warrants will be issued under a warrant agreement
(each, a "Currency Warrant Agreement") to be entered into between us and the
Bank or another bank or trust company, as warrant agent (the "Currency Warrant
Agent"). The Currency Warrant Agent will act solely as our agent under the
applicable Currency Warrant Agreement and will not assume any obligation or
relationship of agency or trust for or with any holders of Currency Warrants.
We may issue Currency Warrants either in the form of (i) currency put
warrants, entitling the holders to receive from us 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 (ii) currency call
warrants, entitling the holders to receive from us 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").
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 those tax considerations.
Unless otherwise specified 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 the
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 that brokerage firm or its agent. Transfer of
ownership of any Currency Warrant will be effected only through the selling
holder's brokerage firm.
Each issue of Currency Warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale of
that issue of Currency Warrants. In the event that the Currency Warrants are
delisted from, or permanently suspended from trading on, the applicable national
securities exchange, the expiration date for such Currency Warrants will be the
date the delisting or trading suspension becomes effective, and Currency
Warrants not previously exercised will be deemed automatically exercised on that
expiration date. The applicable Currency Warrant Agreement will contain a
covenant from us that we will not seek delisting of the Currency Warrants, or
suspen-
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sion of their trading, on the applicable national securities exchange unless we
have concurrently arranged for listing on another national securities exchange.
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 that the Currency Warrants will expire worthless. Further,
the cash settlement value of 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 that 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 of the Designated Currency, and the exchange
rate associated with the Designated Currency. Because Currency Warrants are
unsecured obligations of the Company, changes in our perceived creditworthiness
may also be expected to affect the trading prices of 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 the
exercise is actually effected.
Prospective 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 "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 this prospectus and the
prospectus supplement.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities, Preferred Stock, Depositary
Shares, Common Stock, Securities Warrants or Currency Warrants (together
referred to as the "Offered Securities") (i) through underwriters, (ii) through
dealers, (iii) through agents or (iv) directly to purchasers. The applicable
prospectus supplement will set forth the terms of the offering of any Offered
Securities.
If underwriters are utilized in the sale of the Offered Securities, we will
execute an underwriting agreement with those underwriters. 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 the Offered Securities if
any are purchased. In connection with the sale of Offered Securities,
underwriters may be deemed to have received compensation from us in the form of
underwriting discounts or commissions and may also receive commissions from the
purchasers of Offered Securities for whom they may act as agent. Underwriters
may sell Offered Securities to or through dealers. Those dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time. If
underwriters are utilized in the sale of any Offered Securities, the applicable
prospectus supplement will contain a statement regarding the intention, if any,
of the underwriters to make a market in the Offered Securities.
If a dealer is utilized directly by us, we will sell the Offered Securities
to the dealer, as principal. The dealer may then resell the Offered Securities
to the public at varying prices to be determined by the dealer at the time of
resale.
Offered Securities may also be offered and sold through agents designated
by us from time to time. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a reasonable 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
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Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Under agreements which may be entered into by us,
underwriters, dealers or agents who participate in the distribution of Offered
Securities may be entitled to indemnification by us against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which such underwriters, dealers or agents may be required to make.
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 prevailing market prices or at negotiated prices.
Underwriters, dealers or agents may be customers of, engage in transactions
with, or perform services for, us, the Bank, Chase USA, Chase Texas or CSI or
certain of our other subsidiaries in the ordinary course of business.
Offers to purchase Offered Securities may be solicited directly by us.
Except as set forth in the applicable prospectus supplement, none of our
directors, officers, or employees nor those of our bank subsidiaries will
solicit or receive a commission in connection with direct sales by us of the
Offered Securities. Those persons may respond to inquiries by potential
purchasers and perform ministerial and clerical work in connection with 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 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 ours by virtue of the fact that we own all of the outstanding
equity securities of CSI. The offer and sale of any Offered Securities by CSI or
any other qualified affiliate of ours will comply with the requirements of
Section 2720 regarding the underwriting of securities of affiliates and with any
restrictions that may be imposed on CSI or such other affiliate of ours by the
Federal Reserve Board.
This prospectus and the related prospectus supplement may be used by direct
or indirect wholly-owned subsidiaries of ours, including CSI, in connection with
offers and sales related to secondary market transactions in the Offered
Securities. Those subsidiaries may act as principal or agent in those
transactions. Secondary market sales will be made at prices related to
prevailing market prices at the time of sale.
We may authorize underwriters, dealers and agents to solicit offers by
certain institutions to purchase Offered Securities pursuant to Delayed Delivery
Contracts (each a "Contract") providing for payment and delivery on a future
date specified in the prospectus supplement. Institutions with which Contracts
may be made include commercial and savings banks, insurance companies,
educational and charitable institutions and other institutions we may approve.
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 that institution is
subject.
EXPERTS
The audited financial statements incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the year ended December 31, 1997
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts in
auditing and accounting.
LEGAL OPINIONS
The validity of the Offered Securities will be passed upon for us by
Simpson Thacher & Bartlett, New York, New York, and for any underwriters by
Cravath, Swaine & Moore, New York, New York. Cravath, Swaine & Moore acts as
legal counsel to us and our subsidiaries in a substantial number of matters on a
regular basis.
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YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS SUPPLEMENT, THE ATTACHED PROSPECTUS AND THE ATTACHED
PRICING SUPPLEMENT. WE HAVE AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE
THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT, THE ATTACHED PROSPECTUS OR THE ATTACHED PRICING
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE
APPLICABLE DOCUMENT.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
About this Prospectus Supplement;
Pricing Supplements................. S-2
Description of the Notes.............. S-2
Certain United States Federal Income
Tax Consequences.................... S-10
Plan of Distribution.................. S-15
Legal Opinions........................ S-16
Glossary.............................. S-17
PROSPECTUS
Summary............................... 2
The Chase Manhattan Corporation....... 6
Use of Proceeds....................... 6
Description of Debt Securities........ 7
Description of Preferred Stock........ 17
Description of Common Stock........... 26
Description of Securities Warrants.... 26
Description of Currency Warrants...... 27
Plan of Distribution.................. 28
Experts............................... 29
Legal Opinions........................ 29
</TABLE>
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[CHASE LOGO]
The Chase Manhattan
Corporation
Senior Medium-Term
Notes, Series C
Subordinated Medium-Term
Notes, Series A
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PROSPECTUS SUPPLEMENT
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AUGUST 21, 1998
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