<PAGE> 1
As Filed Pursuant to Rule 424(b)(2)
Registration Nos. 333-37567;
333-37567-02
Prospectus Supplement (To Prospectus Dated October 24, 1997)
[CHASE LOGO]
CHASE CAPITAL V
$200,000,000
7.03% CAPITAL SECURITIES, SERIES E
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
The 7.03% Capital Securities, Series E (the "Series E Capital Securities"),
offered hereby represent beneficial ownership interests in Chase Capital V, a
statutory business trust created under the laws of the State of Delaware (the
"Series E Issuer"). The Chase Manhattan Corporation, a Delaware corporation (the
"Corporation"), will be the owner of all the beneficial ownership interests
represented by common securities of the Series E Issuer
(Continued on next page)
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SEE "RISK FACTORS" BEGINNING ON PAGE S-5 HEREOF FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE SERIES E CAPITAL SECURITIES.
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THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<S> <C> <C> <C>
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PROCEEDS TO THE SERIES
INITIAL PUBLIC UNDERWRITING E
OFFERING PRICE(1) COMMISSIONS(2) ISSUER(1)(3)(4)
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PER SERIES E CAPITAL
SECURITY $25.00 (3) $25.00
TOTAL $200,000,000 (3) $200,000,000
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</TABLE>
(1) Plus accrued distributions, if any, from February 4, 1998 to the date of
delivery.
(2) The Series E Issuer and the Corporation have each agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Series E Capital
Securities will be invested in the Series E Subordinated Debentures, the
Corporation has agreed to pay to the Underwriters as compensation for their
arranging the investment therein of such proceeds $.7875 per Series E
Capital Security (or $6,300,000 in the aggregate). See "Underwriting."
(4) Expenses of the offering, which are payable by the Corporation, are
estimated to be $500,000.
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This Prospectus Supplement and the related Prospectus may be used by direct or
indirect wholly owned subsidiaries of the Corporation, including Chase
Securities Inc., in connection with offers and sales related to secondary market
transactions in the Series E Capital Securities. Such subsidiaries may act as
principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale.
The Series E Capital Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that the Series E Capital Securities will be ready for delivery in book-entry
form only through the facilities of The Depository Trust Company in New York,
New York, on or about February 4, 1998, against payment therefor in immediately
available funds.
MERRILL LYNCH & CO. CHASE SECURITIES INC.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
The date of this Prospectus Supplement is January 28, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES E CAPITAL
SECURITIES, INCLUDING OVERALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING
SYNDICATE COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------
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(the "Series E Common Securities" and, collectively with the Series E Capital
Securities, the "Series E Securities"). The Bank of New York is the Property
Trustee of the Series E Issuer. The Series E Issuer exists for the sole purpose
of issuing the Series E Capital Securities and the Series E Common Securities
and investing the proceeds thereof in approximately $206.2 million of 7.03%
Junior Subordinated Deferrable Interest Debentures, Series E (the "Series E
Subordinated Debentures"), to be issued by the Corporation. The Series E
Subordinated Debentures will mature on March 31, 2028. The Series E Capital
Securities will have a preference under certain circumstances with respect to
cash distributions and amounts payable on liquidation or redemption over the
Series E Common Securities. See "Description of Preferred
Securities -- Subordination of Common Securities" in the accompanying
Prospectus.
Holders of the Series E Capital Securities will be entitled to receive
cumulative cash distributions accruing from the date of original issuance and
payable quarterly in arrears on the last day of March, June, September and
December of each year, commencing March 31, 1998, at the annual rate of 7.03% on
the Liquidation Amount (as defined in the accompanying Prospectus) of $25 per
Series E Capital Security ("Distributions"). Subject to certain exceptions, as
described herein, the Corporation has the right to defer payment of interest on
the Series E Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarterly periods with respect to each
deferral period (each, an "Extension Period"), provided that no Extension Period
may extend beyond the Stated Maturity of the Series E Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all
interest then accrued and unpaid (together with interest thereon at the rate of
7.03% per annum, compounded quarterly, to the extent permitted by applicable
law), the Corporation may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the Series E Subordinated
Debentures are so deferred, Distributions on the Series E Capital Securities
will also be deferred and the Corporation will not be permitted, subject to
certain exceptions described herein, to declare or pay any cash distributions
with respect to the Corporation's capital stock or debt securities that rank
pari passu with or junior to the Series E Subordinated Debentures (including the
7.67% Junior Subordinated Deferrable Interest Debentures, Series A (the "Series
A Subordinated Debentures"), the Global Floating Rate Junior Subordinated
Deferrable Interest Debentures, Series B (the "Series B Subordinated
Debentures"), the Floating Rate Junior Subordinated Deferrable Interest
Debentures, Series C (the "Series C Subordinated Debentures") and the 7.34%
Junior Subordinated Deferrable Interest Debentures, Series D (the "Series D
Subordinated Debentures") of the Corporation). During an Extension Period,
interest on the Series E Subordinated Debentures will continue to accrue (and
the amount of Distributions to which holders of the Series E Capital Securities
are entitled will accumulate), at the rate of 7.03% per annum, compounded
quarterly from the relevant payment date for such interest, and holders of
Series E Capital Securities will be required to accrue interest income for
United States federal income tax purposes. See "Certain Terms of Series E
Subordinated Debentures -- Option to Defer Interest Payments" and "Certain
Federal Income Tax Consequences -- Interest Income and Original Issue Discount."
The Series E Subordinated Debentures are unsecured and subordinated to all
Senior Debt (as defined in the accompanying Prospectus). Substantially all of
the Corporation's existing indebtedness constitutes Senior Debt (other than an
aggregate of approximately $1,804.2 million of the Corporation's existing
indebtedness evidenced by the Series A Subordinated Debentures, Series B
Subordinated Debentures, Series C Subordinated Debentures and Series D
Subordinated Debentures). Because the Corporation is a holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary, including The Chase Manhattan Bank (the "Bank"), Chase Manhattan
Bank USA, National Association ("Chase USA"), and Chase Bank of Texas
S-2
<PAGE> 3
(cover page continued)
National Association (formerly known as Texas Commerce Bank National
Association)("Chase Texas"), upon such subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of creditors of that
subsidiary, except to the extent that the Corporation may itself be recognized
as a creditor of that subsidiary. Accordingly, the Series E Subordinated
Debentures (and therefore the Series E Capital Securities) will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders thereof should only look to the assets of the
Corporation for payments on the Series E Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Subordination" in the
accompanying Prospectus.
The Corporation has, through the Series E Guarantee, the Series E Trust
Agreement, the Series E Subordinated Debentures and the Indenture (each as
defined herein), taken together, fully, irrevocably and unconditionally
guaranteed all of the Series E Issuer's obligations under the Series E Capital
Securities. See "Relationship Among the Preferred Securities, the Corresponding
Junior Subordinated Debentures and the Guarantees -- Full and Unconditional
Guarantee" in the accompanying Prospectus. The Series E Guarantee of the
Corporation (the "Series E Guarantee") guarantees the payment of Distributions
and payments on liquidation of the Series E Issuer or redemption of the Series E
Capital Securities, but only in each case to the extent of funds held by the
Series E Issuer, as described herein. See "Description of Guarantees" in the
accompanying Prospectus. If the Corporation does not make interest payments on
the Series E Subordinated Debentures held by the Series E Issuer, the Series E
Issuer will have insufficient funds to pay Distributions on the Series E Capital
Securities. The Series E Guarantee does not cover payment of Distributions when
the Series E Issuer has insufficient funds to pay such Distributions. In such
event, a holder of Series E Capital Securities may institute a legal proceeding
directly against the Corporation pursuant to the terms of the Indenture to
enforce payment of amounts equal to such Distributions to such holder. See
"Description of Junior Subordinated Debentures -- Enforcement of Certain Rights
by Holders of Preferred Securities" in the accompanying Prospectus. The
obligations of the Corporation under the Series E Guarantee are subordinate and
junior in right of payment to all Senior Debt of the Corporation.
The Series E Capital Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series E Subordinated Debentures at
their Stated Maturity or earlier redemption. Subject to the Corporation having
received prior approval of the Board of Governors of the Federal Reserve System
(the "Federal Reserve") to do so if then required under applicable capital
guidelines or policies, the Series E Subordinated Debentures are redeemable
prior to their Stated Maturity at the option of the Corporation (i) on or after
March 31, 2003, in whole at any time or in part from time to time, or (ii) at
any time in certain circumstances as described under "Certain Terms of Series E
Subordinated Debentures -- Conditional Right to Redeem upon a Tax Event or
Capital Treatment Event," in whole (but not in part), within 90 days following
the occurrence of a Tax Event or Capital Treatment Event. See "Certain Terms of
Series E Capital Securities -- Redemption" and "Certain Terms of Series E
Subordinated Debentures -- Redemption."
The Series E Capital Securities have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance. If Series E
Subordinated Debentures are distributed to the holders of Series E Capital
Securities in exchange therefor upon the liquidation of the Series E Issuer, the
Corporation will use its best efforts to list the Series E Subordinated
Debentures on the New York Stock Exchange or such other stock exchanges or
automated quotation systems, if any, on which the Series E Capital Securities
are then listed or traded.
The Corporation will have the right at any time to terminate the Series E
Issuer, subject to the Corporation having received prior approval of the Federal
Reserve to do so if then required under applicable capital guidelines or
policies. See "Certain Terms of Series E Capital Securities -- Liquidation of
Series E Issuer and Distribution of Series E Subordinated Debentures to
Holders." In the event of the termination of the Series E Issuer, after
satisfaction of liabilities to creditors of the
S-3
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(cover page continued)
Series E Issuer as required by applicable law, the holders of the Series E
Capital Securities will be entitled to receive a Liquidation Amount of $25 per
Series E Capital Security plus accumulated and unpaid Distributions thereon to
the date of payment, which may be in the form of a distribution of such amount
in Series E Subordinated Debentures in exchange therefor, subject to certain
exceptions. See "Description of Preferred Securities -- Liquidation Distribution
Upon Termination" in the accompanying Prospectus.
The Series E Capital Securities will be represented by one or more global
certificates registered in the name of The Depository Trust Company ("DTC") or
its nominee. Beneficial interests in the Series E Capital Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described in the accompanying
Prospectus, Series E Capital Securities in certificated form will not be issued
in exchange for the global certificates. See "Certain Terms of Series E Capital
Securities -- Registration of Series E Capital Securities."
S-4
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The information in this Prospectus Supplement supplements, and should be
read in conjunction with, the information contained in the accompanying
Prospectus. As used herein, (i) the "Indenture" means the Junior Subordinated
Indenture, dated as of December 1, 1996, as amended and supplemented from time
to time, between the Corporation and The Bank of New York, as trustee (the
"Debenture Trustee"), and (ii) the "Series E Trust Agreement" means the Amended
and Restated Trust Agreement relating to the Series E Issuer among the
Corporation, as Depositor, The Bank of New York, as Property Trustee (the
"Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee (the
"Delaware Trustee"), the Administrative Trustees named therein (collectively,
with the Property Trustee and Delaware Trustee, the "Issuer Trustees") and the
holders of the Series E Capital Securities. Each of the other capitalized terms
used in this Prospectus Supplement and not otherwise defined in this Prospectus
Supplement has the meaning set forth in the accompanying Prospectus.
------------------
RISK FACTORS
Prospective purchasers of the Series E Capital Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and in
the accompanying Prospectus and should particularly consider the following
matters. In addition, because holders of Series E Capital Securities may receive
Series E Subordinated Debentures in exchange therefor upon liquidation of the
Series E Issuer, prospective purchasers of Series E Capital Securities are also
making an investment decision with regard to the Series E Subordinated
Debentures and should carefully review all the information regarding the Series
E Subordinated Debentures contained herein.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES E GUARANTEE AND THE SERIES
E SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series E Guarantee issued by
the Corporation for the benefit of the holders of Series E Securities and under
the Series E Subordinated Debentures are unsecured and rank subordinate and
junior in right of payment to all Senior Debt of the Corporation. Substantially
all of the Corporation's existing indebtedness constitutes Senior Debt (other
than approximately $1,804.2 million of the Corporation's existing indebtedness
evidenced by the Series A, Series B, Series C and Series D Subordinated
Debentures). Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of the assets of any subsidiary,
including the Bank, Chase USA, and Chase Texas, upon such subsidiary's
liquidation or reorganization or otherwise, is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation may
itself be recognized as a creditor of that subsidiary. There are various legal
limitations on the extent to which certain of the Corporation's subsidiaries may
extend credit, pay dividends or otherwise supply funds to, or engage in
transactions with, the Corporation or certain of its other subsidiaries.
Accordingly, the Series E Subordinated Debentures and the Series E Guarantee
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Series E Subordinated Debentures and
beneficiaries of the Series E Guarantee should look only to the assets of the
Corporation for payments on the Series E Subordinated Debentures or under the
Series E Guarantee, as the case may be. See "The Chase Manhattan Corporation."
None of the Indenture, the Series E Guarantee or the Series E Trust Agreement
places any limitation on the amount of secured or unsecured debt, including
Senior Debt, that may be incurred by the Corporation. See "Description of
Guarantees -- Status of the Guarantees" and "Description of Junior Subordinated
Debentures -- Subordination" in the accompanying Prospectus.
The ability of the Series E Issuer to pay amounts due on the Series E
Capital Securities is solely dependent upon the Corporation's making payments on
the Series E Subordinated Debentures as and when required.
S-5
<PAGE> 6
OPTION TO DEFER INTEREST PAYMENT; TAX CONSEQUENCES; MARKET PRICE CONSEQUENCES
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series E Subordinated Debentures at any time or from time to
time for a period not exceeding 20 consecutive quarterly periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series E Subordinated Debentures. As a consequence of any
such deferral, quarterly Distributions on the Series E Capital Securities by the
Series E Issuer will also be deferred (and the amount of Distributions to which
holders of the Series E Capital Securities are entitled will accumulate
additional Distributions thereon at the rate of 7.03% per annum, compounded
quarterly from the relevant payment date for such Distributions) during any such
Extension Period. During any such Extension Period, the Corporation may not, and
may not permit any subsidiary of the Corporation to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including other
series of Junior Subordinated Debentures) that rank pari passu with or junior in
interest to the Series E Subordinated Debentures (including, without limitation,
the Series A, Series B, Series C and Series D Subordinated Debentures) or (iii)
make any guarantee payments with respect to any guarantee by the Corporation of
the debt securities of any subsidiary of the Corporation if such guarantee ranks
pari passu with or junior in interest to the Series E Subordinated Debentures
(other than (a) dividends or distributions in capital stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Series E Guarantee and (d) purchases of
common stock related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees, related to
the issuance of common stock or rights under a dividend reinvestment and stock
purchase plan, or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest, provided that no
Extension Period may exceed 20 consecutive quarterly periods or extend beyond
the Stated Maturity of the Series E Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all interest then accrued
and unpaid (together with interest thereon at the rate of 7.03% per annum,
compounded quarterly from the interest payment date for such interest, to the
extent permitted by applicable law), the Corporation may elect to begin a new
Extension Period subject to the above requirements. There is no limitation on
the number of times that the Corporation may elect to begin an Extension Period.
See "Certain Terms of Series E Capital Securities -- Distributions" and "Certain
Terms of Series E Subordinated Debentures -- Option to Defer Interest Payments."
Should an Extension Period occur, a holder of Series E Capital Securities
will be required to accrue income (in the form of original issue discount) in
respect of its pro rata share of the Series E Subordinated Debentures held by
the Series E Issuer for United States federal income tax purposes. As a result,
a holder of Series E Capital Securities will be required to include such income
in gross income for United States federal income tax purposes in advance of the
receipt of cash attributable to such income, and will not receive the cash
related to such income from the Series E Issuer if the holder disposes of the
Series E Capital Securities prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount" and "-- Sales or Redemption of Series E Capital
Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Series E Subordinated Debentures. However, should
the Corporation elect to exercise such right in the future, the market price of
the Series E Capital Securities is likely to be affected. A holder that disposes
of its Series E Capital Securities during an Extension Period, therefore, might
not receive the same return on its investment as a holder that continues to hold
its Series E Capital Securities.
S-6
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REDEMPTION UPON TAX EVENT OR CAPITAL TREATMENT EVENT
Upon the occurrence and continuation of a Tax Event or Capital Treatment
Event (whether occurring before or after March 31, 2003), the Corporation has
the right if certain conditions are met, to redeem the Series E Subordinated
Debentures in whole (but not in part) within 90 days following the occurrence of
such Tax Event or Capital Treatment Event and thereby cause a mandatory
redemption of the Series E Capital Securities. The exercise of such right is
subject to the Corporation's having received prior approval of the Federal
Reserve to do so if then required under applicable capital guidelines or
policies. See "Certain Terms of Series E Subordinated Debentures -- Conditional
Right to Redeem upon a Tax Event or Capital Treatment Event" and "Description of
Preferred Securities -- Redemption or Exchange" in the accompanying Prospectus.
A "Tax Event" means the receipt by the Series E Issuer of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the Series E Capital Securities under the Series E Trust
Agreement, there is more than an insubstantial risk that (i) the Series E Issuer
is, or will be within 90 days of the date of such opinion, subject to United
States federal income tax with respect to income received or accrued on the
Series E Subordinated Debentures, (ii) interest payable by the Corporation on
the Series E Subordinated Debentures is not, or within 90 days of the date of
such opinion, will not be, deductible by the Corporation, in whole or in part,
for United States federal income tax purposes or (iii) the Series E Issuer is,
or will be within 90 days of the date of the opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges. With
respect to Series E Subordinated Debentures which are no longer held by the
Series E Issuer or another issuer, "Tax Event" means the receipt by the
Corporation of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement or decision is announced on or
after the date of issuance of the Series E Subordinated Debentures under the
Indenture, there is more than an insubstantial risk that interest payable by the
Corporation on the Series E Subordinated Debentures is not, or within 90 days of
the date of such opinion will not be, deductible by the Corporation, in whole or
in part, for United States federal income tax purposes (each of the
circumstances referred to in clauses (i), (ii) and (iii) of the preceding
sentence and the circumstances referred to in this sentence being referred to
herein as an "Adverse Tax Consequence").
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement, action or decision is
announced on or after the date of issuance of the Series E Capital Securities
under the Series E Trust Agreement, there is more than an insubstantial risk
that the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Series E Capital Securities as "Tier 1 Capital" (or
the then equivalent thereof) for purposes of the capital adequacy guidelines of
the Federal Reserve, as then in effect and applicable to the Corporation.
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EXCHANGE OF SERIES E CAPITAL SECURITIES FOR SERIES E SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series E
Issuer and, after satisfaction of liabilities to creditors of the Series E
Issuer as required by applicable law, cause the Series E Subordinated Debentures
to be distributed to the holders of the Series E Capital Securities in exchange
therefor upon liquidation of the Series E Issuer. The exercise of such right is
subject to the Corporation having received prior approval of the Federal Reserve
if then required under applicable capital guidelines or policies. See "Certain
Terms of Series E Capital Securities -- Liquidation of Series E Issuer and
Distribution of Series E Subordinated Debentures to Holders" and "Description of
Preferred Securities -- Redemption or Exchange" in the accompanying Prospectus.
Under current United States federal income tax law and interpretations and
assuming, as expected, the Series E Issuer is classified as a grantor trust for
such purposes, a distribution of the Series E Subordinated Debentures upon a
liquidation of the Series E Issuer should not be a taxable event to holders of
the Series E Capital Securities. However, if a Tax Event were to occur which
would cause the Series E Issuer to be subject to United States federal income
tax with respect to income received or accrued on the Series E Subordinated
Debentures, a distribution of the Series E Subordinated Debentures by the Series
E Issuer could be a taxable event to the Series E Issuer and the holders of the
Series E Capital Securities. See "Certain Federal Income Tax Consequences --
Distribution of Series E Subordinated Debentures to Holders of Series E Capital
Securities."
MARKET PRICES
There can be no assurance as to the market prices for Series E Capital
Securities or Series E Subordinated Debentures that may be distributed in
exchange for Series E Capital Securities upon liquidation of the Series E
Issuer. Accordingly, the Series E Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Series E Subordinated Debentures that a holder of Series E Capital
Securities may receive on liquidation of the Series E Issuer, may trade at a
discount to the price that the investor paid to purchase the Series E Capital
Securities offered hereby. As a result of the existence of the Corporation's
right to defer interest payments, the market price of the Series E Capital
Securities (which represent beneficial ownership interests in the Series E
Issuer) may be more volatile than the market prices of other securities that are
not subject to such optional deferrals. See "Certain Terms of Series E
Subordinated Debentures" and "Description of Junior Subordinated
Debentures -- Corresponding Junior Subordinated Debentures" in the accompanying
Prospectus.
RIGHTS UNDER THE SERIES E GUARANTEE
The Series E Guarantee guarantees to the holders of the Series E Securities
the following payments, to the extent not paid by the Series E Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series E
Securities, to the extent that the Series E Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Series E
Securities called for redemption, to the extent that the Series E Issuer has
funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Series E Issuer
(unless the Series E Subordinated Debentures are distributed to holders of the
Series E Securities), the lesser of (a) the aggregate of the Liquidation Amount
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Series E Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series E Issuer remaining available
for distribution to holders of the Series E Securities after payment of
creditors of the Series E Issuer as required by applicable law. The Series E
Guarantee will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Bank of New York will act as
the indenture trustee under the Series E Guarantee (the "Guarantee Trustee") for
the purpose of compliance with the Trust Indenture Act and will hold the Series
E Guarantee for the benefit of the holders of the Series E Securities. The Bank
of New York
S-8
<PAGE> 9
will also act as Debenture Trustee for the Series E Subordinated Debentures and
as Property Trustee under the Indenture and The Bank of New York (Delaware) will
act as Delaware Trustee under the Series E Trust Agreement.
The Series E Guarantee is subordinate as described under "-- Ranking of
Subordinated Obligations Under the Series E Guarantee and the Series E
Subordinated Debentures."
The holders of not less than a majority in aggregate Liquidation Amount of
the Series E Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Series E Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series E Guarantee. Any holder of
the Series E Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Series E Guarantee without first
instituting a legal proceeding against the Series E Issuer, the Guarantee
Trustee or any other person or entity. If the Corporation were to default on its
obligation to pay amounts payable under the Series E Subordinated Debentures,
the Series E Issuer would lack funds for the payment of Distributions or amounts
payable on redemption of the Series E Securities or otherwise, and, in such
event, holders of the Series E Securities would not be able to rely upon the
Series E Guarantee for payment of such amounts. Instead, if an event of default
under the Indenture shall have occurred and be continuing and such event is
attributable to the failure of the Corporation to pay interest on or principal
of the Series E Subordinated Debentures on the applicable payment date, then a
holder of Series E Capital Securities may institute a legal proceeding directly
against the Corporation pursuant to the terms of the Indenture for enforcement
of payment to such holder of the principal of or interest on such Series E
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Series E Capital Securities of such holder (a "Direct
Action"). In connection with such Direct Action, the Corporation will have a
right of set-off under the Indenture to the extent of any payment made by the
Corporation to such holder of Series E Capital Securities in the Direct Action.
Except as described herein, holders of Series E Capital Securities will not be
able to exercise directly any other remedy available to the holders of the
Series E Subordinated Debentures or assert directly any other rights in respect
of the Series E Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities,"
"-- Debenture Events of Default" and "Description of Guarantees" in the
accompanying Prospectus. The Series E Trust Agreement provides that each holder
of Series E Securities by acceptance thereof agrees to the provisions of the
Series E Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series E Capital Securities generally will have limited voting
rights relating only to the modification of the Series E Capital Securities and
the Series E Guarantee and the exercise of the Series E Issuer's rights as
holder of Series E Subordinated Debentures. Holders of Series E Capital
Securities will not be entitled to vote to appoint, remove or replace the
Property Trustee, the Delaware Trustee or any Administrative Trustee, and such
voting rights are vested exclusively in the holder of the Series E Common
Securities except, with respect to the Property Trustee and the Delaware
Trustee, upon the occurrence of certain events described in the accompanying
Prospectus. The Property Trustee, the Administrative Trustees and the
Corporation may amend the Series E Trust Agreement without the consent of
holders of Series E Capital Securities to ensure that the Series E Issuer will
not be classified for United States federal income tax purposes as an
association or publicly traded partnership subject to taxation as a corporation
unless such action materially and adversely affects the interests of such
holders. See "Description of Preferred Securities -- Removal of Issuer Trustees"
and "-- Voting Rights; Amendment of Each Trust Agreement" in the accompanying
Prospectus.
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LISTING OF SERIES E CAPITAL SECURITIES -- TRADING CHARACTERISTICS
The Series E Capital Securities have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance. Trading of the
Series E Capital Securities on the New York Stock Exchange is expected to
commence within a 30-day period after the initial delivery of the Series E
Captial Securities. Although the Underwriters have indicated to the Corporation
and the Series E Issuer that they intend to make a market in the Series E
Capital Securities prior to commencement of trading on the New York Stock
Exchange as permitted by applicable laws and regulations, they are not obligated
to do so and may discontinue any such market-making activities at any time
without notice. No assurance can be given as to the liquidity of the trading
market for the Series E Capital Securities.
The Series E Capital Securities may trade at prices that do not fully
reflect the value of accrued and unpaid interest with respect to the underlying
Series E Subordinated Debentures. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" and "-- Sales or
Redemption of Series E Capital Securities" for a discussion of the United States
federal income tax consequences that may result from a taxable disposition of
the Series E Capital Securities.
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CHASE CAPITAL V
Chase Capital V (the "Series E Issuer") is a statutory business trust
created under Delaware law pursuant to (i) the Trust Agreement executed by the
Corporation, as Depositor, The Bank of New York, as Property Trustee, The Bank
of New York (Delaware), as Delaware Trustee, and the Administrative Trustees
named therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on September 23, 1997. The Series E Issuer's business and
affairs are conducted by the Issuer Trustees: The Bank of New York, as Property
Trustee, and The Bank of New York (Delaware), as Delaware Trustee, and two
individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Series E Issuer exists for the exclusive
purposes of (i) issuing and selling the Series E Capital Securities and Series E
Common Securities, (ii) using the proceeds from the sale of Series E Capital
Securities and Series E Common Securities to acquire Series E Subordinated
Debentures issued by the Corporation and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer of
the Series E Securities). Accordingly, the Series E Subordinated Debentures will
be the sole assets of the Series E Issuer, and payments under the Series E
Subordinated Debentures will be the sole revenue of the Series E Issuer. All of
the Series E Common Securities will be owned by the Corporation. The Series E
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Series E Capital Securities, except that upon the occurrence and
continuance of an event of default under the Series E Trust Agreement resulting
from an event of default under the Indenture, the rights of the Corporation as
holder of the Series E Common Securities to payment in respect of Distributions
and payments upon liquidation, redemption or otherwise will be subordinated to
the rights of the holders of the Series E Capital Securities. See "Description
of Preferred Securities -- Subordination of Common Securities" in the
accompanying Prospectus. The Corporation will acquire Series E Common Securities
in an aggregate Liquidation Amount at least equal to 3% of the total capital of
the Series E Issuer. The Series E Issuer has a term of 55 years, but may
terminate earlier as provided in the Series E Trust Agreement. The principal
executive office of the Series E Issuer is 270 Park Avenue, New York, New York
10017 and its telephone number is (212) 270-6000. See "The Issuers" in the
accompanying Prospectus.
It is anticipated that the Series E Issuer will not be subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
THE CHASE MANHATTAN CORPORATION
GENERAL
The Corporation is a bank holding company organized under the laws of
Delaware in 1968 and registered under the Bank Holding Company Act of 1956, as
amended. On March 31, 1996, The Chase Manhattan Corporation ("Heritage Chase")
merged with and into Chemical Banking Corporation, and Chemical Banking
Corporation, which was the surviving corporation in the merger, changed its name
to "The Chase Manhattan Corporation." As a result of the merger, the Corporation
has become the largest banking institution in the United States, with over $350
billion in assets and $20 billion in stockholders' equity.
The principal bank subsidiaries of the Corporation are the Bank, a New York
banking corporation, Chase USA, headquartered in Wilmington, Delaware, and Chase
Texas.
The merger of Heritage Chase with and into Chemical Banking Corporation was
accounted for as a pooling-of-interests and, accordingly, the information
presented in this Prospectus Supplement reflects the combined results of
Heritage Chase and the Corporation as if the merger had been in effect for all
periods presented.
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BUSINESS
The activities of the Corporation and its subsidiaries are internally
organized, for operating purposes, into three principal lines of business. A
brief description of each principal line of business is presented below.
Global Banking
Global Banking provides financing, advisory, sales and trading, trade
finance, asset management and private banking. Clients include corporations,
institutions, governments and wealthy individuals located around the world.
Through its Global Banking businesses, the Corporation and its subsidiaries are
utilizing a new model for the delivery of global financial services, integrating
product expertise, industry knowledge and geographic reach to effect superior
customer solutions. Global Banking operates in more than 50 countries, including
major operations in all key international financial centers. Terminal
Businesses, representing discontinued portfolios (primarily the remaining
refinancing country debt and commercial real estate problem asset and
nonperforming portfolios), and Chase Texas (other than the consumer and global
services businesses of Chase Texas) are also included in Global Banking.
Chase Technology Solutions
In order to establish a fully integrated transaction processing platform,
the Corporation has combined its global services businesses, information
technology and operations and electronic commerce initiatives into a new group
called Chase Technology Solutions.
National Consumer Services
National Consumer Services, as of September 30, 1997, included the
fourth-largest bank credit card issuer in the U.S., the third-largest originator
and the second-largest servicer of residential mortgages and a leading provider
of auto financing and other consumer lending products. The Corporation and its
subsidiaries maintain a leading market share position in the New York
metropolitan tri-state area in serving the financial needs of consumers, middle
market commercial enterprises and small businesses. They offer customers
convenient access to financial services by telephone, personal computer and the
internet, and have the most branches and automated teller machines in the New
York metropolitan tri-state area. National Consumer Services also has a small
international consumer presence.
The Corporation is a Delaware corporation with its principal executive
office at 270 Park Avenue, New York, New York 10017. Its telephone number is
(212) 270-6000.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Corporation's consolidated ratios of
earnings to fixed charges and ratios of earnings to combined fixed charges and
preferred stock dividend requirements for each of the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits............. 1.82 1.66 1.90 1.86 1.62 1.50
Including Interest on Deposits............. 1.43 1.32 1.41 1.42 1.31 1.21
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements:
Excluding Interest on Deposits............. 1.77 1.60 1.82 1.76 1.52 1.41
Including Interest on Deposits............. 1.41 1.30 1.38 1.38 1.27 1.18
</TABLE>
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<PAGE> 13
For purposes of computing the ratios of earnings to fixed charges and of
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income from continuing operations plus total taxes based
on income and fixed charges. Fixed charges, excluding interest on deposits,
include interest expense (other than on deposits), one-third (the proportion
deemed representative of the interest factor) of rents, net of income from
subleases, and capitalized interest. Fixed charges, including interest on
deposits, include all interest expense, one-third (the proportion deemed
representative of the interest factor) of rents, net of income from subleases,
and capitalized interest.
USE OF PROCEEDS
All of the proceeds from the sale of the Series E Capital Securities will
be invested by the Series E Issuer in Series E Subordinated Debentures. The
Corporation intends that the proceeds from the sale of the Series E Subordinated
Debentures will be added to its general corporate funds and will be used for
general corporate purposes.
The Corporation is required by the Federal Reserve to maintain certain
levels of capital for bank regulatory purposes. On October 21, 1996, the Federal
Reserve announced that cumulative preferred securities having the
characteristics of the Series E Capital Securities could be included as Tier 1
Capital for bank holding companies. Such Tier 1 Capital treatment, together with
the Corporation's ability to deduct, for federal income tax purposes, interest
payable on the Series E Subordinated Debentures, will provide the Corporation
with a more cost-effective means of obtaining capital for bank regulatory
purposes than other Tier 1 Capital alternatives currently available to it.
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<PAGE> 14
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of December 31, 1997 and as adjusted to give
effect to the consummation of the offering of the Series E Capital Securities
and the issuance of the Series E Subordinated Debentures. The following data
should be read in conjunction with the consolidated financial statements and
notes thereto of the Corporation and its subsidiaries incorporated herein by
reference.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C>
Total long-term debt........................................................ $ 13,387 $ 13,387
-------- --------
Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures, Series A(a).................. 600 600
Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures, Series B(b).................. 494 494
Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures, Series C(c).................. 296 296
Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures, Series D(d).................. 350 350
Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures, Series E(e).................. -- 200
Preferred Stock of Subsidiary(f)............................................ 550 550
-------- --------
Stockholders' Equity
Preferred Stock........................................................... 1,740 1,740
Common Stock.............................................................. 441 441
Capital Surplus........................................................... 10,360 10,360
Retained Earnings......................................................... 11,103 11,103
Net Unrealized Gain on Securities Available for Sale Net of Taxes......... 95 95
Treasury Stock, At Cost................................................... (1,997) (1,997)
-------- --------
Total Stockholders' Equity.............................................. $ 21,742 $ 21,742
-------- --------
Total Capitalization........................................................ $ 37,419 $ 37,619
======== ========
</TABLE>
- ---------------
(a) On December 4, 1996, Chase Capital I issued $600 million of guaranteed
preferred beneficial interests in a registered public offering. Chase Capital I
invested the proceeds of such offering, together with approximately $18.6
million paid by the Corporation for Chase Capital I's common securities, in
approximately $618.6 million principal amount of Series A Subordinated
Debentures. The Series A Subordinated Debentures bear interest at the rate of
7.67% per annum and will mature on December 1, 2026. The Corporation owns all of
the common securities of Chase Capital I and the sole assets of Chase Capital I
are the Series A Subordinated Debentures.
(b) On January 24, 1997, Chase Capital II issued $500 million of guaranteed
preferred beneficial interests in a registered public offering. Chase Capital II
invested the proceeds of such offering (approximately $494.1 million), together
with approximately $15.3 million paid by the Corporation for Chase Capital II's
common securities, in approximately $515.5 million principal amount of Series B
Subordinated Debentures. The Series B Subordinated Debentures bear interest at
the floating rate of LIBOR plus 0.50% per annum and will mature on February 1,
2027. The Corporation owns all of the common securities of Chase Capital II and
the sole assets of Chase Capital II are the Series B Subordinated Debentures.
(c) On March 11, 1997, Chase Capital III issued $300 million of guaranteed
preferred beneficial interests in a registered public offering. Chase Capital
III invested the proceeds of such offering (approximately $295.7 million),
together with approximately $9.3 million paid by the Corporation for Chase
Capital III's common securities, in approximately $309.3 million principal
amount of Series C Subordinated Debentures. The Series C Subordinated Debentures
bear interest at the floating rate of LIBOR plus 0.55% per annum and will mature
on March 1, 2027. The Corporation owns all of the common securities of Chase
Capital III and the sole assets of Chase Capital III are the Series C
Subordinated Debentures.
(d) On December 5, 1997, Chase Capital IV issued $350 million of guaranteed
preferred beneficial interests in a registered public offering. Chase Capital IV
invested the proceeds of such offering, together with approximately $10.8
million paid by the Corporation for Chase Capital IV's common securities, in
approximately $360.8 million principal amount of Series D Subordinated
Debentures. The Series D Subordinated Debentures bear interest at the rate of
7.34% per annum and will mature on December 6, 2027. The Corporation owns all of
the common securities of Chase Capital IV and the sole assets of Chase Capital
IV are the Series D Subordinated Debentures.
(e) As described herein, the sole assets of the Series E Issuer will be
approximately $206.2 million principal amount of Series E Subordinated
Debentures to be issued by the Corporation to the Series E Issuer. The Series E
Subordinated Debentures will bear interest at the rate of 7.03% per annum on the
Liquidation Amount of $25 per Series E Subordinated Debenture and will mature on
March 31, 2028. The Corporation will own all of the Series E Common Securities
of the Series E Issuer. It is anticipated that the Series E Issuer will not be
subject to the reporting requirements under the Exchange Act.
(f) Reflects the issuance of preferred stock in September 1996 by Chase
Preferred Capital Corporation, a wholly owned subsidiary of the Bank, which has
elected to be treated for federal income tax purposes as a real estate
investment trust.
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<PAGE> 15
ACCOUNTING TREATMENT
For financial reporting purposes, the Series E Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Series E
Issuer will be included in the consolidated financial statements of the
Corporation. The Series E Capital Securities will be presented as part of a
separate line item in the consolidated balance sheets of the Corporation under
the caption "Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures, Series A, Series B, Series C,
Series D and Series E" and appropriate disclosures about the Series E Capital
Securities, the Series E Guarantee and the Series E Subordinated Debentures will
be included in the notes to the consolidated financial statements. For financial
reporting purposes, the Corporation will record Distributions payable on the
Series E Capital Securities as an expense in the consolidated statements of
income.
The Corporation has agreed that future financial reports of the Corporation
will: (i) present the Preferred Securities issued by other trusts created by the
Corporation on the Corporation's balance sheet as a separate line item entitled
"Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated
Deferrable Interest Debentures, Series A, Series B, Series C, Series D and
Series E;" (ii) include in a footnote to the financial statements disclosure
that the sole assets of the trusts are the Junior Subordinated Debentures
(specifying as to each trust the principal amount, interest rate and maturity
date of Junior Subordinated Debentures held); and (iii) if Staff Accounting
Bulletin 53 treatment is sought, include, in an audited footnote to the
financial statements, disclosure that (a) the trusts are wholly owned, (b) the
sole assets of the trusts are the Junior Subordinated Debentures (specifying as
to each trust the principal amount, interest rate and maturity date of the
Junior Subordinated Debentures held), and (c) the obligations of the Corporation
under the Junior Subordinated Debentures, the relevant indenture, trust
agreement and guarantee, in the aggregate, constitute a full and unconditional
guarantee by the Corporation of such trust's obligations under the Preferred
Securities issued by such trust.
CERTAIN TERMS OF SERIES E CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series E
Capital Securities supplements the description of the terms and provisions of
the Preferred Securities set forth in the accompanying Prospectus under the
heading "Description of Preferred Securities," to which description reference is
hereby made. This summary of certain terms and provisions of the Series E
Capital Securities, which describes the material provisions thereof, does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Series E Trust Agreement to which reference is hereby made.
The form of the Series E Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part.
DISTRIBUTIONS
The Series E Capital Securities represent beneficial ownership interests in
the Series E Issuer, and Distributions on the Series E Capital Securities will
be payable at the annual rate of 7.03% on the stated Liquidation Amount of $25,
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year (each, a "Distribution Date"), to the holders of the Series E
Capital Securities on the relevant record dates. The record dates for the Series
E Capital Securities will be, for so long as the Series E Capital Securities
remain in book-entry form, one Business Day (as defined in the accompanying
Prospectus) prior to the relevant Distribution Date and, in the event the Series
E Capital Securities are not in book-entry form, the 15th day of the month in
which the relevant Distribution Date occurs. Distributions will accumulate from
the date of original issuance. The first Distribution Date for the Series E
Capital Securities will be March 31, 1998. The period beginning on and including
the date of original issuance and ending on but excluding the first
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<PAGE> 16
Distribution Date and each successive period beginning on and including a
Distribution Date and ending on but excluding the next succeeding Distribution
Date is herein called a "Distribution Period". The amount of Distributions
payable for any Distribution Period will be computed on the basis of a 360-day
year of twelve 30-day months. In the event that any Distribution Date would
otherwise fall on a day that is not a Business Day, such Distribution Date shall
be postponed to the next day that is a Business Day (without any additional
Distributions or other payment in respect of such delay) unless it would thereby
fall in the next calendar year, in which event the Distribution Date shall be
brought forward to the immediately preceding Business Day. See "Description of
Preferred Securities -- Distributions" in the accompanying Prospectus.
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series E Subordinated Debentures at any time or from time to
time for a period not exceeding 20 consecutive quarterly periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series E Subordinated Debentures. As a consequence of any
such deferral of interest payments by the Corporation, quarterly Distributions
on the Series E Capital Securities by the Series E Issuer will also be deferred
during any such Extension Period. Distributions to which holders of the Series E
Capital Securities are entitled will accumulate additional Distributions thereon
at the rate of 7.03% per annum, compounded quarterly from the relevant payment
date for such Distributions. The term "Distributions" as used herein shall
include any such additional Distributions. During any such Extension Period, the
Corporation may not, and may not permit any subsidiary of the Corporation to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Corporation's
capital stock, (ii) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Corporation
(including other series of Junior Subordinated Debentures) that rank pari passu
with or junior in interest to the Series E Subordinated Debentures (including
the Series A, Series B, Series C and Series D Subordinated Debentures) or (iii)
make any guarantee payments with respect to any guarantee by the Corporation of
the debt securities of any subsidiary of the Corporation if such guarantee ranks
pari passu with or junior in interest to the Series E Subordinated Debentures
(other than (a) dividends or distributions in capital stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Series E Guarantee and (d) purchases of
common stock related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees, related to
the issuance of common stock or rights under a dividend reinvestment and stock
purchase plan, or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest on the Series E
Subordinated Debentures, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the Series
E Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all interest then accrued and unpaid (together with interest
thereon at the rate of 7.03% per annum, compounded quarterly, to the extent
permitted by applicable law), the Corporation may elect to begin a new Extension
Period. There is no limitation on the number of times that the Corporation may
elect to begin an Extension Period. See "Certain Terms of Series E Subordinated
Debentures -- Option to Defer Interest Payments" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series E
Subordinated Debentures.
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<PAGE> 17
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series E
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined in
the accompanying Prospectus) of the Series E Securities, upon not less than 30
nor more than 60 days notice prior to the date fixed for redemption, at a
redemption price, with respect to the Series E Securities (the "Redemption
Price"), equal to the aggregate Liquidation Amount of such Series E Securities,
plus accumulated and unpaid Distributions thereon to the date of redemption (the
"Redemption Date"). See "Certain Terms of Series E Subordinated
Debentures -- Redemption." If less than all of the Series E Subordinated
Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds
from such repayment or redemption shall be allocated to the redemption pro rata
of the Series E Capital Securities and the Series E Common Securities.
The Corporation has the right to redeem the Series E Subordinated
Debentures (i) on or after March 31, 2003, in whole at any time or in part from
time to time, or (ii) at any time, in certain circumstances as described under
"Certain Terms of Series E Subordinated Debentures -- Conditional Right to
Redeem upon a Tax Event or Capital Treatment Event," in whole (but not in part)
within 90 days following the occurrence of a Tax Event or Capital Treatment
Event. A redemption of the Series E Subordinated Debentures would cause a
mandatory redemption of the Series E Capital Securities and the Series E Common
Securities.
LIQUIDATION OF SERIES E ISSUER AND DISTRIBUTION OF SERIES E SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to terminate the Series E
Issuer and, after satisfaction of liabilities to creditors of the Series E
Issuer as required by applicable law, to cause the Series E Subordinated
Debentures to be distributed to the holders of the Series E Capital Securities
in exchange therefor upon liquidation of the Series E Issuer. Such right is
subject to the Corporation's having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies.
Under current United States federal income tax law and interpretations and
assuming, as expected, the Series E Issuer is treated as a grantor trust, a
distribution of Series E Subordinated Debentures in exchange for the Series E
Capital Securities should not be a taxable event to holders of the Series E
Capital Securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or other circumstances, however, the distribution
could be a taxable event to holders of the Series E Capital Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Series E
Subordinated Debentures to Holders of Series E Capital Securities." If the
Corporation elects neither to redeem the Series E Subordinated Debentures prior
to maturity nor to liquidate the Series E Issuer and distribute the Series E
Subordinated Debentures to holders of the Series E Capital Securities in
exchange therefor, the Series E Capital Securities will remain outstanding until
the Stated Maturity of the Series E Subordinated Debentures.
If the Corporation elects to liquidate the Series E Issuer and thereby
causes the Series E Subordinated Debentures to be distributed to holders of the
Series E Capital Securities in exchange therefor upon liquidation of the Series
E Issuer, the Corporation shall continue to have the right to redeem the Series
E Subordinated Debentures in certain circumstances upon the occurrence of a Tax
Event or Capital Treatment Event, as described under "Certain Terms of Series E
Subordinated Debentures -- Conditional Right to Redeem upon a Tax Event or
Capital Treatment Event."
LIQUIDATION VALUE
The amount payable on the Series E Capital Securities in the event of any
liquidation of the Series E Issuer is $25 per Series E Capital Security plus
accumulated and unpaid Distributions, which amount may be paid in the form of a
distribution of a Like Amount of Series E Subordinated
S-17
<PAGE> 18
Debentures, subject to certain exceptions. See "Description of Preferred
Securities -- Liquidation Distribution Upon Termination" in the accompanying
Prospectus.
REGISTRATION OF SERIES E CAPITAL SECURITIES
The Series E Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the Series
E Capital Securities will be shown on, and transfers thereof will be effected
only through, records maintained by participants in DTC. Except as described
below and in the accompanying Prospectus, Series E Capital Securities in
certificated form will not be issued in exchange for the global certificates.
See "Book-Entry Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Series E Capital Securities
registered in the names of persons other than DTC or its nominee only if (i) DTC
notifies the Series E Issuer that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have been
appointed, or if at any time DTC ceases to be a clearing agency registered under
the Exchange Act at a time when DTC is required to be so registered to act as
such depositary, (ii) the Series E Issuer in its sole discretion determines that
such global security shall be so exchangeable or (iii) there shall have occurred
and be continuing an event of default under the Indenture with respect to the
Series E Subordinated Debentures. Any global security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for definitive
certificates registered in such names as DTC shall direct. It is expected that
such instructions will be based upon directions received by DTC from its
Participants (as defined in the accompanying Prospectus) with respect to
ownership of beneficial interests in such global security. In the event that
Series E Capital Securities are issued in definitive form, such Series E Capital
Securities will be in denominations of $25 and integral multiples thereof and
may be transferred or exchanged at the offices described below.
Payments on and any distributions of Series E Subordinated Debentures in
exchange for Series E Capital Securities represented by a global security will
be made to DTC, as the depositary for the Series E Capital Securities. In the
event Series E Capital Securities are issued in certificated form, the
Liquidation Amount and Distributions will be payable, the transfer of the Series
E Capital Securities will be registrable, Series E Subordinated Debentures will
be distributed in exchange for Series E Capital Securities following a
termination of the Series E Issuer and Series E Capital Securities will be
exchangeable for Series E Capital Securities of other denominations of a like
aggregate Liquidation Amount, at the corporate office of the Property Trustee in
New York, New York, or at the offices of any paying agent or transfer agent
appointed by the Administrative Trustees, provided that payment of any
Distribution may be made at the option of the Administrative Trustees by check
mailed to the address of the persons entitled thereto or by wire transfer. In
addition, if the Series E Capital Securities are issued in certificated form,
the record dates for payment of Distributions will be the 15th day of the month
preceding the month in which the relevant Distribution payment is scheduled to
be paid. For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Book-Entry Issuance" in the accompanying Prospectus.
CERTAIN TERMS OF SERIES E SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series E
Subordinated Debentures supplements the description of the terms and provisions
of the Corresponding Junior Subordinated Debentures (as defined in the
accompanying Prospectus) set forth in the accompanying Prospectus under the
heading "Description of Junior Subordinated Debentures" to which description
reference is hereby made. The summary of certain terms and provisions of the
Series E Subordinated Debentures set forth below, which describes the material
provisions thereof, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Indenture,
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to which reference is hereby made. The Indenture has been filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part.
Concurrently with the issuance of the Series E Capital Securities, the
Series E Issuer will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series E Common Securities, in the
Series E Subordinated Debentures issued by the Corporation. The Series E
Subordinated Debentures will bear interest at the annual rate of 7.03% of the
principal amount thereof, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing March 31, 1998, and at maturity to the person in whose name each
Series E Subordinated Debenture is registered at the close of business on the
record date next preceding such Interest Payment Date. The period beginning on
and including the date of original issuance of the Series E Subordinated
Debentures and ending on but excluding the first Interest Payment Date and each
successive period beginning on and including an Interest Payment Date and ending
on but excluding the next succeeding Interest Payment Date is herein called an
"Interest Period". It is anticipated that, until the liquidation, if any, of the
Series E Issuer, each Series E Subordinated Debenture will be held by the
Property Trustee in trust for the benefit of the holders of the Series E Capital
Securities. The amount of interest payable for any Interest Period will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any Interest Payment Date would otherwise fall on a day that is not a
Business Day, such Interest Payment Date shall be postponed to the next day that
is a Business Day (without any interest or other payment in respect of any such
delay) unless it would thereby fall in the next calendar year, in which event
the Interest Payment Date shall be brought forward to the immediately preceding
Business Day. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate of 7.03% per annum, compounded quarterly from the
relevant Interest Payment Date. The term "interest" as used herein shall include
quarterly interest payments and interest on quarterly interest payments not paid
on the applicable Interest Payment Date, as applicable. Notwithstanding anything
to the contrary set forth above, if the maturity date falls on a day that is not
a Business Day, the payment of principal and interest will be paid on the next
succeeding Business Day, with the same force and effect as if made on such
maturity date and no interest on such payments will accrue from and after the
maturity date.
The Series E Subordinated Debentures will be issued as a series of junior
subordinated deferrable interest debentures under the Indenture.
The Series E Subordinated Debentures will mature on March 31, 2028.
The Series E Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt of the Corporation.
See "Description of Junior Subordinated Debentures -- Subordination" in the
accompanying Prospectus. Substantially all of the Corporation's existing
indebtedness constitutes Senior Debt (other than an aggregate of approximately
$1,804.2 million of the Corporation's existing indebtedness evidenced by the
Series A, Series B, Series C and Series D Subordinated Debentures). Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of assets of any subsidiary, including the Bank, Chase USA and
Chase Texas, upon such subsidiary's liquidation or reorganization or otherwise,
is subject to the prior claims of creditors of that subsidiary, except to the
extent that the Corporation may itself be recognized as a creditor of that
subsidiary. Accordingly, the Series E Subordinated Debentures and the Series E
Guarantee will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Series E
Subordinated Debentures and beneficiaries of the Series E Guarantee should look
only to the assets of the Corporation for payments on the Series E Subordinated
Debentures or under the Series E Guarantee. The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Debt, whether under the Indenture, any other existing indenture
or any other indenture that the Corporation may enter into in the future or
otherwise. See "Description of Junior Subordinated Debentures -- Subordination"
in the accompanying Prospectus.
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OPTION TO DEFER INTEREST PAYMENTS
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture at any time or
from time to time during the term of the Series E Subordinated Debentures to
defer payment of interest on the Series E Subordinated Debentures for a period
not exceeding 20 consecutive quarterly periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Series E Subordinated Debentures. At the end of such Extension Period,
the Corporation must pay all interest then accrued and unpaid on the Series E
Subordinated Debentures (together with interest on such unpaid interest at the
rate of 7.03% per annum, compounded quarterly from the relevant Interest Payment
Date, to the extent permitted by applicable law). During an Extension Period,
interest will accrue and holders of Series E Subordinated Debentures (or holders
of Series E Capital Securities while such series is outstanding) will be
required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
During any such Extension Period, the Corporation may not, and may not
permit any subsidiary of the Corporation to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including other series of Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Series E Subordinated Debentures (including the Series A, Series B, Series C and
Series D Subordinated Debentures) or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation if such guarantee ranks pari passu with or junior
in interest to the Series E Subordinated Debentures (other than (a) dividends or
distributions in capital stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Series E Guarantee, and (d) purchases of common stock related
to the issuance of common stock or rights under any of the Corporation's benefit
plans for its directors, officers or employees, related to the issuance of
common stock or rights under a dividend reinvestment and stock purchase plan, or
related to the issuance of common stock (or securities convertible into or
exchangeable for common stock) as consideration in an acquisition transaction
that was entered into prior to the commencement of such Extension Period). Prior
to the termination of any such Extension Period, the Corporation may further
defer the payment of interest on the Series E Subordinated Debentures, provided
that no Extension Period may exceed 20 consecutive quarterly periods or extend
beyond the Stated Maturity of the Series E Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at the rate of 7.03% per
annum, compounded quarterly, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election to
begin such Extension Period at least one Business Day prior to the earlier of
(i) the date Distributions on the Series E Securities would have been payable
except for the election to begin such Extension Period, (ii) the date the
Administrative Trustees are required to give notice to the New York Stock
Exchange, the Nasdaq National Market or other applicable stock exchange or
automated quotation system on which the Series E Capital Securities may then be
listed or quoted or to holders of Series E Subordinated Debentures of the record
date for such Distributions or (iii) the date such Distributions are payable,
but in any event not less than one Business Day prior to such record date. The
Debenture Trustee shall give notice of the Corporation's election to begin a new
Extension Period to the holders of the Series E Subordinated Debentures. There
is no limitation on the number of times that the Corporation may elect to begin
an Extension Period. See "Description of Junior Subordinated
Debentures -- Option to Defer Interest Payments" in the accompanying Prospectus.
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TRUST COSTS AND EXPENSES
In the Indenture, the Corporation, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Series E Capital
Securities) and all costs and expenses of the Series E Issuer (including costs
and expenses relating to the organization of the Series E Issuer, the fees and
expenses of the Issuer Trustees and the costs and expenses relating to the
operation of the Series E Issuer) and to pay any and all taxes and all costs and
expenses with respect thereto (other than United States withholding taxes) to
which the Series E Issuer might become subject.
REDEMPTION
Subject to the Corporation's having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies, the
Series E Subordinated Debentures are redeemable prior to maturity at the option
of the Corporation (i) on or after March 31, 2003, in whole at any time or in
part from time to time or (ii) at any time, in certain circumstances as
described under "-- Conditional Right to Redeem upon a Tax Event or Capital
Treatment Event," in whole (but not in part) within 90 days following the
occurrence of a Tax Event or Capital Treatment Event. The proceeds of any such
redemption will be used by the Series E Issuer to redeem the Series E
Securities.
The redemption price with respect to the Series E Subordinated Debentures
shall be equal to 100% of the principal amount of the Series E Subordinated
Debentures so redeemed plus accrued and unpaid interest thereon to the date of
redemption.
DISTRIBUTION OF SERIES E SUBORDINATED DEBENTURES
As described under "Certain Terms of Series E Capital
Securities -- Liquidation of Series E Issuer and Distribution of Series E
Subordinated Debentures to Holders," under certain circumstances involving the
termination of the Series E Issuer, Series E Subordinated Debentures may be
distributed to the holders of the Series E Capital Securities in exchange
therefor upon liquidation of the Series E Issuer after satisfaction of
liabilities to creditors of the Series E Issuer as provided by applicable law.
If distributed to holders of Series E Capital Securities, the Series E
Subordinated Debentures will initially be issued in the form of one or more
global securities and DTC, or any successor depositary for the Series E Capital
Securities, will act as depositary for the Series E Subordinated Debentures. It
is anticipated that the depositary arrangements for the Series E Subordinated
Debentures would be substantially identical to those in effect for the Series E
Capital Securities. If Series E Subordinated Debentures are distributed to the
holders of Series E Capital Securities in exchange therefor upon the liquidation
of the Series E Issuer, the Corporation will use its best efforts to list the
Series E Subordinated Debentures on the New York Stock Exchange or such other
stock exchanges or automated quotation systems, if any, on which the Series E
Capital Securities are then listed or quoted. There can be no assurance as to
the market price of any Series E Subordinated Debentures that may be distributed
to the holders of Series E Capital Securities.
CONDITIONAL RIGHT TO REDEEM UPON A TAX EVENT OR CAPITAL TREATMENT EVENT
If a Tax Event or a Capital Treatment Event occurs and either (i) in the
opinion of counsel to the Corporation experienced in such matters, there would
in all cases, after effecting the termination of the Series E Issuer and the
distribution of the Series E Subordinated Debentures to the holders of the
Series E Capital Securities in exchange therefor upon liquidation of the Series
E Issuer, be more than an insubstantial risk that an Adverse Tax Consequence (as
defined in "Risk Factors -- Tax Event or Capital Treatment Event -- Exchange of
Series E Capital Securities for Series E Subordinated Debentures or Redemption")
would continue to exist, (ii) in the reasonable determination of the
Corporation, there would in all cases, after effecting the termination of the
Series E Issuer and the distribution of the Series E Subordinated Debentures to
the holders of the Series E Capital
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Securities in exchange therefor upon liquidation of the Series E Issuer, be more
than an insubstantial risk that the Corporation will not be entitled to treat an
amount equal to the Liquidation Amount of the Series E Capital Securities as
"Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital
adequacy guidelines of the Federal Reserve, as then in effect and applicable to
the Corporation, or (iii) the Series E Subordinated Debentures are not held by
the Series E Issuer, then the Corporation shall have the right to redeem the
Series E Subordinated Debentures, in whole but not in part, at any time within
90 days following the occurrence of a Tax Event or Capital Treatment Event at a
redemption price equal to 100% of the principal amount thereof plus accrued and
unpaid interest thereon to the date of redemption. See "Certain Terms of Series
E Capital Securities -- Redemption" and "-- Liquidation of Series E Issuer and
Distribution of Series E Subordinated Debentures to Holders" and "Certain Terms
of Series E Subordinated Debentures -- General."
REGISTRATION OF SERIES E SUBORDINATED DEBENTURES
The Series E Subordinated Debentures will be registered in the name of the
Series E Issuer. In the event that the Series E Subordinated Debentures are
distributed to holders of Series E Capital Securities, it is anticipated that
the depositary and other arrangements for the Series E Subordinated Debentures
will be substantially identical to those in effect for the Series E Capital
Securities, as applicable. See "Certain Terms of Series E Capital
Securities -- Registration of Series E Capital Securities."
CERTAIN TERMS OF SERIES E GUARANTEE
The Series E Guarantee guarantees to the holders of the Series E Securities
the following payments, to the extent not paid by the Series E Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series E
Securities, to the extent that the Series E Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Series E
Securities called for redemption, to the extent that the Series E Issuer has
funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Series E Issuer
(unless the Series E Subordinated Debentures are distributed to holders of the
Series E Securities), the lesser of (a) the aggregate of the Liquidation Amount
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Series E Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series E Issuer remaining available
for distribution to holders of the Series E Securities after payment of
creditors of the Series E Issuer as required by applicable law. The Series E
Guarantee will be qualified as an indenture under the Trust Indenture Act. The
Bank of New York will act as the Guarantee Trustee for the purposes of
compliance with the Trust Indenture Act and will hold the Series E Guarantee for
the benefit of the holders of the Series E Securities. The Bank of New York will
also act as Debenture Trustee for the Series E Subordinated Debentures and as
Property Trustee.
The holders of not less than a majority in aggregate Liquidation Amount of
the Series E Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Series E Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series E Guarantee. Any holder of
the Series E Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Series E Guarantee without first
instituting a legal proceeding against the Series E Issuer, the Guarantee
Trustee or any other person or entity. If the Corporation were to default on its
obligation to pay amounts payable under the Series E Subordinated Debentures,
the Series E Issuer would lack funds for the payment of Distributions or amounts
payable on redemption of the Series E Securities or otherwise, and, in such
event, holders of the Series E Capital Securities would not be able to rely upon
the Series E Guarantee for payment of such amounts. Instead, if an event of
default under the Indenture shall have occurred and be continuing and such event
is attributable to the failure of the Corporation to pay interest on or
principal of the Series E Subordinated Debentures on the applicable payment
date, then a holder of
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Series E Capital Securities may institute a Direct Action against the
Corporation pursuant to the terms of the Indenture for enforcement of payment to
such holder of the principal of or interest on such Series E Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Series E Capital Securities of such holder. In connection with such
Direct Action, the Corporation will have a right of set-off under the Indenture
to the extent of any payment made by the Corporation to such holder of Series E
Capital Securities in the Direct Action. Except as described herein, holders of
Series E Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Series E Subordinated Debentures or
assert directly any other rights in respect of the Series E Subordinated
Debentures. See "Description of Guarantees" in the accompanying Prospectus. The
Series E Trust Agreement provides that each holder of Series E Securities by
acceptance thereof agrees to the provisions of the Series E Guarantee and the
Indenture.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Simpson Thacher & Bartlett, special tax counsel to the
Corporation and the Series E Issuer ("Tax Counsel"), the following summary
accurately describes the material United States federal income tax consequences
that may be relevant to the purchase, ownership and disposition of Series E
Capital Securities. Unless otherwise stated, this summary deals only with Series
E Capital Securities held as capital assets by United States Persons (defined
below) who purchase the Series E Capital Securities upon original issuance at
their original offering price. As used herein, a "United States Person" means a
person that is (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, (iii) an estate
the income of which is subject to United States federal income taxation
regardless of its source, or (iv) any trust if a court within the United States
is able to exercise primary supervision over the administration of such trust
and one or more United States Persons have the authority to control all
substantial decisions of such trust. The tax treatment of a holder may vary
depending on his, her or its particular situation. This summary does not address
all the tax consequences that may be relevant to a particular holder or to
holders who may be subject to special tax treatment, such as banks, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax-exempt investors, or foreign investors. In
addition, this summary does not include any description of any alternative
minimum tax consequences or the tax laws of any state, local or foreign
government that may be applicable to a holder of Series E Capital Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury regulations promulgated thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis.
The authorities on which this summary is based are subject to various
interpretations and the opinions of Tax Counsel are not binding on the Internal
Revenue Service ("IRS") or the courts, either of which could take a contrary
position. Moreover, no rulings have been or will be sought from the IRS with
respect to the transactions described herein. Accordingly, there can be no
assurance that the IRS will not challenge the opinions expressed herein or that
a court would not sustain such a challenge. Nevertheless, Tax Counsel has
advised that it is of the view that, if challenged, the opinions expressed
herein would be sustained by a court with jurisdiction in a properly presented
case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES E
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN,
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE
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REDEMPTION OF THE SERIES E CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX
EVENTS SEE "CERTAIN TERMS OF SERIES E CAPITAL SECURITIES -- REDEMPTION."
CLASSIFICATION OF THE SERIES E ISSUER
In connection with the issuance of the Series E Capital Securities, Tax
Counsel is of the opinion that, under current law and assuming compliance with
the terms of the Series E Trust Agreement, and based on certain facts and
assumptions contained in such opinion, the Series E Issuer will be classified as
a grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes. As a result, each beneficial owner of Series
E Capital Securities (a "Securityholder") will be treated as owning an undivided
beneficial interest in the Series E Subordinated Debentures. Accordingly, each
Securityholder will be required to include in its gross income its pro rata
share of the interest income or original issue discount that is paid or accrued
on the Series E Subordinated Debentures. See "-- Interest Income and Original
Issue Discount."
CLASSIFICATION OF THE SERIES E SUBORDINATED DEBENTURES
The Corporation, the Series E Issuer and the holders of the Series E
Securities (by acceptance of a beneficial interest in a Series E Security) will
agree to treat the Series E Subordinated Debentures as indebtedness for all
United States tax purposes. In connection with the issuance of the Series E
Subordinated Debentures, Tax Counsel is of the opinion that, under current law,
and based on certain representations, facts and assumptions set forth in such
opinion, the Series E Subordinated Debentures will be classified as indebtedness
for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under applicable Treasury regulations, the Series E Subordinated Debentures
will not be considered to have been issued with "original issue discount"
("OID") within the meaning of Section 1273(a) of the Code. Accordingly, except
as set forth below, stated interest on the Series E Subordinated Debentures
generally will be included in income by a Securityholder at the time such
interest income is paid or accrued in accordance with such Securityholder's
regular method of tax accounting.
If, however, the Corporation exercises its right to defer payments of
interest on the Series E Subordinated Debentures, the Series E Subordinated
Debentures will become OID instruments at such time and all Securityholders will
be required to accrue the stated interest on the Series E Subordinated
Debentures on a daily basis during the Extension Period, even though the
Corporation will not pay such interest until the end of the Extension Period,
and even though some Securityholders may use the cash method of tax accounting.
Moreover, thereafter the Series E Subordinated Debentures will be taxed as OID
instruments for as long as they remain outstanding. Thus, even after the end of
the Extension Period, all Securityholders would be required to continue to
include the stated interest on the Series E Subordinated Debentures in income on
a daily economic accrual basis, regardless of their method of tax accounting and
in advance of receipt of the cash attributable to such interest income. Under
the OID economic accrual rules, a Securityholder would accrue an amount of
interest income each year that approximates the stated interest payments called
for under the terms of the Series E Subordinated Debentures, and actual cash
payments of interest on the Series E Subordinated Debentures would not be
reported separately as taxable income. Any amount of OID included in a
Securityholder's gross income (whether or not during an Extension Period) will
increase such Securityholder's tax basis in its Series E Capital Securities, and
the amount of Distributions received by a Securityholder with respect to such
Series E Capital Securities will reduce the tax basis of such Series E Capital
Securities.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS
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were to assert successfully that the stated interest on the Series E
Subordinated Debentures was OID regardless of whether the Corporation exercises
its right to defer payments of interest on such debentures, all Securityholders
would be required to include such stated interest in income on a daily economic
accrual basis as described above.
Corporate Securityholders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Series E
Capital Securities.
DISTRIBUTION OF SERIES E SUBORDINATED DEBENTURES TO HOLDERS OF SERIES E CAPITAL
SECURITIES
Under current law, a distribution by the Series E Issuer of the Series E
Subordinated Debentures as described under the caption "Certain Terms of Series
E Capital Securities -- Liquidation of Series E Issuer and Distribution of
Series E Subordinated Debentures to Holders" will be non-taxable and will result
in the Securityholder receiving directly its pro rata share of the Series E
Subordinated Debentures previously held indirectly through the Series E Issuer,
with a holding period and aggregate tax basis equal to the holding period and
aggregate tax basis such Securityholder had in its Series E Capital Securities
before such distribution. If, however, the liquidation of the Series E Issuer
were to occur because the Series E Issuer is subject to United States federal
income tax with respect to income accrued or received on the Series E
Subordinated Debentures as a result of a Tax Event or otherwise, the
distribution of Series E Subordinated Debentures to Securityholders by the
Series E Issuer could be a taxable event to the Series E Issuer and each
Securityholder, and a Securityholder would recognize gain or loss as if the
Securityholder had exchanged its Series E Capital Securities for the Series E
Subordinated Debentures it received upon the liquidation of the Series E Issuer.
A Securityholder will accrue interest in respect of Series E Subordinated
Debentures received from the Series E Issuer in the manner described above under
"-- Interest Income and Original Issue Discount."
SALES OR REDEMPTION OF SERIES E CAPITAL SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Series E
Capital Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized by the Securityholder on the sale or
redemption of the Series E Capital Securities (except to the extent that such
amount realized is characterized as a payment in respect of accrued but unpaid
interest on such Securityholder's allocable share of the Series E Subordinated
Debentures that such Securityholder had not included in income previously) and
the Securityholder's adjusted tax basis in the Series E Capital Securities sold
or redeemed. Such gain or loss generally will be taxable as long-term capital
gain or loss if the Securityholder held the Series E Capital Securities that it
sold or redeemed for more than one year. Capital gains of individuals derived
with respect to capital assets held for more than one year are eligible for
reduced rates of taxation depending upon the holding period of such capital
assets. Securityholders should consult their own tax advisors regarding capital
gains rates applicable to them. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for federal income tax
purposes.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any
Securityholder that is not a United States Person. As discussed above, the
Series E Capital Securities will be treated as evidence of an indirect
beneficial ownership interest in the Series E Subordinated Debentures. See
"-- Classification of the Trust." Thus, under present United States federal
income tax law, and subject to the discussion below concerning backup
withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Series E Issuer (or the
Corporation) or any paying agent of principal or interest (which for
purposes of this discussion includes any OID) on the Series E Capital
Securities (or the Series E Subordinated Debentures) to a Non-United States
Holder, provided (i) that the beneficial owner of the Series E Capital
Securities ("Beneficial Owner") does not actually or
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constructively own 10% or more of the total combined voting power of all
classes of stock of the Corporation entitled to vote within the meaning of
section 871(h)(3) of the Code and the regulations thereunder, (ii) the
Beneficial Owner is not a controlled foreign corporation that is related to
the Corporation through stock ownership, (iii) the Beneficial Owner is not
a bank whose receipt of interest on the Series E Subordinated Debentures is
described in section 881(c)(3)(A) of the Code and (iv) the Beneficial Owner
satisfies the statement requirement (described generally below) set forth
in section 871(h) and section 881(c) of the Code and the regulations
thereunder; and
(b) no withholding of United States federal income tax will be
required with respect to any gain realized by a Non-United States Holder
upon the sale or other disposition of the Series E Capital Securities (or
the Series E Subordinated Debentures).
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Series E Capital Securities on
behalf of such owner, must provide, in accordance with specified procedures, to
the Series E Issuer or its paying agent, a statement to the effect that the
Beneficial Owner is not a United States Person. Currently, these requirements
will be met if (1) the Beneficial Owner provides his name and address, and
certifies, under penalties of perjury, that it is not a United States Person
(which certification may be made on an IRS Form W-8 (or successor form)) or (2)
a financial institution holding the Series E Capital Securities on behalf of the
Beneficial Owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes the Series E Issuer or the paying agent with a
copy thereof. Under recently finalized Treasury regulations (the "Final
Regulations"), the statement requirement referred to in (a)(iv) above may also
be satisfied with other documentary evidence for interest paid after December
31, 1998 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 interest made
to such Non-United States Holder will be subject to a 30% United States federal
withholding tax unless the Beneficial Owner provides the Series E Issuer or its
paying agent, as the case may be, with a properly executed (1) IRS Form 1001 (or
a successor form) claiming an exemption from, or a reduction of, such
withholding tax under the benefit of a tax treaty or (2) IRS Form 4224 (or a
successor form) stating that interest paid on the Series E Capital Securities
(or the Series E Subordinated Debentures) is not subject to such withholding tax
because it is effectively connected with the Beneficial Owner's conduct of a
trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest on the Series E Capital Securities (or the Series E
Subordinated Debentures) is effectively connected with the conduct of such trade
or business, the Non-United States Holder, although exempt from the withholding
tax discussed above, will be subject to United States federal income tax on such
interest on a net income basis in the same manner as if it were a United States
Person. In addition, if such Non-United States Holder is a foreign corporation,
it may be subject to a branch profits tax equal to 30% of its effectively
connected earnings and profits for the taxable year, subject to adjustments. For
this purpose, such interest income would be included in such foreign
corporation's earnings and profits. Under the Final Regulations, Non-United
States 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.
Any gain realized upon the sale or other disposition of the Series E
Capital Securities (or the Series E Subordinated Debentures) generally will not
be subject to United States federal income tax unless (i) such gain is
effectively connected with a United States trade or business of the Non-United
States Holder, (ii) in the case of a Non-United States Holder who is an
individual, such individual is present in the United States for 183 days or more
in the taxable year of such sale, exchange or retirement, and certain other
conditions are met, or (iii) in the case of any gain representing accrued
interest on the Series E Subordinated Debentures, the requirements described
above are not satisfied.
S-26
<PAGE> 27
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of OID accrued on the Series E Capital Securities held of record
by United States Persons (other than corporations and other exempt
Securityholders), if any, will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury Regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
Payment of the proceeds from the disposition of Series E Capital Securities
to or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the IRS.
It is anticipated that income on the Series E Capital Securities will be
reported to holders on Form 1099 and mailed to holders of the Series E Capital
Securities by January 31 following each calendar year.
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Series E Capital Securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code; however,
governmental plans may be subject to similar provisions under applicable state
laws.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Series E Issuer would be
deemed to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of
the Code if "plan assets" of the Plan were used to acquire an equity interest in
the Series E Issuer and no exception were applicable under the Plan Assets
Regulation. An "equity interest" is defined under the Plan Assets Regulation as
any interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features and specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Series E Issuer would not be deemed to be "plan assets" of
investing Plans if, at all times, less than 25% of the value of each class of
equity interests in the Series E Issuer were held by Plans, other employee
benefit plans not subject to ERISA or Section 4975 of the Code (such as
governmental, church and
S-27
<PAGE> 28
foreign plans), and entities holding assets deemed to be "plan assets" of any
Plan (collectively, "Benefit Plan Investors"), or if the Series E Capital
Securities were "publicly-offered securities" for purposes of the Plan Assets
Regulation. No assurance can be given that the Series E Capital Securities held
by Benefit Plan Investors will be less than 25% of the total value of such
Series E Capital Securities at the completion of the initial offering or
thereafter, and no monitoring or other measures will be taken with respect to
the satisfaction of the conditions to this exception. In addition, no assurance
can be given that the Series E Capital Securities would be considered to be
"publicly-offered securities" under the Plan Assets Regulation. All of the
Series E Common Securities will be purchased and initially held by the
Corporation.
Certain transactions involving the Series E Issuer could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Series E Capital Securities were
acquired with "plan assets" of such Plan and the assets of the Series E Issuer
were deemed to be "plan assets" of Plans investing in the Series E Issuer. For
example, if the Corporation were a Party in Interest with respect to a Plan
(either directly or by reason of its ownership of the Bank or other
subsidiaries), extensions of credit between the Corporation and the Series E
Issuer (as represented by the Series E Subordinated Debentures and the Series E
Guarantee) would likely be prohibited by Section 406(a)(1)(B) of ERISA and
Section 4975(c)(1)(B) of the Code, unless exemptive relief were available under
an applicable administrative exemption (see below). In addition, if the
Corporation were considered to be a fiduciary with respect to the Series E
Issuer as a result of certain powers it holds (such as the powers to remove and
replace the Property Trustee and the Administrative Trustees), it is possible
that the optional redemption or acceleration of the Series E Subordinated
Debentures would be considered to be prohibited transactions under Section
406(b) of ERISA and Section 4975(c)(1)(E) of the Code. IN ORDER TO AVOID SUCH
PROHIBITED TRANSACTIONS, EACH INVESTING PLAN, BY PURCHASING SERIES E CAPITAL
SECURITIES, WILL BE DEEMED TO HAVE DIRECTED THE SERIES E ISSUER TO INVEST IN THE
SERIES E SUBORDINATED DEBENTURES AND TO HAVE APPOINTED THE PROPERTY TRUSTEE.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect prohibited
transactions that may arise from the purchase or holding of the Series E Capital
Securities if assets of the Series E Issuer were deemed to be "plan assets" of
Plans investing in the Series E Issuer as described above. Those class
exemptions are PTCE 96-23 (for certain transactions determined by in-house asset
managers), PTCE 95-60 (for certain transactions involving insurance company
general accounts), PTCE 91-38 (for certain transactions involving bank
collective investment funds), PTCE 90-1 (for certain transactions involving
insurance company separate accounts), and PTCE 84-14 (for certain transactions
determined by independent qualified asset managers).
Because the Series E Capital Securities may be deemed to be equity
interests in the Series E Issuer for purposes of applying ERISA and Section 4975
of the Code, the Series E Capital Securities may not be purchased or held by any
Plan, any entity whose underlying assets include "plan assets" by reason of any
Plan's investment in the entity (a "Plan Asset Entity") or any person investing
"plan assets" of any Plan, unless such purchaser or holder is eligible for the
exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
another applicable exemption. Any purchaser or holder of the Series E Capital
Securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that it either (a) is not a Plan or a Plan Asset
Entity and is not purchasing such securities on behalf of or with "plan assets"
of any Plan or (b) is eligible for the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption with respect
to such purchase or holding. If a purchaser or holder of the Series E Capital
Securities that is a Plan or a Plan Asset Entity elects to rely on an exemption
other than PTCE 96-23, 95-60, 91-38, 90-1 or 84-14, the Corporation and the
Series E Issuer may require a satisfactory opinion of counsel or other evidence
with respect to the availability of such exemption for such purchase and
holding.
S-28
<PAGE> 29
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Series E
Capital Securities on behalf of or with "plan assets" of any Plan consult with
their counsel regarding the potential consequences if the assets of the Series E
Issuer were deemed to be "plan assets" and the availability of exemptive relief
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or any other applicable exemption.
S-29
<PAGE> 30
UNDERWRITING
Subject to the terms and conditions set forth in the Standard Provisions
dated November 24, 1997 and the Pricing Agreement dated January 28, 1998
(collectively, the "Underwriting Agreement"), the Corporation and the Series E
Issuer have agreed that the Series E Issuer will sell to each of the
Underwriters named below, and each of such Underwriters has severally agreed to
purchase from the Series E Issuer, the respective number of Series E Capital
Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF SERIES E CAPITAL SECURITIES
-------------------------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................. 1,000,000
Chase Securities Inc. .................................. 1,000,000
Morgan Stanley & Co. Incorporated....................... 980,000
PaineWebber Incorporated................................ 980,000
Prudential Securities Incorporated...................... 980,000
Smith Barney Inc. ...................................... 980,000
BT Alex. Brown Incorporated............................. 80,000
Bear, Stearns & Co. Inc. ............................... 80,000
CIBC Oppenheimer Corp. ................................. 80,000
Cowen & Company......................................... 80,000
Dain Rauscher Incorporated.............................. 80,000
A.G. Edwards & Sons, Inc. .............................. 80,000
EVEREN Securities, Inc. ................................ 80,000
Goldman, Sachs & Co. ................................... 80,000
Lehman Brothers Inc. ................................... 80,000
The Ohio Company........................................ 80,000
Piper Jaffray Inc. ..................................... 80,000
Raymond James & Associates, Inc. ....................... 80,000
Tucker Anthony Incorporated............................. 80,000
Wheat, First Securities, Inc. .......................... 80,000
Advest, Inc. ........................................... 40,000
Robert W. Baird & Co. Incorporated...................... 40,000
Blaylock & Partners, L.P. .............................. 40,000
J.C. Bradford & Co. .................................... 40,000
Fahnestock & Co. Inc. .................................. 40,000
First Albany Corporation................................ 40,000
First of Michigan Corporation........................... 40,000
Gibralter Securities Co. ............................... 40,000
Gruntal & Co., L.L.C. .................................. 40,000
Interstate/Johnson Lane Corporation..................... 40,000
Janney Montgomery Scott Inc. ........................... 40,000
Josepthal & Co. Inc. ................................... 40,000
Kennedy, Cabot & Co. ................................... 40,000
Legg Mason Wood Walker, Incorporated.................... 40,000
McDonald & Company Securities, Inc. .................... 40,000
Mesirow Financial, Inc. ................................ 40,000
Morgan Keegan & Company, Inc. .......................... 40,000
The Robinson-Humphrey Company, LLC...................... 40,000
Roney & Co., LLC........................................ 40,000
Scott & Stringfellow, Inc. ............................. 40,000
Stephens Inc. .......................................... 40,000
Stifel, Nicolaus & Company, Incorporated................ 40,000
Stone & Youngberg....................................... 40,000
Trilon International Inc. .............................. 40,000
-----------
Total........................................... 8,000,000
===========
</TABLE>
S-30
<PAGE> 31
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Series E Capital
Securities if any are taken.
The Underwriters propose initially to offer the Series E Capital Securities
in part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus Supplement and in part to certain securities
dealers at such price less a concession not in excess of $.50 per Series E
Capital Security. The Underwriters may allow, and such dealers may reallow, a
concession not to exceed $.40 per Series E Capital Security to certain brokers
and dealers. After the Series E Capital Securities are released for sale to the
public, the initial public offering price and other selling terms may from time
to time be varied by the Underwriters.
In view of the fact that the proceeds from the sale of the Series E Capital
Securities will be used to purchase the Series E Subordinated Debentures issued
by the Corporation, the Underwriting Agreement provides that the Corporation
will pay as Underwriters' compensation for the Underwriters' arranging the
investment in such Series E Subordinated Debentures of such proceeds an amount
of $.7875 per Series E Capital Security for the accounts of the several
Underwriters.
The Corporation and the Series E Issuer have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing to and
including the earlier of (i) the termination of trading restrictions on the
Series E Capital Securities, as determined by the Underwriters, and (ii) the
closing date, they will not offer, sell, contract to sell or otherwise dispose
of any Preferred Securities (as defined in the accompanying Prospectus), any
other beneficial interests in the assets of the Series E Issuer, or any
preferred securities or any other securities of the Series E Issuer or the
Corporation which are substantially similar to the Series E Capital Securities,
including any guarantee of such securities, or any securities convertible into
or exchangeable for or representing the right to receive preferred securities or
any such substantially similar securities of either the Series E Issuer or the
Corporation, without the prior written consent of the Underwriters, except for
the Series E Capital Securities offered in connection with this offering.
Prior to this offering, there has been no public market for the Series E
Capital Securities. The Series E Capital Securities have been approved for
listing on the New York Stock Exchange, subject to official notice of issuance.
Trading of the Series E Capital Securities on the New York Stock Exchange is
expected to commence within a 30-day period after the initial delivery of the
Series E Capital Securities. Although the Underwriters have indicated to the
Corporation and the Series E Issuer that they intend to make a market in the
Series E Capital Securities prior to commencement of trading on the New York
Stock Exchange, they are not obligated to do so and may discontinue any such
market-making activities at any time without notice. No assurance can be given
as to the liquidity of the trading markets for the Series E Capital Securities.
In order to meet one of the requirements for listing the Series E Capital
Securities on the New York Stock Exchange, the Underwriters have undertaken to
sell lots of 100 or more of the Series E Capital Securities to a minimum of 400
beneficial holders.
The Corporation and the Series E Issuer have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Act.
It is expected that delivery of the Series E Capital Securities will be
made against payment therefor on or about February 4, 1998, as agreed upon by
the Corporation, the Series E Issuer and the Underwriters in accordance with
Rule 15c6-1 under the Exchange Act.
Chase Securities Inc., one of the Representatives of the Underwriters, is a
wholly owned subsidiary of the Corporation. This Prospectus Supplement and the
related Prospectus may be used by direct or indirect wholly owned subsidiaries
of the Corporation, including Chase Securities Inc., in connection with offers
and sales related to secondary market transactions in the Series E Capital
Securities. Such subsidiaries may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale.
S-31
<PAGE> 32
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
In connection with this offering and in compliance with applicable law,
Merrill, Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), one of
the Representatives of the Underwriters, may over-allot (i.e., sell more Series
E Capital Securities than the total amount shown on the list of Underwriters and
participations which appears above) and may effect transactions which stabilize,
maintain or otherwise affect the market price of the Series E Capital Securities
at levels above those which might otherwise prevail in the open market. Such
transactions may include placing bids for the Series E Capital Securities or
effecting purchases of the Series E Capital Securities for the purpose of
pegging, fixing or maintaining the price of the Series E Capital Securities or
for the purpose of reducing a syndicate short position created in connection
with the offering. In addition, the contractual arrangements among the
Underwriters include a provision whereby, if Merrill Lynch purchases Series E
Capital Securities in the open market for the account of the underwriting
syndicate and the securities purchased can be traced to a particular Underwriter
or member of the selling group, the underwriting syndicate may require the
Underwriter or selling group member in question to purchase the Series E Capital
Securities in question at the cost price to the syndicate or may recover from
(or decline to pay to) the Underwriter or selling group member in question the
selling concession applicable to the securities in question. Merrill Lynch is
not required to engage in any of these activities and any such activities, if
commenced, may be discontinued at any time.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series E
Capital Securities, the enforceability of the Series E Trust Agreement and the
formation of the Series E Issuer will be passed upon by Richards, Layton &
Finger, special Delaware counsel to the Corporation and the Series E Issuer. The
validity of the Series E Guarantee and the Series E Subordinated Debentures will
be passed upon for the Corporation by Simpson Thacher & Bartlett (a partnership
which includes professional corporations) and for the Underwriters by Cravath,
Swaine & Moore. Simpson Thacher & Bartlett and Cravath, Swaine & Moore will rely
on the opinion of Richards, Layton & Finger as to matters of Delaware law.
Cravath, Swaine & Moore from time to time has represented and continues to
represent the Corporation and its subsidiaries in a substantial number of
matters on a regular basis. Certain matters relating to United States federal
income tax considerations described in this Prospectus Supplement will be passed
upon for the Corporation by Simpson Thacher & Bartlett.
S-32
<PAGE> 33
$1,500,000,000
THE CHASE MANHATTAN CORPORATION
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES
CHASE CAPITAL IV
CHASE CAPITAL V
CHASE CAPITAL VI
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
The Chase Manhattan Corporation, a Delaware corporation (the
"Corporation"), may from time to time offer in one or more series or issuances
its junior subordinated deferrable interest debentures (the "Junior Subordinated
Debentures"). The Junior Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to Senior Debt (as defined in
"Description of Junior Subordinated Debentures -- Subordination") of the
Corporation. If provided in an accompanying Prospectus Supplement, the
Corporation will have the right to defer payments of interest on any series of
Junior Subordinated Debentures by extending the interest payment period thereon
at any time or from time to time for up to such number of consecutive interest
payment periods (which shall not extend beyond the Stated Maturity (as defined
herein) of the Junior Subordinated Debentures) with respect to each deferral
period as may be specified in such Prospectus Supplement (each, an "Extension
Period"). In such circumstance, however, the Corporation would not be permitted,
subject to certain exceptions set forth herein, to declare or pay any dividends,
distributions or other payments with respect to, or repay, repurchase, redeem or
otherwise acquire, the Corporation's capital stock or debt securities that rank
pari passu with or junior to such series of Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Option to Defer Interest
Payments" and "-- Restrictions on Certain Payments."
Chase Capital IV, Chase Capital V and Chase Capital VI, each a trust
created under the laws of the State of Delaware (each, an "Issuer," and
collectively, the "Issuers"), may severally offer, from time to time, preferred
securities (the "Preferred Securities") representing beneficial ownership
interests in such Issuer. The Corporation will be the owner of the common
securities (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities") representing common beneficial ownership interests in
such Issuer. Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions ("Distributions") accumulating from
the date of original issuance and payable periodically as specified in an
accompanying Prospectus Supplement.
Concurrently with the issuance by an Issuer of its Preferred Securities,
such Issuer will invest the proceeds thereof and of contributions received in
respect of the Common Securities in a corresponding series of the Corporation's
Junior Subordinated Debentures (the "Corresponding Junior Subordinated
Debentures") with terms corresponding to the terms of that Issuer's Preferred
Securities (the "Related Preferred Securities"). Accordingly, if, as provided in
an accompanying Prospectus Supplement, the
(continued on next page)
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is October 24, 1997.
<PAGE> 34
(cover page continued)
Corporation has the right to defer the payment of interest on a series of
Corresponding Junior Subordinated Debentures, then, if interest payments are so
deferred, Distributions on the Related Preferred Securities would also be
deferred, but would continue to accumulate at the rate per annum set forth in
the related Prospectus Supplement. See "Description of Preferred Securities --
Distributions."
Taken together, the Corporation's obligations under each series of
Corresponding Junior Subordinated Debentures, the Indenture, the related Trust
Agreement and the related Guarantee (each, as defined herein), in the aggregate,
will provide a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Related Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees -- Full and Unconditional Guarantee."
The payment of Distributions with respect to the Preferred Securities of each
Issuer and payments on liquidation of such Issuer or redemption of such
Preferred Securities, in each case out of funds held by such Issuer, will be
irrevocably guaranteed by the Corporation to the extent described herein (each,
a "Guarantee"). See "Description of Guarantees." The obligations of the
Corporation under each Guarantee will be unsecured and subordinate and junior in
right of payment to all Senior Debt of the Corporation.
The Corresponding Junior Subordinated Debentures will be the sole assets of
each Issuer, and payments under the Corresponding Junior Subordinated Debentures
will be the only revenue of each Issuer. If so provided in an accompanying
Prospectus Supplement, the Corporation may, upon receipt of approval of the
Board of Governors of the Federal Reserve System (the "Federal Reserve") (if
such approval is then required under the Federal Reserve's applicable capital
guidelines or policies), redeem the Corresponding Junior Subordinated Debentures
(and thereby cause the redemption of the Trust Securities) or may terminate each
Issuer and, after satisfaction of liabilities to the creditors of such Issuer as
required by applicable law, cause the Corresponding Junior Subordinated
Debentures to be distributed to the holders of Preferred Securities in exchange
therefor upon liquidation of their interests in such Issuer. See "Description of
Preferred Securities -- Liquidation Distribution Upon Termination."
The Junior Subordinated Debentures and Preferred Securities may be offered
in amounts, at prices and on terms to be determined at the time of offering;
provided, however, the aggregate initial public offering price of all Junior
Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of which
this Prospectus forms a part shall not exceed $1,500,000,000. Certain specific
terms of the Junior Subordinated Debentures or Preferred Securities in respect
of which this Prospectus is being delivered will be described in an accompanying
Prospectus Supplement, including without limitation and where applicable and to
the extent not set forth herein, (a) in the case of Junior Subordinated
Debentures, the specific designation, aggregate principal amount, denominations,
Stated Maturity (including any provisions for the shortening or extension
thereof), interest payment dates, interest rate (which may be fixed or variable)
or method of calculating interest, if any, applicable Extension Period or
interest deferral terms, if any, place or places where principal, premium, if
any, and interest, if any, will be payable, any terms of redemption, any sinking
fund provisions, terms for any conversion or exchange into other securities,
initial offering or purchase price, methods of distribution and any other
special terms, and (b) in the case of Preferred Securities, the identity of the
Issuer, specific title, aggregate stated liquidation amount, number of
securities, Distribution rate or method of calculating such rate, Distribution
payment dates, applicable Distribution deferral terms, if any, place or places
where Distributions will be payable, any terms of redemption, exchange, initial
offering or purchase price, methods of distribution and any other special terms.
2
<PAGE> 35
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them will be set forth in a Prospectus Supplement. The
Prospectus Supplement will state whether the Junior Subordinated Debentures or
Preferred Securities will be listed on any national securities exchange or
automated quotation system. If the Junior Subordinated Debentures or Preferred
Securities are not listed on any national securities exchange or automated
quotation system, there can be no assurance that there will be a secondary
market for the Junior Subordinated Debentures or Preferred Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, Suite 1300, New York,
New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov. In addition, such reports, proxy statements
and other information concerning the Corporation can be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Corporation and the Issuers have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Corporation and the securities offered hereby, reference is made
to the Registration Statement and the exhibits and the financial statements,
notes and schedules filed as a part thereof or incorporated by reference
therein, which may be inspected at the public reference facilities of the
Commission at the addresses set forth above or through the Commission's home
page on the Internet. Statements made in this Prospectus concerning the contents
of any documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such document
filed as an exhibit to the Registration Statement.
No separate financial statements of any Issuer have been included herein.
The Corporation and the Issuers do not consider that such financial statements
would be material to holders of the Preferred Securities because each Issuer is
a newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Corresponding Junior Subordinated
Debentures of the
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Corporation and issuing the Trust Securities. See "The Issuers," "Description of
Preferred Securities," "Description of Junior Subordinated
Debentures -- Corresponding Junior Subordinated Debentures" and "Description of
Guarantees." In addition, the Corporation does not expect that any of the
Issuers will be filing reports under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997 and
June 30, 1997.
3. Current Reports on Form 8-K dated January 23, 1997, March 18, 1997,
March 18, 1997, April 18, 1997 and July 15, 1997.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: The Chase
Manhattan Corporation, 270 Park Avenue, New York, New York 10017, Attention:
Office of the Secretary, telephone number (212) 270-4040.
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THE CHASE MANHATTAN CORPORATION
The Corporation is a bank holding company organized under the laws of
Delaware in 1968 and registered under the Bank Holding Company Act of 1956, as
amended. On March 31, 1996, The Chase Manhattan Corporation ("Old Chase") merged
with and into Chemical Banking Corporation, and Chemical Banking Corporation
changed its name to "The Chase Manhattan Corporation."
The Corporation is a Delaware corporation with its principal office at 270
Park Avenue, New York, New York 10017. Its telephone number is (212) 270-6000.
THE ISSUERS
Each Issuer is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement executed by the Corporation, as Depositor of
the Issuer, and the Delaware Trustee and two Administrative Trustees (as defined
herein) of such Issuer and (ii) the filing of a certificate of trust with the
Delaware Secretary of State. The trust agreement of each Issuer will be amended
and restated in its entirety (each, as so amended and restated, a "Trust
Agreement") prior to the issuance of Preferred Securities by such Issuer,
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. Each Trust Agreement will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Each Issuer exists for the exclusive purposes of (i) issuing
and selling its Trust Securities, (ii) using the proceeds from the sale of such
Trust Securities to acquire a series of Corresponding Junior Subordinated
Debentures issued by the Corporation, and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer of
Trust Securities). Accordingly, the Corresponding Junior Subordinated Debentures
will be the sole assets of each Issuer, and payments under the Corresponding
Junior Subordinated Debentures will be the sole revenue of each Issuer.
All of the Common Securities of each Issuer will be owned by the
Corporation. The Common Securities of an Issuer will rank pari passu, and
payments will be made thereon pro rata with the Preferred Securities of such
Issuer, except that upon the occurrence and continuance of an event of default
under a Trust Agreement resulting from an event of default under the Indenture,
the rights of the Corporation as holder of the Common Securities to payment in
respect of Distributions and payments upon liquidation or redemption will be
subordinated to the rights of the holders of the Preferred Securities of such
Issuer. See "Description of Preferred Securities -- Subordination of Common
Securities." The Corporation will acquire Common Securities in an aggregate
Liquidation Amount equal to not less than 3% of the total capital of each
Issuer.
Unless otherwise specified in the applicable Prospectus Supplement, each
Issuer has a term of approximately 55 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer's business and affairs
are conducted by its trustees, each appointed by the
Corporation as holder of the Common Securities. The trustees for each Issuer
will be The Bank of New York, as the Property Trustee (the "Property Trustee"),
The Bank of New York (Delaware), as the Delaware Trustee (the "Delaware
Trustee"), and two individual trustees (the "Administrative Trustees") who are
employees or officers of or affiliated with the Corporation (collectively, the
"Issuer Trustees"). The Bank of New York, as Property Trustee, will act as sole
trustee under each Trust Agreement for purposes of compliance with the Trust
Indenture Act. The Bank of New York will also act as trustee under the
Guarantees and the Indenture. See "Description of Guarantees" and "Description
of Junior Subordinated Debentures." The holder of the Common Securities of an
Issuer, or the holders of a majority in Liquidation Amount of the Related
Preferred Securities if an event of default under the Trust Agreement for such
Issuer has occurred and is continuing, will be entitled to appoint, remove or
replace the Property Trustee and/or the Delaware Trustee for such Issuer. In no
event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights are
vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed
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by the applicable Trust Agreement. The Corporation will pay all fees and
expenses related to each Issuer and the offering of the Preferred Securities and
will pay, directly or indirectly, all ongoing costs, expenses and liabilities of
each Issuer.
The principal executive office of each Issuer is 270 Park Avenue, New York,
New York 10017 and its telephone number is (212) 270-6000.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
Corporation intends to use the proceeds from the sale of its Junior Subordinated
Debentures (including Corresponding Junior Subordinated Debentures issued to the
Issuers in connection with the investment by the Issuers of all of the proceeds
from the sale of Trust Securities) for general corporate purposes, including
investments in or loans to subsidiaries, refinancing of debt, including
outstanding commercial paper and other short-term indebtedness, redemption or
repurchase of shares of its outstanding common and preferred stock, the
satisfaction of other obligations or for such other purposes as may be specified
in the applicable Prospectus Supplement.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under the Junior Subordinated Indenture, dated as of December 1, 1996, as
supplemented from time to time (as so supplemented, the "Indenture"), between
the Corporation and The Bank of New York, as trustee (the "Debenture Trustee").
This summary of certain terms and provisions of the Junior Subordinated
Debentures, Corresponding Junior Subordinated Debentures and the Indenture,
which summarizes the material provisions thereof, does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Indenture, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and to the Trust Indenture Act,
to each of which reference is hereby made. The Indenture is qualified under the
Trust Indenture Act. Whenever particular defined terms of the Indenture (as
supplemented or amended from time to time) are referred to herein or in a
Prospectus Supplement, such defined terms are incorporated herein or therein by
reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu with all
other series of Junior Subordinated Debentures heretofore or hereafter issued
pursuant to the Indenture, and will be unsecured and subordinate and junior in
right of payment to the extent and in the manner set forth in the Indenture to
all Senior Debt (as defined below) of the Corporation. See "-- Subordination."
Because the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subsidiary, including The Chase
Manhattan Bank, Chase Manhattan Bank USA, National Association, and Texas
Commerce Bank National Association, upon such subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of creditors of the
subsidiary, except to the extent the Corporation may itself be recognized as a
creditor of that subsidiary. Accordingly, the Junior Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Junior Subordinated Debentures should
look only to the assets of the Corporation for payments on the Junior
Subordinated Debentures. Except as otherwise provided in the applicable
Prospectus Supplement, the Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of the Corporation, including Senior Debt,
whether under the Indenture, any other existing indenture or any other indenture
that the Corporation may enter into in the future or otherwise. See
"-- Subordination" and the applicable Prospectus Supplement relating to any
offering of Preferred Securities or Junior Subordinated Debentures.
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The Junior Subordinated Debentures will be issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of the
Corporation's Board of Directors or a committee thereof.
The applicable Prospectus Supplement will describe the following terms of
the Junior Subordinated Debentures offered thereby: (1) the title of such Junior
Subordinated Debentures; (2) any limit upon the aggregate principal amount of
such Junior Subordinated Debentures; (3) the date or dates on which the
principal of such Junior Subordinated Debentures is payable (the "Stated
Maturity") or the method of determination thereof; (4) the rate or rates, if
any, at which such Junior Subordinated Debentures shall bear interest, the dates
on which any such interest shall be payable (the "Interest Payment Dates"), the
right, if any, of the Corporation to defer or extend an Interest Payment Date,
the record dates for any interest payable on any Interest Payment Date (the
"Regular Record Dates") and the method by which any of the foregoing shall be
determined; (5) the place or places where, subject to the terms of the Indenture
as described below under "-- Payment and Paying Agents," the principal of and
premium, if any, and interest on such Junior Subordinated Debentures will be
payable and where, subject to the terms of the Indenture as described below
under "-- Denominations, Registration and Transfer," such Junior Subordinated
Debentures may be presented for registration of transfer or exchange and the
place or places where notices and demands to or upon the Corporation in respect
of such Junior Subordinated Debentures and the Indenture may be made ("Place of
Payment"); (6) any period or periods within which, or date or dates on which,
the price or prices at which and the terms and conditions upon which such Junior
Subordinated Debentures may be redeemed, in whole or in part, at the option of
the Corporation or a holder thereof; (7) the obligation or the right, if any, of
the Corporation or a holder thereof to redeem, purchase or repay such Junior
Subordinated Debentures and the period or periods within which, the price or
prices at which, the currency or currencies (including currency unit or units)
in which and the other terms and conditions upon which such Junior Subordinated
Debentures shall be redeemed, repaid or purchased, in whole or in part, pursuant
to such obligation or right; (8) the denominations in which such Junior
Subordinated Debentures shall be issuable; (9) if other than in U.S. Dollars,
the currency or currencies (including currency unit or units) in which the
principal of (and premium, if any) and interest, if any, on the Junior
Subordinated Debentures shall be payable, or in which such Junior Subordinated
Debentures shall be denominated; (10) any additions, modifications or deletions
in the events of default under the Indenture or in the covenants of the
Corporation specified in the Indenture with respect to such Junior Subordinated
Debentures; (11) if other than the principal amount thereof, the portion of the
principal amount of such Junior Subordinated Debentures that shall be payable
upon declaration of acceleration of the maturity thereof; (12) any additions or
changes to the Indenture with respect to such Junior Subordinated Debentures as
shall be necessary to permit or facilitate the issuance of such Junior
Subordinated Debentures in bearer form, registrable or not registrable as to
principal, and with or without interest coupons; (13) any index or indices used
to determine the amount of payments of principal of and premium, if any, on such
Junior Subordinated Debentures and the manner in which such amounts will be
determined; (14) the terms and conditions relating to the issuance of a
temporary Global Security representing all of such Junior Subordinated
Debentures and the exchange of such temporary Global Security for definitive
Junior Subordinated Debentures of such series; (15) subject to the terms
described herein under "-- Global Junior Subordinated Debentures," whether such
Junior Subordinated Debentures shall be issued in whole or in part in the form
of one or more Global Securities and, in such case, the depositary for such
Global Securities, which depositary shall be a clearing agency registered under
the Exchange Act; (16) the appointment of any paying agent or agents; (17) the
terms and conditions of any obligation or right of the Corporation or a holder
to convert or exchange such Junior Subordinated Debentures into Preferred
Securities; (18) the form of Trust Agreement and Guarantee Agreement, if
applicable; and (19) any other terms of the Junior Subordinated Debentures not
inconsistent with the provisions of the Indenture.
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Junior Subordinated Debentures may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain United States federal
income tax consequences and special considerations applicable to any such Junior
Subordinated Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, premium, if any, or interest on any
Junior Subordinated Debentures is payable in one or more foreign currencies or
currency units, the restrictions, elections, certain United States federal
income tax consequences, specific terms and other information with respect to
such series of Junior Subordinated Debentures and such foreign currency or
currency units will be set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debentures,
special United States federal income tax, accounting and other considerations
applicable thereto will be described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issuable only in registered form without
coupons. Junior Subordinated Debentures of any series will be exchangeable for
other Junior Subordinated Debentures of the same issue and series, of any
authorized denominations, of a like aggregate principal amount, of the same
original issue date and stated maturity and bearing the same interest rate.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the appropriate securities registrar or at the
office of any transfer agent designated by the Corporation for such purpose with
respect to any series of Junior Subordinated Debentures and referred to in the
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. The
Corporation will appoint the Debenture Trustee as securities registrar under the
Indenture. If the applicable Prospectus Supplement refers to any transfer agents
(in addition to the securities registrar) initially designated by the
Corporation with respect to any series of Junior Subordinated Debentures, the
Corporation may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent acts,
provided that the Corporation maintains a transfer agent in each place of
payment for such series. The Corporation may at any time designate additional
transfer agents with respect to any series of Junior Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of any series during a period beginning at the
opening of business 15 days before the day of selection for redemption of Junior
Subordinated Debentures of that series and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Junior Subordinated Debentures that will
be deposited with, or on behalf of, a depositary (the "Depositary") identified
in the Prospectus Supplement relating to such series. Global Junior Subordinated
Debentures may be issued only in fully registered form and in either
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temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual definitive Junior Subordinated Debentures represented
thereby, a Global Junior Subordinated Debenture may not be transferred except as
a whole by the Depositary for such Global Junior Subordinated Debenture to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by the Depositary or any nominee to a
successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Junior Subordinated Debentures will be described in the Prospectus Supplement
relating to such series. The Corporation anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, and the
deposit of such Global Junior Subordinated Debenture with or on behalf of the
Depositary, the Depositary for such Global Junior Subordinated Debenture or its
nominee will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture to the accounts of
persons that have accounts with such Depositary, which may include the accounts
of Morgan Guaranty Trust Company of New York, Brussels office, as operator of
the Euroclear System ("Euroclear"), and Cedel Bank, societe anonyme ("Cedel")
("Participants"). Such accounts shall be designated by the dealers, underwriters
or agents with respect to such Junior Subordinated Debentures or by the
Corporation if such Junior Subordinated Debentures are offered and sold directly
by the Corporation. Ownership of beneficial interests in a Global Junior
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants, including Euroclear and Cedel and their
participants. Ownership of beneficial interests in such Global Junior
Subordinated Debenture will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Junior Subordinated Debenture.
So long as the Depositary for a Global Junior Subordinated Debenture, or
its nominee, is the registered owner of such Global Junior Subordinated
Debenture, such Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture for all purposes under
the Indenture. Except as provided below, owners of beneficial interests in a
Global Junior Subordinated Debenture will not be entitled to have any of the
individual Junior Subordinated Debentures of the series represented by such
Global Junior Subordinated Debenture registered in their names, will not receive
or be entitled to receive physical delivery of any such Junior Subordinated
Debentures of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner of
the Global Junior Subordinated Debenture representing such Junior Subordinated
Debentures. None of the Corporation, the Debenture Trustee, any Paying Agent, or
the Securities Registrar for such Junior Subordinated Debentures will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Junior
Subordinated Debenture representing such Junior Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
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The Corporation expects that the Depositary for a series of Junior
Subordinated Debentures or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of a permanent Global Junior
Subordinated Debenture representing any of such Junior Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
such Global Junior Subordinated Debenture for such Junior Subordinated
Debentures as shown on the records of such Depositary or its nominee. The
Corporation also expects that payments by Participants to owners of beneficial
interests in such Global Junior Subordinated Debenture held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Corporation within 90 days, the Corporation
will issue individual Junior Subordinated Debentures of such series in exchange
for the Global Junior Subordinated Debenture representing such series of Junior
Subordinated Debentures. In addition, the Corporation may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Junior Subordinated Debentures, determine not to
have any Junior Subordinated Debentures of such series represented by one or
more Global Junior Subordinated Debentures and, in such event, will issue
certificated Junior Subordinated Debentures of such series in exchange for the
Global Junior Subordinated Debenture. Further, if the Corporation so specifies
with respect to the Junior Subordinated Debentures of a series, an owner of a
beneficial interest in a Global Junior Subordinated Debenture representing
Junior Subordinated Debentures of such series may, on terms acceptable to the
Corporation, the Debenture Trustee and the Depositary for such Global Junior
Subordinated Debenture, receive certificated Junior Subordinated Debentures of
such series in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such Junior
Subordinated Debentures. In any such instance, an owner of a beneficial interest
in a Global Junior Subordinated Debenture will be entitled to physical delivery
of certificated Junior Subordinated Debentures of the series represented by such
Global Junior Subordinated Debenture equal in aggregate principal amount to such
beneficial interest and to have such Junior Subordinated Debentures registered
in its name. Individual Junior Subordinated Debentures of such series so issued
will be issued in the denominations specified for such series in the applicable
Prospectus Supplement.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Junior Subordinated
Debentures (other than any Junior Subordinated Debentures represented by Global
Junior Subordinated Debentures) will be made at the office of the Debenture
Trustee in the City of New York or at the office of such paying agent or paying
agents as the Corporation may designate from time to time, except that at the
option of the Corporation payment of any interest may be made (i) except in the
case of Global Junior Subordinated Debentures, by check mailed to the address of
the person entitled thereto as such address shall appear in the securities
register or (ii) by transfer to an account maintained by the person entitled
thereto as specified in the securities register, provided that proper transfer
instructions have been received by the Regular Record Date. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of any interest on
Junior Subordinated Debentures will be made to the person in whose name such
Junior Subordinated Debentures are registered at the close of business on the
Regular Record Date for such interest, except in the case of defaulted interest.
The Corporation may at any time designate additional paying agents or rescind
the designation of any paying agent; however, the Corporation will at all times
be required to maintain a paying agent in each place of payment for each series
of Junior Subordinated Debentures.
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Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Corporation will
have the right at any time and from time to time during the term of any series
of Junior Subordinated Debentures to defer payment of interest for up to such
number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided, that such Extension Period may not extend beyond the
Stated Maturity of such series of Junior Subordinated Debentures. Certain United
States federal income tax consequences and special considerations applicable to
any such Junior Subordinated Debentures will be described in the applicable
Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, Junior
Subordinated Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation may, at its option and subject to receipt of prior approval by the
Federal Reserve if then required under applicable capital guidelines or
policies, redeem the Junior Subordinated Debentures of any series in whole at
any time or in part from time to time. If the Junior Subordinated Debentures of
any series are so redeemable only on or after a specified date or upon the
satisfaction of additional conditions, the applicable Prospectus Supplement will
specify such date or describe such conditions. Except as otherwise specified in
the applicable Prospectus Supplement, the redemption price for any Junior
Subordinated Debenture so redeemed shall equal any accrued and unpaid interest
thereon to the redemption date, plus 100% of the principal amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Tax Event (as defined below) in respect of a series of Junior Subordinated
Debentures or a Capital Treatment Event (as defined below) shall occur and be
continuing, the Corporation may, at its option and subject to receipt of prior
approval by the Federal Reserve if then required under applicable capital
guidelines or policies, redeem such series of Junior Subordinated Debentures in
whole (but not in part) at any time within 90 days following of the occurrence
of such Tax Event or Capital Treatment Event, at a redemption price equal to
100% of the principal amount of such Junior Subordinated Debentures then
outstanding plus accrued and unpaid interest to the date fixed for redemption,
except as otherwise specified in the applicable Prospectus Supplement.
"Tax Event" means the receipt by the Issuer of a series of Preferred
Securities of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement or decision is announced on or
after the date of issuance of such Preferred Securities, there is more than an
insubstantial risk that (i) such Issuer is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the corresponding series of Corresponding
Junior Subordinated Debentures, (ii) interest payable by the Corporation on such
series of Corresponding Junior Subordinated Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Corporation, in
whole
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or in part, for United States federal income tax purposes, or (iii) such issuer
is, or will be within 90 days of the date of such opinion, subject to more than
a de minimis amount of other taxes, duties or other governmental charges.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement, action or decision is
announced on or after the date of issuance of the applicable Preferred
Securities under the applicable Trust Agreement, there is more than an
insubstantial risk that the Corporation will not be entitled to treat an amount
equal to the Liquidation Amount of the applicable Preferred Securities as "Tier
I Capital" (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Corporation
defaults in payment of the redemption price, on and after the redemption date,
interest will cease to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation will also covenant, as to each series of Junior
Subordinated Debentures, that it will not, and will not permit any subsidiary of
the Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Corporation (including other series of Junior Subordinated Debentures) that rank
pari passu with or junior in interest to the Junior Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in capital stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the redemption or repurchase
of any such rights pursuant thereto, (c) payments under any Guarantee with
respect to the series of Related Preferred Securities and (d) purchases of
common stock related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees, related to
the issuance of common stock or rights under a dividend reinvestment and stock
purchase plan, or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period) if at such time (i) there shall have occurred any event of
which the Corporation has actual knowledge (a) that with the giving of notice or
the lapse of time, or both, would constitute a "Debenture Event of Default"
under the Indenture with respect to the Junior Subordinated Debentures of such
series and (b) in respect of which the Corporation shall not have taken
reasonable steps to cure, (ii) if such Junior Subordinated Debentures are held
by an Issuer of a series of Related Preferred Securities, the Corporation shall
be in default with respect to its payment of any obligations under the Guarantee
relating to such Related Preferred Securities or (iii) the Corporation shall
have given notice of its election of an Extension Period as provided in the
Indenture with respect to the Junior Subordinated Debentures of such series and
shall not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
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MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of any series of Junior Subordinated Debentures,
amend, waive or supplement the Indenture for specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies (provided
that any such action does not materially adversely affect the interests of the
holders of any series of Junior Subordinated Debentures or, in the case of
Corresponding Junior Subordinated Debentures, the holders of the Related
Preferred Securities so long as they remain outstanding) and qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act.
The Indenture contains provisions permitting the Corporation and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of each outstanding series of Junior Subordinated Debentures
affected, to modify the Indenture in a manner adversely affecting the rights of
the holders of such series of the Junior Subordinated Debentures in any material
respect; provided, that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Debenture so affected, (i) change
the Stated Maturity of any series of Junior Subordinated Debentures (except as
otherwise specified in the applicable Prospectus Supplement), or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures of any series, the holders of which are required to
consent to any such modification of the Indenture, provided further that, in the
case of Corresponding Junior Subordinated Debentures, so long as any Related
Preferred Securities remain outstanding, (a) no such modification may be made
that adversely affects the holders of such Preferred Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
event of default or compliance with any covenant under the Indenture may be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount of all outstanding Related Preferred Securities
affected unless and until the principal of the Corresponding Junior Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions have been satisfied, and (b) where a consent under
the Indenture would require the consent of each holder of Corresponding Junior
Subordinated Debentures, no such consent shall be given by the Property Trustee
without the prior consent of each holder of Related Preferred Securities.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debentures, any supplemental
Indenture for the purpose of creating any new series of Junior Subordinated
Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on such series of Junior
Subordinated Debentures when due (subject to the deferral of any interest
payment in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series
of Junior Subordinated Debentures when due whether at maturity or upon
redemption; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Corporation from the Debenture Trustee or the holders of at least
25% in aggregate outstanding principal amount of such affected series of
outstanding Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation.
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The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures of each series affected have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Debenture Trustee. The Debenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of Junior Subordinated Debentures
of each series affected may declare the principal due and payable immediately
upon a Debenture Event of Default, and, in the case of Corresponding Junior
Subordinated Debentures, should the Debenture Trustee or such holders of such
Corresponding Junior Subordinated Debentures fail to make such declaration, the
holders of at least 25% in aggregate Liquidation Amount of the Related Preferred
Securities shall have such right. The holders of a majority in aggregate
outstanding principal amount of Junior Subordinated Debentures of each series
affected may annul such declaration. In the case of Corresponding Junior
Subordinated Debentures, should the holders of such Corresponding Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the Related
Preferred Securities affected shall have such right.
The holders of a majority in aggregate outstanding principal amount of each
series of the Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures of such series, waive any
default, except a default in the payment of principal or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debenture. In the case of
Corresponding Junior Subordinated Debentures, should the holders of such
Corresponding Junior Subordinated Debentures fail to waive such default, the
holders of a majority in aggregate Liquidation Amount of the Related Preferred
Securities affected shall have such right. The Corporation is required to file
annually with the Debenture Trustee a certificate as to whether or not the
Corporation is in compliance with all the conditions and covenants applicable to
it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing as to a
series of Corresponding Junior Subordinated Debentures, the Property Trustee
will have the right to declare the principal of and the interest on such
Corresponding Junior Subordinated Debentures, and any other amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Corresponding Junior Subordinated
Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debentures has occurred and is continuing and such event is
attributable to the failure of the Corporation to pay interest or principal on
such Corresponding Junior Subordinated Debentures on the date such interest or
principal is due and payable, a holder of Related Preferred Securities may
institute a legal proceeding directly against the Corporation for enforcement of
payment to such holder of the principal of or interest on such Corresponding
Junior Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Related Preferred Securities of such holder (a "Direct
Action"). The Corporation may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Preferred Securities outstanding. If the right to bring a Direct
Action is removed, the applicable Issuer may become subject to the reporting
obligations under the Exchange Act. The Corporation shall have the right under
the Indenture to set-off any payment made to such holder of Preferred Securities
by the Corporation in connection with a Direct Action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an event of default under the Trust Agreement. See "Description
of Preferred Securities -- Events of Default; Notice."
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CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties and assets substantially as an entirety to the Corporation, unless
(i) in case the Corporation consolidates with or merges into another Person or
conveys or transfers its properties and assets substantially as an entirety to
any Person, the successor Person is organized under the laws of the United
States or any state or the District of Columbia, and such successor Person
expressly assumes the Corporation's obligations on the Junior Subordinated
Debentures issued under the Indenture; (ii) immediately after giving effect
thereto, no Debenture Event of Default, and no event which, after notice or
lapse of time or both, would become a Debenture Event of Default, shall have
occurred and be continuing; (iii) in the case of Corresponding Junior
Subordinated Debentures, such transaction is permitted under the related Trust
Agreement and Guarantee and does not give rise to any breach or violation of the
related Trust Agreement or Guarantee, and (iv) certain other conditions as
prescribed by the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and the Corporation deposits or causes
to be deposited with the Debenture Trustee funds, in trust, for the purpose and
in an amount in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal (and premium, if any) and interest
to the date of the deposit or to the Stated Maturity, as the case may be, then
the Indenture will cease to be of further effect (except as to the Corporation's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Corporation will be deemed to have satisfied and discharged the Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or exchangeable
into Junior Subordinated Debentures of another series or into Preferred
Securities of another series. The specific terms on which Junior Subordinated
Debentures of any series may be so converted or exchanged will be set forth in
the applicable Prospectus Supplement. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the holder, or at the
option of the Corporation, in which case the number of shares of Preferred
Securities or other securities to be received by the holders of Junior
Subordinated Debentures would be calculated as of a time and in the manner
stated in the applicable Prospectus Supplement.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets of the Corporation upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in
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connection with any insolvency or bankruptcy proceeding of the Corporation, the
holders of Senior Debt will first be entitled to receive payment in full of
principal of (and premium, if any) and interest, if any, on such Senior Debt
before the holders of Junior Subordinated Debentures will be entitled to receive
or retain any payment in respect of the principal of (and premium, if any) or
interest, if any, on the Junior Subordinated Debentures; provided, however, that
holders of Senior Debt shall not be entitled to receive payment of any such
amounts to the extent that such holders would be required by the subordination
provisions of such Senior Debt to pay such amounts over to the obligees on trade
accounts payable or other liabilities arising in the ordinary course of the
Corporation's business.
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon (including any amounts due upon acceleration thereof) before the
holders of Junior Subordinated Debentures will be entitled to receive or retain
any payment in respect of the principal of (or premium, if any) or interest, if
any, on the Junior Subordinated Debentures; provided, however, that holders of
Senior Debt shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions of
such Senior Debt to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of the Corporation's
business.
No payments on account of principal (or premium, if any) or interest in
respect of the Junior Subordinated Debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior Debt
or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) every
obligation of such Person for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; and (vii) every obligation of the type referred to in clauses (i)
through (vi) of another Person and all dividends of another Person the payment
of which, in either case, such Person has guaranteed or is responsible or liable
for, directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Corporation whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Junior Subordinated Debentures or to other
Debt which is pari passu with, or subordinated to, the Junior Subordinated
Debentures; provided, however, that Senior Debt shall not be deemed to include
(i) any Debt of the Corporation which when incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Corporation, (ii) any Debt of the
Corporation to any of its subsidiaries, (iii) Debt to any employee of the
Corporation, (iv) Debt which by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of such Debt by the holders of the
Junior Subordinated Debentures as a result of the subordination
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provisions of the Indenture would be greater than such payments otherwise would
have been as a result of any obligation of such holders of such Debt to pay
amounts over to the obligees on such trade accounts payable or accrued
liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject, and (v) any other debt
securities issued pursuant to the Indenture.
The Indenture places no limitation on the amount of Senior Debt that may be
incurred by the Corporation. The Corporation expects from time to time to incur
additional indebtedness and other obligations constituting Senior Debt.
The Indenture provides that the foregoing subordination provisions, insofar
as they relate to any particular issue of Junior Subordinated Debentures, may be
changed prior to such issuance. Any such change would be described in the
applicable Prospectus Supplement.
TRUST EXPENSES
Pursuant to the Indenture, the Corporation as borrower, has agreed to pay
all debts and other obligations (other than with respect to the Preferred
Securities) and all costs and expenses of each Issuer (including costs and
expenses relating to the organization of each Issuer, the fees and expenses of
the Issuer Trustees and the cost and expenses relating to the operation of each
Issuer) and to pay any and all taxes and all costs and expenses with respect
thereto (other than United States withholding taxes) to which each Issuer might
become subject.
GOVERNING LAW
The Indenture is, and the Junior Subordinated Debentures will be, governed
by and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In that
event, concurrently with the issuance of each Issuer's Preferred Securities,
such Issuer will invest the proceeds thereof and the consideration paid by the
Corporation for the Common Securities of such Issuer in such series of
Corresponding Junior Subordinated Debentures issued by the Corporation to such
Issuer. Each series of Corresponding Junior Subordinated Debentures will be in
the principal amount equal to the aggregate stated Liquidation Amount of the
Related Preferred Securities and the Common Securities of such Issuer and will
rank pari passu with all other series of Junior Subordinated Debentures. Holders
of the Related Preferred Securities for a series of Corresponding Junior
Subordinated Debentures will have the rights, in connection with modifications
to the Indenture or upon occurrence of Debenture Events of Default, as described
under "-- Modification of Indenture", " -- Debenture Events of Default" and
"-- Enforcement of Certain Rights by Holders of Preferred Securities," unless
provided otherwise in the Prospectus Supplement for such Related Preferred
Securities.
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Unless otherwise specified in the applicable Prospectus Supplement, if a
Tax Event in respect of an Issuer shall occur and be continuing, the Corporation
may, at its option and subject to prior approval of the Federal Reserve if then
so required under applicable capital guidelines or policies, redeem the
Corresponding Junior Subordinated Debentures at any time within 90 days of the
occurrence of such Tax Event, in whole but not in part, subject to the
provisions of the Indenture and whether or not such Corresponding Junior
Subordinated Debentures are then otherwise redeemable at the option of the
Corporation. The redemption price for any Corresponding Junior Subordinated
Debentures shall be equal to 100% of the principal amount of such Corresponding
Junior Subordinated Debentures then outstanding plus accrued and unpaid interest
to the date fixed for redemption. For so long as the applicable Issuer is the
holder of all the outstanding Corresponding Junior Subordinated Debentures of
such series, the proceeds of any such redemption will be used by the Issuer to
redeem the corresponding Trust Securities in accordance with their terms. The
Corporation may not redeem a series of Corresponding Junior Subordinated
Debentures in part unless all accrued and unpaid interest has been paid in full
on all outstanding Corresponding Junior Subordinated Debentures of such series
for all interest periods terminating on or prior to the Redemption Date.
The Corporation will covenant, as to each series of Corresponding Junior
Subordinated Debentures, (i) to maintain directly or indirectly 100% ownership
of the Common Securities of the Issuer to which such Corresponding Junior
Subordinated Debentures have been issued, provided that certain successors which
are permitted pursuant to the Indenture may succeed to the Corporation's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind up
or liquidate any Issuer, except (a) in connection with a distribution of
Corresponding Junior Subordinated Debentures to the holders of the Preferred
Securities in exchange therefor upon liquidation of such Issuer, or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the related Trust Agreement, in either such case, if so specified in the
applicable Prospectus Supplement upon prior approval of the Federal Reserve if
then so required under applicable capital guidelines or policies, and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
related Trust Agreement, to cause such Issuer to remain classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Issuer, the Issuer
Trustees on behalf of such Issuer will issue the Preferred Securities and the
Common Securities. The Preferred Securities of a particular issue will represent
beneficial ownership interests in the Issuer and the holders thereof will be
entitled to a preference in certain circumstances with respect to Distributions
and amounts payable on redemption or liquidation over the Common Securities of
such Issuer, as well as other benefits as described in the corresponding Trust
Agreement. This summary of certain provisions of the Preferred Securities and
each Trust Agreement, which summarizes the material terms thereof, does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of each Trust Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act, to each of
which reference is hereby made. Wherever particular defined terms of a Trust
Agreement (as amended or supplemented from time to time) are referred to herein
or in a Prospectus Supplement, such defined terms are incorporated herein or
therein by reference. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each of the Issuers is a legally separate entity and the assets of one are not
available to satisfy the obligations of any of the others or of any other
statutory business trust whose Common Securities are owned by the Corporation.
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GENERAL
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer except
as described under "-- Subordination of Common Securities." Legal title to the
Corresponding Junior Subordinated Debentures will be held by the Property
Trustee in trust for the benefit of the holders of the related Preferred
Securities and Common Securities. Each Guarantee Agreement executed by the
Corporation for the benefit of the holders of an Issuer's Trust Securities (the
"Guarantee") will be a guarantee on a subordinated basis with respect to the
related Trust Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of such Trust Securities when the
related Issuer does not have funds on hand available to make such payments. See
"Description of Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. In the event that any date
on which Distributions are payable on the Preferred Securities is not a Business
Day (as defined below), payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect to any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in either case with the same
force and effect as if made on such date (each date on which Distributions are
payable in accordance with the foregoing, a "Distribution Date"). A "Business
Day" shall mean any day other than a Saturday or a Sunday, or a day on which
banking institutions in The City of New York are authorized or required by law
or executive order to remain closed or a day on which the corporate trust office
of the Property Trustee or the Debenture Trustee is closed for business.
Each Issuer's Preferred Securities represent beneficial ownership interests
in the applicable Issuer, and the Distributions on each Preferred Security will
be payable at a rate specified in the applicable Prospectus Supplement for such
Preferred Securities. The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months unless otherwise
specified in the applicable Prospectus Supplement. Distributions to which
holders of Preferred Securities are entitled will accumulate additional
Distributions at the rate per annum if and as specified in the applicable
Prospectus Supplement. The term "Distributions" as used herein includes any such
additional Distributions unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Corporation has
the right under the Indenture, pursuant to which it will issue the Corresponding
Junior Subordinated Debentures, to defer the payment of interest at any time or
from time to time on any series of the Corresponding Junior Subordinated
Debentures for up to such number of consecutive interest payment periods which
will be specified in such Prospectus Supplement relating to such series (each,
an "Extension Period"), provided, that no Extension Period may extend beyond the
Stated Maturity of the Corresponding Junior Subordinated Debentures. As a
consequence of any such deferral, Distributions on the Related Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the Issuer of such Preferred
Securities during any such Extension Period. During such Extension Period, the
Corporation may not, and may not permit any subsidiary of the Corporation to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Corporation's
capital stock, (ii) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Corporation that
rank pari passu with or junior in interest to the Corresponding Junior
Subordinated Debentures or (iii) make any guarantee payments with respect to any
guarantee by the Corporation of debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in interest to the
Corresponding Junior Subordinated
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Debentures (other than (a) dividends or distributions in capital stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the redemption or repurchase
of any such rights pursuant thereto, (c) payments under the Guarantee with
respect to such Preferred Securities and (d) purchases of common stock related
to the issuance of common stock or rights under any of the Corporation's benefit
plans for its directors, officers or employees, related to the issuance of
common stock or rights under a dividend reinvestment and stock purchase plan, or
related to the issuance of common stock (or securities convertible into or
exchangeable for common stock) as consideration in an acquisition transaction
that was entered into prior to the commencement of such Extension Period).
The revenue of each Issuer available for distribution to holders of its
Preferred Securities will be limited to payments under the Corresponding Junior
Subordinated Debentures in which the Issuer will invest the proceeds from the
issuance and sale of its Trust Securities. See "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures." If the
Corporation does not make interest payments on such Corresponding Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Related Preferred Securities. The payment of
Distributions (if and to the extent the Issuer has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by the Corporation on the basis set forth herein under "Description
of Guarantees."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day prior to the relevant Distribution Date. Subject to any
applicable laws and regulations and the provisions of the applicable Trust
Agreement, each such payment will be made as described under "Book-Entry
Issuance." In the event any Preferred Securities are not in book-entry form, the
relevant record date for such Preferred Securities shall be the date at least 15
days prior to the relevant Distribution Date, as specified in the applicable
Prospectus Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Corresponding Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days notice, at a redemption price (the "Redemption Price")
equal to the aggregate Liquidation Amount of such Trust Securities plus
accumulated but unpaid Distributions thereon to the date of redemption (the
"Redemption Date") and the related amount of the premium, if any, paid by the
Corporation upon the concurrent redemption of such Corresponding Junior
Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Redemption." If less than all of any series of Corresponding
Junior Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the Related Preferred Securities and the Common
Securities. The amount of premium, if any, paid by the Corporation upon the
redemption of all or any part of any series of any Corresponding Junior
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall be
allocated to the redemption pro rata of the Related Preferred Securities and the
Common Securities.
The Corporation will have the right to redeem any series of Corresponding
Junior Subordinated Debentures (i) on or after such date as may be specified in
the applicable Prospectus Supplement, in whole at any time or in part from time
to time, or (ii) at any time, in whole (but not in part), upon the occurrence of
a Tax Event or Capital Treatment Event, in either case subject to receipt of
prior approval by the Federal Reserve if then required under applicable capital
guidelines or policies.
Distribution of Corresponding Junior Subordinated Debentures. Subject to
the Corporation's having received prior approval of the Federal Reserve to do so
if then required under applicable
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capital guidelines or policies, the Corporation has the right at any time to
terminate any Issuer and, after satisfaction of the liabilities of creditors of
such Issuer as provided by applicable law, cause such Corresponding Junior
Subordinated Debentures in respect of the Related Preferred Securities and
Common Securities issued by such Issuer to be distributed to the holders of such
Related Preferred Securities and Common Securities in exchange therefor upon
liquidation of such Issuer.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Preferred Securities (i) such
series of Preferred Securities will no longer be deemed to be outstanding, (ii)
the depositary or its nominee, as the record holder of such series of Preferred
Securities, will receive a registered global certificate or certificates
representing the Corresponding Junior Subordinated Debentures to be delivered
upon such distribution and (iii) any certificates representing such series of
Preferred Securities not held by The Depository Trust Company ("DTC") or its
nominee will be deemed to represent the Corresponding Junior Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount of
such series of Preferred Securities, and bearing accrued and unpaid interest in
an amount equal to the accrued and unpaid Distributions on such series of
Preferred Securities until such certificates are presented to the Administrative
Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of an Issuer were to occur. Accordingly, the Preferred Securities
that an investor may purchase, or the Corresponding Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of an
Issuer, may trade at a discount to the price that the investor paid to purchase
the Preferred Securities offered hereby.
Tax Event or Capital Treatment Event Redemption. If a Tax Event or Capital
Treatment Event in respect of a series of Preferred Securities and Common
Securities shall occur and be continuing, the Corporation has the right to
redeem the Corresponding Junior Subordinated Debentures in whole (but not in
part) and thereby cause a mandatory redemption of such Preferred Securities and
Common Securities in whole (but not in part) at the Redemption Price within 90
days following the occurrence of such Tax Event or Capital Treatment Event. In
the event a Tax Event or Capital Treatment Event in respect of a series of
Preferred Securities and Common Securities has occurred and is continuing and
the Corporation does not elect to redeem the Corresponding Junior Subordinated
Debentures and thereby cause a mandatory redemption of such Preferred Securities
and Common Securities or to terminate the related Issuer and cause the
Corresponding Junior Subordinated Debentures to be distributed to holders of
such Preferred Securities and Common Securities in exchange therefor upon
liquidation of the Issuer as described above, such Preferred Securities will
remain outstanding.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to that portion of the principal amount of Corresponding
Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Indenture, the proceeds of which will be used to pay the Redemption
Price of such Trust Securities, and (ii) with respect to a distribution of
Corresponding Junior Subordinated Debentures to holders of any series of Trust
Securities in exchange therefor in connection with a dissolution or liquidation
of the related Issuer, Corresponding Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Corresponding Junior Subordinated Debentures would be
distributed.
"Liquidation Amount" means the stated amount per Trust Security as set
forth in the applicable Prospectus Supplement.
"Tax Event" with respect to an Issuer means the receipt by the Issuer of a
series of Preferred Securities of an opinion of counsel experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced proposed change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof
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or therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which proposed change, pronouncement or
decision is announced on or after the date of issuance of such Preferred
Securities under the Trust Agreement, there is more than an insubstantial risk
that (i) such Issuer is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the corresponding series of Corresponding Junior Subordinated
Debentures, (ii) interest payable by the Corporation on such series of
Corresponding Junior Subordinated Debentures is not, or within 90 days of the
date of such opinion, will not be, deductible by the Corporation, in whole or in
part, for United States federal income tax purposes, or (iii) such Issuer is, or
will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Corresponding Junior Subordinated Debentures. Redemptions of
the Preferred Securities shall be made and the Redemption Price shall be payable
on each Redemption Date only to the extent that the related Issuer has funds on
hand available for the payment of such Redemption Price. See also
"-- Subordination of Common Securities."
If an Issuer gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, the Property Trustee will deposit irrevocably
with DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price to the
holders of such Preferred Securities. See "Book-Entry Issuance." If such
Preferred Securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for such Preferred Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of such Preferred Securities so called for redemption will cease, except
the right of the holders of such Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price, and such Preferred
Securities will cease to be outstanding. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not paid
either by the Issuer or by the Corporation pursuant to the relevant Guarantee as
described under "Description of Guarantees," Distributions on such Preferred
Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Issuer for such Preferred
Securities to the date such Redemption Price is actually paid, in which case the
actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
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Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debentures to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the relevant record
date, which shall be one Business Day prior to the relevant Redemption Date or
liquidation date, as applicable; provided, however, that in the event that any
Preferred Securities are not in book-entry form, the relevant record date for
such Preferred Securities shall be a date at least 15 days prior to the
Redemption Date or liquidation date, as applicable, as specified in the
applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities issued
by an Issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property Trustee
from the outstanding Preferred Securities not previously called for redemption,
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions of the Liquidation
Amount of Preferred Securities in such minimum amounts as shall be specified in
the applicable Prospectus Supplement. The Property Trustee shall promptly notify
the trust registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
each Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Preferred Securities which has been or is
to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Issuer's
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the Issuer's outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the Issuer's
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Issuer's Preferred Securities then due and payable.
In the case of any event of default under the applicable Trust Agreement
resulting from a Debenture Event of Default, the Corporation as holder of such
Issuer's Common Securities will be deemed to have waived any right to act with
respect to any such event of default under the applicable Trust Agreement until
the effect of all such events of default with respect to such Preferred
Securities have been cured, waived or otherwise eliminated. Until all events of
default under the applicable Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the holders of such Preferred Securities
and not on behalf of the Corporation as holder of the Issuer's Common
Securities, and only the holders of such Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
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LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each Issuer shall automatically terminate
upon expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Corresponding Junior Subordinated
Debentures to the holders of its Trust Securities, if the Corporation, as
Depositor, has given written direction to the Property Trustee to terminate such
Issuer (subject to the Corporation having received prior approval of the Federal
Reserve if so required under applicable capital guidelines or policies); (iii)
redemption of all of the Issuer's Preferred Securities as described under
"-- Redemption or Exchange -- Mandatory Redemption"; and (iv) the entry of an
order for the dissolution of the Issuer by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of such Issuer as provided by applicable law, to the
holders of such Trust Securities in exchange therefor a Like Amount of the
Corresponding Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Issuer available
for distribution to holders, after satisfaction of liabilities to creditors of
such Issuer as provided by applicable law, an amount equal to, in the case of
holders of Preferred Securities, the aggregate Liquidation Amount plus accrued
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because such Issuer has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by such
Issuer on its Preferred Securities shall be paid on a pro rata basis. The
holder(s) of such Issuer's Common Securities will be entitled to receive
distributions upon any such liquidation pro rata with the holders of its
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over the
Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
each Trust Agreement (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 90 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Trustees by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Preferred Securities of the applicable Issuer, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under such
Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Corporation to
appoint a successor Property Trustee within 90 days thereof.
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Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's Preferred
Securities, the Administrative Trustees and the Corporation, as Depositor,
unless such Event of Default shall have been cured or waived. The Corporation,
as Depositor, and the Administrative Trustees are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under each Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities as
described above. See "-- Subordination of Common Securities" and "-- Liquidation
Distribution Upon Termination." The existence of an Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Corporation, as the holder of the
Common Securities, and the Administrative Trustees shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case a Debenture
Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under each Trust Agreement,
provided such Person shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUERS
An Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below or as otherwise described in the Trust Agreement. An Issuer may,
at the request of the Corporation, with the consent of the Administrative
Trustees and without the consent of the holders of the Preferred Securities,
merge with or into, consolidate, amalgamate, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an entirety
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to, a trust organized as such under the laws of any State; provided, that (i)
such successor entity either (a) expressly assumes all of the obligations of
such Issuer with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Preferred Securities in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Corporation expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the
Corresponding Junior Subordinated Debentures, (iii) the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Preferred Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities to be downgraded by any nationally recognized statistical
rating organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose substantially identical to that of the Issuer, (vii) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
the Corporation has received an opinion from independent counsel to the Issuer
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Issuer nor such successor entity will be required
to register as an investment company under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and (viii) the Corporation or any
permitted successor or assignee owns all of the Common Securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, an Issuer shall not, except with the consent of
holders of 100% in Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease would cause the Issuer or the successor entity to be
classified as other than a grantor trust for United States federal income tax
purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of Guarantees -- Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
Each Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under such Trust Agreement, which shall not be inconsistent
with the other provisions of such Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of such Trust Agreement to such extent as shall be
necessary to ensure that the Issuer will be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are outstanding or to ensure that the Issuer will not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that in the case of either clause (i) or clause (ii), such action shall not
adversely affect in any material respect the interests of any holder of
Preferred Securities, and any such amendments of such Trust Agreement shall
become effective when notice thereof is given to the holders of Trust
Securities. Each Trust
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Agreement may be amended by the Issuer Trustees and the Corporation with (i) the
consent of holders representing not less than a majority (based upon Liquidation
Amounts) of the outstanding Trust Securities, and (ii) receipt by the Issuer
Trustees of an opinion of counsel to the effect that such amendment or the
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not affect the Issuer's status as a grantor trust for United
States federal income tax purposes or the Issuer's exemption from status as an
"investment company" under the Investment Company Act, provided that without the
consent of each holder of Trust Securities, such Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as any Corresponding Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on the Property Trustee with
respect to such Corresponding Junior Subordinated Debentures, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the corresponding
Junior Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or such Corresponding
Junior Subordinated Debentures, where such consent shall be required, without,
in each case, obtaining the prior approval of the holders of a majority in
aggregate Liquidation Amount of all outstanding Preferred Securities; provided,
however, that where a consent under the Indenture would require the consent of
each holder of Corresponding Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior consent of
each holder of the corresponding Preferred Securities. The Issuer Trustees shall
not revoke any action previously authorized or approved by a vote of the holders
of the Preferred Securities except by subsequent vote of the holders of the
Preferred Securities. The Property Trustee shall notify each holder of Preferred
Securities of any notice of default with respect to the Corresponding Junior
Subordinated Debentures. In addition to obtaining the foregoing approvals of the
holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Issuer Trustees shall obtain an opinion of counsel experienced in
such matters to the effect that such action would not cause the Issuer to be
classified as other than a grantor trust for United States federal income tax
purposes.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each holder of record of Preferred Securities in the manner set forth in each
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for an Issuer to redeem and cancel its Preferred Securities in accordance with
the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited with,
or on behalf of, the Depositary, which unless otherwise indicated in the
applicable Prospectus Supplement for such series will be DTC. Global Preferred
Securities may be issued only in fully registered form and in either temporary
or
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permanent form. Unless and until it is exchanged in whole or in part for the
individual Preferred Securities represented thereby, a Global Preferred Security
may not be transferred except as a whole by the Depositary for such Global
Preferred Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series
of Preferred Securities will be described in the Prospectus Supplement relating
to such series. The Corporation anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-entry
registration and transfer system, the respective aggregate Liquidation Amounts
of the individual Preferred Securities represented by such Global Preferred
Securities to the accounts of Participants, which may include Euroclear and
Cedel. Such accounts shall be designated by the dealers, underwriters or agents
with respect to such Preferred Securities or by the Corporation if such
Preferred Securities are offered and sold directly by the Corporation. Ownership
of beneficial interests in a Global Preferred Security will be limited to
Participants or persons that may hold interests through Participants including
Euroclear and Cedel. Ownership of beneficial interests in such Global Preferred
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Preferred
Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Preferred Securities represented by such Global Preferred Security for all
purposes under the Indenture governing such Preferred Securities. Except as
provided below, owners of beneficial interests in a Global Preferred Security
will not be entitled to have any of the individual Preferred Securities of the
series represented by such Global Preferred Security registered in their names,
will not receive or be entitled to receive physical delivery of any such
Preferred Securities of such series in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Corporation, the
Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
Redemption Price, premium or Distributions in respect of a permanent Global
Preferred Security representing any of such Preferred Securities, immediately
will credit Participants' accounts with payments in amounts proportionate to
their respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security for such Preferred Securities as shown on the records
of such Depositary or its nominee. The Corporation also expects that payments by
Participants to owners of beneficial interests in such Global Preferred Security
held through such Participants will be governed by standing instructions
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and customary practices, as is now the case with securities held for the
accounts of customers in bearer form or registered in "street name." Such
payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling, unable
or ineligible to continue as depositary and a successor depositary is not
appointed by the Issuer within 90 days, the Issuer will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security representing such series of Preferred Securities. In addition, the
Issuer may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities,
determine not to have any Preferred Securities of such series represented by one
or more Global Preferred Securities and, in such event, will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security or Securities representing such series of Preferred Securities.
Further, if the Issuer so specifies with respect to the Preferred Securities of
a series, an owner of a beneficial interest in a Global Preferred Security
representing Preferred Securities of such series may, on terms acceptable to the
Issuer, the Property Trustee and the Depositary for such Global Preferred
Security, receive individual Preferred Securities of such series in exchange for
such beneficial interests, subject to any limitations described in the
Prospectus Supplement relating to such Preferred Securities. In any such
instance, an owner of a beneficial interest in a Global Preferred Security will
be entitled to physical delivery of individual Preferred Securities of the
series represented by such Global Preferred Security equal in principal amount
to such beneficial interest and to have such Preferred Securities registered in
its name.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Issuer's Preferred Securities are not
held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Corporation. In the event that the Property Trustee shall no longer be
the Paying Agent, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the Administrative Trustees and
the Corporation) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuers will not be required to register or cause to be registered
the transfer of their Preferred Securities after such Preferred Securities have
been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the powers vested in
it by the applicable Trust Agreement at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Event of
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Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the applicable Trust Agreement or is unsure of the application of any provision
of the applicable Trust Agreement, and the matter is not one on which holders of
Preferred Securities are entitled under such Trust Agreement to vote, then the
Property Trustee shall take such action as is directed by the Corporation and if
not so directed, shall take such action as it deems advisable and in the best
interests of the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuers in such a way that no Issuer will be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as other than a grantor trust for United
States federal income tax purposes and so that the Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the Corporation for
United States federal income tax purposes. In this connection, the Corporation
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of each Issuer or
each Trust Agreement, that the Corporation and the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer may borrow money or issue debt or mortgage or pledge any of its
assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred Securities
and the Junior Subordinated Debentures, unless otherwise referred to in the
Prospectus Supplement relating to an offering of Preferred Securities or Junior
Subordinated Debentures. The Preferred Securities and the Junior Subordinated
Debentures will be issued only as fully-registered securities registered in the
name of Cede & Co. (DTC's nominee). One or more fully-registered global
certificates will be issued for the Preferred Securities of each Issuer and the
Junior Subordinated Debentures, representing in the aggregate the total number
of such Issuer's Preferred Securities or aggregate principal balance of Junior
Subordinated Debentures, respectively, and will be deposited with the Property
Trustee as custodian for DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated Debentures
on DTC's records. The ownership interest of each
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actual purchaser of each Preferred Security and each Junior Subordinated
Debenture ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records, including Euroclear and Cedel. Beneficial Owners
will not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which the Beneficial Owners
purchased Preferred Securities or Junior Subordinated Debentures. Transfers of
ownership interests in the Preferred Securities or Junior Subordinated
Debentures are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred Securities or
Junior Subordinated Debentures, except in the event that use of the book-entry
system for the Preferred Securities of such Issuer or Junior Subordinated
Debentures is discontinued.
Transfers between Participants will be effected in accordance with DTC's
procedures and will be settled in same-day funds. Transfers between participants
in Euroclear and Cedel will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
Cross-market transfers between Participants, on the one hand, and Euroclear
participants or Cedel participants, on the other hand, will be effected in DTC
in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may
be, by its respective depositary; however, such cross-market transactions will
require delivery of instructions to Euroclear or Cedel, as the case may be, by
the counterparty in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system. Euroclear or
Cedel, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the Preferred Securities or Junior Subordinated Debentures in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Cedel participants may
not deliver instructions directly to the depositaries for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Preferred Security or Junior
Subordinated Debenture from a Participant in DTC will be credited, and any such
crediting will be reported to the relevant Euroclear participant or Cedel
participant, during the securities settlement processing day (which must be a
business day for Euroclear and Cedel, as the case may be) immediately following
the DTC settlement date. Cash received in Euroclear or Cedel as a result of
sales of interests in a Preferred Security or Junior Subordinated Debenture by
or through a Euroclear or Cedel participant to a Participant in DTC will be
received with value on the DTC settlement date but will be available in the
relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following the DTC settlement date.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
or Junior Subordinated Debentures are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all of
an Issuer's Preferred Securities or
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the Junior Subordinated Debentures are being redeemed, DTC's current practice is
to determine by lot the amount of the interest of each Direct Participant to be
redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Preferred Securities or Junior Subordinated Debentures. Under its usual
procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts such Preferred Securities or Junior Subordinated Debentures are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, the relevant Trustee, the Issuer thereof or the
Corporation, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of Distributions to DTC is the responsibility
of the relevant Trustee, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursements of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities or the Junior Subordinated Debentures
at any time by giving reasonable notice to the relevant Trustee and the
Corporation. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Corporation, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through DTC. In any such event,
definitive certificates for such Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and the Corporation believe to
be accurate, but the Issuers and the Corporation assume no responsibility for
the accuracy thereof. Neither the Issuers nor the Corporation has any
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
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DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Corporation concurrently
with the issuance by each Issuer of its Preferred Securities for the benefit of
the holders from time to time of such Preferred Securities and Common
Securities. The Bank of New York will act as indenture trustee ("Guarantee
Trustee") under each Guarantee for the purposes of compliance with the Trust
Indenture Act and each Guarantee will be qualified as an indenture under the
Trust Indenture Act. This summary of certain provisions of the Guarantees, which
summarizes the material terms thereof, does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the provisions
of each Guarantee, including the definitions therein of certain terms, and the
Trust Indenture Act, to each of which reference is hereby made. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Reference in this summary to Preferred Securities
means that Issuer's Preferred Securities to which a Guarantee relates. The
Guarantee Trustee will hold each Guarantee for the benefit of the holders of the
related Issuer's Preferred Securities and Common Securities.
GENERAL
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Trust Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that such Issuer may have or assert
other than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of the related
Issuer (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on such Preferred
Securities, to the extent that such Issuer has funds on hand available therefor
at such time, (ii) the Redemption Price with respect to any Preferred Securities
called for redemption, to the extent that such Issuer has funds on hand
available therefor at such time, or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of such Issuer (unless the Corresponding
Junior Subordinated Debentures are distributed to holders of such Preferred
Securities in exchange therefor), the lesser of (a) the Liquidation Distribution
and (b) the amount of assets of such Issuer remaining available for distribution
to holders of Trust Securities after satisfaction of liabilities to creditors of
such Issuer as required by applicable law. The Corporation's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by the Corporation to the holders of the applicable Trust Securities or by
causing the Issuer to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Issuer's obligations under the Trust Securities, but will apply only
to the extent that such related Issuer has funds sufficient to make such
payments, and is not a guarantee of collection.
If the Corporation does not make interest payments on the Corresponding
Junior Subordinated Debentures held by the Issuer, the Issuer will not be able
to pay Distributions on the Preferred Securities and will not have funds legally
available therefor. Each Guarantee will rank subordinate and junior in right of
payment to all Senior Debt of the Corporation. See "-- Status of the
Guarantees." Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary, upon
such subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the Guarantees will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and claimants should look only to the assets of the
Corporation for payments thereunder. Except as otherwise provided in the
applicable Prospectus Supplement, the Guarantees do not limit the incurrence or
issuance of other secured or unsecured debt of the Corporation, including Senior
Debt, whether under the Indenture, any other existing indenture or any other
indenture that the Corporation may enter into in the future or otherwise.
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The Corporation has, through the applicable Guarantee, the applicable Trust
Agreement, the applicable series of Corresponding Junior Subordinated Debentures
and the Indenture, taken together, fully, irrevocably and unconditionally
guaranteed all of the Issuer's obligations under the Preferred Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Issuer's obligations under the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures and the Guarantees."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior Debt of
the Corporation in the same manner as the Junior Subordinated Debentures.
Each Guarantee will rank pari passu with all other Guarantees issued by the
Corporation. Each Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the related Trust
Securities. Each Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer or upon
distribution to the holders of the Trust Securities of the Corresponding Junior
Subordinated Debentures. None of the Guarantees places a limitation on the
amount of additional Senior Debt that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional indebtedness
constituting Senior Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Trust Securities (in which case no vote
will be required), no Guarantee may be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of such
outstanding Trust Securities. The manner of obtaining any such approval will be
as set forth under "Description of Preferred Securities -- Voting Rights;
Amendment of Each Trust Agreement." All guarantees and agreements contained in
each Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the related Trust Securities then outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
related Trust Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the Trust Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under such Guarantee
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of any Guarantee, undertakes to
perform only such duties as are specifically set forth in each Guarantee and,
after default with respect to any Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any Trust Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Trust Securities, upon full
payment of the amounts payable upon liquidation of the related Issuer or upon
distribution of Corresponding Junior Subordinated Debentures to the holders of
the related Trust Securities in exchange therefor. Each Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of the related Trust Securities must restore payment of any sums paid
under such Trust Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions and other amounts) are irrevocably guaranteed by the Corporation
as and to the extent set forth under "Description of Guarantees." Taken
together, the Corporation's obligations under each series of Corresponding
Junior Subordinated Debentures, the Indenture, the related Trust Agreement and
the related Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of Distributions and other amounts due on
the Related Preferred Securities. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the Related Preferred Securities. If and to the
extent that the Corporation does not make payments on any series of
Corresponding Junior Subordinated Debentures, such Issuer will not pay
Distributions or other amounts due on the Related Preferred Securities. The
Guarantees do not cover payment of Distributions when the related Issuer does
not have sufficient funds to pay such Distributions. In such event, the remedy
of a holder of a series of Preferred Securities is to institute a legal
proceeding directly against the Corporation pursuant to the terms of the
Indenture for enforcement of payment of amounts equal to such Distributions to
such holder. The obligations of the Corporation under each Guarantee are
subordinate and junior in right of payment to all Senior Debt of the
Corporation.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Subordinated Debentures, such payments will
be sufficient to cover Distribu-
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tions and other payments due on the Related Preferred Securities, primarily
because (i) the aggregate principal amount of each series of Corresponding
Junior Subordinated Debentures will be equal to the sum of the aggregate stated
Liquidation Amount of the Related Preferred Securities and related Common
Securities; (ii) the interest rate and interest and other payment dates on each
series of Corresponding Junior Subordinated Debentures will match the
Distribution rate and Distribution and other payment dates for the Related
Preferred Securities; (iii) the Corporation shall pay for all and any costs,
expenses and liabilities of such Issuer except the Issuer's obligations to
holders of its Preferred Securities under such Preferred Securities; and (iv)
each Trust Agreement further provides that the Issuer will not engage in any
activity that is not consistent with the limited purposes of such Issuer.
Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Corporation has theretofore made, or is concurrently
on the date of such payment making, a payment under the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any related Preferred Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the related
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related Issuer or any other person or entity.
A default or event of default under any Senior Debt of the Corporation
would not constitute a default or Event of Default under the Indenture. However,
in the event of payment defaults under, or acceleration of, Senior Debt of the
Corporation, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Corresponding Junior Subordinated
Debentures until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on any
series of Corresponding Junior Subordinated Debentures would constitute an Event
of Default under the Indenture.
LIMITED PURPOSE OF ISSUERS
Each Issuer's Preferred Securities evidence a beneficial interest in such
Issuer, and each Issuer exists for the sole purpose of issuing its Preferred
Securities and Common Securities and investing the proceeds thereof in
Corresponding Junior Subordinated Debentures. A principal difference between the
rights of a holder of a Preferred Security and a holder of a Corresponding
Junior Subordinated Debenture is that a holder of a Corresponding Junior
Subordinated Debenture is entitled to receive from the Corporation the principal
amount of and interest accrued on Corresponding Junior Subordinated Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions from such Issuer (or from the Corporation under the applicable
Guarantee) if and to the extent such Issuer has funds available for the payment
of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding up or liquidation of
any Issuer involving the liquidation of the Corresponding Junior Subordinated
Debentures, after satisfaction of liabilities to creditors of the Issuer as
required by applicable law, the holders of the related Preferred Securities will
be entitled to receive, out of the assets held by such Issuer, the Liquidation
Distribution in cash. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination." Upon any voluntary or involuntary liquidation or
bankruptcy of the Corporation, the Property Trustee, as holder of the
Corresponding Junior Subordinated Debentures, would be a subordinated creditor
of the Corporation, subordinated in right of payment to all Senior Debt as set
forth in the Indenture, but entitled to receive payment in full of principal and
interest, before any stockholders of the Corporation receive payments or
distributions. Since the Corporation is the guarantor under each Guarantee and
has agreed to pay for all costs, expenses and liabilities of each
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Issuer (other than the Issuer's obligations to the holders of its Preferred
Securities), the positions of a holder of such Preferred Securities and a holder
of such Corresponding Junior Subordinated Debentures relative to other creditors
and to stockholders of the Corporation in the event of liquidation or bankruptcy
of the Corporation are expected to be substantially the same.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures or the Preferred Securities may be sold
in a public offering to or through underwriters or dealers designated from time
to time. The Corporation and each Issuer may sell its Junior Subordinated
Debentures and Preferred Securities, respectively, as soon as practicable after
effectiveness of the Registration Statement of which this Prospectus forms a
part. The names of any underwriters or dealers involved in the sale of the
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is delivered, the amount or number of Junior Subordinated Debentures
and Preferred Securities to be purchased by any such underwriters and any
applicable commissions or discounts will be set forth in the applicable
Prospectus Supplement.
Underwriters may offer and sell Junior Subordinated Debentures or Preferred
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In connection with the sale of
Preferred Securities, underwriters may be deemed to have received compensation
from the Corporation and/or the applicable Issuer in the form of underwriting
discounts or commissions and may also receive commissions. Underwriters may sell
Junior Subordinated Debentures or Preferred Securities to or through dealers,
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters.
Any underwriting compensation paid by the Corporation and/or the applicable
Issuer to underwriters in connection with the offering of Junior Subordinated
Debentures or Preferred Securities, and any discounts, concessions or
commissions allowed by such underwriters to participating dealers, will be
described in an accompanying Prospectus Supplement. Underwriters and dealers
participating in the distribution of Junior Subordinated Debentures or Preferred
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of such Junior
Subordinated Debentures or Preferred Securities may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters and dealers
may be entitled, under agreement with the Corporation and the applicable Issuer,
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by the
Corporation for certain expenses.
In connection with the offering of the Preferred Securities of any Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set forth
in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set forth
in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, the Corporation and/or the applicable Issuer and/or any of their
affiliates in the ordinary course of business.
The Junior Subordinated Debentures and the Preferred Securities will be new
issues of securities and will have no established trading market. Any
underwriters to whom Junior Subordinated Debentures or Preferred Securities are
sold for public offering and sale may make a market in such Junior Subordinated
Debentures and Preferred Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. Such
Junior Subordinated Debentures or Preferred Securities may or may not be listed
on a national securities
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exchange or the Nasdaq National Market. No assurance can be given as to the
liquidity of or the existence of trading markets for any Junior Subordinated
Debentures or Preferred Securities.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed upon for the Corporation by Simpson Thacher &
Bartlett (a partnership which includes professional corporations), counsel to
the Corporation, and for the Issuers by Richards, Layton & Finger, special
Delaware counsel to the Issuers and the Corporation. The validity of the
Guarantees and the Junior Subordinated Debentures will be passed upon for the
Underwriters by Cravath, Swaine & Moore. Simpson Thacher & Bartlett and Cravath,
Swaine & Moore will rely on the opinion of Richards, Layton & Finger as to
matters of Delaware law.
EXPERTS
The consolidated financial statements and schedules of the Corporation and
subsidiaries appearing in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1996 have been audited by Price Waterhouse LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedules are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE SERIES E ISSUER OR BY THE
UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS, NOR ANY SALE MADE HEREUNDER AND THEREUNDER, SHALL
UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THE INFORMATION HEREIN OR
THEREIN IS CURRENT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR THE SERIES E ISSUER
SINCE THE DATE HEREOF.
------------------------------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Risk Factors S- 5
Chase Capital V S-11
The Chase Manhattan Corporation S-11
Consolidated Ratios of Earnings to Fixed
Charges S-12
Use of Proceeds S-13
Capitalization S-14
Accounting Treatment S-15
Certain Terms of Series E Capital
Securities S-15
Certain Terms of Series E Subordinated
Debentures S-18
Certain Terms of Series E Guarantee S-22
Certain Federal Income Tax Consequences S-23
Certain ERISA Considerations S-27
Underwriting S-30
Validity of Securities S-32
PROSPECTUS
Available Information 3
Incorporation of Certain Documents by
Reference 4
The Chase Manhattan Corporation 5
The Issuers 5
Use of Proceeds 6
Description of Junior Subordinated
Debentures 6
Description of Preferred Securities 18
Book-Entry Issuance 30
Description of Guarantees 33
Relationship Among the Preferred
Securities, the Corresponding Junior
Subordinated Debentures and the
Guarantees 35
Plan of Distribution 37
Validity of Securities 38
Experts 38
</TABLE>
Prospectus Supplement
CHASE CAPITAL V
$200,000,000
7.03% CAPITAL SECURITIES,
SERIES E
(LIQUIDATION AMOUNT $25
PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
[CHASE LOGO]
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
Dated January 28, 1998
