<PAGE> 1
As Filed Pursuant to Rule 424(b)(2)
Registration No. 333-56587;
333-37567
333-37567-03
Prospectus Supplement (To Prospectus Dated July 17, 1998)
[Chase Logo]
CHASE CAPITAL VI
$250,000,000
FLOATING RATE CAPITAL SECURITIES, SERIES F
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
The Floating Rate Capital Securities, Series F (the "Capital Securities"),
offered hereby represent beneficial ownership interests in Chase Capital VI, a
statutory business trust created under the laws of the State of Delaware (the
"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 Issuer (the "Common Securities"
(Continued on next page)
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SEE "RISK FACTORS" BEGINNING ON PAGE S-4 HEREOF FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE 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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INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE(1) COMMISSIONS(2) ISSUER(1)(3)(4)
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PER CAPITAL SECURITY $992.95 (3) $992.95
TOTAL $248,237,500 (3) $248,237,500
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</TABLE>
(1) Plus accrued distributions from August 5, 1998.
(2) The 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 Capital Securities
will be invested in the Subordinated Debentures, the Corporation has agreed
to pay to the Underwriters as compensation for their arranging the
investment therein of such proceeds $10.00 per Capital Security (or
$2,500,000 in the aggregate). See "Underwriting."
(4) Expenses of the offering, which are payable by the Corporation, are
estimated to be $100,000.
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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. ("CSI"), in connection with offers and sales related to
secondary market transactions in the 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 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
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 August 5, 1998, against payment therefor in immediately available funds.
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
The date of this Prospectus Supplement is July 29, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CAPITAL
SECURITIES, INCLUDING OVERALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT
COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
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and, collectively with the Capital Securities, the "Issuer Securities"). The
Bank of New York is the Property Trustee of the Issuer. The Issuer exists for
the sole purpose of issuing the Capital Securities and the Common Securities and
investing the proceeds thereof in approximately $257.7 million of Floating Rate
Junior Subordinated Deferrable Interest Debentures, Series F (the "Subordinated
Debentures"), to be issued by the Corporation. The Subordinated Debentures will
mature on August 1, 2028. The Capital Securities will have a preference under
certain circumstances with respect to cash distributions and amounts payable on
liquidation or redemption over the Common Securities. See "Description of
Preferred Securities -- Subordination of Common Securities" in the accompanying
Prospectus.
Holders of the Capital Securities will be entitled to receive cumulative
cash distributions accruing from August 5, 1998 and payable quarterly in arrears
on the 1st day of February, May, August and November of each year, commencing
November 1, 1998, at a variable annual rate equal to LIBOR (as defined herein)
plus .625% on the Liquidation Amount (as defined in the accompanying Prospectus)
of $1,000 per Capital Security ("Distributions"). Subject to certain exceptions,
as described herein, the Corporation has the right to defer payment of interest
on the 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 Subordinated Debentures. Upon the termination
of any such Extension Period and the payment of all interest then accrued and
unpaid (together with interest thereon at a variable annual rate equal to LIBOR
plus .625%, 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 Subordinated
Debentures are so deferred, Distributions on the 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 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"), the 7.34% Junior
Subordinated Deferrable Interest Debentures, Series D (the "Series D
Subordinated Debentures"), and the 7.03% Junior Subordinated Deferrable Interest
Debentures, Series E (the "Series E Subordinated Debentures; and collectively
with the Series A Subordinated Debentures, the Series B Subordinated Debentures,
the Series C Subordinated Debentures, and the Series D Subordinated Debentures,
the "Other Subordinated Debentures"), of the Corporation. During an Extension
Period, interest on the Subordinated Debentures will continue to accrue (and the
amount of Distributions to which holders of the Capital Securities are entitled
will accumulate), at a variable annual rate equal to LIBOR plus .625%,
compounded quarterly from the relevant payment date for such interest, and
holders of Capital Securities will be required to accrue interest income for
United States federal income tax purposes. See "Certain Terms of Subordinated
Debentures -- Option to Defer Interest Payments" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The 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
approximately $2,010.3 million of the Corporation's existing indebtedness
evidenced by the Other 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, National Association ("Chase
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(cover page continued)
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 Subordinated Debentures (and therefore the 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 Subordinated
Debentures. See "Description of Junior Subordinated Debentures -- Subordination"
in the accompanying Prospectus.
The Corporation has, through the Guarantee, the Trust Agreement, the
Subordinated Debentures and the Indenture (each as defined herein), taken
together, fully, irrevocably and unconditionally guaranteed all of the Issuer's
obligations under the 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 Guarantee guarantees the payment of Distributions and payments on
liquidation of the Issuer or redemption of the Capital Securities, but only in
each case to the extent of funds held by the Issuer, as described herein (the
"Guarantee"). See "Description of Guarantees" in the accompanying Prospectus. If
the Corporation does not make interest payments on the Subordinated Debentures
held by the Issuer, the Issuer will have insufficient funds to pay Distributions
on the Capital Securities. The Guarantee does not cover payment of Distributions
when the Issuer has insufficient funds to pay such Distributions. In such event,
a holder of 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 Guarantee are subordinate and junior in right of payment to all Senior
Debt of the Corporation.
The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Subordinated Debentures at their Stated Maturity or
earlier redemption. Subject to the Corporation having received prior approval of
the Federal Reserve to do so if then required under applicable capital
guidelines or policies, the Subordinated Debentures are redeemable prior to
their Stated Maturity at the option of the Corporation (i) on or after August 1,
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 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 a Capital Treatment Event. See "Certain Terms of Capital
Securities -- Redemption" and "Certain Terms of Subordinated
Debentures -- Redemption."
The Corporation will have the right at any time to terminate the 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 Capital Securities -- Liquidation of Issuer and Distribution
of Subordinated Debentures to Holders." In the event of the termination of the
Issuer, after satisfaction of liabilities to creditors of the Issuer as required
by applicable law, the holders of the Capital Securities will be entitled to
receive a Liquidation Amount of $1,000 per 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 Subordinated Debentures in exchange therefor,
subject to certain exceptions. See "Description of Preferred
Securities -- Liquidation Distribution Upon Termination" in the accompanying
Prospectus.
The 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 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,
Capital Securities in certificated form will not be issued in exchange for the
global certificates. See "Certain Terms of Capital Securities -- Registration of
Capital Securities."
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The information in this Prospectus Supplement supplements (and to the
extent inconsistent therewith, supersedes), 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 "Trust Agreement" means the Amended and Restated Trust Agreement
relating to the 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 Capital Securities. Each
of the other capitalized terms used in this Prospectus Supplement and not
otherwise defined in this Prospectus Supplement has the meaning set forth in the
accompanying Prospectus.
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RISK FACTORS
Prospective purchasers of the 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 Capital Securities may receive Subordinated
Debentures in exchange therefor upon liquidation of the Issuer, prospective
purchasers of Capital Securities are also making an investment decision with
regard to the Subordinated Debentures and should carefully review all the
information regarding the Subordinated Debentures contained herein.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBENTURES
The obligations of the Corporation under the Guarantee issued by the
Corporation for the benefit of the holders of Issuer Securities and under the
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 $2,010.3 million of the Corporation's existing indebtedness
evidenced by the Other 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 Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Subordinated Debentures should look only to the
assets of the Corporation for payments on the Subordinated Debentures. See "The
Chase Manhattan Corporation." None of the Indenture, the Guarantee or the 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 Issuer to pay amounts due on the Capital Securities is
solely dependent upon the Corporation's making payments on the Subordinated
Debentures as and when required.
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 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 Subordinated Debentures. As a consequence of any such
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deferral, quarterly Distributions on the Capital Securities by the Issuer will
also be deferred (and the amount of Distributions to which holders of the
Capital Securities are entitled will accumulate additional Distributions thereon
at a variable annual rate equal to LIBOR plus .625%, 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
Subordinated Debentures (including, without limitation, the Other 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
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 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 Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all interest then accrued
and unpaid (together with interest thereon at a variable annual rate equal to
LIBOR plus .625%, 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 Capital Securities -- Distributions" and
"Certain Terms of Subordinated Debentures -- Option to Defer Interest Payments."
Should an Extension Period occur, a holder of Capital Securities will be
required to accrue income (in the form of original issue discount) in respect of
its pro rata share of the Subordinated Debentures held by the Issuer for United
States federal income tax purposes. As a result, a holder of 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
Issuer if the holder disposes of the 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 Capital Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Subordinated Debentures. However, should the
Corporation elect to exercise such right in the future, the market price of the
Capital Securities is likely to be affected. A holder that disposes of its
Capital Securities during an Extension Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its Capital
Securities.
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 August 1, 2003), the Corporation has
the right, if certain conditions are met, to redeem the 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
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of the 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 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 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 decision or judicial decision or administrative action or other
official pronouncement interpreting or applying such laws or regulations, which
amendment or change is effective or which proposed change, pronouncement,
decision or action is announced on or after the date of issuance of the Capital
Securities under the Trust Agreement, there is more than an insubstantial risk
that (i) the 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 Subordinated Debentures, (ii) interest payable by the Corporation
on the 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 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
Subordinated Debentures which are no longer held by the 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 decision or judicial decision or administrative action
or other official pronouncement interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement, decision or action is announced on or after the date of issuance
of the Subordinated Debentures under the Indenture, there is more than an
insubstantial risk that interest payable by the Corporation on the 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").
Recently, a petition was filed in the United States Tax Court as a result
of a challenge by the Internal Revenue Service ("IRS") of the petitioner's
treatment as indebtedness of a loan issued in circumstances with similarities to
the issuance of the Subordinated Debentures. If this matter is in fact litigated
and the Tax Court were to sustain the IRS's position on this matter, such
judicial decision could constitute a Tax Event which could result in an early
redemption of the Capital Securities.
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 Capital Securities under the
Trust Agreement, there is more than an insubstantial risk that the Corporation
will not be entitled to treat an amount equal to the Liquidation Amount of the
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 CAPITAL SECURITIES FOR SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Issuer
and, after satisfaction of liabilities to creditors of the Issuer as required by
applicable law, cause the Subordinated Debentures to be distributed to the
holders of the Capital Securities in exchange therefor upon liquidation of the
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 Capital Securities -- Liquidation
of Issuer and Distribution of 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 Issuer is classified as a grantor trust for such
purposes, a distribution of the Subordinated Debentures upon a liquidation of
the Issuer should not be a taxable event to holders of the Capital Securities.
However, if a Tax Event were to occur which would cause the Issuer to be subject
to United States federal income tax with respect to income received or accrued
on the Subordinated Debentures, a distribution of the Subordinated Debentures by
the Issuer could be a taxable event to the Issuer and the holders of the Capital
Securities. See "Certain Federal Income Tax Consequences -- Distribution of
Subordinated Debentures to Holders of Capital Securities."
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
Subordinated Debentures that may be distributed in exchange for Capital
Securities upon liquidation of the Issuer. Accordingly, the Capital Securities
that an investor may purchase, whether pursuant to the offer made hereby or in
the secondary market, or the Subordinated Debentures that a holder of Capital
Securities may receive on liquidation of the Issuer, may trade at a discount to
the price that the investor paid to purchase the Capital Securities offered
hereby. As a result of the existence of the Corporation's right to defer
interest payments, the market price of the Capital Securities (which represent
beneficial ownership interests in the Issuer) may be more volatile than the
market prices of other securities that are not subject to such optional
deferrals. See "Certain Terms of Subordinated Debentures" and "Description of
Junior Subordinated Debentures -- Corresponding Junior Subordinated Debentures"
in the accompanying Prospectus.
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Capital Securities the
following payments, to the extent not paid by the Issuer: (i) any accumulated
and unpaid Distributions required to be paid on the Issuer Securities, to the
extent that the Issuer has funds on hand available therefor at such time, (ii)
the redemption price with respect to any Issuer Securities called for
redemption, to the extent that the Issuer has funds on hand available therefor
at such time, and (iii) upon a voluntary or involuntary dissolution, winding up
or liquidation of the Issuer (unless the Subordinated Debentures are distributed
to holders of the Issuer 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 Issuer has funds on hand available therefor at
such time, and (b) the amount of assets of the Issuer remaining available for
distribution to holders of the Issuer Securities after payment of creditors of
the Issuer as required by applicable law. The 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 Guarantee (the "Guarantee Trustee") for the purpose of compliance with the
Trust Indenture Act and will hold the Guarantee for the benefit of the holders
of the Issuer Securities. The Bank of New York will also act as Debenture
Trustee for the Subordinated Debentures and as Property Trustee under the
Indenture and The Bank of New York (Delaware) will act as Delaware Trustee under
the Trust Agreement.
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The Guarantee is subordinate as described under "-- Ranking of Subordinated
Obligations Under the Guarantee and the Subordinated Debentures."
The holders of not less than a majority in aggregate Liquidation Amount of
the Issuer Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of the Issuer
Securities may institute a legal proceeding directly against the Corporation to
enforce its rights under the Guarantee without first instituting a legal
proceeding against the 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 Subordinated Debentures, the Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Issuer
Securities or otherwise, and, in such event, holders of the Issuer Securities
would not be able to rely upon the 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 Subordinated Debentures on the applicable
payment date, then a holder of Issuer 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 Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Issuer 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 Issuer Securities in the Direct Action. Except as
described herein, holders of Issuer Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated
Debentures or assert directly any other rights in respect of the 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
Trust Agreement provides that each holder of Issuer Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities generally will have limited voting rights
relating only to the modification of the Capital Securities and the Guarantee
and the exercise of the Issuer's rights as holder of Subordinated Debentures and
the Guarantee. Holders of 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 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 Trust Agreement without the consent of holders of
Capital Securities to ensure that the Issuer will not be classified for United
States federal income tax purposes as an association or publicly traded
partnership subject to taxation as a corporation unless such action materially
and adversely affects the interests of such holders. See "Description of
Preferred Securities -- Voting Rights; Amendment of Trust Agreement" and
"-- Removal of Issuer Trustees" in the accompanying Prospectus.
TRADING CHARACTERISTICS OF CAPITAL SECURITIES
The Corporation does not intend to have the Capital Securities listed on
The New York Stock Exchange or any other securities exchange. Although the
Corporation has been advised that the Underwriters intend to make a market in
the Capital Securities, the Underwriters are not obligated to do so and may
discontinue market making at any time. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Capital Securities.
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CHASE CAPITAL VI
The 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 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 Issuer
exists for the exclusive purposes of (i) issuing and selling the Capital
Securities and Common Securities, (ii) using the proceeds from the sale of
Capital Securities and Common Securities to acquire 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 Issuer
Securities). Accordingly, the Subordinated Debentures will be the sole assets of
the Issuer, and payments under the Subordinated Debentures will be the sole
revenue of the Issuer. All of the Common Securities will be owned by the
Corporation. The Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Capital Securities, except that upon the
occurrence and continuance of an event of default under the Trust Agreement
resulting from an event of default under the Indenture, the rights of the
Corporation as holder of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Capital Securities. See
"Description of Preferred Securities -- Subordination of Common Securities" in
the accompanying Prospectus. The Corporation will acquire Common Securities in
an aggregate Liquidation Amount at least equal to 3% of the total capital of the
Issuer. The Issuer has a term of 55 years, but may terminate earlier as provided
in the Trust Agreement. The principal executive office of the 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 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. Through its subsidiaries the Corporation conducts domestic and
international financial services businesses. As of June 30, 1998, the
Corporation was the largest banking institution in the United States, with $367
billion in assets and $23 billion in stockholders' equity as of June 30, 1998.
The principal bank subsidiaries of the Corporation are the Bank,
headquartered in New York, Chase USA, headquartered in Delaware, and Chase
Texas, headquartered in Texas. The Corporation's principal non-bank subsidiary
is CSI, which is engaged in securities underwriting and dealing.
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." The merger 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 major business franchises. A brief
description of these business franchises is presented below.
Global Banking
Global Banking provides financing, advisory, sales and trading, trade
finance, asset management and private banking services. Clients include
corporations, institutions, governments and wealthy individuals located around
the world. Global Banking operates in more than 50 countries, including major
operations in all key international financial centers. Chase Texas (other than
its consumer and global services businesses) is also included in Global Banking.
Chase Technology Solutions
Chase Technology Solutions combines the Corporation's global services
businesses, information technology and operations, and electronic commerce
initiatives into a single group. Global services is a leading provider of
information and transaction services globally and includes custody, cash
management, trust and other fiduciary services.
National Consumer Services
National Consumer Services included, as of June 30, 1998, the
fourth-largest bank credit card issuer in the U.S., the third-largest originator
and servicer of residential mortgages in the U.S., and a leading provider of
auto financing and other consumer lending products. The 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. 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.
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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>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits..... 1.78 1.82 1.66 1.90 1.86 1.62
Including Interest on Deposits..... 1.39 1.43 1.32 1.41 1.42 1.31
Earnings to Combined Fixed Charges
and Preferred Stock Dividend
Requirements:
Excluding Interest on Deposits..... 1.75 1.77 1.60 1.82 1.76 1.52
Including Interest on Deposits..... 1.38 1.41 1.30 1.38 1.38 1.27
</TABLE>
For purposes of computing the 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 Capital Securities will be
invested by the Issuer in the Subordinated Debentures. The Corporation intends
that the proceeds from the sale of the 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 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 Subordinated Debentures, will provide the Corporation with a more
cost-effective means of obtaining capital for bank regulatory purposes than
other Tier 1 Capital alternatives currently available to it.
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CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of June 30, 1998 and as adjusted to give
effect to the consummation of the offering of the Capital Securities and the
issuance of the 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>
JUNE 30, 1998
-----------------------
AS
ACTUAL ADJUSTED
------ --------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C>
Total long-term debt................................ $14,451 $14,451
------- -------
Guaranteed Preferred Beneficial Interests in the
Corporation's Junior Subordinated Deferrable
Interest Debentures(a)............................ 1,940 2,190
Preferred Stock of Subsidiary(b).................... 550 550
------- -------
Stockholders' Equity
Preferred Stock................................... 1,168 1,168
Common Stock...................................... 882 882
Capital Surplus................................... 9,738 9,738
Retained Earnings................................. 12,211 12,211
Accumulated Other Comprehensive Income............ 113 113
Treasury Stock, At Cost........................... (1,502) (1,502)
------- -------
Total Stockholders' Equity..................... $22,610 $22,610
------- -------
Total Capitalization................................ $39,551 $39,801
======= =======
</TABLE>
- ---------------
(a) Includes the net proceeds from the issuance of (i) $600 million of
guaranteed preferred beneficial interests issued by Chase Capital I, (ii) $500
million issued by Chase Capital II, (iii) $300 million issued by Chase Capital
III, (iv) $350 million issued by Chase Capital IV, (v) $200 million issued by
Chase Capital V and (vi) the Capital Securities offered hereby. The net proceeds
of each such offering, together with the respective amounts paid by the
Corporation for the common securities of the respective issuers, were invested
(i) by Chase Capital I in approximately $618.6 million principal amount of
Series A Subordinated Debentures, which bear interest at the rate of 7.67% per
annum and will mature on December 1, 2026; (ii) by Chase Capital II in
approximately $515.5 million principal amount of Series B Subordinated
Debentures, which bear interest at the floating rate of LIBOR plus .50% per
annum and will mature on February 1, 2027; (iii) by Chase Capital III in
approximately $309.3 million principal amount of Series C Subordinated
Debentures, which bear interest at the floating rate of LIBOR plus .55% per
annum and will mature on March 1, 2027; (iv) by Chase Capital IV in
approximately $360.8 million principal amount of Series D Subordinated
Debentures, which bear interest at the rate of 7.34% per annum and will mature
on December 6, 2027; and (v) by Chase Capital V in approximately $206.2 million
principal amount of Series E Subordinated Debentures, which bear interest at the
rate of 7.03% per annum and will mature on March 31, 2028. The proceeds of the
offering of the Capital Securities will be invested by the Issuer in $257.7
million of Subordinated Debentures which will bear interest at the floating rate
of LIBOR plus .625% per annum and will mature on August 1, 2028. The Corporation
owns all of the common securities of each of Chase Capital I, Chase Capital II,
Chase Capital III, Chase Capital IV, Chase Capital V and, upon consummation of
the offering of the Capital Securities, the Issuer. The sole assets of each of
such trusts are (or, in the case of the Issuer, will be) the respective
debentures referred to above.
(b) 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.
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Issuer will
be included in the consolidated financial statements of the Corporation. The
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" and appropriate disclosures about the Capital Securities,
the Guarantee and the 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 Capital Securities as an
expense in the consolidated statements of income.
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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 the Corporation's Junior
Subordinated Deferrable Interest Debentures"; (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 and 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 CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Capital
Securities supplements, and to the extent inconsistent therewith supersedes, 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 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 Trust Agreement, to which
reference is hereby made. The form of the 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 Capital Securities represent beneficial ownership interests in the
Issuer, and Distributions on the Capital Securities will be payable at a
variable annual rate equal to LIBOR plus .625% on the stated Liquidation Amount
of $1,000, payable quarterly in arrears on February 1, May 1, August 1 and
November 1 of each year (each, a "Distribution Date"), to the holders of the
Capital Securities on the relevant record dates. The record dates for the
Capital Securities will be, for so long as the 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 Capital Securities
are not in book-entry form, the 15th day of the month preceding the month in
which the relevant Distribution Date occurs. Distributions will accumulate from
August 5, 1998. The first Distribution Date for the Capital Securities will be
November 1, 1998. The period beginning on and including August 5 and ending on
but excluding the first Distribution Date and each successive period beginning
on and including a Distribution Date and ending on but excluding the next
succeeding Distribution Date is herein called a "Distribution Period". The
amount of Distributions payable for any Distribution Period will be computed on
the basis of the actual number of days in such Distribution Period (which number
of actual days shall include the first day but exclude the last day of such
period) divided by 360. In the event that any Distribution Date would otherwise
fall on a day that is not a Business Day (as defined in the accompanying
Prospectus), such Distribution Date shall be postponed to the next day that is a
Business Day unless it would thereby fall in the next calendar month, in which
event the Distribution Date shall be brought forward to the immediately
preceding Business Day. See "Description of Preferred
Securities -- Distributions" in the accompanying Prospectus.
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the 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 Subordinated Debentures. As a consequence of any such deferral
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of interest payments by the Corporation, quarterly Distributions on the Capital
Securities by the Issuer will also be deferred during any such Extension Period.
Interest on the Subordinated Debentures will continue to accrue and, as a
result, Distributions to which holders of the Capital Securities are entitled
will accumulate additional Distributions thereon at a variable annual rate equal
to LIBOR plus .625%, 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 Subordinated Debentures (including the Other 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
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 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 Subordinated Debentures, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all interest then accrued and unpaid (together with interest
thereon at a variable annual rate equal to LIBOR plus .625%, 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 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
Subordinated Debentures.
DISTRIBUTION RATE
LIBOR and the amount of Distributions payable in respect of each
Distribution Period will be calculated by The Bank of New York, as Calculation
Agent, in the same manner as LIBOR and the interest payable in respect of each
Interest Period for the Subordinated Debentures, as described under "Certain
Terms of Subordinated Debentures -- Interest Rate."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the 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 Issuer 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 Issuer Securities (the "Redemption Price"), equal to the
aggregate Liquidation Amount of such Issuer Securities plus accumulated and
unpaid Distributions thereon to the date of redemption (the "Redemption Date").
See "Certain Terms of Subordinated Debentures -- Redemption." If less than all
of the Subordinated Debentures are to be repaid or redeemed on a
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<PAGE> 15
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption pro rata of the Capital Securities and the Common
Securities.
The Corporation has the right to redeem the Subordinated Debentures (i) on
or after August 1, 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
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 a Capital Treatment Event. A redemption of the
Subordinated Debentures would cause a mandatory redemption of Capital Securities
and Common Securities.
LIQUIDATION OF ISSUER AND DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS
The Corporation will have the right at any time to terminate the Issuer and
cause the Subordinated Debentures to be distributed to the holders of the
Capital Securities in exchange therefor upon liquidation of the 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 Issuer is treated as a grantor trust, a distribution
of Subordinated Debentures in exchange for the Capital Securities should not be
a taxable event to holders of the 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 Capital
Securities. See "Certain Federal Income Tax Consequences -- Distribution of
Subordinated Debentures to Holders of Capital Securities." If the Corporation
elects neither to redeem the Subordinated Debentures prior to maturity nor to
liquidate the Issuer and distribute the Subordinated Debentures to holders of
the Capital Securities in exchange therefor, the Capital Securities will remain
outstanding until the Stated Maturity of the Subordinated Debentures.
If the Corporation elects to liquidate the Issuer and thereby causes the
Subordinated Debentures to be distributed to holders of the Capital Securities
in exchange therefor upon liquidation of the Issuer, the Corporation shall
continue to have the right to redeem the Subordinated Debentures in certain
circumstances upon the occurrence of a Tax Event or a Capital Treatment Event,
as described under "Certain Terms of Subordinated Debentures -- Conditional
Right to Redeem upon a Tax Event or Capital Treatment Event."
LIQUIDATION VALUE
The amount payable on the Capital Securities in the event of any
liquidation of the Issuer is $1,000 per Capital Security plus accumulated and
unpaid Distributions, which amount may be paid in the form of a distribution of
a Like Amount of Subordinated Debentures, subject to certain exceptions. See
"Description of Preferred Securities -- Liquidation Distribution Upon
Termination" in the accompanying Prospectus.
REGISTRATION OF CAPITAL SECURITIES
The Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the
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, 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 Capital Securities registered
in the names of persons other than DTC or its nominee only if (i) DTC notifies
the 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 Issuer in its
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<PAGE> 16
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 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
Capital Securities are issued in definitive form, such Capital Securities will
be in denominations of $1,000 and integral multiples thereof and may be
transferred or exchanged at the offices described below.
Payments on and any distributions of Subordinated Debentures in exchange
for Capital Securities represented by a global security will be made to DTC, as
the depositary for the Capital Securities. In the event Capital Securities are
issued in certificated form, the Liquidation Amount and Distributions will be
payable, the transfer of the Capital Securities will be registrable,
Subordinated Debentures will be distributed in exchange for Capital Securities
following a termination of the Issuer and Capital Securities will be
exchangeable for 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 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 SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Subordinated
Debentures supplements, and to the extent inconsistent therewith supersedes, 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 Subordinated Debentures set forth below,
which describes the material provisions thereof, does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the Indenture,
to which reference is hereby made. The Indenture has been filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part.
Concurrently with the issuance of the Capital Securities, the Issuer will
invest the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in the Subordinated Debentures issued by
the Corporation. The Subordinated Debentures will bear interest at a variable
annual rate equal to LIBOR plus .625% on the principal amount thereof, payable
quarterly in arrears on February 1, May 1, August 1 and November 1 of each year
(each, an "Interest Payment Date"), commencing November 1, 1998, and at maturity
to the person in whose name each Subordinated Debenture is registered at the
close of business on the Business Day next preceding such Interest Payment Date.
The period beginning on and including August 5, 1998 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 Issuer, each
Subordinated Debenture will be held by the Property Trustee in trust for the
benefit of the holders of the Capital Securities. The amount of interest payable
for any Interest Period will be computed on the basis of the actual number of
days in such Interest Period (which number of actual days shall include the
first day but exclude the last day of such Interest Period)
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divided by 360. In the event that any Interest Payment Date would otherwise fall
on a day that is not a Business Day, such Interest Payment Date shall be
postponed to the next day that is a Business Day unless it would thereby fall in
the next calendar month, in which event the Interest Payment Date shall be
brought forward to the immediately preceding Business Day. Accrued interest that
is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at a variable
annual rate equal to LIBOR plus .625%, 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 Subordinated Debentures will be issued as a series of junior
subordinated deferrable interest debentures under the Indenture.
The Subordinated Debentures will mature on August 1, 2028 (such date, the
"Stated Maturity").
The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Debt of the Corporation. See
"Description of Junior Subordinated Debentures -- Subordination" in the
accompanying Prospectus. Substantially all of the Corporation's existing
indebtedness constitutes Senior Debt (other than approximately $2,010.3 million
of the Corporation's existing indebtedness evidenced by the Other 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
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Subordinated Debentures. The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Debt, whether under the Indenture, any other existing indenture
or any other indenture that the Corporation may enter into in the future or
otherwise. See "Description of Junior Subordinated Debentures -- Subordination"
in the accompanying Prospectus.
INTEREST RATE
The Bank of New York, as Calculation Agent (the "Calculation Agent"), will
calculate the interest rate for each Interest Period based on LIBOR determined
as of two London Banking Days (defined as any day on which dealings in deposits
in U.S. Dollars are transacted in the London interbank market) prior to the
first day of such Interest Period (each, a "Determination Date"). "LIBOR" means,
with respect to an Interest Period relating to an Interest Payment Date (in the
following order of priority):
(1) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page 3750
as of 11:00 a.m. (London time) on the related Determination Date;
(2) if such rate does not appear on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date, LIBOR will be the
arithmetic mean (if necessary, rounded upwards to the nearest whole
multiple of 0.00001%) of the rates (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity that appear on Reuters
Monitor Money Rates Page LIBO ("Reuters Page LIBO") as of 11:00 a.m.
(London time) on such Determination Date;
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(3) if such rate does not appear on Reuters Page LIBO as of 11:00 a.m.
(London time) on the related Determination Date, the Calculation Agent will
request the principal London offices of four leading banks in the London
interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for
Eurodollar deposits having a three-month maturity as of 11:00 a.m. (London
time) on such Determination Date. If at least two quotations are provided,
LIBOR will be the arithmetic mean (if necessary, rounded upwards to the
nearest whole multiple of 0.00001%) of such quotations;
(4) if fewer than two such quotations are provided as requested in
clause (3) above, the Calculation Agent will request four major New York
City banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in Eurodollars
having a three-month maturity as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, LIBOR
will be the arithmetic mean (if necessary, rounded upwards to the nearest
whole multiple of 0.00001%) of such quotations; and
(5) if fewer than two such quotations are provided as requested in
clause (4) above, LIBOR will be LIBOR as determined on the previous
Determination Date.
If the rate for Eurodollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 or Reuters Page LIBO, as the case may
be, as of 11:00 a.m. (London time) on the related Determination Date is
superseded on Telerate Page 3750 or Reuters Page LIBO, as the case may be, by a
corrected rate before 12:00 noon (London time) on such Determination Date, the
corrected rate as so substituted on the applicable page will be the applicable
LIBOR for such Determination Date.
The interest rate on the Subordinated Debentures will in no event be higher
than the maximum rate permitted by New York law as the same may be modified by
United States laws of general application. Under present New York law, the
maximum rate of interest is 25% per annum on a simple interest basis. This limit
will not apply to Subordinated Debentures in a principal amount of $2,500,000 or
more.
Absent manifest error, the Calculation Agent's determination of LIBOR and
its calculation of the applicable interest rate for each Interest Period will be
final and binding. Investors may obtain the interest rates for the current and
preceding Interest Period by writing or calling Corporate Trust Administration
at the Calculation Agent at The Bank of New York, 101 Barclay Street, Floor 21
West, New York, New York 10286 (telephone (800) 524-4458).
OPTION TO DEFER INTEREST PAYMENTS
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture at any time or
from time to time during the term of the Subordinated Debentures to defer
payment of interest on the 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
Subordinated Debentures. At the end of such Extension Period, the Corporation
must pay all interest then accrued and unpaid on the Subordinated Debentures
(together with interest on such unpaid interest at a variable annual rate equal
to LIBOR plus .625%, 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 Subordinated Debentures (or holders of
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,
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(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 Subordinated Debentures (including the Other 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
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
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 Subordinated Debentures, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all interest then accrued and unpaid (together with interest
thereon at a variable annual rate equal to LIBOR plus .625%, 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
Issuer 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 Capital
Securities may then be listed or quoted or to holders of 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 Subordinated
Debentures. There is no limitation on the number of times that the Corporation
may elect to begin an Extension Period. See "Description of Junior Subordinated
Debentures -- Option to Defer Interest Payments" in the accompanying Prospectus.
TRUST COSTS AND EXPENSES
In the Indenture, the Corporation, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Capital Securities) and
all costs and expenses of the Issuer (including costs and expenses relating to
the organization of the Issuer, the fees and expenses of the Issuer Trustees and
the costs and expenses relating to the operation of the 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 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
Subordinated Debentures are redeemable prior to maturity at the option of the
Corporation (i) on or after August 1, 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 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. The proceeds
of any such redemption will be used by the Issuer to redeem the Issuer
Securities.
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The redemption price with respect to the Subordinated Debentures shall be
equal to 100% of the principal amount of the Subordinated Debentures so redeemed
plus accrued and unpaid interest thereon to the date of redemption.
DISTRIBUTION OF SUBORDINATED DEBENTURES
As described under "Certain Terms of Capital Securities -- Liquidation of
Issuer and Distribution of Subordinated Debentures to Holders," under certain
circumstances involving the termination of the Issuer, Subordinated Debentures
may be distributed to the holders of the Capital Securities in exchange therefor
upon liquidation of the Issuer after satisfaction of liabilities to creditors of
the Issuer as provided by applicable law. If distributed to holders of Capital
Securities, the Subordinated Debentures will initially be issued in the form of
one or more global securities and DTC, or any successor depositary for the
Capital Securities, will act as depositary for the Subordinated Debentures. It
is anticipated that the depositary arrangements for the Subordinated Debentures
would be substantially identical to those in effect for the Capital Securities.
There can be no assurance as to the market price of any Subordinated Debentures
that may be distributed to the holders of 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 Issuer and the distribution
of the Subordinated Debentures to the holders of the Capital Securities in
exchange therefor upon liquidation of the Issuer, be more than an insubstantial
risk that an Adverse Tax Consequence (as defined in "Risk Factors -- Redemption
Upon Tax Event or Capital Treatment Event") would continue to exist, (ii) in the
reasonable determination of the Corporation, there would in all cases, after
effecting the termination of the Issuer and the distribution of the Subordinated
Debentures to the holders of the Capital Securities in exchange therefor upon
liquidation of the 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 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 Subordinated
Debentures are not held by the Issuer, then the Corporation shall have the right
to redeem the 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 Capital Securities -- Liquidation of Issuer and Distribution of
Subordinated Debentures to Holders" and " -- Redemption," and "Certain Terms of
Subordinated Debentures -- General."
REGISTRATION OF SUBORDINATED DEBENTURES
The Subordinated Debentures will be registered in the name of the Issuer.
In the event that the Subordinated Debentures are distributed to holders of
Capital Securities, it is anticipated that the depositary and other arrangements
for the Subordinated Debentures will be substantially identical to those in
effect for the Capital Securities as applicable. See "Certain Terms of Capital
Securities -- Registration of Capital Securities."
CERTAIN TERMS OF GUARANTEE
The Guarantee guarantees to the holders of the Issuer Securities the
following payments, to the extent not paid by the Issuer: (i) any accumulated
and unpaid Distributions required to be paid on the Issuer Securities, to the
extent that the Issuer has funds on hand available therefor at such time, (ii)
the Redemption Price with respect to any Issuer Securities called for
redemption, to the extent
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that the Issuer has funds on hand available therefor at such time, and (iii)
upon a voluntary or involuntary dissolution, winding up or liquidation of the
Issuer (unless the Subordinated Debentures are distributed to holders of the
Issuer 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 Issuer has funds on hand available therefor at such time, and
(b) the amount of assets of the Issuer remaining available for distribution to
holders of the Issuer Securities after payment of creditors of the Issuer as
required by applicable law. The 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 Guarantee for the benefit of the holders of the Issuer Securities. The
Bank of New York will also act as Debenture Trustee for the Subordinated
Debentures and as Property Trustee.
The holders of not less than a majority in aggregate Liquidation Amount of
the Issuer Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of the Issuer
Securities may institute a legal proceeding directly against the Corporation to
enforce its rights under the Guarantee without first instituting a legal
proceeding against the 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 Subordinated Debentures, the Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Issuer
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the 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 Subordinated Debentures on the applicable
payment date, then a holder of Issuer 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 Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the 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 Capital Securities in
the Direct Action. Except as described herein, holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Subordinated Debentures or assert directly any other rights in respect of
the Subordinated Debentures. See "Description of Guarantees" in the accompanying
Prospectus. The Trust Agreement provides that each holder of Issuer Securities
by acceptance thereof agrees to the provisions of the 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 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 Capital Securities.
Unless otherwise stated, this summary deals only with Capital Securities held as
capital assets by United States Persons (defined below) who purchase the 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
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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, persons
holding Capital Securities as part of a hedging, conversion or constructive sale
transaction or a straddle 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 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 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 CAPITAL
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE CAPITAL
SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "CERTAIN TERMS OF
CAPITAL SECURITIES -- REDEMPTION."
CLASSIFICATION OF THE ISSUER
In connection with the issuance of the Capital Securities, Tax Counsel is
of the opinion that, under current law and assuming compliance with the terms of
the Trust Agreement, and based on certain facts and assumptions contained in
such opinion, the 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 Capital Securities (a
"Securityholder") will be treated as owning an undivided beneficial interest in
the 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 Subordinated Debentures.
See "--Interest Income and Original Issue Discount."
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
The Corporation, the Issuer and the holders of the Issuer Securities (by
acceptance of a beneficial interest in an Issuer Security) will agree to treat
the Subordinated Debentures as indebtedness for all United States tax purposes.
Recently, a petition was filed in the United States Tax Court as a result of a
challenge by the IRS of the petitioner's treatment as indebtedness of a loan
issued in circumstances with similarities to the issuance of the Subordinated
Debentures. Nevertheless, in connection with the issuance of the 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
Subordinated Debentures will be classified as indebtedness for United States
federal income tax purposes.
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INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the applicable Treasury regulations, the 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 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 Subordinated Debentures, the Subordinated Debentures will become
OID instruments at such time and all Securityholders will be required to accrue
the stated interest on the Subordinated Debentures on a daily basis during the
Extension Period, even though the Company will not pay such interest until the
end of the Extension Period, and even though some Securityholders may use the
cash method of tax accounting. Moreover, thereafter the 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 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 Subordinated Debentures, and
actual cash payments of interest on the 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 Capital Securities, and the
amount of Distributions received by a Securityholder with respect to such
Capital Securities will reduce the tax basis of such Capital Securities.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully that the
stated interest on the 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 Capital
Securities.
DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS OF CAPITAL SECURITIES
Under current law, a distribution by the Issuer of the Subordinated
Debentures as described under the caption "Certain Terms of Capital
Securities -- Liquidation of Issuer and Distribution of Subordinated Debentures
to Holders" will be non-taxable and will result in the Securityholder receiving
directly its pro rata share of the Subordinated Debentures previously held
indirectly through the Issuer, with a holding period and aggregate tax basis
equal to the holding period and aggregate tax basis such Securityholder had in
its Capital Securities before such distribution. If, however, the liquidation of
the Issuer were to occur because the Issuer is subject to United States federal
income tax with respect to income accrued or received on the Subordinated
Debentures as a result of a Tax Event or otherwise, the distribution of
Subordinated Debentures to Securityholders by the Issuer could be a taxable
event to the Issuer and each Securityholder, and a Securityholder would
recognize gain or loss as if the Securityholder had exchanged its Capital
Securities for the Subordinated Debentures it received upon the liquidation of
the Issuer. A Securityholder will accrue interest in respect of Subordinated
Debentures received from the Issuer in the manner described above under
"-- Interest Income and Original Issue Discount."
SALES OR REDEMPTION OF CAPITAL SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Capital
Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized by the
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Securityholder on the sale or redemption of the 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
Subordinated Debentures that such Securityholder had not included in income
previously which will be taxable as such) and the Securityholder's adjusted tax
basis in the 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
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. 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
Capital Securities will be treated as evidence of an indirect beneficial
ownership interest in the 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 Issuer (or the Corporation) or
any paying agent of principal or interest (which for purposes of this
discussion includes any OID) on the Capital Securities (or the Subordinated
Debentures) to a Non-United States Holder, provided (i) that the beneficial
owner of the Capital Securities ("Beneficial Owner") does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Corporation entitled to vote within the meaning of
section 871(h)(3) of the Code and the regulations thereunder, (ii) the
Beneficial Owner is not a controlled foreign corporation that is related to
the Corporation through stock ownership, (iii) the Beneficial Owner is not
a bank whose receipt of interest on the 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 Capital Securities (or the
Subordinated Debentures).
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Capital Securities on behalf of
such owner, must provide, in accordance with specified procedures, to the 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 Capital Securities on behalf of the Beneficial Owner certifies,
under penalties of perjury, that such statement has been received by it and
furnishes the Issuer or the paying agent with a copy thereof. Under final
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, 1999 with respect to an offshore
account or through certain foreign intermediaries.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of 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 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
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Capital Securities (or the 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. 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.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest on the Capital Securities (or the 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% (or lesser rate under an applicable
tax treaty) of its effectively connected earnings and profits for the taxable
year, subject to adjustments. For this purpose, such interest income would be
included in such foreign corporation's earnings and profits.
Any gain realized upon the sale or other disposition of the Capital
Securities (or the 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 Subordinated
Debentures, the requirements described above are not satisfied.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of OID accrued on the 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 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 Capital Securities will be reported to
holders on Form 1099 and mailed to holders of the 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 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.
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<PAGE> 26
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 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 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 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 Issuer were held by Plans, other employee benefit plans not subject to
ERISA or Section 4975 of the Code (such as governmental, church and foreign
plans), and entities holding assets deemed to be "plan assets" of any Plan
(collectively, "Benefit Plan Investors"), or if the Capital Securities were
"publicly-offered securities" for purposes of the Plan Assets Regulation. No
assurance can be given that the Capital Securities held by Benefit Plan
Investors will be less than 25% of the total value of such 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 Capital
Securities would be considered to be "publicly-offered securities" under the
Plan Assets Regulation. All of the Common Securities will be purchased and
initially held by the Corporation.
Certain transactions involving the 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 Capital Securities were acquired with "plan
assets" of such Plan and the assets of the Issuer were deemed to be "plan
assets" of Plans investing in the 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 Issuer (as represented by the Subordinated Debentures and
the 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 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 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 CAPITAL SECURITIES, WILL BE
DEEMED TO HAVE DIRECTED THE ISSUER TO INVEST IN THE 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 Capital
Securities if assets of the Issuer were deemed to be "plan assets" of Plans
investing in the 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
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<PAGE> 27
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 Capital Securities may be deemed to be equity interests in the
Issuer for purposes of applying ERISA and Section 4975 of the Code, the 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 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 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 Issuer may require a satisfactory opinion of
counsel or other evidence with respect to the availability of such exemption for
such purchase and holding.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the 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 Issuer were
deemed to be "plan assets" and the availability of exemptive relief under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 or any other applicable exemption.
UNDERWRITING
Subject to the terms and conditions set forth in the Standard Provisions
dated July 29, 1998 and the Pricing Agreement dated July 29, 1998 (collectively,
the "Underwriting Agreement"), the Corporation and the Issuer have agreed that
the Issuer will sell to each of the Underwriters named below, and each of such
Underwriters has severally agreed to purchase from the Issuer, the respective
number of Capital Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER
OF
SERIES C
CAPITAL
NAME SECURITIES
---- ----------
<S> <C>
Chase Securities Inc. ...................................... 62,500
Goldman, Sachs & Co. ....................................... 62,500
Lehman Brothers Inc. ....................................... 62,500
Merrill Lynch, Pierce, Fenner & Smith 62,500
Incorporated...................................
-------
Total............................................. 250,000
=======
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Capital Securities if
any are taken.
The Underwriters propose initially to offer the 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 $6.00 per Capital
Security. The Underwriters may allow, and such dealers may reallow, a concession
not to exceed $2.50 per Capital Security to certain brokers and dealers. After
the Capital Securities are released
S-27
<PAGE> 28
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 Capital
Securities will be used to purchase the Subordinated Debentures issued by the
Corporation, the Underwriting Agreement provides that the Corporation will pay
as Underwriters' compensation for the Underwriters' arranging the investment
therein of such proceeds an amount of $10.00 per Capital Security for the
accounts of the several Underwriters.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Capital Securities offered hereby as interests in a direct
participation program, the offering is being made in compliance with Rule 2810
of the NASD's Conduct Rules. Offers and sales of Capital Securities will be made
only to (i) "qualified institutional buyers", as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act"); (ii) institutional "accredited
investors", as defined in Rule 501(a)(1)-(3) of Regulation D under the Act or
(iii) individual "accredited investors", as defined in Rule 501(a)(4)-(6) of
Regulation D under the Act, for whom an investment in non-convertible investment
grade preferred securities is appropriate. The Underwriters may not confirm
sales to any accounts over which they exercise discretionary authority without
the prior written approval of the transaction by the customer.
The Corporation and the 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
Capital Securities, as determined by the Underwriters, and (ii) the closing
date, they will not offer, sell, contract to sell or otherwise dispose of any
Preferred Securities, any other beneficial interests in the assets of the
Issuer, or any preferred securities or any other securities of the Issuer or the
Corporation which are substantially similar to the 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 Issuer or the
Corporation, without the prior written consent of the Underwriters, except for
the Capital Securities offered in connection with this offering.
The Capital Securities are a new issue of securities with no established
trading market. The Issuer does not intend to apply for listing of the Capital
Securities on a national securities exchange, but has been advised by the
Underwriters that they presently intend to make a market in the Capital
Securities as permitted by applicable laws and regulations. The Underwriters are
not obligated, however, to make a market in the Capital Securities and any such
market making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Capital Securities.
The Corporation and the Issuer have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the Act.
CSI, the managing underwriter, is a wholly owned subsidiary of the
Corporation. This Prospectus Supplement and the related Prospectus may be used
by direct or indirect wholly owned subsidiaries of the Corporation, including
CSI, in connection with offers and sales related to secondary market
transactions in the Capital Securities. Such subsidiaries may act as principal
or agent in such transactions. Such sales will be made at prices related to
prevailing market prices at the time of sale.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
CSI, as the managing underwriter, on behalf of the Underwriters, may engage
in stabilizing transactions, syndicate covering transactions and penalty bids in
accordance with Rule 104 under the Exchange Act. Stabilizing transactions permit
bids to purchase the underlying security so long
S-28
<PAGE> 29
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Capital Securities in the open market
after the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit such managing underwriter to reclaim a selling
concession from a syndicate member when the Capital Securities originally sold
by such syndicate member are purchased in a syndicate covering transaction to
cover syndicate short positions. Such stabilizing transactions, syndicate
covering transactions and penalty bids may cause the price of the Capital
Securities to be higher than it would otherwise be in the absence of such
transactions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Capital
Securities, the enforceability of the Trust Agreement and the formation of the
Issuer will be passed upon by Richards, Layton & Finger, special Delaware
counsel to the Corporation and the Issuer. The validity of the Guarantee and the
Subordinated Debentures will be passed upon for the Corporation by Simpson
Thacher & Bartlett, New York, New York, and for the Underwriters by Cravath,
Swaine & Moore, New York, New York. 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-29
<PAGE> 30
$1,500,000,000
THE CHASE MANHATTAN CORPORATION
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES
CHASE CAPITAL VI
CHASE CAPITAL VII
CHASE CAPITAL VIII
CHASE CAPITAL IX
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 VI, Chase Capital VII, Chase Capital VIII and Chase Capital
IX, 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 July 17, 1998.
<PAGE> 31
(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> 32
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
3
<PAGE> 33
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, 1997.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
3. Current Reports on Form 8-K dated January 21, 1998, January 28, 1998,
March 17, 1998, April 21, 1998 and May 19, 1998.
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.
4
<PAGE> 34
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 ("heritage 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
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holder of the Common Securities. The duties and obligations of each Issuer
Trustee are governed 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 Chase Bank
of Texas, 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 or in part, for United States federal income tax purposes, or (iii) such
issuer is, or will be within 90 days of the
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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 Agreement may be amended by the Issuer Trustees and the
Corporation with (i) the consent of
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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 permanent form. Unless and until it is exchanged in whole or in part for the
individual Preferred
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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 and
customary practices, as is now the case with securities held for the accounts of
customers in
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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 Default has
occurred and is continuing and the Property Trustee is required to decide
between
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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 actual purchaser of each
Preferred Security and each Junior Subordinated Debenture ("Beneficial
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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 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.
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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, 1997 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.
38
<PAGE> 68
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. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY 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 ANY 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 ISSUER SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
------------------------------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Risk Factors S-4
Chase Capital VI S-9
The Chase Manhattan Corporation S-9
Consolidated Ratios of Earnings to Fixed
Charges S-11
Use of Proceeds S-11
Capitalization S-12
Accounting Treatment S-12
Certain Terms of Capital Securities S-13
Certain Terms of Subordinated Debentures S-16
Certain Terms of Guarantee S-20
Certain Federal Income Tax Consequences S-21
Certain ERISA Considerations S-25
Underwriting S-27
Validity of Securities S-29
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 VI
$250,000,000
FLOATING RATE CAPITAL SECURITIES,
SERIES F
(LIQUIDATION AMOUNT $1,000
PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
[CHASE LOGO]
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
Dated July 29, 1998
