<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
File No. 333-70639
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 29, 1999)
[THE CHASE MANHATTAN CORPORATION LOGO]
The Chase Manhattan Corporation
270 Park Avenue, New York, New York 10017 - (212) 270-6000
Senior Medium-Term Notes, Series C
Subordinated Medium-Term Notes, Series A
The Chase Manhattan Corporation ("Chase", which may be referred to as "we" or
"us") may offer its Medium-Term Notes, Series A or Series C (the "Notes"), at
one or more times. We will describe the specific terms of any particular Notes
being offered in an attached pricing supplement.
The following terms may apply to particular Notes being offered:
- They may be Senior Medium-Term Notes, Series C, which are "Senior
Securities", as described in the attached prospectus, or Subordinated
Medium-Term Notes, Series A, which are "Subordinated Securities", as
described in the attached prospectus.
- They may mature between nine months and 100 years after issuance.
- They may bear interest at a fixed or floating rate (or both). Certain
Notes issued at a discount may not bear interest. Floating interest rates
may be based on any of the following formulas or on other interest rate
formulas specified in the applicable pricing supplement.
<TABLE>
<S> <C> <C> <C> <C>
- CD Rate - Treasury Rate - Prime Rate
- Federal Funds Rate - Commercial Paper Rate - CMT Rate
- LIBOR
</TABLE>
Any floating interest rate may be adjusted by adding or subtracting a
specified spread or margin or by applying a spread multiplier.
- They may be denominated in foreign or composite currencies, if specified
in the applicable pricing supplement.
- They will not be redeemable prior to maturity and will not be subject to
a sinking fund, unless otherwise specified in the applicable pricing
supplement.
- They may be issued in certificated or book-entry form.
We may offer the Notes as follows:
- Through agents who have agreed to use reasonable efforts to solicit
offers to purchase the Notes. Unless otherwise specified in the
applicable pricing supplement, we will pay the agents commissions ranging
from 0.125% to 0.750% of the principal amount of the Notes offered.
- Through one or more of those agents purchasing the Notes as principal and
acting as underwriter or dealer. We will pay those agents an underwriting
discount or commission to be negotiated at the time of sale and specified
in the applicable pricing supplement.
- Directly to investors. We will not pay a discount or commission to any
agent for a direct sale of Notes by us.
Unless otherwise specified in an applicable pricing supplement, the Notes will
not be listed on any securities exchange.
THE NOTES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. THE
NOTES ARE NOT SECURED.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS
SUPPLEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus supplement, the attached prospectus and any pricing supplement
may be used by affiliates of Chase, including Chase Securities Inc., in
connection with offers and sales of the Notes in the secondary market. These
affiliates may act as principal or agent in those transactions. Secondary market
sales by these affiliates will be made at prices related to market prices at the
time of sale.
------------------------
The date of this prospectus supplement is February 3, 1999.
<PAGE> 2
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the attached prospectus and the
attached pricing supplement. We have not authorized anyone to provide you with
any other information. You should not rely on any other information in making
your investment decision.
We are offering to sell the Notes only in places where sales are permitted.
You should not assume that the information in this prospectus supplement,
the attached prospectus or the attached pricing supplement is accurate as of any
date other than their respective dates.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
About this Prospectus Supplement;
Pricing Supplements.................. S-3
Description of the Notes............... S-3
Certain United States Federal Income
Tax Consequences..................... S-12
Plan of Distribution................... S-18
Legal Opinions......................... S-19
Glossary............................... S-20
PROSPECTUS
Summary................................ 2
The Chase Manhattan Corporation........ 6
Use of Proceeds........................ 6
Description of Debt Securities......... 7
Description of Preferred Stock......... 17
Description of Common Stock............ 24
Description of Securities Warrants..... 25
Description of Currency Warrants....... 25
Plan of Distribution................... 26
Experts................................ 28
Legal Opinions......................... 28
</TABLE>
References in this prospectus supplement, the attached prospectus and the
attached pricing supplement to "$" and "dollars" are to the currency of the
United States.
S-2
<PAGE> 3
ABOUT THIS PROSPECTUS SUPPLEMENT; PRICING SUPPLEMENTS
Chase may use this prospectus supplement, together with the attached
prospectus and an attached pricing supplement, to offer our Senior Medium-Term
Notes, Series C (the "Senior Notes"), or our Subordinated Medium-Term Notes,
Series A (the "Subordinated Notes"), from time to time. The Senior Notes and
Subordinated Notes are referred to together as the "Notes." The total initial
public offering price of Notes that we may offer by use of this prospectus
supplement is $8,117,182,414 (or the equivalent in foreign or composite
currencies). That amount will be reduced by the amount of any securities issued
under our shelf registration statement (No. 333-70639) (the "registration
statement").
This prospectus supplement sets forth certain terms of the Notes that we
may offer. It supplements the description of the Debt Securities, Senior
Securities and Subordinated Securities contained in the attached prospectus. If
information in this prospectus supplement is inconsistent with the prospectus,
this prospectus supplement will apply and will supersede that information in the
prospectus.
Each time we issue Notes, we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the Notes we are offering and the terms of the offering. The
pricing supplement may also add, update or change information in this prospectus
supplement or the attached prospectus. Any information in the pricing
supplement, including any changes in the method of calculating interest on any
Note, that is inconsistent with this prospectus supplement will apply and will
supersede that information in this prospectus supplement.
It is important for you to read and consider all information contained in
this prospectus supplement and the attached prospectus and pricing supplement in
making your investment decision. You should also read and consider the
information in the documents we have referred you to in "Where You Can Find More
Information About Chase" on page 5 of the attached prospectus.
DESCRIPTION OF THE NOTES
GENERAL
The following summary of certain terms of the Notes is not complete. You
should refer to the indentures under which the Notes will be issued, copies of
which are exhibits to the registration statement. The definitions of certain
capitalized terms used in this prospectus supplement are provided in the
Glossary beginning on page S-20. Capitalized terms used in this prospectus
supplement but not defined in this prospectus supplement, including the
Glossary, have the meanings assigned in the attached prospectus.
The Senior Notes will be "Senior Securities," as described in the attached
prospectus. The Subordinated Notes will be "Subordinated Securities," as
described in the attached prospectus. The Senior Notes will constitute one
series of Senior Securities issued under the senior indenture referred to in the
attached prospectus. They will have the same rank as all other Senior Securities
of Chase.
The Subordinated Notes will constitute one series of Subordinated
Securities issued under the subordinated indenture referred to in the attached
prospectus. They will have the same rank as all other Subordinated Securities of
Chase. The Subordinated Notes will be subordinated to Senior Indebtedness and,
under the circumstances described in the attached prospectus, to Additional
Senior Obligations. See "Description of Debt Securities -- Subordinated
Securities -- Subordination" in the attached prospectus. As of September 30,
1998, the aggregate principal amount of Senior Indebtedness and Additional
Senior Obligations outstanding was approximately $8.6 billion.
Payment of the Subordinated Notes may be accelerated only in the event of
our bankruptcy or reorganization. Holders of Subordinated Notes are not entitled
to accelerate the maturity of the Subordinated Notes upon a payment default or a
default by us in the performance of any covenant contained in the subordinated
indenture. See "Description of Debt Securities -- Subordinated
Securities -- Defaults and Waivers" in the attached prospectus. Unless otherwise
specified in the applicable pricing supplement, the Subordinated Notes are not
S-3
<PAGE> 4
convertible into or exchangeable for any other securities.
We are offering the Notes on a continuing basis. Each Note will mature on a
Business Day from 9 months to 100 years from its date of issue, as agreed
between us and the purchaser. Unless otherwise specified in the applicable
pricing supplement, the Notes will not be redeemable prior to maturity and there
will be no sinking fund established for the Notes.
The Notes may bear interest at (A) a fixed rate, which may be zero in the
case of certain discounted Notes, or (B) a floating rate. Interest on floating
rate Notes will be determined, and adjusted periodically, by reference to an
interest rate index or formula. We may issue Notes at prices less than their
stated principal amount. Those discounted Notes may or may not bear interest
payable on a periodic basis, and certain of those discounted Notes may be
designated in the attached pricing supplement as "Original Issue Discount
Notes". For a definition of "Original Issue Discount Notes" as well as a
discussion of certain United States federal income tax consequences relating to
those Notes, see "Certain United States Federal Income Tax Consequences" below.
Unless otherwise specified in the applicable pricing supplement, the amount
payable to the holder of an Original Issue Discount Note upon an acceleration of
its maturity will equal its adjusted issue price (which will be less than the
amount payable at maturity).
Unless otherwise specified in the applicable pricing supplement, the Notes
will be denominated in U.S. dollars and we will make all payments of principal
of and interest on the Notes in U.S. dollars. Except as otherwise specified in
the applicable pricing supplement, the authorized denominations of the Notes
denominated in U.S. dollars will be U.S. $1,000 and integral multiples of U.S.
$1,000 in excess of $1,000.
Each Note will be issued in fully registered form without coupons. Each
Note will be issued initially either in definitive, certificated form or in
global form. We will deposit Notes in global form with, or on behalf of, DTC, as
depository, as described in the attached prospectus under the heading
"Description of Debt Securities -- Permanent Global Debt Securities".
Notes in certificated form may be presented for registration of transfer or
exchange at the corporate trust office of The Chase Manhattan Bank in the
Borough of Manhattan, The City of New York. Unless otherwise specified in the
applicable pricing supplement, we will pay interest on certificated Notes, other
than interest payable upon maturity or upon earlier redemption or repayment, by
check to the person in whose name a certificated Note is registered at the close
of business on the applicable record date before each interest payment date.
However, a holder of $10,000,000 or more in aggregate principal amount of
certificated Notes of like tenor and terms will be entitled to receive payment
in U.S. dollars by wire transfer of immediately available funds if appropriate
payment instructions have been received in writing by the paying agent not less
than 15 calendar days prior to the applicable interest payment date. Interest
payable on certificated Notes at maturity or upon earlier redemption or
repayment of principal will be payable to the person to whom principal is
payable. At maturity or upon earlier redemption or repayment, payments of
principal and interest will be made only upon presentment of the certificated
Note to the paying agent.
Unless otherwise specified in the applicable pricing supplement, the paying
agent for the Notes will initially be The Chase Manhattan Bank.
INTEREST AND INTEREST RATES
Unless otherwise specified in the applicable pricing supplement, each Note
will accrue interest from and including its date of issue. The applicable
pricing supplement will designate whether a particular Note is a fixed rate Note
or a floating rate Note. The interest rate on the Notes will never be higher
than the maximum rate permitted by applicable law. Under New York law as in
effect on the date of this prospectus supplement, the maximum rate of interest
is 25% per year on a simple interest basis. This limit does not apply to Notes
in a principal amount of $2,500,000 or more.
Interest on a Note will be payable on the first interest payment date
following its date of issue. However, if the date of a Note's issue is on or
after the record date for that interest payment date, interest will be payable
beginning on the second interest payment date following the Note's issue. Unless
otherwise specified in the
S-4
<PAGE> 5
applicable pricing supplement, the record date for any interest payment date
will be the 15th day prior to that interest payment date.
If any interest payment date with respect to any floating rate Note, other
than an interest payment date that is also the maturity date of that Note, falls
on a day that is not a Business Day (or, in the case of a LIBOR Note, a day that
is not a London Business Day), that interest payment date will be postponed to
the next day that is a Business Day or London Business Day, as the case may be,
and interest will continue to accrue. However, in the case of a LIBOR Note, if
the next London Business Day is in the following calendar month, the interest
payment date will be the preceding London Business Day. A "Business Day" is any
day, other than a Saturday, Sunday or other day that, in New York City, banking
institutions generally are authorized or required to close. A "London Business
Day" is a Business Day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
If the maturity date of any floating rate or fixed rate Note, or an
interest payment date for any fixed rate Note, falls on a day that is not a
Business Day (or London Business Day, in the case of the maturity date of a
LIBOR Note), payment of principal, premium, if any, and interest with respect to
that Note will be paid on the next Business Day (or London Business Day, as the
case may be), and no interest on that payment will accrue from and after that
maturity date or interest payment date.
FIXED RATE NOTES
The pricing supplement for a fixed rate Note will designate a fixed rate of
interest per year payable on the Notes (which may be zero). Fixed rate Notes may
bear one or more annual rates of interest as specified in the applicable pricing
supplement. Interest payments, if any, on fixed rate Notes will be made on the
interest payment dates specified in the applicable pricing supplement. Interest,
if any, on fixed rate Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
FLOATING RATE NOTES
The pricing supplement for a floating rate Note will specify the following
terms that apply to that Note:
- the interest rate basis or index to be used to determine the Note's
interest rate;
- the "Index Maturity", which means the period to maturity of the
instrument or obligations on which the Note's interest rate index is
based. For example, LIBOR may be different for one-month U.S. dollar
deposits and three-month U.S. dollar deposits. If the attached pricing
supplement indicates LIBOR as the index and three months as the Index
Maturity, we will pay interest on the Note based on LIBOR for three-month
U.S. dollar deposits;
- the frequency of changes of the interest rate on the Note, which may be
daily, weekly, monthly, quarterly, semi-annually or annually;
- the dates as of which the Calculation Agent will determine each new
interest rate (the "Interest Determination Dates"), if different from
those specified in this prospectus supplement; and
- the "Reset Dates", which are the dates on which each interest rate will
change, if different from those specified in the Glossary.
The applicable pricing supplement will also specify any of the following
terms that may apply to a floating rate Note:
- the "Spread", which is the number of basis points that must be added to
or subtracted from the applicable interest rate basis or index to
determine the interest rate of the Note. For example, assuming a Note
bears interest at LIBOR plus a Spread of .01%, if LIBOR in effect for a
particular interest period is 5.00% per year, that Note will bear
interest for that interest period at a rate equal to 5.01% per year;
- the "Spread Multiplier", which is the number by which the applicable
interest rate index or formula must be multiplied to determine the
interest rate of the Note. For example, assuming a Note bears interest at
LIBOR times a Spread Multiplier of 90%, if LIBOR in effect for a
particular interest period is 5.00% per year, that Note will bear
interest for that
S-5
<PAGE> 6
interest period at a rate equal to 4.50% per year;
- the "Maximum Interest Rate" or the ceiling on the interest rate of the
Note for any interest period; and
- the "Minimum Interest Rate" or the floor on the interest rate of the Note
for any interest period.
Unless otherwise specified in the applicable pricing supplement, The Chase
Manhattan Bank will be the "Calculation Agent" with respect to the calculation
of rates of interest payable on floating rate Notes. Upon the request of a
registered holder of a floating rate Note, the Calculation Agent will provide
the interest rate then in effect and, if different, the interest rate which will
become effective as a result of a determination made on the most recent Interest
Determination Date with respect to that floating rate Note. The holder of any
floating rate Note as to which The Chase Manhattan Bank is the Calculation Agent
may call 212-946-3481 for interest rate information.
Unless otherwise specified in the applicable pricing supplement, each
interest payment on any floating rate Note will include interest accrued from
and including the date of issue or the last date to which interest has been
paid, as the case may be, to but excluding the applicable interest payment date
or the date of maturity, as the case may be.
Accrued interest on a floating rate Note will be calculated by multiplying
the principal amount of the Note by an accrued interest factor. The Calculation
Agent will compute the accrued interest factor by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise specified in the applicable pricing supplement, the
Calculation Agent will compute the interest factor for each day by dividing the
interest rate in effect on that day by (A) the actual number of days in the
year, in the case of Treasury Rate Notes and CMT Rate Notes or (B) 360, in the
case of all other floating rate Notes.
The interest rate on a floating rate Note in effect on any day will be (i)
if the day is a Reset Date, the interest rate with respect to the Interest
Determination Date relating to that Reset Date, or (ii) if the day is not a
Reset Date, the interest rate with respect to the Interest Determination Date
relating to the preceding Reset Date. However, unless otherwise specified in the
applicable pricing supplement, the interest rate in effect for the ten calendar
days prior to the date of maturity will be that in effect on the tenth calendar
day prior to the date of maturity. Unless otherwise specified in the applicable
pricing supplement, the Calculation Agent will generally determine the initial
interest rate on a floating rate Note as if the date of issue of that Note were
a Reset Date.
Except as otherwise specified in the applicable pricing supplement, the
Calculation Agent will round all percentages and decimals resulting from any
calculation of interest on floating rate Notes, if necessary, to the nearest one
hundred thousandth of a percentage point, with five one-millionths of a
percentage point rounded upwards. For example, the Calculation Agent will round
6.555545% (or .06555545) to 6.55555% (or .0655555) and the Calculation Agent
will round 6.555544% (or .06555544) to 6.55554% (or .0655554). The Calculation
Agent will also round all dollar amounts used in or resulting from any
calculation to the nearest cent (with one-half cent being rounded upwards).
S-6
<PAGE> 7
The following table sets forth, for each of the most common interest rate
indices that we may use, the source in which we expect the index to be published
and the Interest Determination Date for Notes with interest rates based on that
index. Following the chart below, we have described with greater specificity the
procedures to determine interest rates based on each index specified below. If
we elect to have different Interest Determination Dates apply to any floating
rate Note, we will specify those Interest Determination Dates in the applicable
pricing supplement.
<TABLE>
<CAPTION>
INTEREST
INDEX PRIMARY SOURCE OF RATE DETERMINATION DATE
----- ---------------------- ------------------
<S> <C> <C>
CD Rate................. H.15(519) under the heading "CDs (secon- Second Business Day preceding the
dary market)" Reset Date
Commercial Paper Rate... H.15(519) under the heading "Commercial Second Business Day preceding the
paper -- Nonfinancial" Reset Date
Federal Funds
Rate.................. H.15(519) under the heading "Federal Second Business Day preceding the
funds (effective)" Reset Date
LIBOR................... Bridge Telerate, Inc. (and if the Index Second London Business Day preceding
Currency is U.S. dollars, page 3750) or, the Reset Date
if "LIBOR Reuters" is specified, the
applicable page on Reuters Monitor Money
Rates Service
Treasury Rate........... Bridge Telerate, Inc. page 56 or 57 The day that Treasury bills of the
under the heading "INVESTMENT RATE". Index Maturity are auctioned for the
week in which the Reset Date falls
(generally Monday, but may be the
following Tuesday or preceding Friday
if Monday is a holiday)
Prime Rate.............. H.15(519) under the heading "Bank prime Second Business Day preceding the
loan" Reset Date
CMT Rate................ Bridge Telerate, Inc. page 7052 (or Second Business Day preceding the
7051, if specified in the pricing Reset Date
supplement) under the heading ". . .
Treasury Constant Maturities . . .
Federal Reserve Board Release H.15 . . .
Mondays Approximately 3:45"
</TABLE>
CD Rate Notes
A CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the "CD
Rate" for any Interest Determination Date is the rate on that date for
negotiable U.S. dollar certificates of deposit having the Index Maturity
specified in the pricing supplement, as published in H.15(519) prior to 3:00
P.M., New York City time, on the Calculation Date pertaining to that Interest
Determination Date under the heading "CDs (secondary market)".
The Calculation Agent will follow the procedures below if the CD Rate
cannot be determined as described above:
- If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the Calculation Date, the CD Rate will be the rate on that
Interest Determination Date for negotiable U.S. dollar certificates of
deposit of the Index Maturity designated in the pricing supplement, as
published in H.15 Daily Update, under the heading "CDs (secondary
market)" or in another recognized electronic source used for the purpose
of displaying that rate.
- If that rate is not published in H.15(519), H.15 Daily Update or another
recognized electronic source by 3:00 P.M., New York City time, on the
Calculation Date, then
S-7
<PAGE> 8
the Calculation Agent will determine the CD Rate to be the average of the
secondary market offered rates as of 10:00 A.M., New York City time, on
that Interest Determination Date, quoted by three leading nonbank dealers
in negotiable U.S. dollar certificates of deposit in New York City for
negotiable U.S. dollar certificates of deposit in a denomination of
$5,000,000 of major United States money-center banks of the highest
credit standing (in the market for negotiable certificates of deposit)
with a remaining maturity closest to the Index Maturity designated in the
pricing supplement. The Calculation Agent will select the three dealers
referred to above.
- If fewer than three dealers selected by the Calculation Agent are quoting
as mentioned above, the CD Rate will be the CD Rate in effect on that
Interest Determination Date.
Commercial Paper Rate Notes
A Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the
"Commercial Paper Rate" for any Interest Determination Date is the Money Market
Yield of the rate on that date for commercial paper having the Index Maturity
specified in the pricing supplement, as published in H.15(519) prior to 3:00
P.M., New York City time, on the Calculation Date pertaining to that Interest
Determination Date under the heading "Commercial paper -- Nonfinancial".
The Calculation Agent will follow the procedures below if the Commercial
Paper Rate cannot be determined as described above:
- If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the Calculation Date, the Commercial Paper Rate will be the
Money Market Yield of the rate on that Interest Determination Date for
commercial paper having the Index Maturity designated in the pricing
supplement, as published in H.15 Daily Update under the heading
"Commercial paper -- Nonfinancial" or in another recognized electronic
source used for the purpose of displaying that rate.
- If that rate is not published in H.15(519), H.15 Daily Update or another
recognized electronic source by 3:00 P.M., New York City time, on the
Calculation Date, then the Calculation Agent will determine the
Commercial Paper Rate to be the Money Market Yield of the average of the
offered rates of three leading dealers of commercial paper in New York
City as of 11:00 A.M., New York City time, on that Interest Determination
Date for commercial paper having the Index Maturity specified in the
pricing supplement placed for a nonfinancial issuer whose bond rating is
"Aa", or the equivalent, from a nationally recognized statistical rating
organization. The Calculation Agent will select the three dealers
referred to above.
- If fewer than three dealers selected by the Calculation Agent are quoting
as mentioned above, the Commercial Paper Rate will be the Commercial
Paper Rate in effect on that Interest Determination Date.
Federal Funds Rate Notes
A Federal Funds Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any) specified in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the
"Federal Funds Rate" for any Interest Determination Date is the rate on that
date for Federal Funds, as published in H.15(519) under the heading "Federal
funds (effective)", as that rate is displayed on Telerate Page 120 prior to 3:00
P.M., New York City time, on the Calculation Date pertaining to that Interest
Determination Date.
The Calculation Agent will follow the procedures below if the Federal Funds
Rate cannot be determined as described above:
- If the above rate does not appear on Telerate Page 120 by 3:00 P.M., New
York City time, on the Calculation Date, the Federal Funds Rate will be
the rate on
S-8
<PAGE> 9
that Interest Determination Date, as published in H.15(519) (or if not
published in H.15(519), in H.15 Daily Update) under the heading "Federal
funds (effective)" or in another recognized electronic source used for
the purpose of displaying that rate.
- If that rate does not appear on Telerate Page 120 or is not published in
H.15(519), H.15 Daily Update or another recognized electronic source by
3:00 P.M., New York City time, on the Calculation Date, then the
Calculation Agent will determine the Federal Funds Rate to be the average
of the rates for the last transaction in overnight Federal funds arranged
by three leading brokers of Federal funds transactions in New York City
as of 9:00 A.M., New York City time, on that Interest Determination Date.
The Calculation Agent will select the three brokers referred to above.
- If fewer than three brokers selected by the Calculation Agent are quoting
as mentioned above, the Federal Funds Rate will be the Federal Funds Rate
in effect on that Interest Determination Date.
LIBOR Notes
A LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in the
applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the
Calculation Agent will determine LIBOR as follows:
On each Interest Determination Date:
- If "LIBOR Telerate" is specified in the applicable pricing supplement,
"LIBOR" will be the rate for deposits in the Index Currency having the
Index Maturity specified in the pricing supplement beginning on the
second London Business Day immediately following the applicable Interest
Determination Date, as that rate appears on the Designated LIBOR Page as
of 11:00 A.M., London time, on that Interest Determination Date.
- If "LIBOR Reuters" is specified in the applicable pricing supplement,
"LIBOR" will be the average of the offered rates for deposits in the
Index Currency having the Index Maturity specified in the pricing
supplement beginning on the second London Business Day immediately
following the applicable Interest Determination Date, as those rates
appear on the Designated LIBOR Page as of 11:00 A.M., London time, on
that Interest Determination Date, if at least two offered rates appear on
the Designated LIBOR Page. If the Designated LIBOR Page by its terms
provides only for a single rate, the Calculation Agent will use that
single rate regardless of the foregoing provisions requiring more than
one rate.
On any Interest Determination Date on which fewer than the required number
of applicable rates appear or no rate appears on the Designated LIBOR Page, the
Calculation Agent will determine LIBOR as follows:
- LIBOR will be determined on the basis of the offered rates at which
deposits in the Index Currency having the Index Maturity designated in
the pricing supplement beginning on the second London Business Day
immediately following the Interest Determination Date and in a principal
amount that is representative of a single transaction in the Index
Currency in that market at that time are offered by four major banks in
the London interbank market at approximately 11:00 A.M., London time, on
the Interest Determination Date to prime banks in the London interbank
market. The Calculation Agent will select the four banks and request the
principal London office of each of those banks to provide a quotation of
its rate. If at least two quotations are provided, LIBOR for that
Interest Determination Date will be the average of those quotations.
- If fewer than two quotations are provided as mentioned above, LIBOR will
be the average of the rates quoted by three major banks in New York City
at approximately 11:00 A.M., New York City time, on the Interest
Determination Date for loans to leading European banks in the Index
Currency having the Index Maturity designated in the pricing supplement
beginning on the second London Busi-
S-9
<PAGE> 10
ness Day immediately following the Interest Determination Date and in a
principal amount that is representative for a single transaction in the
Index Currency in that market at that time. The Calculation Agent will
select the three banks referred to above.
- If fewer than three banks selected by the Calculation Agent are quoting
as mentioned above, LIBOR will be LIBOR in effect on the Interest
Determination Date.
Treasury Rate Notes
A Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the
"Treasury Rate" for any Interest Determination Date is the rate set at the most
recent auction of direct obligations of the United States ("Treasury bills")
having the Index Maturity designated in the pricing supplement, as it appears on
Telerate Page 56 or 57 by 3:00 P.M., New York City time, on the Calculation Date
pertaining to that Interest Determination Date under the heading "INVESTMENT
RATE".
The Calculation Agent will follow the procedures below if the Treasury Rate
cannot be determined as described above:
- If the above rate does not appear on Telerate Page 56 or 57 by 3:00 P.M.,
New York City time, on the Calculation Date, the Treasury Rate will be
the rate (expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) of those Treasury
bills having the Index Maturity specified in the pricing supplement, as
published in H.15(519) (or if not published in H.15(519), in H.15 Daily
Update) under the heading "U.S. Government Securities/Treasury bills/
Auction high" or in another recognized electronic source used for the
purpose of displaying that rate.
- If the above rate is not published in H.15(519), H.15 Daily Update or
another recognized electronic source by 3:00 P.M., New York City time, on
the Calculation Date, the Treasury Rate will be the auction rate
(expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury.
- If the results of the most recent auction of Treasury bills having the
Index Maturity designated in the pricing supplement are not published or
announced as described above by 3:00 P.M., New York City time, on the
Calculation Date, or if no auction is held in a particular week, the
Treasury Rate will be the rate (expressed as a bond equivalent on the
basis of a year or 365 or 366 days, as applicable, and applied on a daily
basis) of those Treasury bills having the Index Maturity specified in the
pricing supplement as published in H.15(519) (or if not published in
H.15(519), in H.15 Daily Update) under the heading "U.S. Government
Securities/Treasury bills/Secondary market" or in another recognized
electronic source used for the purpose of displaying that rate.
- If the above rate is not published in H.15(519), H.15 Daily Update or
another recognized electronic source by 3:00 P.M., New York City time on
the Calculation Date, then the Calculation Agent will determine the
Treasury Rate to be a yield to maturity (expressed as a bond equivalent,
on the basis of a year of 365 or 366 days, as applicable, and applied on
a daily basis) of the average of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on the Interest
Determination Date of three leading primary United States government
securities dealers selected by the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity
specified in the pricing supplement. The Calculation Agent will select
the three dealers referred to above.
S-10
<PAGE> 11
- If fewer than three dealers selected by the Calculation Agent are quoting
as mentioned above, the Treasury Rate will be the Treasury Rate in effect
on that Interest Determination Date.
Prime Rate Notes
A Prime Rate Note will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the Note and the applicable pricing supplement.
Unless otherwise specified in the Note and the applicable pricing
supplement, the "Prime Rate" for any Interest Determination Date is the prime
rate or base lending rate on that date, as published in H.15(519) by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to the Interest
Determination Date under the heading "Bank prime loan".
The Calculation Agent will follow the procedures below if the Prime Rate
cannot be determined as described above:
- If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the Calculation Date, the Prime Rate will be the rate as
published in H.15 Daily Update under the heading "Bank prime loan" or
another recognized electronic source used for the purpose of displaying
that rate.
- If that rate is not published in H.15(519), H.15 Daily Update or another
recognized electronic source by 3:00 P.M., New York City time, on the
Calculation Date, then the Calculation Agent will determine the Prime
Rate to be the average of the rates of interest publicly announced by
each bank that appears on the Reuters Screen US Prime 1 as that bank's
prime rate or base lending rate as in effect for that Interest
Determination Date.
- If fewer than four rates appear on the Reuters Screen US Prime 1 on the
Interest Determination Date, then the Prime Rate will be the average of
the prime rates or base lending rates quoted (on the basis of the actual
number of days in the year divided by a 360-day year) as of the close of
business on the Interest Determination Date by three major banks in The
City of New York selected by the Calculation Agent.
- If fewer than three banks selected by the Calculation Agent are quoting
as mentioned above, the Prime Rate will be the Prime Rate in effect on
the Interest Determination Date.
CMT Rate Notes
A CMT Rate Note will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any) specified
in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the "CMT
Rate" for any Interest Determination Date is the rate displayed on the
Designated CMT Telerate Page by 3:00 P.M., New York City time, on the
Calculation Date pertaining to the Interest Determination Date under the heading
". . . Treasury Constant Maturities. . . Federal Reserve Board Release H.15. . .
Mondays Approximately 3:45 P.M.," under the column for the Index Maturity
specified in the pricing supplement for:
- if the Designated CMT Telerate Page is 7051, that Interest Determination
Date; or
- if the Designated CMT Telerate Page is 7052, the week or the month, as
applicable, ended immediately preceding the week or month in which the
related Interest Determination Date occurs.
The Calculation Agent will follow the procedures below if the CMT Rate
cannot be determined as described above:
- If the above rate is not displayed on the relevant page by 3:00 P.M., New
York City time, on the Calculation Date, then the CMT Rate will be the
Treasury constant maturity rate for the Index Maturity, as published in
H.15(519).
- If that rate is not published in H.15(519) by 3:00 P.M., New York City
time, on the Calculation Date, then the CMT Rate will be the Treasury
constant maturity rate (or other United States Treasury rate) for the
Index Maturity for the Interest Determination Date as may then be
published by either the Board of Governors of the Federal Reserve System
or the United
S-11
<PAGE> 12
States Department of the Treasury that the Calculation Agent determines
to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in H.15(519).
- If that information is not provided by 3:00 P.M., New York City time, on
the Calculation Date, then the Calculation Agent will determine the CMT
Rate to be a yield to maturity based on the average of the secondary
market offered rates as of approximately 3:30 P.M., New York City time,
on the Interest Determination Date reported, according to their written
records, by three leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of New York selected by
the Calculation Agent as described in the following sentence. The
Calculation Agent will select five Reference Dealers and will eliminate
the highest quotation (or, in the event of equality, one of the highest
quotations) and the lowest quotation (or, in the event of equality, one
of the lowest quotations), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Index Maturity and
a remaining term to maturity of not less than the Index Maturity minus
one year.
- If the Calculation Agent cannot obtain three Treasury Note quotations,
the Calculation Agent will determine the CMT Rate to be a yield to
maturity based on the average of the secondary market offered rates as of
approximately 3:30 P.M., New York City time, on the Interest
Determination Date of three Reference Dealers in New York City (selected
using the same method described above) for Treasury Notes with an
original maturity of the number of years that is the next highest to the
Index Maturity and a remaining term to maturity closest to the Index
Maturity and in an amount of at least U.S. $100 million.
- If three or four but not five Reference Dealers are quoting as described
above, then the CMT Rate will be based on the average of the offered
rates obtained and neither the highest nor the lowest of those quotations
will be eliminated.
- If fewer than three Reference Dealers selected by the Calculation Agent
are quoting as described above, the CMT Rate will be the CMT Rate in
effect on the Interest Determination Date.
OTHER PROVISIONS; ADDENDA
Any provisions relating to the calculation of the interest rate applicable
to a Note or any other related matter may be modified as specified in the
applicable pricing supplement.
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES
The following summarizes certain United States federal income tax
consequences of the ownership of Notes as of the date of this prospectus
supplement. Except where noted, this summary deals only with Notes held as
capital assets and does not deal with special situations. For example, this
summary does not address:
- tax consequences to holders who may be subject to special tax treatment,
such as dealers in securities or currencies, financial institutions,
tax-exempt entities or life insurance companies;
- tax consequences to persons holding Notes as part of a hedging,
integrated, constructive sale or conversion transaction or a straddle;
- tax consequences to holders of Notes whose "functional currency" is not
the U.S. dollar;
- alternative minimum tax consequences, if any; or
- any state, local or foreign tax consequences.
The discussion below is based upon the provisions of the Internal Revenue
Code (the "Code"), and regulations, rulings and judicial decisions as of the
date of this prospectus supplement. Those authorities may be changed, perhaps
retroactively, so as to result in United States federal income tax consequences
different from those discussed below. We will summarize any special United
States federal tax considerations relevant to a particular issue of the Notes in
the applicable pricing supplement.
S-12
<PAGE> 13
If you are considering the purchase of Notes, you should consult your own
tax advisors concerning the tax consequences to you in light of your particular
situation.
CONSEQUENCES TO UNITED STATES HOLDERS
The following is a summary of certain United States federal tax
consequences that will apply to you if you are a United States Holder of Notes.
Certain consequences to "Non-United States Holders" of the Notes (which are
holders than are not United States Holders) are described under "-- Non-United
States Holders" below.
"United States Holder" means a beneficial owner of a Note that is:
- a citizen or resident of the United States;
- a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision of the United States;
- an estate the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust that is subject to the supervision of a court within the United
States and the control of one or more United States persons.
Payments of Interest
Except as set forth below, interest on a Note will generally be taxable to
you as ordinary income from domestic sources at the time it is paid or accrued
in accordance with your method of accounting for tax purposes.
Original Issue Discount
If you own Notes issued with original issue discount ("OID"), you will be
subject to special tax accounting rules, as described in greater detail below.
In that case, you should be aware that you generally must include OID in gross
income in advance of the receipt of cash attributable to that income. However,
you generally will not be required to include separately in income cash payments
received on the Notes, even if denominated as interest, to the extent those
payments do not constitute qualified stated interest (as defined below). Notes
issued with OID will be referred to as "Original Issue Discount Notes." Notice
will be given in the applicable pricing supplement when we determine that a
particular Note will be an Original Issue Discount Note.
A Note with an issue price that is less than its "stated redemption price
at maturity" (the sum of all payments to be made on the Note other than
"qualified stated interest") generally will be issued with OID if that
difference is at least 0.25% of the stated redemption price at maturity
multiplied by the number of complete years to maturity. The "issue price" of
each Note in a particular offering will be the first price at which a
substantial amount of that particular offering is sold to the public. The term
"qualified stated interest" means stated interest that is unconditionally
payable in cash or in property, other than debt instruments of the issuer, if
the interest to be paid meets all of the following conditions:
- it is payable at least once per year;
- it is payable over the entire term of the Note; and
- it is payable at a single fixed rate or, subject to certain conditions,
based on one or more interest indices.
We will give you notice in the attached pricing supplement when we determine
that a particular Note will bear interest that is not qualified stated interest.
If you own a Note issued with de minimis OID (i.e., discount that is not OID
because it is less than 0.25% of the stated redemption price at maturity
multiplied by the number of complete years to maturity), you generally must
include the de minimis OID in income at the time payments (other than qualified
stated interest) on the Notes are made in proportion to the amount paid. Any
amount of de minimis OID that you have included in income will be treated as
capital gain.
Certain of the Notes may contain provisions permitting them to be redeemed
prior to their stated maturity at our option and/or at the option of the holder.
Original Issue Discount Notes containing those features may be subject to rules
that differ from the general rules discussed in this prospectus supplement. If
you are considering the purchase of Original Issue Discount Notes with those
features, you should
S-13
<PAGE> 14
carefully examine the applicable pricing supplement and should consult your own
tax advisors with respect to those features since the tax consequences to you
with respect to OID will depend, in part, on the particular terms and features
of the Notes.
If you own Original Issue Discount Notes with a maturity upon issuance of
more than one year, you generally must include OID in income in advance of the
receipt of some or all of the related cash payments using the "constant yield
method" described in the following paragraph. This method takes into account the
compounding of interest. The accruals of OID on an Original Issue Discount Note
will generally be less in the early years and more in the later years.
The amount of OID that you must include in income if you are the initial
United States Holder of an Original Issue Discount Note is the sum of the "daily
portions" of OID with respect to the Note for each day during the taxable year
or portion of the taxable year in which you held that Note ("accrued OID"). The
daily portion is determined by allocating to each day in any "accrual period" a
pro rata portion of the OID allocable to that accrual period. The "accrual
period" for an Original Issue Discount Note may be of any length and may vary in
length over the term of the Note, provided that each accrual period is no longer
than one year and each scheduled payment of principal or interest occurs on the
first day or the final day of an accrual period. The amount of OID allocable to
any accrual period is an amount equal to the excess, if any, of (a) the Note's
adjusted issue price at the beginning of the accrual period times its yield to
maturity, determined on the basis of compounding at the close of each accrual
period and properly adjusted for the length of the accrual period, over (b) the
aggregate of all qualified stated interest allocable to the accrual period. OID
allocable to a final accrual period is the difference between the amount payable
at maturity, other than a payment of qualified stated interest, and the adjusted
issue price at the beginning of the final accrual period. Special rules apply
for calculating OID for an initial short accrual period. The "adjusted issue
price" of a Note at the beginning of any accrual period is equal to its issue
price increased by the accrued OID for each prior accrual period (determined
without regard to the amortization of any acquisition or bond premium, as
described below) and reduced by any payments made on the Note (other than
qualified stated interest) on or before the first day of the accrual period. We
are required to provide information returns stating the amount of OID accrued on
Notes held of record by persons other than corporations and other exempt
holders.
Floating rate Notes are subject to special OID rules. In the case of an
Original Issue Discount Note that is a floating rate Note, both the "yield to
maturity" and "qualified stated interest" will be determined solely for purposes
of calculating the accrual of OID as though the Note will bear interest in all
periods at a fixed rate generally equal to the rate that would be applicable to
interest payments on the Note on its date of issue or, in the case of certain
floating rate Notes, the rate that reflects the yield to maturity that is
reasonably expected for the Note. Additional rules may apply if:
- the interest on a floating rate Note is based on more than one interest
index; or
- the principal amount of the Note is indexed in any manner.
If you are considering the purchase of floating rate Original Issue
Discount Notes, you should carefully examine the applicable pricing supplement
and should consult your own tax advisors regarding the United States federal
income tax consequences to you of holding and disposing of those Notes.
You may elect to treat all interest on any Note as OID and calculate the
amount includible in gross income under the constant yield method described
above. For the purposes of this election, interest includes stated interest,
acquisition discount, OID, de minimis OID, market discount, de minimis market
discount and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium. You must make this election for the taxable year in which
you acquired the Note, and you may not revoke the election without the consent
of the Internal Revenue Service (the "IRS"). You should consult with your own
tax advisors about this election.
S-14
<PAGE> 15
Short-Term Notes
In the case of Notes having a term of one year or less ("Short-Term
Notes"), all payments, including all stated interest, will be included in the
stated redemption price at maturity and will not be qualified stated interest.
As a result, you will generally be taxed on the discount in lieu of stated
interest. The discount will be equal to the excess of the stated redemption
price at maturity over the issue price of a Short-Term Note, unless you elect to
compute this discount using tax basis instead of issue price. In general,
individuals and certain other cash method United States Holders of Short-Term
Notes are not required to include accrued discount in their income currently
unless they elect to do so (but may be required to include stated interest in
income as the income is received). United States Holders that report income for
United States federal income tax purposes on the accrual method and certain
other United States Holders are required to accrue discount on Short-Term Notes
(as ordinary income) on a straight-line basis, unless an election is made to
accrue the discount according to a constant yield method based on daily
compounding. If you are not required, and do not elect, to include discount in
income currently, any gain you realize on the sale, exchange or retirement of a
Short-Term Note will generally be ordinary income to you to the extent of the
discount accrued by you through the date of sale, exchange or retirement. In
addition, if you do not elect to currently include accrued discount in income,
you may be required to defer deductions for a portion of your interest expense
with respect to any indebtedness attributable to the Short-Term Notes.
Market Discount
If you purchase a Note, other than an Original Issue Discount Note, for an
amount that is less than its stated redemption price at maturity or, in the case
of an Original Issue Discount Note, its adjusted issue price, the amount of the
difference will be treated as "market discount" for United States federal income
tax purposes, unless that difference is less than a specified de minimis amount.
Under the market discount rules, you will be required to treat any payment,
other than qualified stated interest, on, or any gain on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to the extent of
the market discount that you have not previously included in income and are
treated as having accrued on the Note at the time of its payment or disposition.
In addition, you may be required to defer, until the maturity of the Note or its
earlier disposition in a taxable transaction, the deduction of all or a portion
of the interest expense on any indebtedness attributable to the Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless you elect
to accrue on a constant interest method. You may elect to include market
discount in income currently as it accrues, on either a ratable or constant
interest method, in which case the rule described above regarding deferral of
interest deductions will not apply. Your election to include market discount in
income currently, once made, applies to all market discount obligations acquired
by you on or after the first taxable year to which your election applies and may
not be revoked without the consent of the IRS.
Acquisition Premium; Amortizable Bond
Premium
If you purchase an Original Issue Discount Note for an amount that is
greater than its adjusted issue price but equal to or less than the sum of all
amounts payable on the Note after the purchase date other than payments of
qualified stated interest, you will be considered to have purchased that Note at
an "acquisition premium." Under the acquisition premium rules, the amount of OID
that you must include in gross income with respect to the Note for any taxable
year will be reduced by the portion of the acquisition premium properly
allocable to that year.
If you purchase a Note (including an Original Issue Discount Note) for an
amount in excess of the sum of all amounts payable on the Note after the
purchase date other than qualified stated interest, you will be considered to
have purchased the Note at a "premium" and, if it is an Original Issue Discount
Note, you will not be required to include any OID in income. You generally may
elect to amortize the premium over the remaining term of the Note on a constant
yield method as an offset to interest
S-15
<PAGE> 16
when includible in income under your regular accounting method. In the case of
instruments that provide for alternative payment schedules, bond premium is
calculated by assuming that (A) you will exercise or not exercise options in a
manner that maximizes your yield and (B) we will exercise or not exercise
options in a manner that minimizes your yield (except that we will be assumed to
exercise call options in a manner that maximizes your yield). If you do not
elect to amortize bond premium, that premium will decrease the gain or increase
the loss you would otherwise recognize on disposition of the Note. Your election
to amortize premium on a constant yield method will also apply to all debt
obligations held or subsequently acquired by you on or after the first day of
the first taxable year to which the election applies. You may not revoke the
election without the consent of the IRS.
Sale, Exchange and Retirement of Notes
Your tax basis in a Note will, in general, be your cost for that Note,
increased by OID, market discount or any discount with respect to a Short-Term
Note that you previously included in income, and reduced by any amortized
premium and any cash payments on the Note other than qualified stated interest.
Upon the sale, exchange, retirement or other disposition of a Note, you will
recognize gain or loss equal to the difference between the amount you realize
upon the sale, exchange, retirement or other disposition (less an amount equal
to any accrued qualified stated interest that you did not previously include in
income, which will be taxable as such) and the adjusted tax basis of the Note.
Except as described above with respect to certain Short-Term Notes or with
respect to market discounts, that gain or loss will be capital gain or loss.
Capital gains of individuals derived in respect of capital assets held for more
than one year are eligible for reduced rates of taxation. The deductibility of
capital losses is subject to limitations.
CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a summary of certain United States federal income tax
consequences that will apply to you if you are a Non-United States Holder of
Notes.
U.S. Federal Withholding Tax
The 30% U.S. federal withholding tax will not apply to any payment of
principal or interest (including OID) on Notes provided that:
- you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of the Code and U.S. Treasury regulations;
- you are not a controlled foreign corporation that is related to us
through stock ownership;
- you are not a bank whose receipt of interest on the Notes is described in
the Code; and
- either (a) you provide your name and address on an IRS Form W-8, and
certify, under penalty of perjury, that you are not a U.S. person or (b)
a financial institution holding the Notes on your behalf certifies, under
penalty of perjury, that it has received an IRS Form W-8 from you as the
beneficial owner and provides us with a copy.
If you cannot satisfy the requirements described above, payments of
premium, if any, and interest, including OID, made to you will be subject to the
30% U.S. federal withholding tax, unless you provide us with a properly executed
(1) IRS Form 1001 claiming an exemption from, or reduction in, withholding under
the benefit of a tax treaty or (2) IRS Form 4224 stating that interest paid on
the Notes is not subject to withholding tax because it is effectively connected
with your conduct of a trade or business in the United States.
Except as discussed below, the 30% U.S. federal withholding tax will not
apply to any gain or income that you realize on the sale, exchange, retirement
or other disposition of Notes.
U.S. Federal Estate Tax
Your estate will not be subject to U.S. federal estate tax on Notes
beneficially owned by you at the time of your death, provided that (1) you do
not own 10% or more of the total combined voting power of all classes of our
voting stock, within the meaning of the
S-16
<PAGE> 17
Code and U.S. Treasury regulations, and (2) interest on those Notes would not
have been, if received at the time of your death, effectively connected with the
conduct by you of a trade or business in the United States.
U.S. Federal Income Tax
If you are engaged in a trade or business in the United States and premium,
if any, or interest, including OID, on the Notes is effectively connected with
the conduct of that trade or business, you will be subject to U.S. federal
income tax on that interest and OID on a net income basis (although exempt from
the 30% withholding tax) in the same manner as if you were a U.S. person as
defined under the Code. In addition, if you are a foreign corporation, you may
be subject to a branch profits tax equal to 30% (or lower applicable treaty
rate) of your earnings and profits for the taxable year, subject to adjustments
that are effectively connected with the conduct by you of a trade or business in
the United States. For this purpose, the premium, if any, and interest,
including OID, on Notes will be included in earnings and profits.
Any gain or income realized by you on the disposition of a Note generally
will not be subject to U.S. federal income or withholding tax unless:
(1) that gain or income is effectively connected with the conduct of a
trade or business in the United States by you;
(2) you are an individual who is present in the United States for 183 days
or more in the taxable year of that disposition, and certain other conditions
are met; or
(3) to the extent the gain is considered accrued but unpaid interest on the
Note, the requirements described above are not satisfied.
Information Reporting and Backup Withholding
In general, you will not be required to provide information reporting and
backup withholding regarding payments that we make to you provided that we do
not have actual knowledge that you are a U.S. person and we have received from
you the statement described above under "U.S. Federal Withholding Tax."
In addition, you will not be required to pay backup withholding and provide
information reporting regarding the proceeds of the sale of a Note made within
the United States or conducted through certain U.S. related financial
intermediaries, if the payor receives the statement described above and does not
have actual knowledge that you are a U.S. person, as defined under the Code, or
you otherwise establish an exemption.
U.S. Treasury regulations were recently issued that generally modify the
information reporting and backup withholding rules applicable to certain
payments made after December 31, 1999. In general, the new U.S. Treasury
regulations would not significantly alter the present rules discussed above,
except in certain special situations.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the IRS.
NON-DOLLAR DENOMINATED NOTES
We will summarize the United States federal income tax consequences to you
with respect to any Notes we may offer that are denominated in currencies other
than U.S. dollars in the applicable pricing supplement.
S-17
<PAGE> 18
PLAN OF DISTRIBUTION
We may sell the Notes (A) through agents, (B) through underwriters or
dealers or (C) directly to purchasers.
DISTRIBUTION THROUGH AGENTS
We may sell the Notes on a continuing basis through agents that become
parties to a master agency agreement (each an "Agent"), a form of which is filed
as an exhibit to the registration statement. Each Agent's obligations are
separate and several from those of any other Agent. Each Agent will use
reasonable efforts when requested by us to solicit purchases of the Notes. We
will pay each Agent a commission to be negotiated at the time of sale. Unless
otherwise specified in the applicable pricing supplement, the commission may
range from .125% to .750% of the principal amount of each Note sold through that
Agent, depending on its stated maturity. As of the date of this prospectus
supplement, the Agents include Chase Securities Inc., Bear, Stearns & Co. Inc.,
Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated, PaineWebber Incorporated, Prudential Securities Incorporated,
Salomon Smith Barney Inc. and Warburg Dillon Read LLC. Chase Securities Inc. is
a wholly owned subsidiary of Chase.
DISTRIBUTION THROUGH UNDERWRITERS
We may also sell Notes to any Agent, acting as principal, for its own
account or for resale to one or more investors or other purchasers, including
other broker-dealers.
The Agents may sell any Notes they have purchased as principal to any
dealer at a discount. Unless otherwise specified in the applicable pricing
supplement, the discount allowed to any dealer will not be in excess of the
discount to be received by the Agent from us. Unless otherwise specified in the
applicable pricing supplement, any Note we sell to an Agent as principal will be
purchased by that Agent at a price equal to 100% of the principal amount of that
Note less a percentage ranging from .125% to .750% of that principal amount,
depending upon the Note's stated maturity. The Agents may resell Notes to
investors and other purchasers from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The Agents may also resell Notes
to certain dealers as described above. After the initial public offering of any
Notes, the Agents may change the public offering price and other selling terms.
DIRECT SALES
We may sell Notes directly to investors, without the involvement of any
Agent or underwriter. In this case, we would not be obligated to pay any
commission or discount in connection with the sale.
GENERAL INFORMATION
We will set forth the names of any Agents or other persons through which we
sell any Notes, as well as any commissions or discounts payable to those Agents
or other persons, in the applicable pricing supplement.
We will have the sole right to accept offers to purchase Notes and may, in
our absolute discretion, reject any proposed purchase of Notes in whole or in
part. Each Agent will have the right, in its discretion reasonably exercised, to
reject in whole or in part any proposed purchase of Notes through it.
Any Agent, underwriter or dealer that participates in the offering of the
Notes may be an "underwriter" within the meaning of the Securities Act of 1933.
We have agreed to indemnify each Agent and certain other persons against certain
liabilities, including liabilities under the Securities Act.
We may also accept (but not solicit) offers to purchase Notes through
additional agents on substantially the same terms and conditions (including
commissions) as would apply to purchases by the Agents under the master agency
agreement referred to above.
Unless otherwise specified in the applicable pricing supplement, the Notes
will not be listed on any securities exchange. The Agents have advised us that
they may from time to time purchase and sell the Notes in the secondary market.
However, no Agent is obligated to do so and any Agent may discontinue making a
market in the Notes at any time without notice. We can
S-18
<PAGE> 19
give no assurance as to the existence or liquidity of any secondary market for
the Notes.
The Agents, as well as other agents to or through which we may sell Notes,
may engage in transactions with us and perform services for us in the ordinary
course of business.
Chase Securities Inc. is an affiliate of ours by virtue of the fact that we
own all the outstanding equity securities of Chase Securities Inc. The offer and
sale of any Notes by Chase Securities Inc. will comply with the requirements of
Rule 2720 of the Conduct Rules of the National Association of Securities
Dealers, Inc. regarding a member firm's underwriting securities of an affiliate.
As required by Rule 2720, no such offer and sale will be made to any
discretionary account without the prior approval of the customer. See "Plan of
Distribution" in the attached prospectus.
Our affiliates, including Chase Securities Inc., may use this prospectus
supplement, the attached prospectus and any applicable pricing supplement in
connection with offers and sales of the Notes in the secondary market. These
affiliates may act as principal or agent in those transactions. Secondary market
sales by these affiliates will be made at prices related to market prices at the
time of sale.
In connection with certain offerings of the Notes, the Agents may engage in
overallotment, stabilizing transactions and syndicate covering transactions in
accordance with Regulation M under the Securities Exchange Act of 1934.
Overallotment involves sales in excess of the offering size, which create a
short position for the Agents. Stabilizing transactions involve bids to purchase
the Notes in the open market for the purpose of pegging, fixing or maintaining
the price of the Notes. Syndicate covering transactions involve purchases of the
Notes in the open market after the distribution has been completed in order to
cover short positions. Stabilizing transactions and syndicate covering
transactions may cause the price of the Notes to be higher than it would
otherwise be in the absence of those transactions. Those activities, if begun,
may be discontinued at any time.
LEGAL OPINIONS
Our counsel, Simpson Thacher & Bartlett, New York, New York, will deliver
an opinion for us regarding the validity of the Notes. Cravath, Swaine & Moore,
New York, New York, counsel for the Agents, will deliver a similar opinion for
the Agents. Cravath, Swaine & Moore has represented and continues to represent
us and our subsidiaries in a substantial number of matters on a regular basis.
In the opinions described above, certain assumptions will be made regarding
future action required to be taken by us and the appropriate trustee in
connection with the issuance and sale of any particular Notes, the specific
terms of those Notes and other matters that may affect the validity of those
Notes but that cannot be ascertained on the date of the relevant opinion.
S-19
<PAGE> 20
GLOSSARY
Set forth below are definitions of some of the terms used in this
prospectus supplement and not defined in the attached prospectus.
"Calculation Date" means, with respect to any Interest Determination Date,
the date on which the Calculation Agent is to calculate an interest rate for a
floating rate Note. Unless otherwise specified in the Note and the applicable
pricing supplement, the Calculation Date pertaining to an Interest Determination
Date for a floating rate Note will be the first to occur of (a) the tenth
calendar day after that Interest Determination Date or, if that day is not a
Business Day, the following Business Day and (b) the Business Day preceding the
applicable interest payment date or maturity date of that Note, as the case may
be. However, LIBOR will be calculated on the Interest Determination Date.
"Designated CMT Telerate Page" means the display on Bridge Telerate Inc.
(or any successor service) on the page specified in the pricing supplement (or
any other page that replaces that page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)) or, if no page
is specified, page 7052.
"Designated LIBOR Page" means:
- if "LIBOR Telerate" is designated in the pricing supplement, the display
on Bridge Telerate Inc. for the purpose of displaying the London
interbank rates of major banks for the applicable Index Currency; or
- if "LIBOR Reuters" is designated in the pricing supplement, the display
on the Reuters Monitor Money Rates Service for the purpose of displaying
the London interbank rates of major banks for the applicable Index
Currency.
If neither LIBOR Telerate nor LIBOR Reuters is specified, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is the Index Currency, page 3750) had been specified.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication, published by the Board
of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15 (519), available through
the website of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/
releases/h15/update, or any successor site or publication.
"Index Currency" means the currency, including composite currencies,
specified in the pricing supplement as the currency for which LIBOR will be
calculated. If no currency is specified, the Index Currency will be U.S.
dollars.
"Money Market Yield" means a yield calculated in accordance with the
following formula:
<TABLE>
<C> <C> <S>
D X 360
Money Market Yield = 360 - (D X M) X 100
</TABLE>
where "D" refers to the annual rate for the commercial paper, quoted on a bank
discount basis and expressed as a decimal, and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
"Reset Date" means the date on which a floating rate Note will begin to
bear interest at an interest rate determined as of any Interest Determination
Date. Unless otherwise specified in the applicable Note and pricing supplement,
the Reset Dates will be:
- in the case of a floating rate Note that resets daily, each Business Day;
- in the case of a floating rate Note (other than a Treasury Rate Note)
that resets weekly, Wednesday of each week;
- in the case of a Treasury Rate Note that resets weekly, Tuesday of each
week;
- in the case of a floating rate Note that resets monthly, the third
Wednesday of each month;
- in the case of a floating rate Note that resets quarterly, the third
Wednesday of March, June, September and December of each year;
- in the case of a floating rate Note that resets semi-annually, the third
Wednesday of each of two months of each year specified in the pricing
supplement; and
- in the case of a floating rate Note that resets annually, the third
Wednesday of
S-20
<PAGE> 21
one month of each year specified in the pricing supplement.
If a Reset Date would otherwise be a day that is not a Business Day, that Reset
Date will be postponed to the next Business Day. However, if a Reset Date for a
LIBOR Note would otherwise be a day that is not a London Business Day, that
Reset Date will be postponed until the next London Business Day, unless that
next London Business Day falls in the following month. In that case, the Reset
Date will be the preceding London Business Day. If a Treasury bill auction will
be held on any day that would otherwise be a Reset Date for a Treasury Rate
Note, then that Reset Date will instead be the Business Day immediately
following that auction date.
"Reuters Screen US Prime 1 Page" means the display on the Reuters Monitor
Money Rates Service on the page designated as "US Prime 1" (or any other page
that replaces that page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
"Telerate Page 56 or 57 " means the display on Bridge Telerate, Inc. (or
any successor since) on page 56 or 57 (or any other page that replaces the
applicable page on that service for the purpose of displaying the rate for the
most recent auction of Treasury bills).
"Telerate Page 120" means the display on Bridge Telerate, Inc. (or any
successor service) on page 120 (or any other page that replaces that page on
that service for the purpose of displaying the Federal funds (effective) rate as
reported in H.15(519)).
S-21
<PAGE> 22
[Chase Manhattan Logo]
THE CHASE MANHATTAN CORPORATION
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
WARRANTS
------------------------
WE WILL PROVIDE SPECIFIC TERMS OF THE ABOVE SECURITIES IN SUPPLEMENTS TO THIS
PROSPECTUS.
YOU SHOULD READ THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT CAREFULLY BEFORE
YOU INVEST.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THIS PROSPECTUS IS DATED JANUARY 29, 1999
<PAGE> 23
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the terms
of our securities, you should carefully read this document and the attached
prospectus supplement, which together give the specific terms of the securities
we are offering. You should also read the documents we have referred you to in
"Where You Can Find More Information About Chase" on page 5 for information
about our company and our financial statements. Certain capitalized terms used
in this summary are defined elsewhere in this prospectus.
THE CHASE MANHATTAN CORPORATION
The Chase Manhattan Corporation ("Chase", which may be referred to as "we" or
"us") is a registered bank holding company. Through various subsidiaries, we
conduct domestic and international financial services businesses. At September
30, 1998, we were one of the largest banking institutions in the United States,
with $356 billion in assets and $23 billion in stockholders' equity.
Our principal bank subsidiaries are The Chase Manhattan Bank, headquartered in
New York, Chase Manhattan Bank USA, National Association, headquartered in
Delaware, and Chase Bank of Texas, National Association, headquartered in Texas.
Our principal non-bank subsidiary is Chase Securities Inc., which is engaged in
securities underwriting and dealing.
THE SECURITIES WE MAY OFFER
This prospectus is part of a registration statement (No. 333-70639) (the
"registration statement") that we filed with the SEC utilizing a "shelf"
registration process. Under this shelf process, we may offer from time to time
up to $8,117,182,414 of any of the following securities, either separately or in
units: debt, preferred stock, depositary shares, common stock and warrants. This
prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add to, update or
change information contained in this prospectus.
DEBT SECURITIES
We may offer our unsecured general obligations, which may be senior (the "Senior
Securities") or subordinated (the "Subordinated Securities"). The Senior
Securities and the Subordinated Securities are together referred to in this
prospectus as the "Debt Securities". The Senior Securities will have the same
rank as all of our other unsecured, unsubordinated debt. The Subordinated
Securities will be entitled to payment only after payment on our Senior
Indebtedness (which is described below and which includes the Senior
Securities). In addition, under certain circumstances relating to our insolvency
or a similar event, the Subordinated Securities will be entitled to payment only
after the payment of claims relating to Additional Senior Obligations (as
described below). For the definitions of Senior Indebtedness and Additional
Senior Obligations, see "Description of Debt Securities -- Subordinated
Securities -- Subordination" below.
The Senior Securities will be issued under an indenture between us and Bankers
Trust Company, as trustee. The Subordinated Securities will be issued under an
indenture between us and U.S. Bank Trust National Association, as trustee. We
have summarized certain general features of the Debt Securities from the
indentures. We encourage you to read the indentures (which are exhibits to the
registration statement) and our recent periodic and current reports filed with
the SEC. Directions on how you can get copies of these reports are provided on
page 5.
We are a holding company that conducts substantially all of our operations
through subsidiaries. As a result, claims of the holders of the Debt Securities
will generally have a junior position to claims of creditors of our subsidiaries
(except to the extent that Chase is recognized, and receives payment, as a
creditor of those subsidiaries). Claims of creditors of our subsidiaries other
than Chase include substantial amounts of long-term debt, deposit liabilities,
federal funds purchased, securities sold under repurchase agreements, commercial
paper and other short-term borrowings.
2
<PAGE> 24
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED SECURITIES
- - Neither indenture limits the amount of debt that we may issue or provides you
with any protection should there be a highly leveraged transaction,
recapitalization or restructuring involving Chase.
- - The indentures allow us to merge or consolidate with another company, or to
sell all or substantially all of our assets to another company. If these
events occur, the other company will be required to assume our
responsibilities relating to the Debt Securities, and we will be released from
all liabilities and obligations.
- - The indentures provide that holders of a majority of the total principal
amount of outstanding Debt Securities of any series may vote to change certain
of our obligations or certain of your rights concerning the Debt Securities of
that series. However, to change the amount or timing of principal, interest or
other payments under the Debt Securities, every holder in the series must
consent.
- - If an event of default (as described below) occurs with respect to any series
of Debt Securities, the trustee or holders of 25% of the outstanding principal
amount of that series may declare the principal amount of the series
immediately payable. However, holders of a majority of the principal amount
may rescind this action.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SENIOR SECURITIES
We have agreed in the indenture relating to the Senior Securities that we and
our subsidiaries will not sell voting stock of The Chase Manhattan Bank, and
that The Chase Manhattan Bank will not issue its voting stock, unless the sale
or issuance is for fair market value and we and our subsidiaries would own at
least 80% of the voting stock of The Chase Manhattan Bank following the sale or
issuance. This covenant would not prevent us from completing a merger,
consolidation or sale of substantially all of our assets. In addition, this
covenant would not prevent the merger or consolidation of The Chase Manhattan
Bank into another domestic bank if Chase and its subsidiaries would own at least
80% of the voting stock of the successor entity after the merger or
consolidation.
If we satisfy certain conditions in the indenture relating to the Senior
Securities, we may discharge that indenture at any time by depositing with the
trustee sufficient funds or government obligations to pay the Senior Securities
when due.
Events of Default. The indenture relating to the Senior Securities provides
that the following are events of default:
- - Interest is not paid for 30 days after due date.
- - Principal or premium is not paid when due.
- - Sinking fund payment is not paid for 5 days after due date.
- - Covenant breach continues for 60 days after notice.
- - Principal payment default on Chase debt (including Senior Securities of other
series) having an aggregate principal amount of more than $25,000,000 is not
rescinded within 30 days after notice.
- - Acceleration of more than $25,000,000 aggregate principal amount of Chase debt
(including Senior Securities of other series) is not rescinded within 30 days
after notice.
- - Occurrence of certain bankruptcy or insolvency events.
- - Occurrence of any other event of default specified in the prospectus
supplement.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SUBORDINATED SECURITIES
The Subordinated Securities will be subordinated to all Senior Indebtedness,
which includes all indebtedness for money borrowed by us, except indebtedness
that is stated to be not superior to, or to have the same rank as, the
Subordinated Securities. At September 30, 1998, approximately $8.2 billion of
Senior Indebtedness was outstanding.
In an insolvency of or similar event relating to Chase, creditors holding
Additional Senior Obligations would also be entitled to full payment before we
could distribute any amounts to holders of the Subordinated Securities.
Additional Senior Obligations include indebtedness for claims under derivative
products, including interest, foreign exchange and commodity contracts, but
exclude claims under Senior Indebtedness or claims under obligations having the
same rank as, or ranking junior to, the Subordinated Securities. At September
30, 1998, approximately $0.4 billion of Additional Senior Obligations were
outstanding.
3
<PAGE> 25
Events of Default. The indenture relating to the Subordinated Securities
provides that the following are events of default:
- - Occurrence of certain bankruptcy or insolvency events.
- - Occurrence of any other event of default specified in the prospectus
supplement.
PREFERRED STOCK AND DEPOSITARY SHARES
We may issue our preferred stock, par value $1 per share, in one or more series.
We will determine the dividend, voting, conversion and other rights of the
series being offered and the terms and conditions relating to the offering and
sale of the series at the time of the offer and sale. We may also issue
fractional shares of preferred stock that will be represented by depositary
shares and depositary receipts.
COMMON STOCK
We may issue our common stock, par value $1 per share. Subject to the rights of
holders of our preferred stock, holders of our common stock are entitled to
receive dividends when declared by our board of directors (which may also refer
to a board committee or officer acting on authority delegated by our board of
directors). Each holder of common stock is entitled to one vote per share. The
holders of common stock have no preemptive rights or cumulative voting rights.
WARRANTS
We may issue warrants for the purchase of Debt Securities, preferred stock or
common stock ("Securities Warrants"). We may also issue warrants for the cash
value in U.S. dollars of the right to purchase or sell foreign or composite
currencies ("Currency Warrants"). We may issue warrants independently or
together with other securities.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
Our consolidated ratios of earnings to fixed charges and our consolidated ratios
of earnings to combined fixed charges and preferred stock dividend requirements
are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- ------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits............ 1.77 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............ 1.74 1.77 1.60 1.82 1.76 1.52
Including Interest on Deposits............ 1.38 1.41 1.30 1.38 1.38 1.27
</TABLE>
For purposes of computing the above ratios, earnings represent net income from
continuing operations plus total taxes based on income and fixed charges. Fixed
charges, excluding interest on deposits, include interest expense (other than on
deposits), one-third (the proportion deemed representative of the interest
factor) of rents, net of income from subleases, and capitalized interest. Fixed
charges, including interest on deposits, include all interest expense, one-third
(the proportion deemed representative of the interest factor) of rents, net of
income from subleases, and capitalized interest.
4
<PAGE> 26
WHERE YOU CAN FIND MORE INFORMATION
ABOUT CHASE
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we make with the SEC under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until our offering is
completed:
(a) Annual Report on Form 10-K for the year ended December 31, 1997;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
(c) Current Reports on Form 8-K filed on January 21, 1998, January 28,
1998, March 17, 1998, April 24, 1998, May 20, 1998, June 15, 1998, July 24,
1998, July 30, 1998, September 2, 1998, September 8, 1998, September 11,
1998, September 29, 1998, October 23, 1998, November 18, 1998, December 16,
1998 and January 22, 1999; and
(d) The descriptions of our common stock and preferred stock contained
in our registration statements filed under Section 12 of the Securities
Exchange Act of 1934.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Office of the Secretary
The Chase Manhattan Corporation
270 Park Avenue
New York, NY 10017
212-270-4040
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN
THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT. WE HAVE AUTHORIZED NO ONE TO
PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF SECURITIES
IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
5
<PAGE> 27
THE CHASE MANHATTAN CORPORATION
GENERAL
Chase is a bank holding company registered under the Bank Holding Company Act of
1956. We were organized as a Delaware corporation in 1968. As of September 30,
1998, we were one of the largest banking institutions in the United States, with
$356 billion in assets and $23 billion in stockholders' equity.
Through our subsidiaries, we conduct domestic and international financial
services businesses. Our principal bank subsidiaries are The Chase Manhattan
Bank, a New York banking corporation (the "Bank"), Chase Manhattan Bank USA,
National Association, headquartered in Delaware ("Chase USA"), and Chase Bank of
Texas, National Association, headquartered in Texas ("Chase Texas"). Our
principal non-bank subsidiary is Chase Securities Inc. ("CSI"), which is engaged
in securities underwriting and dealing.
BUSINESS
Our activities are internally organized, for operating purposes, into three
major business franchises. A brief description of these business franchises is
presented below.
Global Banking
Our Global Banking business included, as of September 30, 1998:
- - Global Markets, which conducts trading and sales of foreign exchange,
derivatives, fixed income securities and commodities and our asset/liability
management activities;
- - Global Investment Banking, which provides financing and advisory services to
corporations, financial institutions, financial sponsors and governments;
- - Corporate Lending, which provides credit and lending services to clients
globally;
- - Chase Capital Partners, which provides equity and mezzanine financing in the
United States and abroad;
- - Global Asset Management and Private Banking, which serves high net worth
individuals and families, and institutional, mutual fund and self-directed
investors located throughout the world;
- - Middle Market, which provides financial services to companies with annual
sales ranging from $10 million to $500 million; and
- - Chase Texas (other than its consumer and global services businesses), which is
the primary bank for more corporations than any other bank in Texas.
National Consumer Services
Our National Consumer Services business included, as of September 30, 1998:
- - Cardmember Services, which includes the fourth-largest bank credit card issuer
in the U.S. as of September 30, 1999 as well as Chase's international consumer
business;
- - Regional Consumer Banking, which maintains a leading share of primary banking
relationships among consumers and small businesses in the New York
metropolitan tri-state area and which also includes the consumer business of
Chase Texas;
- - Chase Home Finance, which was the third largest originator and fourth largest
servicer of residential mortgage loans in the U.S. as of September 30, 1998;
and
- - Diversified Consumer Services, a leading provider of automobile financing,
student lending and unsecured consumer lending.
Chase Technology Solutions
Chase Technology solutions combines Chase'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.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, we will use
the net proceeds we receive from the sale of the securities offered by this
prospectus and the accompanying prospectus supplement for general corporate
purposes. General corporate purposes may include the repayment of debt,
investments in or extensions of credit to our subsidiaries, redemption of
preferred stock, or the financing of possible acquisitions or
6
<PAGE> 28
business expansion. We may invest the net proceeds temporarily or apply them to
repay short-term debt until we are ready to use them for their stated purpose.
DESCRIPTION OF DEBT SECURITIES
GENERAL
We have described below certain general terms that may apply to the Debt
Securities. We will describe the particular terms of any Debt Securities we
offer to you in the prospectus supplement relating to those Debt Securities.
The Debt Securities will be either Senior Securities or Subordinated Securities.
We will issue the Senior Securities under a senior indenture dated as of
December 1, 1989 between us and Bankers Trust Company, as trustee. We will issue
the Subordinated Securities under a subordinated indenture, as amended and
restated as of December 15, 1992, between us and U.S. Bank Trust National
Association, as trustee.
The following summary of certain provisions of the indentures with respect to
the Senior Securities and the Subordinated Securities is not complete. You
should refer to the indentures, copies of which are exhibits to the registration
statement. Section references below are to the sections in the applicable
indenture.
Neither indenture limits the amount of Debt Securities that we may issue. Each
indenture provides that we may issue Debt Securities up to the principal amount
we authorize from time to time. The Senior Securities will be unsecured and will
have the same rank as all of our other unsecured and unsubordinated debt. The
Subordinated Securities will be unsecured and will be subordinated and junior to
all Senior Indebtedness (as defined below under "Subordinated
Securities -- Subordination"). In addition, under certain circumstances relating
to our dissolution, winding-up, liquidation or reorganization, the Subordinated
Securities will be junior to all Additional Senior Obligations (as defined and
to the extent set forth below under "Subordinated Securities -- Subordination").
We are a holding company that conducts substantially all of our operations
through subsidiaries. As a result, claims of the holders of the Debt Securities
will generally have a junior position to claims of creditors of our
subsidiaries, except to the extent that Chase may be recognized, and receives
payment, as a creditor of those subsidiaries. Claims of creditors of our
subsidiaries other than Chase include substantial amounts of long-term debt,
deposit liabilities, federal funds purchased, securities sold under repurchase
agreements, commercial paper and other short-term borrowings.
We may issue the Debt Securities in one or more separate series of Senior
Securities and/or Subordinated Securities. We will specify in the prospectus
supplement relating to a particular series of Debt Securities being offered the
particular amounts, prices and terms of those Debt Securities. These terms may
include:
- - the title and type of the Debt Securities;
- - any limit on the aggregate principal amount or aggregate initial offering
price of the Debt Securities;
- - the purchase price of the Debt Securities;
- - the dates on which the principal of the Debt Securities will be payable and
the amount payable upon acceleration;
- - the interest rates of the Debt Securities, including the interest rates, if
any, applicable to overdue payments, or the method for determining those
rates, and the interest payment dates for the Debt Securities;
- - the places where payments may be made on the Debt Securities;
- - any mandatory or optional redemption provisions applicable to the Debt
Securities;
- - any sinking fund or similar provisions applicable to the Debt Securities;
- - the authorized denominations of the Debt Securities (if other than $1,000 and
integral multiples of $1,000);
- - if denominated in a currency other than U.S. dollars, the currency or
currencies, including the euro or other composite currencies, in which
payments on the Debt Securities will be payable (which currencies may be
different for principal, premium and interest payments);
- - any conversion or exchange provisions applicable to the Debt Securities;
- - any events of default applicable to the Debt Securities (if not described in
this prospectus); and
- - any other specific terms of the Debt Securities.
7
<PAGE> 29
We may issue some of the Debt Securities as original issue discount Debt
Securities. Original issue discount Debt Securities bear no interest or bear
interest at below-market rates and will be sold at a discount below their stated
principal amount. The prospectus supplement will also contain any special tax,
accounting or other information relating to original issue discount Debt
Securities. If we offer other kinds of Debt Securities, including Debt
Securities linked to an index or payable in currencies other than U.S. dollars,
the prospectus supplement relating to those Debt Securities will also contain
any special tax, accounting or other information relating to those Debt
Securities.
We will issue the Debt Securities only in fully registered form without coupons.
The indentures permit us to issue Debt Securities of a series definitive,
certificated form or in permanent global form. You will not be required to pay a
service charge for any transfer or exchange of Debt Securities, but we may
require payment of any taxes or other governmental charges.
Unless otherwise specified in the prospectus supplement, we will pay principal
of (and premium, if any) and interest, if any, on the Debt Securities at the
corporate trust office of the Bank in New York City. You may also make transfers
or exchanges of Debt Securities at that location. We also have the right to pay
interest on any Debt Securities by check mailed to the registered holders of the
Debt Securities at their registered addresses. In connection with any payment on
a Debt Security, we may require the holder to certify information to Chase. In
the absence of that certification, we may rely on any legal presumption to
enable us to determine our responsibilities, if any, to deduct or withhold
taxes, assessments or governmental charges from the payment.
Neither indenture limits our ability to enter into a highly leveraged
transaction or provides you with any special protection in the event of such a
transaction. In addition, neither indenture provides special protection in the
event of a sudden and dramatic decline in our credit quality resulting from a
takeover, recapitalization or similar restructuring of Chase.
We may issue Debt Securities upon the exercise of warrants issued with other
Debt Securities or upon exchange or conversion of exchangeable or convertible
Debt Securities. The prospectus supplement will describe the specific terms of
any of those warrants or exchangeable or convertible securities. It will also
describe the specific terms of the Debt Securities issuable upon the exercise,
exchange or conversion of those securities. See "Description of Securities
Warrants" below.
SENIOR SECURITIES
The Senior Securities will be direct, unsecured general obligations of Chase,
will constitute Senior Indebtedness of Chase, and will have the same rank as our
other Senior Indebtedness. For a definition of "Senior Indebtedness" see
"-- Subordinated Securities -- Subordination" below.
Limitation on Disposition of Stock of the Bank. The senior indenture contains a
covenant by us that, so long as any of the Senior Securities are outstanding,
neither we nor any Intermediate Subsidiary (as defined below) will dispose of
any shares of voting stock of the Bank, or any securities convertible into, or
options, warrants or rights to purchase shares of voting stock of the Bank,
except to Chase or an Intermediate Subsidiary. In addition, the covenant
provides that neither we nor any Intermediate Subsidiary will permit the Bank to
issue any shares of its voting stock, or securities convertible into, or
options, warrants or rights to subscribe for or purchase shares of its voting
stock, nor will we permit any Intermediate Subsidiary to cease to be an
Intermediate Subsidiary. However, this covenant is subject to our rights in
connection with our consolidation or merger with or into another person or a
sale of our assets. These restrictions also will not apply if (1) the
disposition of voting stock of the Bank, or any securities convertible into, or
options, warrants or rights to purchase shares of voting stock of the Bank, is
made for fair market value, as determined by the board of directors of Chase or
the Intermediate Subsidiary, and (2) after giving effect to the transaction, we
and any one or more of our Intermediate Subsidiaries will collectively own at
least 80% of the issued and outstanding voting stock of the Bank or any
successor to the Bank free and clear of any security interest. The above
covenant also does not restrict the Bank from being consolidated with or merged
into another domestic banking corporation if after the merger or consolidation
Chase (or its successor) and any one or more Intermediate Subsidiaries own at
least 80% of the voting stock
8
<PAGE> 30
of the resulting bank and no event of default (and no event which, after notice
or lapse of time or both, would become an event of default) shall have happened
and be continuing. The senior indenture defines an Intermediate Subsidiary as a
subsidiary (1) that is organized under the laws of any domestic jurisdiction and
(2) of which all the shares of capital stock, and all securities convertible
into, and options, warrants and rights to purchase, shares of capital stock, are
owned directly by Chase, free and clear of any security interest. As used above,
"voting stock" means a class of stock having general voting power under ordinary
circumstances, irrespective of the happening of a contingency. The above
covenant would not prevent the Bank from engaging in a sale of assets to the
extent otherwise permitted by the senior indenture. (Section 1006).
Events of Default. The senior indenture defines an event of default with
respect to any series of Senior Securities as any one of the following events:
(1) default in the payment of interest on any Senior Security of that
series and continuance of that default for 30 days;
(2) default in the payment of principal of (or premium, if any, on)
any Senior Security of that series at maturity;
(3) default in the deposit of any sinking fund payment and continuance
of that default for 5 days;
(4) failure by Chase for 60 days after notice to perform any of the
other covenants or warranties in the senior indenture applicable to that
series;
(5)(A) failure by Chase to pay indebtedness for money borrowed by
Chase, including Senior Securities of other series, in an aggregate
principal amount exceeding $25,000,000, at the later of final maturity or
the expiration of any applicable grace period or (B) acceleration of the
maturity of indebtedness for money borrowed by Chase, including Senior
Securities of other series, in an aggregate principal amount exceeding
$25,000,000, if that failure to pay or acceleration results from a default
under the instrument giving rise to or securing the indebtedness for money
borrowed by Chase and is not rescinded or annulled within 30 days after due
notice, unless the default is contested in good faith by appropriate
proceedings;
(6) certain events of bankruptcy, insolvency or reorganization of
Chase or the Bank; and
(7) any other event of default specified with respect to Senior
Securities of that series. (Section 501).
If any event of default with respect to Senior Securities of any series occurs
and is continuing, either the trustee or the holders of not less than 25% in
principal amount of the outstanding Senior Securities of that series may declare
the principal amount (or, if the Senior Securities of that series are original
issue discount Senior Securities, a specified portion of the principal amount)
of all Senior Securities of that series to be due and payable immediately. No
such declaration is required upon certain events of bankruptcy. Subject to
certain conditions, the holders of a majority in principal amount of the
outstanding Senior Securities of that series may annul the declaration and waive
past defaults (except uncured payment defaults and certain other specified
defaults). (Sections 502 and 513).
We will describe in the prospectus supplement any particular provisions relating
to the acceleration of the maturity of a portion of the principal amount of
original issue discount Senior Securities upon an event of default.
The senior indenture requires the trustee to, within 90 days after the
occurrence of a default known to it with respect to any outstanding series of
Senior Securities, give the holders of that series notice of the default if
uncured or not waived. The trustee may withhold this notice if it determines in
good faith that the withholding of this notice is in the interest of those
holders. However, the trustee may not withhold this notice in the case of a
payment default. The trustee may not give the above notice until 60 days after
the occurrence of a default in the performance of a covenant in the senior
indenture other than a covenant to make payment. The term "default" for the
purpose of this provision means any event that is, or after notice or lapse of
time or both would become, an event of default with respect to Senior Securities
of that series. (Section 602).
9
<PAGE> 31
Other than the duty to act with the required standard of care during a default,
the trustee is not obligated to exercise any of its rights or powers under the
senior indenture at the request or direction of any of the holders of Senior
Securities, unless the holders have offered to the trustee reasonable security
or indemnity. (Section 603). The senior indenture provides that the holders of a
majority in principal amount of outstanding Senior Securities of any series may
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust or other power conferred on
the trustee. However, the trustee may decline to act if the direction is
contrary to law or the senior indenture. (Section 512).
The senior indenture includes a covenant requiring us to file annually with the
trustee a certificate of no default, or specifying any default that exists.
(Section 1007).
Defeasance and Covenant Defeasance. The senior indenture contains a provision
that, if made applicable to any series of Senior Securities, permits us to elect
(1) defeasance, which would discharge us from all of our obligations (subject to
limited exceptions) with respect to any Senior Securities of that series then
outstanding, and/or (2) covenant defeasance, which would release us from our
obligations under certain covenants and from the consequences of an event of
default resulting from a breach of those covenants or a cross-default. To make
either of the above elections, we must deposit in trust with the trustee money
and/or U.S. Government Obligations (as defined below) which through the payment
of principal and interest in accordance with their terms will provide sufficient
money, without reinvestment, to repay in full those Senior Securities. As used
in the senior indenture, U.S. Government Obligations are (A) direct obligations
of the United States or of an agency or instrumentality of the United States, in
either case that is or is guaranteed as a full faith and credit obligation of
the United States and that is not redeemable by the issuer and (B) certain
depository receipts with respect to an obligation referred to in clause (A).
As a condition to defeasance or covenant defeasance, we must deliver to the
trustee an opinion of counsel that the holders of the Senior Securities will not
recognize income, gain or loss for Federal income tax purposes as a result of
the defeasance or covenant defeasance and will be subject to Federal income tax
on the same amount, in the same manner and at the same times as would have been
the case if defeasance or covenant defeasance had not occurred. That opinion, in
the case of defeasance, but not covenant defeasance, must refer to and be based
upon a ruling received by us from the Internal Revenue Service or published as a
revenue ruling or upon a change in applicable Federal income tax law.
If we exercise our covenant defeasance option with respect to a particular
series of Senior Securities, then even if there were a default under the related
covenant, payment of those Senior Securities could not be accelerated. We may
exercise our defeasance option with respect to a particular series of Senior
Securities even if we previously had exercised our covenant defeasance option.
If we exercise our defeasance option, payment of those Senior Securities may not
be accelerated because of any event of default. If we exercise our covenant
defeasance option and an acceleration were to occur, the realizable value at the
acceleration date of the money and U.S. Government Obligations in the defeasance
trust could be less than the principal and interest then due on those Senior
Securities. This is because the required deposit of money and/or U.S. Government
Obligations in the defeasance trust is based upon scheduled cash flows rather
than market value, which will vary depending upon interest rates and other
factors.
Modification of the Senior Indenture. We and the trustee may modify the senior
indenture with the consent of the holders of not less than a majority in
principal amount of each series of outstanding Senior Securities affected by the
modification. However, without the consent of each affected holder, no such
modification may:
- - change the stated maturity of any Senior Security;
- - reduce the principal amount of (or premium, if any, on) any Senior Security;
- - reduce the rate of payment of interest on any Senior Security or change
certain other provisions relating to the yield of the Senior Securities;
- - change the currency or currencies in which any Senior Security is payable;
- - reduce the percentage of holders of outstanding Senior Securities of any
series required to
10
<PAGE> 32
consent to any modification, amendment or waiver under the senior indenture; or
- - change the provisions in the senior indenture that relate to its modification
or amendment. (Section 902).
We and the trustee may amend the senior indenture in certain circumstances
without the consent of the holders of Senior Securities in the event we merge
with another person, to replace the trustee, to effect modifications that do not
affect any outstanding series of Senior Securities, and for certain other
purposes.
Consolidation, Merger and Sale of Assets. We may, without the consent of the
holders of any Senior Securities, consolidate or merge with any other person or
transfer or lease all or substantially all of our assets to another person or
permit another corporation to merge into Chase, provided that:
(1) the successor is a person organized under U.S. law;
(2) the successor person, if not Chase, assumes our obligations on the
Senior Securities and under the senior indenture;
(3) after giving effect to the transaction, no event of default, and
no event which, after notice or lapse of time or both, would become an
event of default, shall have occurred and be continuing; and
(4) certain other conditions are met. (Section 801).
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured general obligations of
Chase. The Subordinated Securities will be subordinate and junior in right of
payment to all Senior Indebtedness and, in certain circumstances described below
relating to our dissolution, winding-up, liquidation or reorganization, to all
Additional Senior Obligations. The subordinated indenture does not limit the
amount of debt (including Senior Indebtedness) or Additional Senior Obligations
we may incur. As of September 30, 1998, Senior Indebtedness and Additional
Senior Obligations totaled approximately $8.6 billion.
Unless otherwise specified in the prospectus supplement, the maturity of the
Subordinated Securities will be subject to acceleration only upon our bankruptcy
or reorganization. See "Defaults and Waivers" below.
The holders of Subordinated Securities of a series that is specified to be
convertible into our common stock will be entitled at certain times specified in
the prospectus supplement to convert those convertible Subordinated Securities
into common stock, at the conversion price set forth in the prospectus
supplement.
The holders of Subordinated Securities of any series may be obligated at
maturity, or at any earlier time specified in the prospectus supplement, to
exchange that series of Subordinated Securities for Capital Securities. Capital
Securities may consist of our common stock, perpetual preferred stock or other
capital securities of Chase acceptable to our primary Federal banking regulator,
which currently is the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"). The terms of any such exchange and of the Capital
Securities that will be issued upon the exchange will be described in the
prospectus supplement. (Article Seventeen). Whenever Subordinated Securities are
exchangeable for Capital Securities, we will be obligated to deliver Capital
Securities with a market value equal to the principal amount of those
Subordinated Securities. In addition, we will unconditionally undertake, at our
expense, to sell the Capital Securities in a secondary offering on behalf of any
holders who elect to receive cash for the Capital Securities.
Subordination. The Subordinated Securities will be subordinate in right of
payment to all Senior Indebtedness and, under certain circumstances described
below, to all Additional Senior Obligations.
The subordinated indenture defines "Senior Indebtedness" to mean the principal
of (and premium, if any) and interest on all indebtedness for money borrowed by
us, whether outstanding on the date the subordinated indenture became effective
or created, assumed or incurred after that date (including all indebtedness for
money borrowed by another person that we guarantee), except indebtedness that is
stated to be not superior to or to have the same rank as the Subordinated
Securities. Senior Indebtedness does not include (A) Antecedent Company
Subordinated Indebtedness (as defined below), (B) Subordinated Securities issued
under the subordinated
11
<PAGE> 33
indenture on or after December 15, 1992, (C) Assumed MHC Subordinated
Indebtedness (as defined below), (D) Assumed Heritage Chase Subordinated
Indebtedness (as defined below) and (E) other debt of Chase that is expressly
stated to have the same rank as the Subordinated Securities or to rank not
senior to the Subordinated Securities (that other debt is referred to as "Other
Subordinated Indebtedness").
The subordinated indenture defines "Additional Senior Obligations" to mean all
indebtedness of Chase for claims in respect of derivative products, such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements, except Senior Indebtedness and except obligations that are
expressly stated to have the same rank as or to rank not senior to the
Subordinated Securities.
At September 30, 1998, we had approximately $8.0 billion of Subordinated
Securities issued and outstanding under the subordinated indenture.
Antecedent Company Subordinated Indebtedness means all outstanding subordinated
indebtedness of Chase issued prior to December 15, 1992 (other than Assumed MHC
Subordinated Indebtedness and Assumed Heritage Chase Subordinated Indebtedness).
At September 30, 1998, we had approximately $1.0 billion of Antecedent Company
Subordinated Indebtedness outstanding.
Assumed MHC Subordinated Indebtedness means all outstanding subordinated
indebtedness of Chase that was assumed by us as a result of the merger of
Manufacturers Hanover Corporation into Chase. At September 30, 1998, we had
approximately $150 million of Assumed MHC Subordinated Indebtedness outstanding.
Assumed Heritage Chase Subordinated Indebtedness means all outstanding
subordinated indebtedness of Chase that was assumed by us as a result of the
merger of The Chase Manhattan Corporation into Chase. At September 30, 1998, we
had approximately $3.6 billion of Assumed Heritage Chase Subordinated
Indebtedness outstanding.
At September 30, 1998, we had approximately $436 million of Other Subordinated
Indebtedness outstanding that ranked equally with the Subordinated Securities.
Under the subordinated indenture, we may not make any payment on the
Subordinated Securities or exchange any Subordinated Securities for Capital
Securities in the event:
- - we have failed to make full payment of all amounts of principal (and premium,
if any) and interest, if any, due on all Senior Indebtedness; or
- - there shall exist any event of default or any event which, with notice or
lapse of time or both, would become such an event of default on any Senior
Indebtedness.
In addition, upon our dissolution, winding-up, liquidation or reorganization:
(1) we must pay to the holders of Senior Indebtedness the full amounts of
principal of (and premium, if any) and interest, if any, on that Senior
Indebtedness before any payment or distribution is made on the Subordinated
Securities, and (2) if, after we have made those payments on the Senior
Indebtedness, (A) there are amounts available for payment on the Subordinated
Securities and (B) creditors in respect of Additional Senior Obligations have
not received their full payments, then we will first use amounts available for
payment on the Subordinated Securities to pay in full all Additional Senior
Obligations before we may make any payment on the Subordinated Securities.
No series of our subordinated securities will be subordinated to any of our
other series of subordinated securities. However, Antecedent Company
Subordinated Indebtedness is subordinated only to Senior Indebtedness;
Subordinated Securities and Other Subordinated Indebtedness are subordinated to
Senior Indebtedness and, in certain circumstances relating to our dissolution,
winding-up, liquidation or reorganization, to Additional Senior Obligations;
Assumed MHC Subordinated Indebtedness is subordinated to Senior Indebtedness,
Additional Senior Obligations and all of our other obligations to our creditors,
except any obligation that is expressly stated to have the same rank as, or to
rank not senior to, the Assumed MHC Subordinated Indebtedness; and Assumed
Heritage Chase Subordinated Indebtedness is subordinated to Senior Indebtedness,
Additional Senior Obligations and all of our other obligations to our creditors,
except any obligation that is expressly stated to have the same rank as, or to
rank junior to, the Assumed Heritage Chase Subordinated Indebtedness. As a
result of the differences between the subordination provisions applicable to the
Subordinated Securities, the Antecedent Com-
12
<PAGE> 34
pany Subordinated Indebtedness, the Other Subordinated Indebtedness, the Assumed
MHC Subordinated Indebtedness and the Assumed Heritage Chase Subordinated
Indebtedness, in the event of our dissolution, winding-up, liquidation or
reorganization, the holders of Subordinated Securities and Other Subordinated
Indebtedness may receive less, proportionately, than the holders of Antecedent
Company Subordinated Indebtedness, but more, proportionately, than the holders
of Assumed MHC Subordinated Indebtedness and Assumed Heritage Chase Subordinated
Indebtedness.
Limitation on Disposition of Voting Stock of the Bank. Except as noted below,
the subordinated indenture does not contain a covenant prohibiting us from
selling or otherwise disposing of any shares of voting stock of the Bank, or
securities convertible into, or options, warrants or rights to purchase shares
of voting stock of the Bank. The subordinated indenture also does not prohibit
the Bank from issuing any shares of its voting stock or securities convertible
into, or options, warrants or rights to purchase shares of its voting stock.
However, the subordinated indenture does contain a covenant, which is for the
exclusive benefit of holders of the Antecedent Company Subordinated Indebtedness
and which is subject to the provisions described below under "Consolidation,
Merger and Sale of Assets", that we will not sell or otherwise dispose of any
shares of voting stock of the Bank, or securities convertible into, or options,
warrants or rights to purchase shares of voting stock of the Bank, nor will we
permit the Bank to issue any shares of its voting stock, or securities
convertible into, or options, warrants or rights to purchase shares of its
voting stock. However, the covenant does not prohibit:
- - issuances or sales of directors' qualifying shares;
- - issuances or sales of shares to us;
- - sales or other dispositions or issuances for fair market value, as determined
by our board of directors, so long as we would continue to own directly or
indirectly not less than 80% of the issued and outstanding shares of the
voting stock of the Bank;
- - sales or other dispositions or issuances made in compliance with an order or
direction of a court or regulatory authority of competent jurisdiction; and
- - sales of voting stock by the Bank to its shareholders if those sales do not
reduce the percentage of shares of voting stock owned by us. (Section 5.07).
Defaults and Waivers. The subordinated indenture defines an event of default
with respect to any series of Subordinated Securities as:
- - any one of certain events of bankruptcy or reorganization affecting Chase; or
- - any other event of default specified with respect to Subordinated Securities
of that series. (Section 7.01).
If an event of default occurs and is continuing with respect to any outstanding
series of Subordinated Securities, the trustee or the holders of at least 25% in
aggregate principal amount of that outstanding series of Subordinated Securities
may declare the principal (or, in the case of original issue discount
Subordinated Securities, a specified amount of principal) of all Subordinated
Securities of that series to be due and payable immediately in cash. Subject to
certain conditions, the holders of not less than a majority in aggregate
principal amount of the Subordinated Securities of that series may annul any
such declaration and waive certain past defaults. (Section 7.01). The right of
the holders of Subordinated Securities of a series to demand payment in cash
upon the occurrence and continuance of an event of default will continue to
exist so long as the Subordinated Securities of that series have not been
exchanged or converted. Any such right to enforce that payment in cash would, in
the event of the bankruptcy or reorganization of Chase, be subject to the broad
equity powers of a Federal bankruptcy court and to its determination of the
nature and status of the payment claims of the holders of the Subordinated
Securities. Prior to any declaration of acceleration, the holders of a majority
in aggregate principal amount of the applicable series of Subordinated
Securities may waive any past default or event of default, except a payment
default. (Section 7.07).
Unless otherwise provided in the terms of a series of Subordinated Securities,
there will be no right of acceleration of the payment of principal of the
Subordinated Securities of that series upon a default in the payment of
principal or interest or a default in the performance of any covenant or
agreement in the Subordinated Securities or the subordinated indenture. In the
event of a default
13
<PAGE> 35
in the payment of interest or principal (including a default in the delivery of
any Capital Securities in exchange for Subordinated Securities) or in the
performance of any covenant or agreement in the Subordinated Securities or the
subordinated indenture, the trustee may, subject to certain limitations and
conditions, seek to enforce that payment (or delivery) or the performance of
that covenant or agreement.
The subordinated indenture requires the trustee, within 90 days after the
occurrence of a default with respect to the Subordinated Securities of any
series, to give the holders of that series notice of all uncured defaults known
to it (the term "default" being defined to include the events specified above
without grace periods or notice). However, except in certain cases involving the
bankruptcy or reorganization of Chase, a payment default or a default in the
obligation to deliver Capital Securities in exchange for Subordinated
Securities, the trustee may withhold the notice if it determines in good faith
that the withholding of the notice is in the interest of those holders. (Section
7.08). We are required to furnish to the trustee annually an officers'
certificate as to the absence of defaults under the subordinated indenture.
(Section 5.06).
Other than the duties of the trustee to act with the required standard of care
during a default, the trustee is not obligated to exercise any of its rights or
powers under the subordinated indenture at the request or direction of any of
the holders of the Subordinated Securities, unless those holders shall have
offered to the trustee reasonable security or indemnity. Subject to that
provision for security or indemnification, the holders of a majority in
principal amount of the Subordinated Securities of any series then outstanding
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to, or exercising any trust or power
conferred on, the trustee with respect to the Subordinated Securities of that
series. (Sections 7.07 and 8.02).
Modification of the Subordinated Indenture. The subordinated indenture contains
provisions permitting us and the trustee to modify the subordinated indenture or
the rights of the holders of the Subordinated Securities with the consent of the
holders of not less than a majority in principal amount of each outstanding
series of the Subordinated Securities affected by the modification. However, no
such modification may, without the consent of each holder of Subordinated
Securities affected by the modification:
- - change the stated maturity date of the principal of, or any installment of
principal of or interest on, any Subordinated Security;
- - reduce the principal amount of (or premium, if any) or interest, if any, on
any Subordinated Security;
- - reduce the portion of the principal amount of an original issue discount
Subordinated Security payable upon acceleration of the maturity of that
Subordinated Security;
- - reduce any amount payable upon redemption of any Subordinated Security;
- - change the place or places where, or the currency in which, any Subordinated
Security or any premium or interest is payable;
- - change the definition of market value;
- - impair the right of any holders of Subordinated Securities of any series to
receive on any exchange date for Subordinated Securities of that series
Capital Securities with a market value equal to that required by the terms of
the Subordinated Securities;
- - impair the conversion rights (if any) of any holders;
- - impair the right of a holder to institute suit for the enforcement of any
payment on or with respect to any Subordinated Security (including any right
of redemption at the option of the holder of that Subordinated Security) or
impair any rights to the delivery of Capital Securities in exchange for any
Subordinated Security or to require Chase to sell Capital Securities in a
secondary offering or to require the delivery of common stock, Debt Securities
or other property upon conversion of Subordinated Securities;
- - reduce the above-stated percentage of Subordinated Securities of any series
the consent of the holders of which is necessary to modify or amend the
subordinated indenture or reduce the percentage of Subordinated Securities of
any series the holders of which are required to waive any past default or
event of default;
- - modify the foregoing requirements. (Section 11.02).
The subordinated indenture permits us and the trustee to amend the subordinated
indenture in
14
<PAGE> 36
certain circumstances without the consent of the holders of Subordinated
Securities in the event of the merger of Chase, the replacement of the trustee,
to effect modifications which do not affect any outstanding series of
Subordinated Securities and for certain other purposes. (Section 11.01).
Consolidation, Merger and Sale of Assets. We may not merge or consolidate with
any other corporation or sell or convey all or substantially all of our assets
as an entirety to any other corporation, unless (1) we are the continuing
corporation or the successor corporation expressly assumes the payment of the
principal of (including issuance and delivery of Capital Securities) and
premium, if any, and interest, if any, on the Subordinated Securities and the
performance and observance of all the covenants and conditions of the
subordinated indenture binding upon us, and (2) we or the successor corporation
shall not, immediately after merger, consolidation, sale or conveyance, be in
default in the performance of any such covenant or condition. (Article Twelve).
PERMANENT GLOBAL DEBT SECURITIES
We may issue certain series of the Debt Securities as permanent global Debt
Securities and deposit them with a depositary with respect to that series.
Unless otherwise indicated in the prospectus supplement, the following is a
summary of the depository arrangements applicable to Debt Securities issued in
permanent global form and for which The Depositary Trust Company ("DTC") acts as
depositary (the "global Debt Securities").
Each global Debt Security will be deposited with, or on behalf of, DTC, as
depositary, or its nominee and registered in the name of a nominee of DTC.
Except under the limited circumstances described below, global Debt Securities
are not exchangeable for definitive, certificated Debt Securities.
Only institutions that have accounts with DTC or its nominee ("participants") or
persons that may hold interests through participants may own beneficial
interests in a global Debt Security. DTC will maintain records reflecting
ownership of beneficial interests by participants in the global Debt Securities
and transfers of those interests. Participants will maintain records evidencing
ownership of beneficial interests in the global Debt Securities by persons that
hold through those participants and transfers of those interests within those
participants. DTC has no knowledge of the actual beneficial owners of the Debt
Securities. You will not receive written confirmation from DTC of your purchase
of a beneficial interest in a global Debt Security, but we do expect that you
will receive written confirmations providing details of the transaction, as well
as periodic statements of your holdings, from the participant through which you
entered the transaction. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of those securities in
definitive, certificated form. Those laws may impair your ability to transfer
beneficial interests in a global Debt Security.
DTC has advised us that upon the issuance of a global Debt Security and the
deposit of that global Debt Security with DTC, DTC will immediately credit, on
its book-entry registration and transfer system, the respective principal
amounts represented by that global Debt Security to the accounts of its
participants.
We will make payment of principal of, and interest on, Debt Securities
represented by a global Debt Security to DTC or its nominee, as the case may be,
as the registered owner and holder of the global Debt Security representing
those Debt Securities. DTC has advised us that upon receipt of any payment of
principal of, or interest on, a global Debt Security, DTC will immediately
credit accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of that global Debt
Security, as shown in the records of DTC. Standing instructions and customary
practices will govern payments by participants to owners of beneficial interests
in a global Debt Security held through those participants, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name". Those payments will be the sole responsibility of those
participants, subject to any statutory or regulatory requirements that may be in
effect from time to time.
Neither we, the trustees nor any of our respective agents will be responsible
for any aspect of the records of DTC, any nominee or any participant relating
to, or payments made on account of, beneficial interests in a global Debt
Security or for maintaining, supervising or reviewing any of the records of DTC,
any nominee or any participant relating to those beneficial interests.
15
<PAGE> 37
A global Debt Security is exchangeable for definitive Debt Securities registered
in the name of a person other than DTC or its nominee only if:
(a) DTC notifies us that it is unwilling or unable to continue as
depositary for that global Debt Security or DTC ceases to be registered
under the Securities Exchange Act of 1934;
(b) we determine in our discretion that the global Debt Security will
be exchangeable for definitive Debt Securities in registered form; or
(c) there shall have occurred and be continuing an event of default or
an event which, with notice or the lapse of time or both, would constitute
an event of default under the Debt Securities.
Any global Debt Security that is exchangeable as described in the preceding
sentence will be exchangeable in whole for definitive, certificated Debt
Securities in registered form, of like tenor and of an equal aggregate principal
amount as the global Debt Security, in denominations specified in the applicable
prospectus supplement (if other than $1,000 and integral multiples of $1,000).
The registrar will register the definitive Debt Securities in the name or names
instructed by DTC. We expect that these instructions may be based upon
directions received by DTC from its participants with respect to ownership of
beneficial interests in the global Debt Security. We will make payment of any
principal and interest on the definitive Debt Securities and will register
transfers and exchanges of those definitive Debt Securities at the corporate
trust office of the Bank in the Borough of Manhattan, The City of New York.
However, we may elect to pay interest by check mailed to the address of the
person entitled to that interest payment as of the record date, as shown on the
register for the Debt Securities.
Except as provided above, as an owner of a beneficial interest in a global Debt
Security, you will not be entitled to receive physical delivery of Debt
Securities in definitive form and will not be considered the holder of Debt
Securities for any purpose under the applicable indenture. No global Debt
Security will be exchangeable except for another global Debt Security of like
denomination and tenor to be registered in the name of DTC or its nominee.
Accordingly, you must rely on the procedures of DTC and the participant through
which you own your interest to exercise any rights of a holder under the global
Debt Security or the applicable indenture.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a global
Debt Security desires to take any action that a holder is entitled to take under
the Debt Securities or the indentures, DTC would authorize the participants
holding the relevant beneficial interests to take that action, and those
participants would authorize beneficial owners owning through those participants
to take that action or would otherwise act upon the instructions of beneficial
owners owning through them.
DTC has advised us that DTC is a limited purpose trust company organized under
the laws of the State of New York, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the Securities Exchange Act of 1934. DTC was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants in those
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. DTC is
owned by a number of its participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. (the "NASD"). Access to DTC's book-entry system is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either directly
or indirectly. The rules applicable to DTC and its participants are on file with
the SEC.
INFORMATION CONCERNING THE TRUSTEES
We, the Bank and certain of our other subsidiaries maintain deposits and conduct
other banking transactions with each of the trustees under the indentures in the
ordinary course of business.
16
<PAGE> 38
DESCRIPTION OF PREFERRED STOCK
GENERAL
Our certificate of incorporation authorizes our board of directors to cause
preferred stock to be issued in one or more series, without stockholder action.
The board of directors is authorized to issue up to 200,000,000 shares of
preferred stock, $1 par value per share, and can determine the number of shares
of each series, and the rights, preference and limitations of each series. We
may amend our certificate of incorporation to increase the number of authorized
shares of preferred stock in a manner permitted by our certificate of
incorporation and the Delaware General Corporation Law. As of the date of this
prospectus, we have six series of preferred stock outstanding, which are
described below under "Outstanding Preferred Stock".
Under regulations adopted by the Federal Reserve Board, if the holders of any
series of our preferred stock become entitled to vote for the election of
directors because dividends on that series are in arrears, that series may then
be deemed a "class of voting securities." In that case, a holder of 25% or more
of the series, or a holder of 5% or more if that holder would also be considered
to exercise a "controlling influence" over Chase, may then be subject to
regulation as a bank holding company in accordance with the Bank Holding Company
Act of 1956. In addition, (1) any other bank holding company may be required to
obtain the prior approval of the Federal Reserve Board to acquire or retain 5%
or more of that series, and (2) any person other than a bank holding company may
be required to obtain the approval of the Federal Reserve Board to acquire or
retain 10% or more of that series.
We will describe the particular terms of any series of preferred stock being
offered in the prospectus supplement relating to that series of preferred stock.
Those terms may include:
- - the number of shares being offered;
- - the title and liquidation preference per share;
- - the purchase price;
- - the dividend rate (or method for determining that rate);
- - the dates on which dividends will be paid;
- - whether dividends will be cumulative or noncumulative and, if cumulative, the
dates from which dividends will begin to accumulate;
- - any applicable redemption or sinking fund provisions;
- - any applicable conversion provisions;
- - whether we have elected to offer depositary shares with respect to that series
of preferred stock; and
- - any additional dividend, liquidation, redemption, sinking fund and other
rights and restrictions applicable to that series of preferred stock.
If the terms of any series of preferred stock being offered differ from the
terms set forth below, we will also disclose those terms in the prospectus
supplement relating to that series of preferred stock. The following summary is
not complete. You should refer to the certificate of designations relating to
the series of the preferred stock being offered for the complete terms of that
preferred stock. We will file that certificate of designations with the SEC
promptly after the offering of the preferred stock.
The preferred stock will, when issued, be fully paid and nonassessable. Unless
otherwise specified in the prospectus supplement, in the event we liquidate,
dissolve or wind-up our business, each series of preferred stock being offered
will have the same rank as to dividends and distributions as our currently
outstanding preferred stock and each other series of preferred stock we may
offer in the future by use of this prospectus. The preferred stock will have no
preemptive rights.
DIVIDEND RIGHTS
If you purchase preferred stock being offered by use of this prospectus and an
applicable prospectus supplement, you will be entitled to receive, when, as and
if declared by our board of directors, cash dividends at the rates and on the
dates set forth in the prospectus supplement. Dividend rates may be fixed or
variable or both. Different series of preferred stock may be entitled to
dividends at different dividend rates or based upon different methods of
determination. We will pay each dividend to the holders of record as they appear
on our stock books (or, if applicable, the records of the depositary referred to
below under "-- Depositary Shares") on record dates determined by the board of
directors. Dividends on any series of the preferred stock may be cumulative or
noncumulative, as specified in the prospectus supplement. If the board of
directors fails to declare a dividend on any series of preferred stock
17
<PAGE> 39
for which dividends are noncumulative, then your right to receive that dividend
will be lost, and we will have no obligation to pay the dividend for that
dividend period, whether or not we declare dividends for any future dividend
period.
We may not declare or pay any dividend on any series of preferred stock, unless,
for the dividend period commencing after the immediately preceding dividend
payment date, we have previously declared and paid or we contemporaneously
declare and pay full dividends (and cumulative dividends still owing, if any) on
all other series of preferred stock which rank equally with or senior to that
series of preferred stock. If we do not pay the dividends on those equally and
senior ranking series in full, we may only declare dividends pro rata, so that
the amount of dividends declared per share on that series of preferred stock and
on each other equally or senior ranking series of preferred stock will bear to
each other the same ratio that accrued dividends per share on that series of
preferred stock and those other series bear to each other. In addition,
generally, unless we have paid full dividends, including cumulative dividends
still owing, if any, on all outstanding shares of any series of preferred stock,
we may not declare or pay dividends on our common stock and generally we may not
redeem or purchase any common stock. We will not pay interest or any sum of
money in lieu of interest on any dividend payment or payments that may be in
arrears.
We will compute the amount of dividends payable for each dividend period by
annualizing the applicable dividend rate and dividing by the number of dividend
periods in a year, except that the amount of dividends payable for the initial
dividend period or any period shorter than a full dividend period will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full month, the actual number of days elapsed in the
period.
RIGHTS UPON LIQUIDATION
In the event we liquidate, dissolve or wind-up our affairs, either voluntarily
or involuntarily, if you purchase preferred stock offered by use of this
prospectus and an applicable prospectus supplement, you will be entitled to
receive liquidating distributions in the amount set forth in the prospectus
supplement, plus accrued and unpaid dividends, if any, before we make any
distribution of assets to the holders of our common stock. If we fail to pay in
full all amounts payable with respect to preferred stock being offered by us and
any stock having the same rank as that series of preferred stock, the holders of
the preferred stock and of that other stock will share in any distribution of
assets in proportion to the full respective preferential amounts to which they
are entitled. After the holders of each series of preferred stock and any stock
having the same rank as the preferred stock are paid in full, they will have no
right or claim to any of our remaining assets. Neither the sale of all or
substantially all our property or business nor a merger or consolidation by us
with any other corporation will be considered a dissolution, liquidation or
winding-up of our business or affairs.
REDEMPTION
The applicable prospectus supplement will indicate whether the series of
preferred stock being offered is subject to redemption, in whole or in part,
whether at our option or mandatorily and whether or not pursuant to a sinking
fund. The redemption provisions that may apply to a series of preferred stock
being offered, including the redemption dates, the redemption prices for that
series and whether those redemption prices will be paid in cash, stock or a
combination of cash and stock, will be set forth in the prospectus supplement.
If the redemption price is to be paid only from the proceeds of the sale of our
capital stock, the terms of the series of preferred stock may also provide that,
if no such capital stock is sold or if the amount of cash received is
insufficient to pay in full the redemption price then due, the series of
preferred stock will automatically be converted into shares of the applicable
capital stock pursuant to conversion provisions specified in the prospectus
supplement.
If we are redeeming fewer than all the outstanding shares of any series of
preferred stock being offered, whether by mandatory or optional redemption, the
board of directors will determine the method for selecting the shares to be
redeemed, which may be by lot or pro rata or by any other method the board of
directors determines to be equitable. From and after the redemption date,
dividends will cease to accrue on the shares of preferred stock called for
redemption and all rights of the holders of those shares (except the right to
receive the redemption price) will cease.
18
<PAGE> 40
In the event that we fail to pay full dividends, including accrued but unpaid
dividends, if any, on any series of preferred stock being offered, we may not
redeem that series in part and we may not purchase or acquire any shares of that
series of preferred stock, except by an offer made on the same terms to all
holders of that series of preferred stock.
CONVERSION RIGHTS
The prospectus supplement will state the terms, if any, on which shares of a
series of preferred stock being offered are convertible into shares of our
common stock or another series of our preferred stock. As described under
"-- Redemption" above, under certain circumstances, preferred stock may be
mandatorily convertible into our common stock or another series of our preferred
stock.
VOTING RIGHTS
Except as indicated below or in the prospectus supplement, or except as
expressly required by applicable law, the holders of preferred stock being
offered will not be entitled to vote. Except as indicated in the prospectus
supplement, in the event we offer full shares of any series of preferred stock,
each share will be entitled to one vote on matters on which holders of that
series of preferred stock are entitled to vote. However, as more fully described
below under "-- Depositary Shares", if we use this prospectus to offer
depositary shares representing a fraction of a share of a series of preferred
stock, each depositary share, in effect, will be entitled to that fraction of a
vote, rather than a full vote. Because each full share of any series of
preferred stock being offered will be entitled to one vote, the voting power of
that series will depend on the number of shares in that series, and not on the
aggregate liquidation preference or initial offering price of the shares of that
series of preferred stock.
If, at the time of any annual meeting of our stockholders, the equivalent of six
quarterly dividends payable on any series of preferred stock being offered is in
default, the number of directors constituting our board of directors will be
increased by two and the holders of all outstanding series of preferred stock,
voting together as a single class, will be entitled to elect those additional
two directors at that annual meeting. Each director elected by the holders of
shares of the outstanding preferred stock will continue to serve as director for
the full term for which he or she shall have been elected, even if prior to the
end of that term we have paid in full the amount of dividends that had been in
arrears. For purposes of this paragraph, "default" means that accrued and unpaid
dividends on the applicable series are equal to or greater than the equivalent
of six quarterly dividends.
Unless otherwise specified in the prospectus supplement, the terms of each
series of preferred stock being offered will state that the approval of at least
two-thirds of the outstanding shares of preferred stock will be required to:
- - create any class or series of stock having a preference over any outstanding
series of preferred stock; or
- - change the provisions of our certificate of incorporation in a manner that
would adversely affect the voting powers or other rights of the holders of a
series of preferred stock.
The terms of the preferred stock being offered will also state that if the
amendment will not adversely affect all series of outstanding preferred stock,
then the amendment will only need to be approved by holders of at least
two-thirds of the shares of the series of preferred stock adversely affected.
19
<PAGE> 41
OUTSTANDING PREFERRED STOCK
As of the date of this prospectus, we have six series of preferred stock issued
and outstanding, as described in the following table:
<TABLE>
<CAPTION>
STATED VALUE AND NUMBER OUTSTANDING AT EARLIEST RATE IN EFFECT AT
REDEMPTION PRICE OF SEPTEMBER 30, REDEMPTION SEPTEMBER 30,
PER SHARE(a) SHARES 1998 DATE 1998
---------------- ------------- -------------- ---------- -----------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Adjustable Rate, Series L
Cumulative.................... $100.00 2.0 $200 6/30/1999 4.500%(b)
Adjustable Rate, Series N
Cumulative.................... 25.00 9.1 228 6/30/1999 4.505(b)
9.76% Cumulative................ 25.00 4.0 100 9/30/1999 9.76
10.96% Cumulative............... 25.00 4.0 100 6/30/2000 10.96
10.84% Cumulative............... 25.00 8.0 200 6/30/2001 10.84
Fixed/Adjustable Rate
Noncumulative................. 50.00 4.0 200 6/30/2003 4.96(c)
</TABLE>
- ---------------
(a) Redemption price is price indicated in table, plus accrued but unpaid
dividends, if any.
(b) Floating rates are based on certain U.S. Treasury rates. The minimum and
maximum rates are 4.50% and 10.50%, respectively, for each of the Adjustable
Rate, Series L Cumulative Preferred Stock and the Adjustable Rate, Series N
Cumulative Preferred Stock.
(c) Dividends on this series for dividend periods commencing on or after July 1,
2003 will be at a floating rate based on certain U.S. Treasury rates (but
subject to a minimum rate of 5.46% and a maximum rate of 11.46%). The amount
of dividends payable may be adjusted, and the stock may be redeemed earlier
than June 30, 2003 in the event of certain amendments to the Internal
Revenue Code of 1986 relating to the dividends-received deduction.
Ranking. All the outstanding series of preferred stock have the same rank. All
the outstanding series of preferred stock have preference over our common stock
with respect to the payment of dividends and the distribution of assets in the
event of our liquidation or dissolution.
Dividends. Dividends payable on each series of outstanding preferred stock are
payable quarterly, when and as declared by the board of directors, on each March
31, June 30, September 30 and December 31. Dividends on all the outstanding
preferred stock, other than the Fixed/Adjustable Rate Noncumulative Preferred
Stock, are cumulative. If we fail to declare a dividend on the Fixed/ Adjustable
Noncumulative Preferred Stock for any dividend period, holders of that series
will have no right to receive a dividend for that dividend period, whether or
not we declare dividends on that series for any future dividend periods.
Rights Upon Liquidation; Redemption. In the event of our liquidation,
dissolution or winding-up, the holders of each outstanding series of preferred
stock will be entitled to receive liquidating distributions, in the amount set
forth opposite that series in the table above, plus accrued and unpaid
dividends, if any, before any distribution of our assets is made to the holders
of our common stock. Each of the outstanding series of preferred stock is
redeemable at our option at a redemption price equal to the redemption price set
forth opposite that series in the table above, plus accrued but unpaid
dividends, if any. In addition, we may redeem the shares of the Fixed/Adjustable
Rate Noncumulative Preferred Stock earlier than June 30, 2003 in the event of
certain amendments to the Internal Revenue Code of 1986 relating to the
dividends-received deduction.
Voting Rights. All currently outstanding series of preferred stock provide that
if, at the time of any annual meeting of our stockholders, the equivalent of six
quarterly dividends payable on any series of outstanding preferred stock is in
default, the number of directors constituting our board of directors will be
increased by two and the holders of all the outstanding preferred stock, voting
together as a single class, will be entitled to elect those additional two
directors at that annual meeting. Each director elected by the holders of shares
of the outstanding preferred stock will continue to serve as director for the
full term for which he or she shall have been elected, even if
20
<PAGE> 42
prior to the end of that term we have paid in full the amount of dividends that
had been in arrears. For purposes of this paragraph, "default" means that
accrued and unpaid dividends on the applicable series are equal to or greater
than the equivalent of six quarterly dividends.
Each series of the outstanding preferred stock other than the 10.96% Cumulative
Preferred Stock and Adjustable Rate, Series L Cumulative Preferred Stock
provides (and, unless otherwise specified in the prospectus supplement, each
series of preferred stock being offered by use of this prospectus will provide)
that the affirmative vote of the holders of at least two-thirds of the shares of
all outstanding series of preferred stock, voting together as a single class
without regard to series, will be required to:
- - create any class or series of stock having a preference over any outstanding
series of preferred stock; or
- - change the provisions of our certificate of incorporation in a manner that
would adversely affect the voting powers or other rights of the holders of a
series of preferred stock.
Those series of preferred stock also state that if the amendment will not
adversely affect all series of outstanding preferred stock, then the amendment
will only need to be approved by holders of at least two-thirds of the shares of
the series of preferred stock adversely affected.
The 10.96% Cumulative Preferred Stock and the Adjustable Rate, Series L
Cumulative Preferred Stock each provide as follows:
- - the consent of holders of at least two-thirds of the outstanding shares of the
particular series, voting as a separate class, is required for any amendment
of our certificate of incorporation that would adversely affect the powers,
preferences, privileges or rights of that series; and
- - the consent of the holders of at least two-thirds of the voting power of that
series and each other series of preferred stock having the same rank, voting
together as a single class without regard to series, is required to create,
authorize, issue, or reclassify any stock into, any additional class or series
of stock ranking prior to that series as to dividends or upon liquidation, or
any other security or obligation convertible into or exercisable for any such
prior-ranking stock.
Miscellaneous. No series of outstanding preferred stock is convertible into
shares of our common stock or other securities of Chase. No series of
outstanding preferred stock is subject to preemptive rights.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C. will be the transfer agent, registrar
and dividend disbursement agent for any preferred stock or depositary shares
being offered by use of this prospectus. The registrar for the preferred stock
will send notices to the holders of the preferred stock of any meetings at which
those holders will have the right to elect directors or to vote on any other
matter.
DEPOSITARY SHARES
General. We may, at our option, elect to offer fractional shares of preferred
stock, rather than full shares of preferred stock. If we do, we will issue to
the public receipts for depositary shares, and each of these depositary shares
will represent a fraction of a share of a particular series of preferred stock.
We will specify that fraction in the prospectus supplement.
The shares of any series of preferred stock underlying the depositary shares
will be deposited under a deposit agreement between us and a depositary selected
by us. The depositary will be a bank or trust company and will have its
principal office in the United States and a combined capital and surplus of at
least $50,000,000. Subject to the terms of the deposit agreement, each owner of
a depositary share will be entitled, in proportion to the applicable fractional
interest in shares of preferred stock underlying that depositary share, to all
the rights and preferences of the preferred stock underlying that depositary
share. Those rights include dividend, voting, redemption, conversion and
liquidation rights.
The depositary shares will be evidenced by depositary receipts issued under the
deposit agreement. We will issue depositary receipts to those persons who
purchase the fractional interests in the preferred stock underlying the
depositary shares, in accordance with the terms of the offering. The following
summary of the deposit agreement, the depositary shares and the depositary
receipts is not complete. You should refer to the forms of the deposit agreement
and depositary receipts that are filed as exhibits to the registration
statement.
21
<PAGE> 43
Dividends and Other Distributions. The depositary will distribute all cash
dividends or other cash distributions received in respect of the preferred stock
to the record holders of related depositary shares in proportion to the number
of depositary shares owned by those holders.
If we make a distribution other than in cash, the depositary will distribute
property received by it to the record holders of depositary shares that are
entitled to receive the distribution, unless the depositary determines that it
is not feasible to make the distribution. If this occurs, the depositary may,
with our approval, sell the property and distribute the net proceeds from the
sale to the applicable holders.
Redemption of Depositary Shares. Whenever we redeem shares of preferred stock
that are held by the depositary, the depositary will redeem, as of the same
redemption date, the number of depositary shares representing the shares of
preferred stock so redeemed. The redemption price per depositary share will be
equal to the applicable fraction of the redemption price per share payable with
respect to that series of the preferred stock. If fewer than all the depositary
shares are to be redeemed, the depositary will select the depositary shares to
be redeemed by lot or pro rata as determined by the depositary.
Depositary shares called for redemption will no longer be outstanding after the
applicable redemption date, and all rights of the holders of those depositary
shares will cease, except the right to receive any money, securities, or other
property upon surrender to the depositary of the depositary receipts evidencing
those depositary shares.
Voting the Preferred Stock. Upon receipt of notice of any meeting at which the
holders of preferred stock are entitled to vote, the depositary will mail the
information contained in the notice of meeting to the record holders of the
depositary shares underlying that preferred stock. Each record holder of those
depositary shares on the record date (which will be the same date as the record
date for the preferred stock) will be entitled to instruct the depositary as to
the exercise of the voting rights pertaining to the amount of the preferred
stock underlying that holder's depositary shares. The depositary will try, as
far as practicable, to vote the number of shares of preferred stock underlying
those depositary shares in accordance with those instructions, and we will agree
to take all action which the depositary deems necessary in order to enable the
depositary to do so. The depositary will not vote the shares of preferred stock
to the extent it does not receive specific instructions from the holders of
depositary shares underlying the preferred stock.
Amendment and Termination of the Deposit Agreement. We and the depositary may
amend the form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement at any time. However, any amendment that
materially and adversely alters the rights of the holders of depositary shares
will not be effective unless the amendment has been approved by the holders of
at least a majority of the depositary shares then outstanding. The deposit
agreement may be terminated by us or by the depositary only if (1) all
outstanding depositary shares have been redeemed or (2) there has been a final
distribution of the underlying preferred stock in connection with our
liquidation, dissolution or winding up and the preferred stock has been
distributed to the holders of depositary receipts.
Charges of Depositary. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. We will also pay charges of the depositary in connection with the
initial deposit of the preferred stock and any redemption of the preferred
stock. Holders of depositary receipts will pay other transfer and other taxes
and governmental charges and such other charges, including a fee for the
withdrawal of shares of preferred stock upon surrender of depositary receipts,
as are expressly provided in the deposit agreement to be for their accounts.
Resignation and Removal of Depositary. The depositary may resign at any time by
delivering a notice to us of its election to do so. We may remove the depositary
at any time. Any such resignation or removal will take effect upon the
appointment of a successor depositary and its acceptance of its appointment. We
must appoint a successor depositary within 60 days after delivery of the notice
of resignation or removal. The successor depositary must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
22
<PAGE> 44
Miscellaneous. The depositary will forward to holders of depository receipts
all reports and communications from us that we deliver to the depositary and
that we are required to furnish to the holders of the preferred stock.
Neither we nor the depositary will be liable if either of us is prevented or
delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those of
the depositary will be limited to performing in good faith our respective duties
under the deposit agreement. Neither we nor the depositary will be obligated to
prosecute or defend any legal proceeding relating to any depositary shares or
preferred stock unless satisfactory indemnity is furnished. We and the
depositary may rely upon written advice of counsel or accountants, or upon
information provided by persons presenting preferred stock for deposit, holders
of depositary receipts or other persons we believe to be competent and on
documents we believe to be genuine.
PERMANENT GLOBAL PREFERRED SECURITIES
We may issue certain series of the preferred stock or depositary shares as
permanent global securities and deposit them with a depositary with respect to
that series. Unless otherwise indicated in the prospectus supplement, the
following is a summary of the depositary arrangements applicable to preferred
stock or depositary receipts issued in permanent global form and for which DTC
acts as the depositary ("global preferred securities").
Each global preferred security will be deposited with, or on behalf of, DTC or
its nominee and registered in the name of a nominee of DTC. Except under the
limited circumstances described below, global preferred securities are not
exchangeable for definitive, certificated preferred stock or depositary
receipts.
Only DTC's participants or persons that may hold interests through those
participants may own beneficial interests in a global preferred security. DTC
will maintain records reflecting ownership of beneficial interests by
participants in the global preferred securities and transfers of those
interests. Participants will maintain records evidencing ownership of beneficial
interests in the global preferred securities by persons that hold through those
participants and transfers of those interests within those participants. DTC has
no knowledge of the actual beneficial owners of the preferred stock or
depositary shares, as the case may be, represented by a global preferred
security. You will not receive written confirmation from DTC of your purchase of
a beneficial interest in a global preferred security, but we do expect that you
will receive written confirmations providing details of the transaction, as well
as periodic statements of your holdings, from the participants through which you
entered the transaction. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of those securities in
definitive, certificated form. Those laws may impair your ability to transfer
beneficial interests in a global preferred security.
DTC has advised us that upon the issuance of a global preferred security and the
deposit of that global preferred security with DTC, DTC will immediately credit,
on its book-entry registration and transfer system, the respective principal
amounts represented by that global preferred security to the accounts of its
participants.
We will make payments on preferred stock and depositary shares represented by a
global preferred security to DTC or its nominee, as the case may be, as the
registered owner and holder of the global preferred security representing the
preferred stock or depositary shares. DTC has advised us that upon receipt of
any payment on a global preferred security, DTC will immediately credit accounts
of participants with payments in amounts proportionate to their respective
beneficial interests in that global preferred security, as shown in the records
of DTC. Standing instructions and customary practices will govern payments by
participants to owners of beneficial interests in a global preferred security
held through those participants, as is now the case with securities held for the
accounts of customers in bearer form or registered in "street name". Those
payments will be the sole responsibility of those participants, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Neither we nor any of our agents will be responsible for any aspect of the
records of DTC, any nominee or any participant relating to, or payments made on
account of beneficial interests in a global preferred security or for
maintaining, supervising or reviewing any of the records of DTC, any nominee or
any participant relating to those beneficial interests.
23
<PAGE> 45
A global preferred security is exchangeable for definitive certificated
preferred stock or depositary receipts, as the case may be, registered in the
name of a person other than DTC or its nominee, only if:
(a) DTC notifies us that it is unwilling or unable to continue as
depositary for the global preferred security or DTC ceases to be registered
under the Securities Exchange Act of 1934; or
(b) We determine in our discretion that the global preferred security
will be exchangeable for definitive preferred stock or depositary receipts,
as the case may be, in registered form.
Any global preferred security that is exchangeable as described in the preceding
sentence will be exchangeable in whole for definitive, certificated preferred
stock or depositary receipts, as the case may be, registered by the registrar in
the name or names instructed by DTC. We expect that those instructions may be
based upon directions received by DTC from its participants with respect to
ownership of beneficial interests in that global preferred security.
Except as provided above, as an owner of a beneficial interest in a global
preferred security, you will not be entitled to receive physical delivery of
certificates representing shares of preferred stock or depositary shares, as the
case may be, and will not be considered the holder of preferred stock or
depositary shares, as the case may be. No global preferred security will be
exchangeable except for another global preferred security to be registered in
the name of DTC or its nominee. Accordingly, you must rely on the procedures of
DTC and the participant through which you own your interest to exercise any
rights of a holder of preferred stock or depositary shares, as the case may be.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a global
preferred security desires to take any action that a holder of preferred stock
or depositary shares, as the case may be, is entitled to take, DTC would
authorize the participants holding the relevant beneficial interests to take
that action and those participants would authorize beneficial owners owning
through those participants to take that action or would otherwise act upon the
instructions of beneficial owners owning through them.
DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
1,500,000,000 shares of common stock. As of September 30, 1998, we had
881,549,790 shares of common stock issued (including 36,029,776 shares held in
treasury) and had reserved approximately 142,309,139 shares of common stock for
issuance under various employee or director incentive, compensation and option
plans.
The following summary is not complete. You should refer to the applicable
provisions of our certificate of incorporation, including the certificates of
designations pursuant to which the outstanding series of preferred stock were
issued, and to the Delaware General Corporation Law for a complete statement of
the terms and rights of the common stock.
Dividends. Holders of common stock are entitled to receive dividends when, as
and if declared by the board of directors, out of funds legally available for
their payment, subject to the rights of holders of the preferred stock.
Voting Rights. Each holder of common stock is entitled to one vote per share.
Subject to the rights, if any, of the holders of any series of preferred stock
pursuant to applicable law or the provision of the certificate of designations
creating that series, all voting rights are vested in the holders of shares of
common stock. Holders of shares of common stock have noncumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of directors can elect 100% of the directors, and the holders of
the remaining shares will not be able to elect any directors.
Rights Upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share equally in any of our assets available for distribution after
we have paid in full all of our debts and distributions and the full liquidation
preferences of all series of our outstanding preferred stock.
Miscellaneous. The issued and outstanding shares of common stock are fully paid
and nonassessable. Holders of shares of common stock
24
<PAGE> 46
are not entitled to preemptive rights. Shares of common stock are not
convertible into shares of any other class of capital stock. ChaseMellon
Shareholder Services, L.L.C. is the transfer agent, registrar and dividend
disbursement agent for the common stock.
DESCRIPTION OF SECURITIES WARRANTS
We may issue Securities Warrants for the purchase of Debt Securities, preferred
stock or common stock. We may issue Securities Warrants independently or
together with Debt Securities, preferred stock, common stock or other
securities. Each series of Securities Warrants will be issued under a separate
securities warrant agreement to be entered into between us and the Bank or
another bank or trust company, as warrant agent. The warrant agent will act
solely as our agent in connection with the Securities Warrants and will not
assume any obligation or relationship of agency or trust for or with any
registered holders or beneficial owners of Securities Warrants. This summary of
certain provisions of the Securities Warrants and the securities warrant
agreement is not complete. You should refer to the securities warrant agreement,
including the forms of Securities Warrant certificate representing the
Securities Warrants, relating to the specific Securities Warrants being offered
for the complete terms of the securities warrant agreement and the Securities
Warrants. We will file that securities warrant agreement, together with the form
of Securities Warrants, with the SEC promptly after the offering of the specific
Securities Warrants.
Each Securities Warrant will entitle the holder to purchase the principal amount
of Debt Securities or the number of shares of preferred stock or common stock at
the exercise price set forth in, or calculable as set forth in, the prospectus
supplement. The exercise price may be subject to adjustment upon the occurrence
of certain events, as set forth in the prospectus supplement. After the close of
business on the expiration date of the Securities Warrants, unexercised
Securities Warrants will become void. We will also specify in the prospectus
supplement the place or places where, and the manner in which, Securities
Warrants may be exercised.
Prior to the exercise of any Securities Warrants, holders of the Securities
Warrants will not have any of the rights of holders of the Debt Securities,
preferred stock or common stock, as the case may be, purchasable upon exercise
of those Securities Warrants, including, (1) in the case of Securities Warrants
for the purchase of Debt Securities, the right to receive payments of principal
of (and premium, if any) or interest, if any, on the Debt Securities purchasable
upon exercise or to enforce covenants in the applicable indenture, or (2) in the
case of Securities Warrants for the purchase of preferred stock or common stock,
the right to receive payments of dividends, if any, on the preferred stock or
common stock purchasable upon exercise or to exercise any applicable right to
vote.
DESCRIPTION OF CURRENCY WARRANTS
We have described below certain general terms and provisions of the Currency
Warrants that we may offer. We will describe the particular terms of the
Currency Warrants and the extent, if any, to which general provisions described
below do not apply to the Currency Warrants offered in the prospectus
supplement. The following summary is not complete. You should refer to the
Currency Warrants and the currency warrant agreement relating to the specific
Currency Warrants being offered for the complete terms of those Currency
Warrants. We will file the form of Currency Warrants and currency warrant
agreement with the SEC promptly after the offering of the specific Currency
Warrants.
We will issue each issue of Currency Warrants under a currency warrant agreement
to be entered into between us and the Bank or another bank or trust company, as
warrant agent. The warrant agent will act solely as our agent under the
applicable currency warrant agreement and will not assume any obligation or
relationship of agency or trust for or with any holders of Currency Warrants.
We may issue Currency Warrants either in the form of:
- - currency put warrants, which entitle the holders to receive from us the cash
settlement value in U.S. dollars of the right to sell a specified amount of a
specified foreign currency or composite currency (the "Designated Currency")
for a specified amount of U.S. dollars; or
25
<PAGE> 47
- - currency call warrants, which entitle the holders to receive from us the cash
settlement value in U.S. dollars of the right to purchase a specified amount
of a Designated Currency for a specified amount of U.S. dollars.
As a prospective purchaser of Currency Warrants, you should be aware of special
United States Federal income tax considerations applicable to instruments such
as the Currency Warrants. The prospectus supplement relating to each issue of
Currency Warrants will describe those tax considerations.
Unless otherwise specified in the applicable prospectus supplement, we will
issue the Currency Warrants in the form of global Currency Warrant certificates,
registered in the name of a depositary or its nominee. Holders will not be
entitled to receive definitive certificates representing Currency Warrants. A
holder's ownership of a Currency Warrant will be recorded on or through the
records of the brokerage firm or other entity that maintains the holder's
account. In turn, the total number of Currency Warrants held by an individual
brokerage firm for its clients will be maintained on the records of the
depositary in the name of that brokerage firm or its agent. Transfer of
ownership of any Currency Warrant will be effected only through the selling
holder's brokerage firm.
Each issue of Currency Warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale of
that issue of Currency Warrants. In the event that the Currency Warrants are
delisted from, or permanently suspended from trading on, the applicable national
securities exchange, the expiration date for those Currency Warrants will be the
date the delisting or trading suspension becomes effective, and Currency
Warrants not previously exercised will be deemed automatically exercised on that
expiration date. The applicable currency warrant agreement will contain a
covenant from us that we will not seek to delist the Currency Warrants or
suspend their trading on the applicable national securities exchange unless we
have concurrently arranged for listing on another national securities exchange.
Currency Warrants involve a high degree of risk, including risks arising from
fluctuations in the price of the underlying currency, foreign exchange risks and
the risk that the Currency Warrants will expire worthless. Further, the cash
settlement value of Currency Warrants at any time prior to exercise or
expiration may be less than the trading value of the Currency Warrants. The
trading value of the Currency Warrants will fluctuate because that value is
dependent, at any time, on a number of factors, including the time remaining to
exercise the Currency Warrants, the relationship between the exercise price of
the Currency Warrants and the price of the Designated Currency, and the exchange
rate associated with the Designated Currency. Because Currency Warrants are
unsecured obligations of Chase, changes in our perceived creditworthiness may
also be expected to affect the trading prices of Currency Warrants. Finally, the
amount of actual cash settlement of a Currency Warrant may vary as a result of
fluctuations in the price of the Designated Currency between the time you give
instructions to exercise the Currency Warrant and the time the exercise is
actually effected.
As a prospective purchaser of Currency Warrants you should be prepared to
sustain a loss of some or all of the purchase price of your Currency Warrants.
You should also be experienced with respect to options and option transactions
and should reach an investment decision only after careful consideration with
your advisers of the suitability of the Currency Warrants in light of your
particular financial circumstances. You should also consider the information set
forth under "Risk Factors" in the prospectus supplement relating to the
particular issue of Currency Warrants and to the other information regarding the
Currency Warrants and the Designated Currency set forth in the prospectus
supplement.
PLAN OF DISTRIBUTION
We may sell the Debt Securities, preferred stock, depositary shares, common
stock, Securities Warrants or Currency Warrants being offered by use of this
prospectus:
- - through underwriters;
- - through dealers;
- - through agents; or
- - directly to purchasers.
26
<PAGE> 48
We will set forth the terms of the offering of any securities being offered in
the applicable prospectus supplement.
If we utilize underwriters in an offering of securities using this prospectus,
we will execute an underwriting agreement with those underwriters. The
underwriting agreement will provide that the obligations of the underwriters
with respect to a sale of the offered securities are subject to certain
conditions precedent and that the underwriters will be obligated to purchase all
the offered securities if any are purchased. Underwriters may sell those
securities to or through dealers. The underwriters may change any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers from time to time. If we utilize underwriters in an offering of
securities using this prospectus, the applicable prospectus supplement will
contain a statement regarding the intention, if any, of the underwriters to make
a market in the offered securities.
If we utilize a dealer in an offering of securities using this prospectus, we
will sell the offered securities to the dealer, as principal. The dealer may
then resell those securities to the public at a fixed price or at varying prices
to be determined by the dealer at the time of resale.
We may also use this prospectus to offer and sell securities through agents
designated by us from time to time. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a reasonable efforts basis for the
period of its appointment.
Underwriters, dealers or agents participating in a distribution of securities by
use of this prospectus may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
offered securities, whether received from us or from purchasers of offered
securities for whom they act as agent, may be deemed to be underwriting
discounts and commissions under the Securities Act.
Under agreements that we may enter into, underwriters, dealers or agents who
participate in the distribution of securities by use of this prospectus may be
entitled to indemnification by us against certain liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that those underwriters, dealers or agents may be required to make.
We may offer to sell securities either at a fixed price or prices which may be
changed, at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices.
Underwriters, dealers, agents or their affiliates may be customers of, engage in
transactions with, or perform services for, us, the Bank, Chase USA, Chase Texas
or CSI or certain of our other subsidiaries in the ordinary course of business.
Under Rule 2720 of the Conduct Rules of the NASD, when an NASD member, such as
CSI, participates in the distribution of an affiliated company's securities, the
offering must be conducted in accordance with the applicable provisions of Rule
2720. CSI is considered to be an "affiliate" (as that term is defined in Rule
2720) of ours by virtue of the fact that we own all of the outstanding equity
securities of CSI. Any offer and sale of offered securities by CSI or any other
qualified affiliate of ours will comply with the requirements of Rule 2720
regarding the underwriting of securities of affiliates and with any restrictions
that may be imposed on CSI or our other affiliates by the Federal Reserve Board.
Our direct or indirect wholly-owned subsidiaries, including CSI, may use this
prospectus and the related prospectus supplement in connection with offers and
sales of securities in the secondary market. Those subsidiaries may act as
principal or agent in those transactions. Secondary market sales will be made at
prices related to prevailing market prices at the time of sale.
We may also use this prospectus to directly solicit offers to purchase
securities. Except as set forth in the applicable prospectus supplement, none of
our directors, officers, or employees nor those of our bank subsidiaries will
solicit or receive a commission in connection with those direct sales. Those
persons may respond to inquiries by potential purchasers and perform ministerial
and clerical work in connection with direct sales.
We may authorize underwriters, dealers and agents to solicit offers by certain
institutions to purchase securities pursuant to delayed delivery contracts
providing for payment and delivery on a future date specified in the prospectus
supplement. Institutions with which delayed delivery contracts
27
<PAGE> 49
may be made include commercial and savings banks, insurance companies,
educational and charitable institutions and other institutions we may approve.
The obligations of any purchaser under any delayed delivery contract will not be
subject to any conditions except that any related sale of offered securities to
underwriters shall have occurred and the purchase by an institution of the
securities covered by its delayed delivery contract shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which that institution is subject.
EXPERTS
The audited financial statements incorporated in this prospectus by reference to
our Annual Report on Form 10-K for the year ended December 31, 1997 have been
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
LEGAL OPINIONS
Simpson Thacher & Bartlett, New York, New York, will provide an opinion for us
regarding the validity of the Offered Securities and Cravath, Swaine & Moore,
New York, New York will provide such an opinion for the underwriters. Cravath,
Swaine & Moore acts as legal counsel to us and our subsidiaries in a substantial
number of matters on a regular basis.
28
<PAGE> 50
[THE CHASE MANHATTAN CORPORATION LOGO]
