<PAGE> 1
Filed pursuant to Rule 424(b)(2)
Registration Nos. 333-56587 and 333-56587-02
[CHASE LOGO]
Prospectus Supplement (To Prospectus Dated July 17, 1998)
$250,000,000
CHASE CAPITAL VIII
8.25% CAPITAL SECURITIES, SERIES H
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED BELOW, BY
THE CHASE MANHATTAN CORPORATION
DISTRIBUTIONS
- Quarterly, beginning October 31, 2000.
- Distributions may be postponed for up to five years, but not beyond the
maturity date.
ISSUER AND GUARANTOR
- Chase Capital VIII, a subsidiary of The Chase Manhattan Corporation, will
issue the Capital Securities.
- Chase Capital VIII's only assets will be the Subordinated Debentures to be
issued by The Chase Manhattan Corporation and having essentially the same
payment terms as the Capital Securities. Chase Capital VIII can make
distributions on the Capital Securities only if The Chase Manhattan
Corporation makes interest payments on the Subordinated Debentures.
- The Chase Manhattan Corporation will guarantee the Capital Securities as
described in this document.
MATURITY DATE
- July 15, 2030.
REDEMPTION
- The Capital Securities may be redeemed at any time on or after July 31, 2005
or earlier upon certain events involving taxation or capital treatment.
SUBORDINATION
- The Subordinated Debentures will be subordinated to all existing and future
senior debt of The Chase Manhattan Corporation and all liabilities of its
subsidiaries. As a result, the Capital Securities also will be effectively
subordinated to the same debt and liabilities.
LISTING
- The Capital Securities have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance.
----------------------------------------------------------------------
INVESTING IN THE CAPITAL SECURITIES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE S-7.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK. THEY ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Per Capital Security Total
<S> <C> <C>
Initial Public Offering Price $25.00(1) $250,000,000(1)
Underwriting Commissions (2) (2)
Proceeds to Issuer $25.00 $250,000,000
</TABLE>
(1) Your purchase price will also include any distributions accrued on the
Capital Securities since July 31, 2000.
(2) The Chase Manhattan Corporation will pay underwriting commissions of $0.7875
per Capital Security ($7,875,000 in total).
----------------------------------------------------------------------
- The Capital Securities will be delivered to you through the book-entry
facilities of The Depository Trust Company on or about July 31, 2000.
- The underwriters named herein will purchase the Capital Securities on a firm
commitment basis and offer them to you, subject to certain conditions.
- Certain of our affiliates, including Chase Securities Inc., may use this
Prospectus Supplement and the attached Prospectus in connection with offers
and sales of the Capital Securities in the secondary market. These
affiliates may act as principal or agent in those transactions. Secondary
market sales will be made at prices related to market prices at the time of
sale.
CHASE SECURITIES INC. SALOMON SMITH BARNEY
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
BEAR, STEARNS & CO. INC. LEHMAN BROTHERS U.S. BANCORP PIPER JAFFRAY
----------------------------------------------------------------------
The date of this Prospectus Supplement is July 25, 2000.
<PAGE> 2
In making your investment decision, you should rely only on the information
contained or incorporated by reference in this Prospectus Supplement and the
attached Prospectus. We have not authorized anyone to provide you with any other
information. If you receive any information not authorized by us, you should not
rely on it.
We are offering the Capital Securities for sale only in places where sales
are permitted.
You should not assume that the information contained or incorporated by
reference in this Prospectus Supplement or the attached Prospectus is accurate
as of any date other than its respective date.
------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
Summary............................... S-3
Risk Factors.......................... S-7
Chase Capital VIII.................... S-9
The Chase Manhattan Corporation....... S-9
Capitalization........................ S-11
Accounting Treatment.................. S-12
Summary of Terms of Capital
Securities.......................... S-12
Summary of Terms of Subordinated
Debentures.......................... S-17
Guarantee of Capital Securities....... S-20
Certain Federal Income Tax
Consequences........................ S-20
ERISA Considerations.................. S-24
Underwriting.......................... S-27
Validity of Securities................ S-29
PROSPECTUS
Available Information................. 3
Incorporation of Certain Documents by
Reference........................... 3
The Chase Manhattan Corporation....... 5
The Issuers........................... 5
Use of Proceeds....................... 6
Description of Junior Subordinated
Debentures.......................... 6
Description of Preferred Securities... 17
Book-Entry Issuance................... 28
Description of Guarantees............. 31
Relationship Among the Preferred
Securities, the Corresponding Junior
Subordinated Debentures and the
Guarantees.......................... 33
Plan of Distribution.................. 34
Validity of Securities................ 35
Experts............................... 35
</TABLE>
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<PAGE> 3
SUMMARY
In this summary, we have highlighted certain information in this Prospectus
Supplement and the attached Prospectus. This summary may not contain all of the
information that is important to you. To understand the terms of the Capital
Securities and the related Guarantees and Subordinated Debentures, as well as
the considerations that are important to you in making your investment decision,
you should carefully read this entire Prospectus Supplement and the attached
Prospectus. You should also read the documents we have referred you to in
"Available Information" and "Incorporation of Certain Documents by Reference" on
pages 3 and 4 of the attached Prospectus.
ABOUT THIS PROSPECTUS SUPPLEMENT
This Prospectus Supplement summarizes the specific terms of the securities
being offered and supplements the general descriptions set forth in the attached
Prospectus. This Prospectus Supplement may also update or supersede information
in the attached Prospectus. In the case of inconsistencies, this Prospectus
Supplement will apply. Capitalized terms used but not defined in this Prospectus
Supplement have the meanings indicated in the attached Prospectus.
THE ISSUER AND CHASE
Chase Capital VIII, which we refer to as the "Issuer", is a Delaware
business trust. It was created for the sole purpose of issuing the 8.25% Capital
Securities, Series H, which we refer to as the "Capital Securities", and
engaging in the other transactions described in this Prospectus Supplement and
the attached Prospectus. The Issuer Trustees referred to on page 5 of the
attached Prospectus will conduct the business affairs of the Issuer.
The Chase Manhattan Corporation, which we refer to as "Chase", is a bank
holding company. Through its subsidiaries, Chase conducts domestic and
international financial services businesses. Chase is one of the largest banking
institutions in the United States, with $391 billion in assets and $24 billion
in stockholders' equity as of March 31, 2000.
Chase's principal executive office is located at 270 Park Avenue, New York,
New York 10017. Its telephone number is (212) 270-6000.
THE CAPITAL SECURITIES
Each Capital Security will represent an undivided beneficial ownership
interest in the assets of the Issuer.
The Issuer will sell the Capital Securities to the public and its Common
Securities to Chase. The Issuer will use the proceeds from those sales to
purchase $257,731,975 aggregate principal amount of 8.25% Junior Subordinated
Deferrable Interest Debentures, Series H, which we refer to as the "Subordinated
Debentures". Chase will pay interest on the Subordinated Debentures at the same
rates and on the same dates as the Issuer makes payments on the Capital
Securities. The Issuer will use payments it receives on the Subordinated
Debentures to make the corresponding payments on the Capital Securities.
DISTRIBUTIONS
If you purchase Capital Securities, you will be entitled to receive
cumulative cash distributions at the annual rate of 8.25% of the stated
liquidation amount of $25 per Capital Security (the "Liquidation Amount").
Distributions will accumulate from July 31, 2000. The Issuer will make
distribution payments on the Capital Securities quarterly in arrears, on each
January 31, April 30, July 31 and October 31, beginning October 31, 2000, unless
those payments are deferred as described below.
DEFERRAL OF DISTRIBUTIONS
Chase may elect, on one or more occasions, to defer the quarterly interest
payments on the Subordinated Debentures for a period of up to 20 consecutive
quarterly periods. In other words, Chase can declare one or more interest
payment moratoriums on the Subordinated Debentures, each of which may last for
up to five years. However, no interest deferral may (1) extend beyond the stated
maturity date of the Subordinated Debentures or (2) begin during the existence
of an event of default with respect to the Subordinated Debentures.
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If Chase exercises its right to defer interest payments on the Subordinated
Debentures, the Issuer will also defer distribution payments on the Capital
Securities.
Although you will not receive distribution payments on the Capital
Securities if interest payments are deferred, interest will continue to accrue,
compounded quarterly, on the Subordinated Debentures, and deferred interest
payments will accrue additional interest. As a result, additional distributions
will continue to accumulate on the deferred distributions at the annual rate of
8.25%, compounded quarterly.
If Chase defers payments of interest on the Subordinated Debentures, the
Subordinated Debentures will be treated as being issued with original issue
discount for United States federal income tax purposes. This means that you must
include interest income with respect to the deferred distributions on your
Capital Securities in gross income for United States federal income tax
purposes, prior to receiving any cash distributions.
REDEMPTION
The Issuer will redeem the Capital Securities and its Common Securities on
July 15, 2030, the stated maturity date of the Subordinated Debentures. In
addition, if Chase redeems or repays any Subordinated Debentures prior to their
stated maturity date, the Issuer will use the cash it receives to redeem, on a
proportionate basis, an equal amount of Capital Securities and Common
Securities.
The redemption terms of the Subordinated Debentures are summarized below
under "Summary -- The Subordinated Debentures -- Redemption."
Upon any redemption of the Capital Securities, you will be entitled to
receive a redemption price equal to the Liquidation Amount of the Capital
Securities redeemed, plus any accumulated and unpaid distributions to the date
of redemption.
LIQUIDATION OF THE ISSUER AND DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS
Chase may dissolve the Issuer at any time, subject to its receipt of any
required prior approval by the Board of Governors of the Federal Reserve System
(the "Federal Reserve").
If Chase dissolves the Issuer, after the Issuer satisfies all of its
liabilities as required by law, the Issuer Trustees will:
- distribute the Subordinated Debentures to the holders of the Capital
Securities; or
- if the Property Trustee determines that a distribution of the
Subordinated Debentures is not practical, pay the Liquidation Amount of
the Capital Securities, plus any accumulated and unpaid distributions to
the payment date, in cash.
BOOK-ENTRY
The Capital Securities will be represented by one or more global securities
registered in the name of and deposited with The Depository Trust Company
("DTC") or its nominee. This means that you will not receive a certificate for
your Capital Securities and Capital Securities will not be registered in your
name, except under certain limited circumstances described in the attached
Prospectus under the caption "Description of Preferred Securities -- Global
Preferred Securities".
LISTING OF THE CAPITAL SECURITIES
The Capital Securities have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance.
THE SUBORDINATED DEBENTURES
MATURITY AND INTEREST
The Subordinated Debentures will mature on July 15, 2030. They will bear
interest at the annual rate of 8.25% of their principal amount. Interest on the
Subordinated Debentures will accrue from July 31, 2000. Chase will pay that
interest quarterly in arrears on each January 31, April 30, July 31 and October
31, beginning October 31, 2000.
RANKING
The Subordinated Debentures will constitute one series of the Junior
Subordinated Debentures referred to in the attached Prospectus and will be
issued by Chase under the Indenture referred to in the attached Prospectus. The
Subordinated Debentures will be unsecured and will rank junior to
S-4
<PAGE> 5
all of Chase's Senior Debt. For a definition of "Senior Debt", see page 15 of
the attached Prospectus. Substantially all of Chase's debt, other than other
series of Junior Subordinated Debentures previously issued or that may be issued
in the future, constitutes Senior Debt.
CERTAIN PAYMENT RESTRICTIONS APPLICABLE TO CHASE
During any period in which Chase has elected to defer interest payments on
the Subordinated Debentures, Chase generally may not make payments on its
capital stock, debt securities or guarantees, subject to certain limited
exceptions.
REDEMPTION
Chase may elect to redeem any or all of the Subordinated Debentures at one
or more times on or after July 31, 2005. In addition, if certain changes occur
relating to the tax or capital treatment of the Capital Securities, Chase may
elect to redeem all, but not less than all, of the Subordinated Debentures. For
a description of the changes that would permit such a redemption, see "Summary
of Terms of Subordinated Debentures -- Conditional Right to Redeem Upon a Tax
Event or Capital Treatment Event" below.
If required under the Federal Reserve's capital rules, Chase will obtain
the approval of the Federal Reserve prior to exercising the redemption rights
described above.
EVENTS OF DEFAULT
The following events, which are referred to as "Debenture Events of
Default" in the attached Prospectus, are events of default with respect to the
Subordinated Debentures:
- Chase fails to pay interest within 30 days after the due date; or
- Chase fails to pay principal or premium when due; or
- Chase materially breaches a covenant in the Indenture and the breach
continues for 90 days after notice by the trustee under the Indenture or
holders of at least 25% of the principal amount of the Subordinated
Debentures; or
- certain events occur involving the bankruptcy, insolvency or
reorganization of Chase.
Upon an event of default, the trustee under the Indenture may declare all
principal and interest on the Subordinated Debentures immediately due and
payable. Under certain limited circumstances, the holders of a majority of the
aggregate Liquidation Amount of Capital Securities may make that declaration or
directly exercise certain rights and remedies under the Indenture.
LISTING OF SUBORDINATED DEBENTURES UPON DISTRIBUTION TO HOLDERS
If the Issuer Trustees distribute the Subordinated Debentures to holders of
the Capital Securities upon liquidation of the Issuer, Chase will use its best
efforts to have the Subordinated Debentures listed or quoted on any stock
exchange or quotation system on which the Capital Securities were listed at the
time of the Issuer's termination.
GUARANTEE BY CHASE
Chase will fully and unconditionally guarantee payment of amounts due under
the Capital Securities on a subordinated basis and to the extent the Issuer has
funds available for payment of those amounts. We refer to this obligation as the
"Guarantee". However, the Guarantee does not cover payments if the Issuer does
not have sufficient funds to make the distribution payments, including, for
example, if Chase has failed to pay to the Issuer amounts due under the
Subordinated Debentures.
Chase, as issuer of the Subordinated Debentures, is also obligated to pay
the expenses and other obligations of the Issuer, other than its obligations to
make payments on the Capital Securities.
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth Chase's consolidated ratios of earnings to
fixed charges and ratios of earnings to combined fixed charges and preferred
stock dividend requirements for each of the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------
2000 1999 1998 1997 1996 1995
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits............ 2.36 2.64 1.84 1.82 1.66 1.90
Including Interest on Deposits............ 1.60 1.71 1.43 1.43 1.32 1.41
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements:
Excluding Interest on Deposits............ 2.34 2.61 1.82 1.77 1.60 1.82
Including Interest on Deposits............ 1.59 1.70 1.42 1.41 1.30 1.38
</TABLE>
For purposes of the above ratios, earnings consist of 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 portion 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
portion deemed representative of the interest factor) of rents, net of income
from subleases, and capitalized interest.
S-6
<PAGE> 7
RISK FACTORS
Before deciding whether to purchase any Capital Securities, you should pay
special attention to the following risk factors.
SUBORDINATION OF THE SUBORDINATED DEBENTURES AND THE GUARANTEE
Chase's obligations under the Subordinated Debentures and the Guarantee are
unsecured and rank junior in right of payment to all of Chase's existing and
future Senior Debt. This means that Chase cannot make any payments on the
Subordinated Debentures or under the Guarantee if Chase is in default on its
Senior Debt. In addition, in the event of the bankruptcy, insolvency or
liquidation of Chase, Chase's assets must be used to pay off its Senior Debt in
full before any payments may be made on the Subordinated Debentures or under the
Guarantee. Substantially all of Chase's existing debt, other than the Junior
Subordinated Debentures, is Senior Debt.
The Indenture, the Guarantee and the trust agreement with respect to the
Issuer and the Capital Securities (the "Trust Agreement") do not limit Chase's
ability to incur additional secured or unsecured debt, including Senior Debt.
See "Description of Guarantees -- Status of the Guarantees" and "Description of
Junior Subordinated Debentures -- Subordination" in the attached Prospectus.
STATUS OF CHASE AS A HOLDING COMPANY
Chase is a holding company that conducts substantially all of its
operations through subsidiaries. As a result, its ability to make payments on
the Subordinated Debentures and the Guarantee will depend primarily upon the
receipt of dividends and other distributions from its subsidiaries. Various
legal limitations restrict the extent to which Chase's subsidiaries may extend
credit, pay dividends or other funds or otherwise engage in transactions with
Chase or certain of its other subsidiaries.
In addition, Chase's right to participate in any distribution of assets
from any subsidiary, upon the subsidiary's liquidation or otherwise, is subject
to the prior claims of creditors of that subsidiary, except to the extent that
Chase is recognized as a creditor of that subsidiary. As a result, the
Subordinated Debentures and the Guarantee will be effectively subordinated to
all existing and future liabilities of Chase's subsidiaries. You should look
only to the assets of Chase as the source of payment for the Subordinated
Debentures and the Guarantee.
DEPENDENCE ON CHASE'S PAYMENTS ON SUBORDINATED DEBENTURES; LIMITATIONS UNDER THE
GUARANTEE
The Issuer's ability to make timely distribution and redemption payments on
the Capital Securities is solely dependent on Chase's making the corresponding
payments on the Subordinated Debentures. In addition, the Guarantee only
guarantees that Chase will make distribution and redemption payments if the
Issuer had funds available to make the payments but failed to do so.
If the Issuer defaults on its payment obligations under the Capital
Securities because Chase has failed to make the corresponding payments under the
Subordinated Debentures, you will not be able to rely upon the Guarantee for
payment. Instead, you may institute a legal proceeding directly against Chase
for enforcement of its payment obligations under the Indenture and the
Subordinated Debentures.
POTENTIAL ADVERSE MARKET PRICE AND TAX CONSEQUENCES OF DEFERRAL OF INTEREST
PAYMENTS
Chase currently does not intend to exercise its right to defer payments of
interest on the Subordinated Debentures. However, if it exercises that right in
the future, the market price of the Capital Securities is likely to be affected.
As a result of the existence of Chase's deferral right, the market price of the
Capital Securities, payments on which depend solely on payments being made on
the Subordinated Debentures, may be more volatile than the market prices of
other securities that are not subject to optional deferrals.
If Chase does defer interest on the Subordinated Debentures and you elect
to sell Capital Securities during the period of that deferral, you may not
receive the same return on your investment as a holder that continues to hold
its Capital Securities until the payment of interest at the end of the deferral
period.
If Chase does defer interest payments on the Subordinated Debentures, you
will be required to accrue income, in the form of original issue discount, for
United States federal income tax purposes during the period of the deferral in
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<PAGE> 8
respect of your proportionate share of the Subordinated Debentures, even if you
normally report income when received and even though you will not receive the
cash attributable to that income until after the end of the period of deferral.
See "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount" and "-- Sales of Capital Securities."
CAPITAL SECURITIES MAY BE REDEEMED AT ANY TIME UPON A TAX EVENT OR CAPITAL
TREATMENT EVENT
Under certain circumstances, within 90 days after the occurrence of a Tax
Event or a Capital Treatment Event, each of which terms is defined beginning at
page S-19 below, Chase may elect to redeem the Subordinated Debentures in whole,
but not in part. That redemption would cause a mandatory redemption of the
Capital Securities at a redemption price equal to their Liquidation Amount plus
accumulated and unpaid distributions. See "Summary of Terms of Subordinated
Debentures -- Conditional Right to Redeem upon a Tax Event or Capital Treatment
Event" below and "Description of Preferred Securities -- Redemption or Exchange"
in the attached Prospectus.
LIMITED VOTING RIGHTS
As a holder of Capital Securities, you will have limited voting rights. You
generally will not be entitled to vote to appoint, remove or replace the
Property Trustee, the Delaware Trustee or any Administrative Trustee, all of
whom will be appointed, removed or replaced by Chase. However, if an event of
default occurs with respect to the Subordinated Debentures, you would be
entitled to vote to remove, replace or appoint the Property Trustee and the
Delaware Trustee.
UNCERTAIN LIQUIDITY OF TRADING MARKET
The Capital Securities have been approved for listing on The New York Stock
Exchange, subject to official notice of issuance. We expect trading of the
Capital Securities on the New York Stock Exchange to begin within 30 days after
initial issuance of the Capital Securities. The underwriters for this offering
have advised us that they intend to make a market in the Capital Securities
prior to the date the Capital Securities begin trading on the New York Stock
Exchange. However, the Underwriters may discontinue market making at any time.
Therefore, we cannot assure you as to the liquidity of the trading markets for
the Capital Securities.
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<PAGE> 9
CHASE CAPITAL VIII
The Issuer is a statutory business trust created under Delaware law in
1998. It is one of the Issuers formed for the purposes and having the
characteristics described under the caption "The Issuers" in the attached
Prospectus. The Issuer will be governed by the Trust Agreement to be signed by
Chase, as Depositor, The Bank of New York, as Property Trustee, The Bank of New
York (Delaware), as Delaware Trustee, and the Administrative Trustees named in
the Trust Agreement.
The Issuer will not be subject to the reporting requirements of the
Securities Exchange Act. As further described under the caption "Accounting
Treatment" below, Chase has agreed that it will provide certain information
regarding the Issuer and the Capital Securities in the financial statements
included in Chase's periodic reports to the SEC.
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 March
31, 2000, we were one of the largest banking institutions in the United States,
with $391 billion in assets and $24 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"), and Chase Manhattan Bank USA,
National Association, headquartered in Delaware ("Chase USA"). 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 Bank
Global Bank combines the strengths of a leading commercial bank and a
leading investment bank to meet the needs of customers around the world. Our
Global Bank businesses included, as of March 31, 2000:
- Global Markets, which conducts trading and sales of foreign exchange and
derivatives contracts and fixed income securities, and which also
includes our domestic and international treasury units, which manage
interest rate exposures and securities portfolios;
- Chase Capital Partners, which provides equity and mezzanine financing in
the United States and, to a lesser extent, abroad and which invests in
equity funds and manages high yield funds;
- Global Investment Banking, which advises and provides integrated
financial solutions to corporations, financial institutions, governments,
financial sponsors and entrepreneurs worldwide;
- Corporate Lending and Portfolio Management, which provides credit and
lending services to clients globally utilizing a strategy that emphasizes
origination for distribution and active portfolio management; and;
- Global Private Bank, which serves a global base of high net worth
individuals and families.
National Consumer Services
National Consumer Services serves consumers, middle market customers and
small business across the United States through an array of channels. Our
National Consumer Services businesses included, as of March 31, 2000:
- Chase Cardmember Services, which includes the fourth-largest bank credit
card issuer in the U.S., as of March 31, 2000 as well as Chase's
international consumer business;
- Regional Consumer Banking, which has a leading share of primary banking
relationships among consumers and small businesses in the New York
metropolitan tri-
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state area and is a leading retail institution in key Texas markets;
- Chase Home Finance, which as of March 31, 2000 was the largest originator
and servicer of residential mortgage loans in the U.S. and a leading
provider of home equity and manufactured housing financing;
- Diversified Consumer Services, which as of March 31, 2000 was one of the
largest bank originators of auto loans and leases in the U.S. and a
leading provider of student loans, and which provides brokerage services
and investment products and distributes bank insurance in the U.S.; and
- Middle Market Clients, which provides financial services to companies
which annual sales ranging from $3 million to $500 million.
Global Services
Global Services is a leading provider of information and transaction
services globally and includes custody, cash management, trust and other
fiduciary services. At March 31, 2000, Global Services included:
- Global Investor Services, which provides custody and other investor
services to mutual funds, investment managers, pension funds, insurance
companies and banks globally;
- Chase Treasury Solutions, which provides treasury, cash management,
multicurrency payment, trade finance, liquidity information and
web-enabled solutions to customers around the world and is a market
leader in FedWire, ACH and CHIPS volume; and
- Capital Markets Fiduciary Services, which is a leader worldwide in
delivering a broad range of securities processing, trustee and agency and
support services.
Corporate and Support Units
In addition to our three major business franchises, Chase has corporate and
support units that include:
- Chase.com, which manages Chase's new internet-related ventures and works
with our business units to capitalize on internet opportunities;
- Chase Business Services, which is Chase's internal service provider; and
- Technology Solutions, which provides support for Chase's e-commerce and
technology infrastructure.
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CAPITALIZATION
The following table sets forth the consolidated capitalization of Chase as
of March 31, 2000 and as adjusted to give effect to the issuance of the Capital
Securities and the Subordinated Debentures. You should also read Chase's
consolidated financial statements and the related notes, which are incorporated
by reference.
<TABLE>
<CAPTION>
MARCH 31, 2000
--------------------------
ACTUAL AS ADJUSTED
----------- -----------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C>
Total long-term debt........................................ $20,640 $20,640
------- -------
Guaranteed Preferred Beneficial Interests in Chase's Junior
Subordinated Deferrable Interest Debentures(a)............ 2,538 2,788
Preferred Stock of Subsidiary(b)............................ 550 550
------- -------
Stockholders' Equity
Preferred Stock........................................... 928 928
Common Stock.............................................. 882 882
Capital Surplus........................................... 9,323 9,323
Retained Earnings......................................... 18,494 18,494
Accumulated Other Comprehensive Income.................... (1,369) (1,369)
Treasury Stock, At Cost................................... (4,285) (4,285)
------- -------
Total Stockholders' Equity........................ $23,973 $23,973
------- -------
TOTAL CAPITALIZATION........................................ $47,701 $47,951
======= =======
</TABLE>
---------------
(a) Includes the net proceeds from the issuance of the following guaranteed
preferred securities having the following total liquidation amounts:
(1) $600 million issued by Chase Capital I; (2) $500 million issued by
Chase Capital II; (3) $300 million issued by Chase Capital III; (4)
$350 million issued by Chase Capital IV; (5) $200 million issued by
Chase Capital V; (6) $250 million issued by Chase Capital VI; (7) $350
million issued by Chase Capital VII; and (8) in the "as adjusted"
column only, the Capital Securities being offered.
The net proceeds from each above issuance, together with the amounts paid by
Chase for the related common securities, were invested:
(1) by Chase Capital I in approximately $618.6 million principal
amount of Series A Junior Subordinated Debentures, which bear
interest at the annual rate of 7.67% and which will mature on
December 1, 2026;
(2) by Chase Capital II in approximately $515.5 million principal
amount of Series B Junior Subordinated Debentures, which bear
interest at the annual floating rate of LIBOR plus .50% and which
will mature on February 1, 2027;
(3) by Chase Capital III in approximately $309.3 million principal
amount of Series C Junior Subordinated Debentures, which bear
interest at the annual floating rate of LIBOR plus .55% and which
will mature on March 1, 2027;
(4) by Chase Capital IV in approximately $360.8 million principal
amount of Series D Junior Subordinated Debentures, which bear
interest at the annual rate of 7.34% and which will mature on
December 6, 2027;
(5) by Chase Capital V in approximately $206.2 million principal
amount of Series E Junior Subordinated Debentures, which bear
interest at the annual rate of 7.03% and which will mature on
March 31, 2028;
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(6) by Chase Capital VI in approximately $257.7 million principal
amount of Series F Junior Subordinated Debentures, which bear
interest at the annual floating rate of LIBOR plus .625% and which
will mature on August 1, 2028; and
(7) by Chase Capital VII in approximately $360.8 million principal
amount of Series G Junior Subordinated Debentures, which bear
interest at the annual rate of 7.00% and which will mature on May
15, 2029.
The Issuer will invest the proceeds of the offering of the Capital
Securities in approximately $257.7 million of Subordinated
Debentures, which will bear interest at the annual rate of 8.25%
and will mature on July 15, 2030. Chase owns all of the common
securities of each of Chase Capital I, Chase Capital II, Chase
Capital III, Chase Capital IV, Chase Capital V, Chase Capital VI
and Chase Capital VII and will own all of the common securities of
the Issuer. The sole assets of each of the trusts are (or, in the
case of the Issuer, will be) the respective Junior Subordinated
Debentures referred to above.
(b) Reflects the issuance of preferred stock in September 1996 by Chase
Preferred Capital Corporation, a wholly owned subsidiary of the Bank, which
has elected to be treated for federal income tax purposes as a real estate
investment trust.
ACCOUNTING TREATMENT
The Issuer will be treated as a subsidiary of Chase for financial reporting
purposes, and the Issuer's accounts will be included in Chase's consolidated
financial statements. In its future financial reports, Chase will
- present the Capital Securities as part of a separate line item in Chase's
consolidated balance sheets;
- include appropriate disclosures about the Capital Securities, the
Guarantee and the Subordinated Debentures in the notes to Chase's
consolidated financial statements; and
- record distributions payable on the Capital Securities as an expense.
SUMMARY OF TERMS OF
CAPITAL SECURITIES
The Capital Securities represent undivided beneficial ownership interests
in the assets of the Issuer and are a series of "Preferred Securities", as
described in the attached Prospectus.
We have summarized below certain terms of the Capital Securities. This
summary supplements the general description of the Preferred Securities
contained in the attached Prospectus. Any information regarding the Capital
Securities contained in this Prospectus Supplement that is inconsistent with
information in the Prospectus will apply and will supersede the inconsistent
information in the Prospectus.
This summary is not complete. You should also refer to the Trust Agreement,
a form of which has been filed as an exhibit to the registration statement (No.
333-56587) of which this Prospectus Supplement and the attached Prospectus are a
part (the "Registration Statement").
DISTRIBUTIONS
You will be entitled to receive quarterly distributions on the Capital
Securities at the annual rate of 8.25% of the stated Liquidation Amount of each
Capital Security ($25), which is the same as the rate payable on the
Subordinated Debentures. The Issuer will pay distributions quarterly in arrears
on each January 31, April 30, July 31 and October 31, beginning October 31,
2000. Distributions will be cumulative and will accumulate from July 31, 2000.
On each distribution date, the Issuer will pay the applicable distribution
to the holders of the Capital Securities on the record date for that
distribution date. As long as the Capital Securities remain in book-entry form,
the record dates for the Capital Securities will be one Business Day prior to
the relevant distribution date. For the definition of "Business Day", see page
18 of the attached Prospectus. If Capital Securities are not in book-entry form,
the record date will be the 15th day of the month in which the relevant
distribution date occurs.
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The period beginning on and including July 31, 2000 and ending on but
excluding the first distribution date and each period after that period
beginning on and including a distribution date and ending on but excluding the
next distribution date is called a "distribution period". The amount of
distributions payable for any distribution period will be computed on the basis
of a 360-day year of twelve 30-day months.
In the event that any distribution date would fall on a day that is not a
Business Day, that distribution date will be postponed until the next day that
is a Business Day and no additional distribution or other payment will accrue as
a result of that postponement. However, if the postponement would cause the
distribution date to fall in the next calendar year, the distribution date will
instead be brought forward to the preceding Business Day. See "Description of
Preferred Securities -- Distributions" in the attached Prospectus.
Distributions that are not paid on the applicable distribution date will
accumulate additional distributions, to the extent permitted by law, at the
annual rate of 8.25%, compounded quarterly, from the relevant distribution date.
References to "distributions" in this Prospectus Supplement and the attached
Prospectus include these additional distributions.
DEFERRAL OF DISTRIBUTIONS
If the Subordinated Debentures are not in default, Chase has the right, on
one or more occasions, to defer payment of interest on the Subordinated
Debentures for up to 20 consecutive distribution periods, but not beyond the
stated maturity of the Subordinated Debentures. If Chase exercises this right,
the Issuer will also defer paying quarterly distributions on the Capital
Securities during that period of deferral.
Although no interest or distribution payments will be made during a period
of deferral, interest on the Subordinated Debentures will continue to accrue
and, as a result, distributions on the Capital Securities will continue to
accumulate at the annual rate of 8.25%, compounded quarterly. References to
"distributions" in this Prospectus Supplement and the attached Prospectus
include these additional distributions.
Once Chase makes all deferred interest payments on the Subordinated
Debentures, it can once again defer interest payments subject to the limitations
discussed above. As a result, there could be multiple periods of varying length
during which you would not receive cash distributions on your Capital
Securities.
See "Summary of Terms of Subordinated Debentures -- Option to Defer
Interest Payments" below.
REDEMPTION
If Chase repays or redeems the Subordinated Debentures, in whole or in
part, whether at stated maturity or earlier, the Property Trustee will use the
proceeds of that repayment or redemption to redeem a total amount of Capital
Securities and Common Securities equal to the amount of Subordinated Debentures
redeemed. The redemption price will be equal to the aggregate Liquidation Amount
of the Capital Securities and Common Securities, plus accumulated and unpaid
distributions to the redemption date.
If less than all Capital Securities and Common Securities are redeemed, the
amount of each to be redeemed will be allocated proportionately based upon the
total amount of Capital Securities and Common Securities outstanding.
The Property Trustee will give holders of Capital Securities not less than
30 nor more than 60 days' notice prior to the date of any redemption of Capital
Securities.
See "Summary of Terms of Subordinated Debentures -- Redemption" for a
description of the redemption terms of the Subordinated Debentures.
OPTIONAL LIQUIDATION OF THE ISSUER
AND DISTRIBUTION OF SUBORDINATED
DEBENTURES TO HOLDERS
Chase may elect to dissolve the Issuer at any time and, after satisfaction
of the Issuer's liabilities, to cause the Property Trustee to distribute the
Subordinated Debentures to the holders of the Capital Securities. However, if
then required under the Federal Reserve's capital rules, Chase will receive the
prior approval of the Federal Reserve prior to making that election.
Chase anticipates that any distribution of Subordinated Debentures would be
through book-entry distribution of interests in one or more
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global securities under depositary arrangements similar to those applicable to
the Capital Securities. See "-- Book-Entry Issuance; Issuance of Certificated
Capital Securities" and "-- Global Clearance and Settlement Procedures" below
and "Book-Entry Issuance" in the attached Prospectus.
Under current United States federal income tax law, and assuming, as
expected, the Issuer is treated as a grantor trust, a distribution of
Subordinated Debentures in exchange for the Capital Securities would not be a
taxable event to you. If, however, the Issuer were subject to United States
federal income tax with respect to income accrued or received on the
Subordinated Debentures, the distribution of the Subordinated Debentures by the
Issuer would be a taxable event to the Issuer and to you. See "Certain Federal
Income Tax Consequences -- Distribution of Subordinated Debentures to Holders of
Capital Securities" below.
LIQUIDATION VALUE
Upon liquidation of the Issuer, you would be entitled to receive $25 per
Capital Security, plus accumulated and unpaid distributions to the date of
payment. That amount would be paid to you in the form of a distribution of
Subordinated Debentures, subject to certain exceptions. See "Description of
Preferred Securities -- Liquidation Distribution Upon Termination" in the
attached Prospectus.
SUBORDINATION OF COMMON SECURITIES
The Issuer will pay distributions on its Common Securities at the same rate
and on the same distribution dates as the Capital Securities. However, if there
is an event of default under the Indenture, the Issuer will not pay
distributions on the Common Securities until all distributions on the Capital
Securities have been paid in full. For a more detailed description of
circumstances in which the Capital Securities will have a preference over the
Common Securities, see "Description of Preferred Securities -- Subordination of
Common Securities" in the attached Prospectus.
EVENTS OF DEFAULT UNDER TRUST AGREEMENT
For a description of the events of default under the Trust Agreement, as
well as a summary of the remedies available as a result of those events of
default, see "Description of Preferred Securities -- Events of Default; Notice"
in the attached Prospectus.
An event of default with respect to the Subordinated Debentures also
constitutes an event of default under the Trust Agreement and entitles the
Property Trustee, as sole holder of the Subordinated Debentures, to declare the
Subordinated Debentures due and payable under the Indenture. For a more complete
description of remedies available upon the occurrence of an event of default
with respect to the Subordinated Debentures, see "Description of Junior
Subordinated Debentures -- Debenture Events of Default" and "-- Enforcement of
Certain Rights by Holders of Preferred Securities" in the attached Prospectus.
VOTING RIGHTS
Except as described under "Description of Guarantees -- Amendments and
Assignment" in the attached Prospectus, or as otherwise required by law or the
Trust Agreement, as an owner of Capital Securities, you will not have any voting
rights.
BOOK-ENTRY ISSUANCE; ISSUANCE OF CERTIFICATED CAPITAL SECURITIES
The Capital Securities will be issued in the form of one or more global
securities registered in the name of DTC or its nominee. Ownership and transfers
of beneficial interests in the Capital Securities will be shown only on records
maintained by DTC and its participants. Investors may elect to hold interests in
the global securities through either DTC (in the United States) or Clearstream
Banking S.A. ("Clearstream"), and Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System ("Euroclear"), if they are
participants in those systems, or indirectly through organizations that are
participants in those systems. Clearstream and Euroclear will hold interests on
behalf of their participants through customers' securities accounts in
Clearstream's and Euroclear's names on the books of their respective
depositaries. Those depositaries in turn hold those interests in customers'
securities accounts in the depositaries' names on the books of DTC. The Chase
Manhattan Bank will act as depositary for Clearstream and Euroclear (the "U.S.
Depositary"). Except as
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described below and in the attached Prospectus, you will not be entitled to
receive Capital Securities certificates. See "Description of Preferred
Securities -- Global Preferred Securities" and "Book-Entry Issuance" in the
attached Prospectus.
Clearstream has advised us that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream holds securities for its
participants and facilitates the clearance and settlement of securities
transactions between Clearstream participants through electronic book-entry
changes in accounts of Clearstream participants, thereby eliminating the need
for physical movement of certificates. Clearstream provides to Clearstream
participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Clearstream interfaces with domestic markets in several
countries. As a professional depositary, Clearstream is subject to regulation by
the Luxembourg Monetary Institute. Clearstream participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the underwriters for this offering. Indirect
access to Clearstream is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Clearstream participant either directly or indirectly.
Distributions with respect to interests in Capital Securities held
beneficially through Clearstream will be credited to cash accounts of
Clearstream participants in accordance with its rules and procedures, to the
extent received by the U.S. Depositary.
Euroclear has advised us that it was created in 1968 to hold securities for
participants of Euroclear and to clear and settle transactions between Euroclear
participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of certificates and
any risk from lack of simultaneous transfers of securities and cash. Euroclear
includes various other services, including securities lending and borrowing, and
interfaces with domestic markets in several countries. Euroclear is operated by
the Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"Euroclear Operator"), under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). The Euroclear Operator
conducts all Euroclear operations and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear participants. Euroclear participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries and may include the underwriters for this offering. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Federal Reserve and the New York State Banking
Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. The Euroclear Operator holds all securities in Euroclear on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear participants and has no record of or
relationship with persons holding through Euroclear participants.
Distributions with respect to interests in Capital Securities held
beneficially through Euroclear will be credited to the cash accounts of
Euroclear participants in accordance with the Terms and Conditions, to the
extent received by the U.S. Depositary.
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A global security will be exchangeable for Capital Securities registered in
the names of persons other than DTC or its nominee only if:
- DTC notifies the Issuer that it is unwilling or unable to continue as
depositary or DTC ceases to be a clearing agency registered as legally
required and no successor depositary is appointed;
- The Issuer elects to exchange the global securities for certificated
Capital Securities; or
- An event of default with respect to the Subordinated Debentures occurs
and is continuing.
Any global security that is exchangeable as described above will be
exchangeable for definitive certificates registered in the names directed by
DTC. Any Capital Securities in certificated form will be in denominations of $25
and integral multiples of $25 in excess of $25.
If the Capital Securities are issued in certificated form, the record dates
for payment of distributions will be the 15th day of the month in which the
relevant distribution date occurs. If the Capital Securities are issued in
certificated form, distributions on the Capital Securities will be paid,
transfers and exchanges of Capital Securities will be registered, and
Subordinated Debentures will be distributed in exchange for Capital Securities,
at the corporate office of the Property Trustee in New York, New York, or at the
offices of any paying agent or transfer agent appointed by the Administrative
Trustees. However, payment of any distribution on the Capital Securities may be
made at the option of the Administrative Trustees by check or by wire transfer.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Capital Securities will be made in immediately
available funds. DTC participants will conduct secondary market trading with
other DTC participants in the ordinary way in accordance with DTC's rules, and
those secondary market trades will settle in immediately available funds.
Clearstream and/or Euroclear participants will conduct secondary market trading
with other Clearstream and/or Euroclear participants in the ordinary way in
accordance with the applicable rules and operating procedures of Clearstream and
Euroclear, and those secondary market trades will settle in immediately
available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC on the one hand, and directly or indirectly through Clearstream or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC's rules on behalf of the relevant European international clearing system by
the U.S. Depositary; however, those cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in that system in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to the U.S. Depositary to take action to
effect final settlement on its behalf by delivering or receiving Capital
Securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Clearstream
participants and Euroclear participants may not deliver instructions directly to
DTC.
Because of time-zone differences, credits of Capital Securities received in
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and will be
credited the business day following the DTC settlement date. Those credits or
any transactions in Capital Securities settled during that processing will be
reported to the relevant Euroclear or Clearstream participants on that business
day. Cash received in Clearstream or Euroclear as a result of sales of Capital
Securities by or through a Clearstream participant or a Euroclear participant to
a DTC participant will be received with value on the DTC settlement date but
will be available in the relevant Clearstream or Euroclear cash account only as
of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the above procedures
in order to facilitate transfers of Capital Securities among participants of
DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform those procedures and those procedures may be discontinued at
any time.
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SUMMARY OF TERMS OF SUBORDINATED DEBENTURES
We have summarized below certain terms of the Subordinated Debentures. This
summary supplements the general description of the Junior Subordinated
Debentures contained in the attached Prospectus. Any information regarding the
Subordinated Debentures contained in this Prospectus Supplement that is
inconsistent with information in the Prospectus will apply and will supersede
the inconsistent information in the Prospectus.
This summary is not complete. You should refer to the Indenture, which has
been filed as an exhibit to the Registration Statement. We anticipate that until
the liquidation, if any, of the Issuer, each Subordinated Debenture will be held
by the Property Trustee in trust for the benefit of the holders of the Capital
Securities and the Common Securities.
The Subordinated Debentures will be a series of "Corresponding Junior
Subordinated Debentures" under the Indenture, as described in the attached
Prospectus. They will be unsecured and junior in right of payment to all of
Chase's Senior Debt, as described under "Description of Junior Subordinated
Debentures -- Subordination" in the attached Prospectus.
INTEREST RATE AND MATURITY
The Subordinated Debentures will bear interest at the annual rate of 8.25%
of their principal amount. Interest will be payable quarterly in arrears on
January 31, April 30, July 31 and October 31 of each year, beginning October 31,
2000, and at maturity.
The amount of interest payable for any interest period will be computed on
the basis of a 360-day year of twelve 30-day months. An interest period for the
Subordinated Notes will be (1) the period beginning on and including July 31,
2000 and ending on but excluding the first interest payment date and (2) each
subsequent period beginning on and including an interest payment date and ending
on but excluding the next interest payment date. In the event that any interest
payment date would fall on a day that is not a Business Day, that interest
payment date will be postponed until the next day that is a Business Day and no
interest or other payment will accrue as a result of that postponement. However,
if the postponement would cause the interest payment date to fall in the next
calendar year, the interest payment date will instead be brought forward to the
preceding Business Day.
To the extent permitted by law, accrued interest that is not paid on the
applicable interest payment date will bear additional interest from that date on
the unpaid amount at the annual rate of 8.25%, compounded quarterly. References
to "interest" in this Prospectus Supplement and the attached Prospectus include
quarterly interest payments and interest on unpaid amounts.
The Subordinated Debentures will mature on July 15, 2030. If the maturity
date of the Subordinated Debentures falls on a day that is not a Business Day,
the amount due at maturity will be paid on the following Business Day, and no
interest on that amount will accrue after the stated maturity date.
OPTION TO DEFER INTEREST PAYMENTS
Chase may elect at one or more times to defer payment of interest on the
Subordinated Debentures for up to 20 consecutive quarterly periods if the
Subordinated Debentures are not in default. However, no deferral period may
extend beyond the stated maturity date of the Subordinated Debentures.
During each deferral period, interest will continue to accrue on the
Subordinated Debentures, and, to the extent permitted by law, additional
interest will accrue on the unpaid interest at the annual rate of 8.25%,
compounded quarterly. At the end of each deferral period, or, if earlier, upon
redemption of the Subordinated Debentures, Chase will pay all accrued and unpaid
interest on the Subordinated Debentures.
Chase at any time may pay all or any portion of the interest accrued to
that point during a deferral period.
Once Chase pays all accrued and unpaid interest on the Subordinated
Debentures, it can again defer interest payments on the Subordinated Debentures
as described above.
During any deferral period, neither Chase nor its subsidiaries will be
permitted to:
- declare or pay any dividends or distributions on any of Chase's capital
stock;
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- redeem, purchase, acquire or make a liquidation payment on any of Chase's
capital stock;
- repay, repurchase or redeem, or make any principal, interest or premium
payment on, any of Chase's debt securities that have the same rank as or
rank junior to the Subordinated Debentures (including other series of
Junior Subordinated Debentures); or
- make any guarantee payment with respect to debt securities of any of
Chase's subsidiaries if the guarantee has the same rank as or ranks
junior to the Subordinated Debentures.
However, the following will not be prohibited:
- dividends or distributions paid in Chase's capital stock;
- any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the redemption or repurchase of any rights
under the plan;
- payments under the Guarantee;
- purchases of Chase's common stock in connection with any of its benefit
plans for directors, officers or employees; and
- purchases of common stock related to issuances under a dividend
reinvestment and stock purchase plan or issuances as consideration in an
acquisition transaction entered into prior to the beginning of the
deferral period.
Chase must notify the Property Trustee, the Administrative Trustees, the
Debenture Trustee and, if the Property Trustee is not the sole holder of the
Subordinated Debentures, the holders of the Subordinated Debentures, of its
election to begin to defer interest payments. That notice must be given at least
one Business Day prior to the earliest of:
- the next date distributions on the Capital Securities and Common
Securities would be payable in absence of the deferral election;
- the date the Administrative Trustees are required to specify the record
date for those distributions to the applicable stock exchange or
quotation system on which the Capital Securities are then listed or
quoted or to the holders of the Subordinated Debentures; and
- one Business Day prior to that record date.
See "Description of Junior Subordinated Debentures -- Option to Defer
Interest Payments" in the attached Prospectus.
TRUST COSTS AND EXPENSES
Chase has agreed in the Indenture to pay:
- all debts and other obligations of the Issuer, other than with respect to
the Capital Securities and Common Securities;
- all costs and expenses of the Issuer, including costs and expenses
relating to the organization of the Issuer, the fees and expenses of the
Issuer Trustees and the costs and expenses relating to the operation of
the Issuer; and
- all taxes and related costs and expenses to which the Issuer might become
subject, other than United States withholding taxes.
REDEMPTION
At one or more times on or after July 31, 2005, Chase may, at its option,
redeem some or all of the Subordinated Debentures.
In addition, Chase may, subject to certain conditions, redeem all, but not
less than all, of the Subordinated Debentures within 90 days after the
occurrence of a Tax Event or Capital Treatment Event. See "Conditional Right to
Redeem Upon a Tax Event or a Capital Treatment Event" below.
If required under applicable capital guidelines or policies, Chase will
obtain the prior approval of the Federal Reserve before effecting any
redemption.
The Issuer will use the proceeds of any redemption of the Subordinated
Debentures to redeem the Capital Securities and Common Securities. The
redemption price for any redemption of the Subordinated Debentures will be equal
to the principal amount of the Subordinated Debentures being redeemed, plus
accrued and unpaid interest on those Subordinated Debentures to the date of
redemption.
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DISTRIBUTION OF SUBORDINATED DEBENTURES
As described above, the Subordinated Debentures may be distributed in
exchange for the Capital Securities upon termination and liquidation of the
Issuer, after satisfaction of the Issuer's liabilities to its creditors. See
"Summary of Terms of Capital Securities -- Optional Liquidation of Issuer and
Distribution of Subordinated Debentures to Holders" above.
If the Subordinated Debentures are distributed to the holders of Capital
Securities, we anticipate that the depositary arrangements for the Subordinated
Debentures will be substantially identical to those in effect for the Capital
Securities. See "Summary of Terms of Capital Securities -- Book-Entry Issuance;
Issuance of Certificated Capital Securities" above and "Book-Entry Issuance" in
the attached Prospectus.
If the Subordinated Debentures are distributed to the holders of Capital
Securities, Chase will use its best efforts to list the Subordinated Debentures
on the New York Stock Exchange or any other stock exchange or quotation system
on which the Capital Securities are then listed or quoted.
CONDITIONAL RIGHT TO REDEEM UPON A TAX EVENT OR CAPITAL TREATMENT EVENT
Certain Definitions
At any time within 90 days after a Tax Event or a Capital Treatment Event,
Chase will have the right to redeem all, but not less than all, of the
Subordinated Debentures at a redemption price equal to their principal amount
plus accrued and unpaid interest to the redemption date.
For purposes of the above:
A "Tax Event" means the receipt by the Issuer or Chase of an opinion of
counsel experienced in such matters to the effect that, as a result of:
- any amendment to or change in the laws or regulations of the United
States or any political subdivision or taxing authority thereof or
therein that becomes effective after the initial issuance of the Capital
Securities;
- any proposed change in those laws or regulations that is announced after
the initial issuance of the Capital Securities; or
- any official administrative decision or judicial decision or
administrative action or other official pronouncement interpreting or
applying those laws or regulations that is announced after the initial
issuance of the Capital Securities;
there is more than an insubstantial risk that:
- the Issuer is, or within 90 days of the date of that opinion will be,
subject to United States federal income tax with respect to income
received or accrued on the Subordinated Debentures;
- interest payable by Chase on the Subordinated Debentures is not, or
within 90 days of the date of that opinion, will not be, deductible by
Chase, in whole or in part, for United States federal income tax
purposes; or
- the Issuer is, or within 90 days of the date of that opinion will be,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Capital Treatment Event" means the reasonable determination by Chase that,
as a result of:
- any amendment to, or change in, the laws or regulations of the United
States or any political subdivision thereof or therein that becomes
effective after the initial issuance of the Capital Securities;
- any proposed change in those laws or regulations that is announced after
the initial issuance of the Capital Securities; or
- any official administrative decision or judicial decision or
administrative action or other official pronouncement interpreting or
applying those laws or regulations that is announced after the initial
issuance of the Capital Securities;
there is more than an insubstantial risk that Chase will not be entitled to
treat an amount equal to the Liquidation Amount of the Capital Securities as
"Tier 1 Capital" (or its equivalent) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable.
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GUARANTEE OF CAPITAL SECURITIES
Under the Guarantee, Chase will guarantee certain payment obligations of
the Issuer. For a description of the terms of Chase's guarantee, see
"Description of Guarantees" in the attached Prospectus. The Trust Agreement
provides that, by your acceptance of Capital Securities, you agree to the
provisions of the Guarantee and the Indenture.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Simpson Thacher & Bartlett, special tax counsel to Chase
and the Issuer, the following summary accurately describes the material United
States federal income tax consequences that may be relevant to the purchase,
ownership and disposition of Capital Securities. Unless otherwise stated, this
summary deals only with Capital Securities held as capital assets by United
States Persons who purchase the Capital Securities upon original issuance at
their original issue price.
As used in this summary, a "United States Person" means a person that is:
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any of its political subdivisions;
- an estate the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust that (1) is subject to the supervision of a court within the
United States and the control of one or more United States persons or (2)
has a valid election in effect under applicable United States Treasury
regulations to be treated as a United States person.
Your tax treatment may vary depending on your particular situation. This
summary does not address all the tax consequences that may be relevant to
holders who may be subject to special tax treatment, such as:
- banks;
- real estate investment trusts;
- regulated investment companies;
- insurance companies;
- dealers in securities or currencies;
- tax-exempt investors;
- persons holding Capital Securities as part of a hedging, integrated,
conversion or constructive sale transaction or a straddle;
- traders in securities that elect the mark-to-market method of accounting
for their securities holdings;
- corporations that accumulate earnings to avoid federal income tax; or
- foreign investors.
In addition, this summary does not include any description of the
following, either of which may be applicable to you:
- alternative minimum tax consequences; or
- the tax laws of any state, local or foreign government.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury regulations enacted under the Code and administrative and
judicial interpretations of the Code and those regulations, as of the date of
this Prospectus Supplement. All of the authorities on which this summary is
based are subject to change at any time, possibly on a retroactive basis.
In addition, the authorities on which this summary is based are subject to
various interpretations. The opinions of Simpson Thacher & Bartlett are not
binding on the Internal Revenue Service ("IRS") or the courts, either of which
could disagree with the explanations or conclusions contained in this summary.
No rulings have been or will be sought from the IRS with respect to the
transactions described in this Prospectus Supplement and the attached
Prospectus. Accordingly, there can be no assurance that the IRS will not
challenge the opinions expressed in this summary or that a court would not
sustain such a challenge. Nevertheless, Simpson Thacher & Bartlett has advised
us that they believe that, if challenged, the opinions expressed in this summary
would be sustained by a court with jurisdiction in a properly presented case.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE
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<PAGE> 21
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF THE CAPITAL SECURITIES, AS WELL AS THE CONSEQUENCES TO YOU
UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
CLASSIFICATION OF THE ISSUER
In connection with the issuance of the Capital Securities, Simpson Thacher
& Bartlett is of the opinion that, under current law and assuming compliance
with the terms of the Trust Agreement, and based on certain facts and
assumptions contained in its opinion, the Issuer will be classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes. As a result, for United States federal income tax
purposes, you generally will be treated as owning an undivided beneficial
interest in the Subordinated Debentures and required to include in your gross
income your pro rata share of the interest income or original issue discount
that is paid or accrued on the Subordinated Debentures. See "-- Interest Income
and Original Issue Discount" below.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
Chase, the Issuer and you, by your acceptance of a beneficial ownership
interest in a Capital Security, agree to treat the Subordinated Debentures as
indebtedness for all United States tax purposes. In connection with the issuance
of the Subordinated Debentures, Simpson Thacher & Bartlett is of the opinion
that, under current law, and based on certain representations, facts and
assumptions set forth in its opinion, the Subordinated Debentures will be
classified as indebtedness for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
We anticipate that the Subordinated Debentures will not be issued with an
issue price that is less than their stated redemption price at maturity. Thus,
except as discussed below, the Subordinated Debentures will not be subject to
the special original issue discount ("OID") rules, at least upon initial
issuance. You will generally be taxed on the stated interest on the Subordinated
Debentures as ordinary income at the time it is paid or accrued in accordance
with your regular method of tax accounting.
If, however, Chase exercises its right to defer payments of interest on the
Subordinated Debentures, the Subordinated Debentures will become OID instruments
at that time. In that case, you will be subject to special OID rules described
below. Once the Subordinated Debentures become OID instruments, they will be
taxed as OID instruments for as long as they remain outstanding.
Under the OID economic accrual rules, the following occurs:
- you would accrue an amount of interest income each year that approximates
the stated interest payments called for under the terms of the
Subordinated Debentures using the constant-yield-to-maturity method of
accrual described in Section 1272 of the Code;
- the actual cash payments of interest you receive on the Subordinated
Debentures would not be reported separately as taxable income;
- any amount of OID included in your gross income, whether or not during a
deferral period, with respect to the Capital Securities will increase
your tax basis in those Capital Securities; and
- the amount of distributions that you receive in respect of that accrued
OID will reduce your tax basis in those Capital Securities.
The Treasury regulations dealing with OID and the deferral of interest
payments have not yet been addressed in any rulings or other interpretations by
the IRS. It is possible that the IRS could assert that the Subordinated
Debentures were issued initially with OID. If the IRS were successful,
regardless of whether Chase exercises its option to defer payments of interest
on the Subordinated Debentures, you would be subject to the special OID rules
described above.
If you are a corporate holder of Capital Securities, you will not be
entitled to a dividends-received deduction with respect to any income you
recognize with respect to the Capital Securities.
DISTRIBUTION OF SUBORDINATED DEBENTURES OR CASH TO HOLDERS OF CAPITAL SECURITIES
As described under the caption "Summary of Terms of Capital
Securities -- Optional Liquida-
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<PAGE> 22
tion of the Issuer and Distribution of Subordinated Debentures to Holders"
above, the Subordinated Debentures held by the Issuer may be distributed to you
in exchange for your Capital Securities when the Issuer is liquidated. Under
current law, this type of distribution from a grantor trust would not be
taxable. Upon a distribution, you will receive your pro rata share of the
Subordinated Debentures previously held indirectly through the Issuer. Your
holding period and aggregate tax basis in the Subordinated Debentures will equal
the holding period and aggregate tax basis that you had in your Capital
Securities before the distribution. If, however, the Issuer is treated as an
association taxable as a corporation, a Tax Event will occur. If Chase elects to
distribute the Subordinated Debentures to you at this time, the distribution
would be taxable to the Issuer and to you.
Chase also has the option to redeem the Subordinated Debentures and
distribute the resulting cash in liquidation of the Issuer. This distribution
would be taxable as described below in "--Sales of Capital Securities". Further,
in other circumstances described under "Summary of Terms of the Subordinated
Debentures -- Redemption" and "-- Conditional Right to Redeem Upon a Tax Event
or Capital Treatment Event", Chase may redeem the Subordinated Debentures and
distribute cash in liquidation of the Issuer. This distribution of cash would
also be taxable as described below in "-- Sales of Capital Securities".
If you receive Subordinated Debentures in exchange for your Capital
Securities, you would accrue interest in respect of the Subordinated Debentures
received from the Issuer in the manner described above under "-- Interest Income
and Original Issue Discount".
SALES OF CAPITAL SECURITIES
If you sell or redeem your Capital Securities, you will recognize gain or
loss equal to the difference between:
- your amount realized on the sale or redemption; and
- your adjusted tax basis in the Capital Securities sold or redeemed.
Your gain or loss will be a capital gain or loss except to the extent any
amount realized is treated as payment of accrued but unpaid interest not
previously included in income with respect to your pro rata share of the
Subordinated Debentures required to be included in income. The gain or loss will
generally be a long-term capital gain or loss if you have held your Capital
Securities for more than one year. Long-term capital gains of individuals
derived with respect to capital assets held for more than one year are taxed a
maximum rate of 20%. The deductibility of capital losses is subject to
limitations.
NON-UNITED STATES HOLDERS
The following discussion only applies to you if you are not a United States
Person. As discussed above, the Capital Securities will be treated as evidence
of an indirect beneficial ownership interest in the Subordinated Debentures. See
"-- Classification of the Issuer." As a result, under present United States
federal income tax law, and subject to the discussion below concerning backup
withholding:
(1) no withholding of United States federal income tax will be
required with respect to the payment by Chase or any paying agent of
principal or interest (which for purposes of this discussion includes any
OID) to you on the Capital Securities (or the Subordinated Debentures) if
you meet all of the following requirements:
- you do not actually or constructively own 10% or more of the total
combined voting power of all classes of Chase's voting stock within
the meaning of Section 871(h)(3) of the Code and the regulations
under that Section;
- you are not a controlled foreign corporation related to Chase
through stock ownership;
- you are not a bank whose receipt of interest on the Subordinated
Debentures is described in Section 881(c)(3)(A) of the Code; and
- you satisfy the statement requirement, described generally below,
set forth in Section 871(h) and Section 881(c) of the Code and the
regulations under those sections; and
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<PAGE> 23
(2) no withholding of United States federal income tax generally will
be required with respect to any gain you realize upon the sale or other
disposition of the Capital Securities (or the Subordinated Debentures).
To satisfy the requirements referred to in (1) above, you, or a financial
institution holding the Capital Securities on your behalf, must provide to the
Issuer or its paying agent, in accordance with specified procedures, a statement
to the effect that you are not a United States Person. Currently you can meet
this requirement if one of the following is performed:
- you provide your name and address, and certify, under penalties of
perjury, that you are not a United States Person; this certification may
be made on an IRS Form W-8 or a successor form; or
- a financial institution holding the Capital Securities on your behalf
certifies, under penalties of perjury, that:
- you provided it with a statement described above; and
- the financial institution furnishes a paying agent with a copy of
the statement.
Under final Treasury regulations (the "Final Regulations"), the statement
requirement referred to in clause (1) above may also be satisfied with other
documentary evidence for interest paid after December 31, 2000 with respect to
an offshore account or through certain foreign intermediaries.
If you cannot satisfy the requirements of the "portfolio interest"
exception described in (1) above, payments of premium, if any, and interest
(including OID) made to you will be subject to a 30% United States withholding
tax unless you provide Chase or its paying agent, as the case may be, with one
of the following properly executed forms:
- IRS Form 1001 or a successor form claiming an exemption from or reduction
of withholding tax under the benefit of a tax treaty; or
- IRS Form 4224 or a successor form stating that interest paid on the
Capital Securities (or the Subordinated Debentures) is not subject to
this withholding tax because it is effectively connected with your
conduct of a trade or business in the United States.
Under the Final Regulations, you will generally be required to provide IRS
Form W-8 in lieu of IRS Form 1001 and IRS Form 4224, although alternative
documentation may be applicable in certain situations.
If you are engaged in a trade or business in the United States and interest
on the Capital Securities (or the Subordinated Debentures) is effectively
connected with the conduct of your trade or business, you will be subject to
United States federal income tax on that interest on a net income basis in the
same manner as if you were a United States Person. However, you will not be
subject to the withholding described above.
In addition, if you are a foreign corporation, you may be subject to a
branch profits tax equal to 30% (or lesser rate under an applicable tax treaty)
of your effectively-connected earnings and profits for the taxable year, subject
to adjustments. For this purpose, that interest would be included in your
earnings and profits.
You will generally not be subject to United States federal income tax on
any gain you realized upon a sale or other disposition of the Capital Securities
(or the Subordinated Debentures ) unless:
- the gain is effectively connected with your trade or business in the
United States, or
- you are an individual and are present in the United States for 183 days
or more in the taxable year of that sale, exchange or retirement, and
certain other conditions are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Income on the Capital Securities held of record by United States Persons
(other than corporations and other exempt holders) will be reported annually to
those holders and to the IRS. That income will be reported to you on Form 1099,
which should be mailed to the holders of record prior to January 31 following
each calendar year.
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<PAGE> 24
"Backup withholding" at a rate of 31% will apply to payments of interest to
non-exempt United States Persons unless you:
- furnish your taxpayer identification number in the manner prescribed in
applicable Treasury regulations;
- certify that the number is correct;
- certify as to no loss of exemption from backup withholding; and
- meet certain other conditions.
In general, no information reporting or backup withholding will be required
with respect to payments made by the Issuer to non-United States Persons if a
statement described in (1) under "Non-United States Holders" has been received
and the payor does not have actual knowledge that you are a United States
Person.
In addition, backup withholding may apply to the payment of proceeds from
the disposition of Capital Securities (or Subordinated Debentures) within the
United States or conducted through certain United States-related financial
intermediaries unless the statement described in (1) under "Non-United States
Holders" has been received and the payor does not have actual knowledge that
your are a United States Person or you otherwise establish an exemption.
Any amounts withheld from you under the backup withholding rules generally
will be allowed as a refund or a credit against your United States federal
income tax liability, provided that the required information is furnished to the
IRS.
ERISA CONSIDERATIONS
Each fiduciary of any of the following, which we collectively refer to as
"Plans":
- an employee benefit plan subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"),
- a plan described in Section 4975 of the Code, including an individual
retirement arrangement or a Keogh plan, and
- any entity whose underlying assets include "plan assets" by reason of any
such plan's investment in that entity,
should consider the fiduciary standards of ERISA in the context of the Plan's
particular circumstances before authorizing an investment in the Capital
Securities. Among other factors, the fiduciary should consider whether the
investment would satisfy the prudence and diversification requirements of ERISA
and would be consistent with the documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from
engaging in certain transactions involving "plan assets" with persons who are
"parties in interest" under ERISA or "disqualified persons" under the Code
(collectively, "Parties in Interest"). A violation of these "prohibited
transaction" rules may result in an excise tax, penalty or other liability under
ERISA and/or Section 4975 of the Code, unless exemptive relief is available
under an applicable statutory or administrative exemption. In the case of an
individual retirement account, the occurrence of a prohibited transaction
involving the individual who established the individual retirement account, or
his or her beneficiaries, would cause the individual retirement account to lose
its tax exempt status, unless exemptive relief is available. Employee benefit
plans that are governmental plans, as defined in Section 3(32) of ERISA, certain
church plans, as defined in Section 3(33) of ERISA, and foreign plans, as
described in Section 4(b)(4) of ERISA, are not subject to the requirements of
ERISA or Section 4975 of the Code; however, governmental plans may be subject to
similar provisions under applicable state laws.
Under a regulation issued by the U.S. Department of Labor (the "DOL"),
which we refer to as the "Plan Assets Regulation", the assets of the Issuer
would be deemed to be "plan assets" of a Plan for purposes of ERISA and Section
4975 of the Code if "plan assets" of the Plan were used to acquire an equity
interest in the Issuer and no exception were applicable under the Plan Assets
Regulation. The Plan Assets Regulation defines an "equity interest" as any
interest in an entity, other than an instrument that is treated as indebtedness
under applicable local law and has no substantial equity features, and
specifically includes a beneficial interest in a trust.
Under an exception contained in the Plan Assets Regulation, the assets of
the Issuer would
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<PAGE> 25
not be deemed to be "plan assets" of investing Plans if:
- immediately after the most recent acquisition of an equity interest in
the Issuer, less than 25% of the value of each class of equity interests
in the Issuer were held by "Benefit Plan Investors", which we define as
Plans, other employee benefit plans not subject to ERISA or Section 4975
of the Code (such as governmental, church and foreign plans), and
entities holding assets deemed to be "plan assets"; or
- the Capital Securities were "publicly-offered securities" for purposes of
the Plan Assets Regulation.
No assurance can be given that Benefit Plan Investors will hold less than
25% of the total value of the Capital Securities at the completion of the
initial offering or thereafter, and we do not intend to monitor or take any
other measures to assure satisfaction of the conditions to this exception. In
addition, no assurance can be given that the Capital Securities would be
considered to be publicly-offered securities under the Plan Assets Regulation.
Certain transactions involving the Issuer could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities were acquired with "plan
assets" of the Plan and the assets of the Issuer were deemed to be "plan assets"
of Plans investing in the Issuer. For example, if Chase were a Party in Interest
with respect to a Plan (either directly or by reason of its ownership of the
Bank or other subsidiaries), extensions of credit between Chase and the Issuer
(including the Subordinated Debentures and the Guarantee) would likely be
prohibited by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the
Code, unless exemptive relief were available under an applicable administrative
exemption (see below). In addition, if Chase were considered to be a fiduciary
with respect to the Issuer as a result of certain powers it holds (such as its
powers to remove and replace the Property Trustee and the Administrative
Trustees), it is possible that the optional redemption or acceleration of the
Subordinated Debentures would be considered to be a prohibited transaction under
Section 406(b) of ERISA and Section 4975(c)(1)(E) of the Code. In order to avoid
these prohibited transactions, each Benefit Plan Investor, by purchasing Capital
Securities, will be deemed to have directed the Issuer to invest in the
Subordinated Debentures and to have appointed the Property Trustee.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
that may arise from the purchase or holding of the Capital Securities if assets
of the Issuer were deemed to be "plan assets" of Plans investing in the Issuer
as described above. Those class exemptions are:
- PTCE 96-23 (for certain transactions determined by in-house asset
managers);
- PTCE 95-60 (for certain transactions involving insurance company general
accounts);
- PTCE 91-38 (for certain transactions involving bank collective investment
funds);
- PTCE 90-1 (for certain transactions involving insurance company separate
accounts); and
- PTCE 84-14 (for certain transactions determined by independent qualified
asset managers).
Because the Capital Securities may be deemed to be equity interests in the
Issuer for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose underlying
assets include "plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity") or any person investing "plan assets" of any Plan, unless
the purchaser or holder is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption.
By purchasing or holding Capital Securities or any interest in them you
will be deemed to have represented that either:
- you are not a Plan or a Plan Asset Entity and are not purchasing the
securities on behalf of or with "plan assets" of any Plan; or
- you are eligible for the exemptive relief available under PTCE 96-23,
95-60, 91-38, 90-1 or 84-14 or another applicable exemption.
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<PAGE> 26
If a purchaser or holder of the Capital Securities that is a Plan or a Plan
Asset Entity elects to rely on an exemption other than PTCE 96-23, 95-60, 91-38,
90-1 or 84-14, Chase and the Issuer may require a satisfactory opinion of
counsel or other evidence of the availability of that exemption.
Due to the complexity of the above rules and the penalties that may be
imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons considering purchasing
the Capital Securities on behalf of or with "plan assets" of any Plan consult
with their counsel regarding the potential consequences if the assets of the
Issuer were deemed to be "plan assets" and regarding the availability of
exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or any other
applicable exemption.
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<PAGE> 27
UNDERWRITING
Chase, the Issuer and the underwriters named below (the "Underwriters")
have entered into an underwriting agreement relating to the offer and sale of
the Capital Securities (the "Underwriting Agreement"). In the Underwriting
Agreement, the Issuer has agreed to sell to each Underwriter, and each
Underwriter has agreed to purchase from the Issuer, the number of Capital
Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
NAME CAPITAL SECURITIES
---- ------------------
<S> <C>
Chase Securities Inc........................................ 1,577,750
Salomon Smith Barney Inc. .................................. 1,577,750
Merrill Lynch, Pierce, Fenner, & Smith
Incorporated................................... 1,565,000
PaineWebber Incorporated.................................... 1,565,000
Prudential Securities Incorporated.......................... 1,565,000
Bear, Stearns & Co. Inc..................................... 325,000
Lehman Brothers Inc......................................... 325,000
U.S. Bancorp Piper Jaffray Inc.............................. 325,000
A.G. Edwards & Sons, Inc.................................... 75,000
First Union Securities, Inc................................. 75,000
Dain Rauscher Incorporated.................................. 75,000
McDonald Investments Inc., A Keycorp Company................ 75,000
Raymond James & Associates, Inc............................. 75,000
Robert W. Baird & Co. Incorporated.......................... 75,000
The Robinson-Humphrey Company, LLC.......................... 75,000
SG Cowen Securities Corporation............................. 75,000
UBS Warburg LLC............................................. 75,000
ABN Amro Incorporated....................................... 18,500
BB&T Investment Services, Inc., a Division of Scott &
Stringfellow.............................................. 18,500
Davenport & Company LLC..................................... 18,500
Fahnestock & Co. Inc........................................ 18,500
Fifth Third Securities, Inc................................. 18,500
First Albany Corporation.................................... 18,500
Gibraltar Securities Co..................................... 18,500
Gruntal & Co., L.L.C........................................ 18,500
Guzman & Company............................................ 18,500
J.J.B. Hilliard, W.L. Lyons, Inc............................ 18,500
Janney Montgomery Scott Inc................................. 18,500
Keefe, Bruyette & Woods, Inc................................ 18,500
Legg Mason Wood Walker, Incorporated........................ 18,500
Mesirow Financial, Inc...................................... 18,500
Morgan Keegan & Company, Inc................................ 18,500
Muriel Siebert & Co., Inc................................... 18,500
NatCity Investments, Inc.................................... 18,500
Olde Discount Corporation................................... 18,500
Charles Schwab & Co., Inc................................... 18,500
Stephens Inc................................................ 18,500
Stifel, Nicolaus & Company, Incorporated.................... 18,500
TD Securities (USA) Inc..................................... 18,500
Tucker Anthony Incorporated................................. 18,500
Utendahl Capital Partners, L.P.............................. 18,500
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF
NAME CAPITAL SECURITIES
---- ------------------
<S> <C>
Wachovia Securities, Inc.................................... 18,500
Wedbush Morgan Securities................................... 18,500
The Williams Capital Group, L.P............................. 18,500
------------
Total............................................. 10,000,000
</TABLE>
The obligations of the Underwriters under the Underwriting Agreement,
including their agreement to purchase the Capital Securities from the Issuer,
are several and not joint. Those obligations are also subject to the
satisfaction of certain conditions in the Underwriting Agreement. The
Underwriters have agreed to purchase all of the Capital Securities if any are
purchased.
The Underwriters have advised us that they propose to offer the Capital
Securities to the public at the public offering price that appears on the cover
page of this Prospectus Supplement. The Underwriters may offer the Capital
Securities to selected dealers at the public offering price minus a selling
concession of up to $0.50 per Capital Security. In addition, the Underwriters
may allow, and those selected dealers may reallow, a selling concession of up to
$0.30 per Capital Security to certain other dealers. After the initial public
offering, the Underwriters may change the public offering price and any other
selling terms.
In view of the fact that the Issuer is using the proceeds from the sale of
the Capital Securities to purchase the Subordinated Debentures, Chase has agreed
that:
- Chase will pay the Underwriters compensation for their arrangement of
that investment in an amount equal to $0.7875 per Capital Security; and
- Chase will pay the expenses of Chase and the Issuer related to this
offering, which Chase estimates will be $100,000.
In addition, Chase and the Issuer have agreed:
- to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933; and
- that until the closing of the sale of the Capital Securities, Chase will
not, without the consent of the Underwriters, offer or sell any
securities of the Issuer or Chase that are substantially similar to the
Capital Securities.
The Capital Securities are a new issue of securities, and there is
currently no established trading market for the Capital Securities. The Capital
Securities have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance. We expect trading of the Capital
Securities on the New York Stock Exchange to begin within a 30-day period after
the initial issuance of the Capital Securities. The Underwriters have advised us
that they intend to make a market in the Capital Securities prior to the date
trading on the New York Stock Exchange begins. However, they are not obligated
to do so and may discontinue any market making in the Capital Securities at any
time in their sole discretion. Therefore, we cannot assure you as to the
liquidity of the trading markets for the Capital Securities.
In order to meet one of the requirements for listing the Capital Securities
on the New York Stock Exchange, the Underwriters have undertaken to sell lots of
100 or more of the Capital Securities to a minimum of 400 beneficial holders.
We own directly or indirectly all the outstanding equity securities of
Chase Securities Inc. ("CSI"). The underwriting arrangements for this offering
comply with the requirements of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD") regarding an NASD member
firm's underwriting of securities of an affiliate. In accordance with Rule 2720,
no Underwriter may make sales in this offering to any discretionary account
without the prior approval of the customer.
Chase's affiliates, including CSI, may use this Prospectus Supplement and
the attached Prospectus in connection with offers and sales of the Capital
Securities in the secondary market. These affiliates 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.
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<PAGE> 29
In connection with this offering, CSI, on behalf of the Underwriters, may
engage in overallotment, stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Regulation M under the
Securities Exchange Act of 1934 (the "Exchange Act"). Overallotment involves
sales in excess of the offering size, which create a short position for the
Underwriters. Stabilizing transactions involve bids to purchase the Capital
Securities in the open market for the purpose of pegging, fixing or maintaining
the price of the Capital Securities. Syndicate covering transactions involve
purchases of the Capital Securities in the open market after the distribution
has been completed in order to cover syndicate short positions. Penalty bids
permit the managing underwriter to reclaim a selling concession from a syndicate
member when the Capital Securities originally sold by that syndicate member are
purchased in a syndicate covering transaction to cover syndicate short
positions. Stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the Capital Securities to be higher than it would
otherwise be in the absence of those transactions. If CSI engages in
stabilizing, syndicate covering transactions or penalty bids it may discontinue
them at any time.
Certain of the Underwriters engage in transactions with and perform
services for Chase and its affiliates in the ordinary course of business.
The Issuer will deliver the Capital Securities to the Underwriters at the
closing of this offering when the Underwriters pay the Issuer the purchase price
of the Capital Securities. The Underwriting Agreement provides that the closing
will occur on July 31, 2000, which is four business days after the date of this
Prospectus Supplement. Rule 15c6-1 under the Exchange Act generally requires
that securities trades in the secondary market settle in three business days,
unless the parties to a trade expressly agree otherwise.
VALIDITY OF SECURITIES
Richards, Layton & Finger, special Delaware counsel to Chase and the
Issuer, will opine on certain matters of Delaware law relating to the validity
of the Capital Securities, the enforceability of the Trust Agreement and the
formation of the Issuer. Simpson Thacher & Bartlett, New York, New York, will
opine on the validity of the Guarantee and the Subordinated Debentures for
Chase, and Cravath, Swaine & Moore, New York, New York, will opine on those
matters for the Underwriters. Simpson Thacher & Bartlett and Cravath, Swaine &
Moore will rely on the opinion of Richards, Layton & Finger as to matters of
Delaware law. Cravath, Swaine & Moore has represented and continues to represent
Chase and its subsidiaries in a substantial number of matters on a regular
basis. Simpson Thacher & Bartlett, as tax counsel, will opine on certain matters
relating to the United States federal income tax considerations described in
this Prospectus Supplement.
S-29
<PAGE> 30
$1,500,000,000
THE CHASE MANHATTAN CORPORATION
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES
CHASE CAPITAL VI
CHASE CAPITAL VII
CHASE CAPITAL VIII
CHASE CAPITAL IX
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
THE CHASE MANHATTAN CORPORATION
The Chase Manhattan Corporation, a Delaware corporation (the
"Corporation"), may from time to time offer in one or more series or issuances
its junior subordinated deferrable interest debentures (the "Junior Subordinated
Debentures"). The Junior Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to Senior Debt (as defined in
"Description of Junior Subordinated Debentures -- Subordination") of the
Corporation. If provided in an accompanying Prospectus Supplement, the
Corporation will have the right to defer payments of interest on any series of
Junior Subordinated Debentures by extending the interest payment period thereon
at any time or from time to time for up to such number of consecutive interest
payment periods (which shall not extend beyond the Stated Maturity (as defined
herein) of the Junior Subordinated Debentures) with respect to each deferral
period as may be specified in such Prospectus Supplement (each, an "Extension
Period"). In such circumstance, however, the Corporation would not be permitted,
subject to certain exceptions set forth herein, to declare or pay any dividends,
distributions or other payments with respect to, or repay, repurchase, redeem or
otherwise acquire, the Corporation's capital stock or debt securities that rank
pari passu with or junior to such series of Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Option to Defer Interest
Payments" and "-- Restrictions on Certain Payments."
Chase Capital VI, Chase Capital VII, Chase Capital VIII and Chase Capital
IX, each a trust created under the laws of the State of Delaware (each, an
"Issuer," and collectively, the "Issuers"), may severally offer, from time to
time, preferred securities (the "Preferred Securities") representing beneficial
ownership interests in such Issuer. The Corporation will be the owner of the
common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing common beneficial ownership
interests in such Issuer. Holders of the Preferred Securities will be entitled
to receive preferential cumulative cash distributions ("Distributions")
accumulating from the date of original issuance and payable periodically as
specified in an accompanying Prospectus Supplement.
Concurrently with the issuance by an Issuer of its Preferred Securities,
such Issuer will invest the proceeds thereof and of contributions received in
respect of the Common Securities in a corresponding series of the Corporation's
Junior Subordinated Debentures (the "Corresponding Junior Subordinated
Debentures") with terms corresponding to the terms of that Issuer's Preferred
Securities (the "Related Preferred Securities"). Accordingly, if, as provided in
an accompanying Prospectus Supplement, the
(continued on next page)
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is July 17, 1998.
<PAGE> 31
(cover page continued)
Corporation has the right to defer the payment of interest on a series of
Corresponding Junior Subordinated Debentures, then, if interest payments are so
deferred, Distributions on the Related Preferred Securities would also be
deferred, but would continue to accumulate at the rate per annum set forth in
the related Prospectus Supplement. See "Description of Preferred
Securities -- Distributions."
Taken together, the Corporation's obligations under each series of
Corresponding Junior Subordinated Debentures, the Indenture, the related Trust
Agreement and the related Guarantee (each, as defined herein), in the aggregate,
will provide a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Related Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees -- Full and Unconditional Guarantee."
The payment of Distributions with respect to the Preferred Securities of each
Issuer and payments on liquidation of such Issuer or redemption of such
Preferred Securities, in each case out of funds held by such Issuer, will be
irrevocably guaranteed by the Corporation to the extent described herein (each,
a "Guarantee"). See "Description of Guarantees." The obligations of the
Corporation under each Guarantee will be unsecured and subordinate and junior in
right of payment to all Senior Debt of the Corporation.
The Corresponding Junior Subordinated Debentures will be the sole assets of
each Issuer, and payments under the Corresponding Junior Subordinated Debentures
will be the only revenue of each Issuer. If so provided in an accompanying
Prospectus Supplement, the Corporation may, upon receipt of approval of the
Board of Governors of the Federal Reserve System (the "Federal Reserve") (if
such approval is then required under the Federal Reserve's applicable capital
guidelines or policies), redeem the Corresponding Junior Subordinated Debentures
(and thereby cause the redemption of the Trust Securities) or may terminate each
Issuer and, after satisfaction of liabilities to the creditors of such Issuer as
required by applicable law, cause the Corresponding Junior Subordinated
Debentures to be distributed to the holders of Preferred Securities in exchange
therefor upon liquidation of their interests in such Issuer. See "Description of
Preferred Securities -- Liquidation Distribution Upon Termination."
The Junior Subordinated Debentures and Preferred Securities may be offered
in amounts, at prices and on terms to be determined at the time of offering;
provided, however, the aggregate initial public offering price of all Junior
Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of which
this Prospectus forms a part shall not exceed $1,500,000,000. Certain specific
terms of the Junior Subordinated Debentures or Preferred Securities in respect
of which this Prospectus is being delivered will be described in an accompanying
Prospectus Supplement, including without limitation and where applicable and to
the extent not set forth herein, (a) in the case of Junior Subordinated
Debentures, the specific designation, aggregate principal amount, denominations,
Stated Maturity (including any provisions for the shortening or extension
thereof), interest payment dates, interest rate (which may be fixed or variable)
or method of calculating interest, if any, applicable Extension Period or
interest deferral terms, if any, place or places where principal, premium, if
any, and interest, if any, will be payable, any terms of redemption, any sinking
fund provisions, terms for any conversion or exchange into other securities,
initial offering or purchase price, methods of distribution and any other
special terms, and (b) in the case of Preferred Securities, the identity of the
Issuer, specific title, aggregate stated liquidation amount, number of
securities, Distribution rate or method of calculating such rate, Distribution
payment dates, applicable Distribution deferral terms, if any, place or places
where Distributions will be payable, any terms of redemption, exchange, initial
offering or purchase price, methods of distribution and any other special terms.
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them will be set forth in a Prospectus Supplement. The
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<PAGE> 32
Prospectus Supplement will state whether the Junior Subordinated Debentures or
Preferred Securities will be listed on any national securities exchange or
automated quotation system. If the Junior Subordinated Debentures or Preferred
Securities are not listed on any national securities exchange or automated
quotation system, there can be no assurance that there will be a secondary
market for the Junior Subordinated Debentures or Preferred Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, Suite 1300, New York,
New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov. In addition, such reports, proxy statements
and other information concerning the Corporation can be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Corporation and the Issuers have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Corporation and the securities offered hereby, reference is made
to the Registration Statement and the exhibits and the financial statements,
notes and schedules filed as a part thereof or incorporated by reference
therein, which may be inspected at the public reference facilities of the
Commission at the addresses set forth above or through the Commission's home
page on the Internet. Statements made in this Prospectus concerning the contents
of any documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such document
filed as an exhibit to the Registration Statement.
No separate financial statements of any Issuer have been included herein.
The Corporation and the Issuers do not consider that such financial statements
would be material to holders of the Preferred Securities because each Issuer is
a newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Corresponding Junior Subordinated
Debentures of the Corporation and issuing the Trust Securities. See "The
Issuers," "Description of Preferred Securities," "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures" and
"Description of Guarantees." In addition, the Corporation does not expect that
any of the Issuers will be filing reports under the Exchange Act with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1997.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
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<PAGE> 33
3. Current Reports on Form 8-K dated January 21, 1998, January 28, 1998,
March 17, 1998, April 21, 1998 and May 19, 1998.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: The Chase
Manhattan Corporation, 270 Park Avenue, New York, New York 10017, Attention:
Office of the Secretary, telephone number (212) 270-4040.
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<PAGE> 34
THE CHASE MANHATTAN CORPORATION
The Corporation is a bank holding company organized under the laws of
Delaware in 1968 and registered under the Bank Holding Company Act of 1956, as
amended. On March 31, 1996, The Chase Manhattan Corporation ("heritage Chase")
merged with and into Chemical Banking Corporation, and Chemical Banking
Corporation changed its name to "The Chase Manhattan Corporation."
The Corporation is a Delaware corporation with its principal office at 270
Park Avenue, New York, New York 10017. Its telephone number is (212) 270-6000.
THE ISSUERS
Each Issuer is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement executed by the Corporation, as Depositor of
the Issuer, and the Delaware Trustee and two Administrative Trustees (as defined
herein) of such Issuer and (ii) the filing of a certificate of trust with the
Delaware Secretary of State. The trust agreement of each Issuer will be amended
and restated in its entirety (each, as so amended and restated, a "Trust
Agreement") prior to the issuance of Preferred Securities by such Issuer,
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. Each Trust Agreement will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Each Issuer exists for the exclusive purposes of (i) issuing
and selling its Trust Securities, (ii) using the proceeds from the sale of such
Trust Securities to acquire a series of Corresponding Junior Subordinated
Debentures issued by the Corporation, and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer of
Trust Securities). Accordingly, the Corresponding Junior Subordinated Debentures
will be the sole assets of each Issuer, and payments under the Corresponding
Junior Subordinated Debentures will be the sole revenue of each Issuer.
All of the Common Securities of each Issuer will be owned by the
Corporation. The Common Securities of an Issuer will rank pari passu, and
payments will be made thereon pro rata with the Preferred Securities of such
Issuer, except that upon the occurrence and continuance of an event of default
under a Trust Agreement resulting from an event of default under the Indenture,
the rights of the Corporation as holder of the Common Securities to payment in
respect of Distributions and payments upon liquidation or redemption will be
subordinated to the rights of the holders of the Preferred Securities of such
Issuer. See "Description of Preferred Securities -- Subordination of Common
Securities." The Corporation will acquire Common Securities in an aggregate
Liquidation Amount equal to not less than 3% of the total capital of each
Issuer.
Unless otherwise specified in the applicable Prospectus Supplement, each
Issuer has a term of approximately 55 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer's business and affairs
are conducted by its trustees, each appointed by the
Corporation as holder of the Common Securities. The trustees for each Issuer
will be The Bank of New York, as the Property Trustee (the "Property Trustee"),
The Bank of New York (Delaware), as the Delaware Trustee (the "Delaware
Trustee"), and two individual trustees (the "Administrative Trustees") who are
employees or officers of or affiliated with the Corporation (collectively, the
"Issuer Trustees"). The Bank of New York, as Property Trustee, will act as sole
trustee under each Trust Agreement for purposes of compliance with the Trust
Indenture Act. The Bank of New York will also act as trustee under the
Guarantees and the Indenture. See "Description of Guarantees" and "Description
of Junior Subordinated Debentures." The holder of the Common Securities of an
Issuer, or the holders of a majority in Liquidation Amount of the Related
Preferred Securities if an event of default under the Trust Agreement for such
Issuer has occurred and is continuing, will be entitled to appoint, remove or
replace the Property Trustee and/or the Delaware Trustee for such Issuer. In no
event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights are
vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed by the applicable Trust
Agreement. The Corporation will pay all fees and expenses related to each Issuer
and the offering of the Preferred Securities and will pay, directly or
indirectly, all ongoing costs, expenses and liabilities of each Issuer.
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The principal executive office of each Issuer is 270 Park Avenue, New York,
New York 10017 and its telephone number is (212) 270-6000.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
Corporation intends to use the proceeds from the sale of its Junior Subordinated
Debentures (including Corresponding Junior Subordinated Debentures issued to the
Issuers in connection with the investment by the Issuers of all of the proceeds
from the sale of Trust Securities) for general corporate purposes, including
investments in or loans to subsidiaries, refinancing of debt, including
outstanding commercial paper and other short-term indebtedness, redemption or
repurchase of shares of its outstanding common and preferred stock, the
satisfaction of other obligations or for such other purposes as may be specified
in the applicable Prospectus Supplement.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under the Junior Subordinated Indenture, dated as of December 1, 1996, as
supplemented from time to time (as so supplemented, the "Indenture"), between
the Corporation and The Bank of New York, as trustee (the "Debenture Trustee").
This summary of certain terms and provisions of the Junior Subordinated
Debentures, Corresponding Junior Subordinated Debentures and the Indenture,
which summarizes the material provisions thereof, does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Indenture, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and to the Trust Indenture Act,
to each of which reference is hereby made. The Indenture is qualified under the
Trust Indenture Act. Whenever particular defined terms of the Indenture (as
supplemented or amended from time to time) are referred to herein or in a
Prospectus Supplement, such defined terms are incorporated herein or therein by
reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu with all
other series of Junior Subordinated Debentures heretofore or hereafter issued
pursuant to the Indenture, and will be unsecured and subordinate and junior in
right of payment to the extent and in the manner set forth in the Indenture to
all Senior Debt (as defined below) of the Corporation. See "-- Subordination."
Because the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subsidiary, including The Chase
Manhattan Bank, Chase Manhattan Bank USA, National Association, and Chase Bank
of Texas, National Association, upon such subsidiary's liquidation or
reorganization or otherwise, is subject to the prior claims of creditors of the
subsidiary, except to the extent the Corporation may itself be recognized as a
creditor of that subsidiary. Accordingly, the Junior Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Junior Subordinated Debentures should
look only to the assets of the Corporation for payments on the Junior
Subordinated Debentures. Except as otherwise provided in the applicable
Prospectus Supplement, the Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of the Corporation, including Senior Debt,
whether under the Indenture, any other existing indenture or any other indenture
that the Corporation may enter into in the future or otherwise. See
"-- Subordination" and the applicable Prospectus Supplement relating to any
offering of Preferred Securities or Junior Subordinated Debentures.
The Junior Subordinated Debentures will be issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of the
Corporation's Board of Directors or a committee thereof.
The applicable Prospectus Supplement will describe the following terms of
the Junior Subordinated Debentures offered thereby: (1) the title of such Junior
Subordinated Debentures; (2) any limit upon the aggregate principal amount of
such Junior Subordinated Debentures; (3) the date or dates on which the
principal of such Junior Subordinated Debentures is payable (the "Stated
Maturity") or the method of determination thereof; (4) the rate or rates, if
any, at which such Junior Subordinated Debentures shall bear
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interest, the dates on which any such interest shall be payable (the "Interest
Payment Dates"), the right, if any, of the Corporation to defer or extend an
Interest Payment Date, the record dates for any interest payable on any Interest
Payment Date (the "Regular Record Dates") and the method by which any of the
foregoing shall be determined; (5) the place or places where, subject to the
terms of the Indenture as described below under "-- Payment and Paying Agents,"
the principal of and premium, if any, and interest on such Junior Subordinated
Debentures will be payable and where, subject to the terms of the Indenture as
described below under "-- Denominations, Registration and Transfer," such Junior
Subordinated Debentures may be presented for registration of transfer or
exchange and the place or places where notices and demands to or upon the
Corporation in respect of such Junior Subordinated Debentures and the Indenture
may be made ("Place of Payment"); (6) any period or periods within which, or
date or dates on which, the price or prices at which and the terms and
conditions upon which such Junior Subordinated Debentures may be redeemed, in
whole or in part, at the option of the Corporation or a holder thereof; (7) the
obligation or the right, if any, of the Corporation or a holder thereof to
redeem, purchase or repay such Junior Subordinated Debentures and the period or
periods within which, the price or prices at which, the currency or currencies
(including currency unit or units) in which and the other terms and conditions
upon which such Junior Subordinated Debentures shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation or right; (8) the
denominations in which such Junior Subordinated Debentures shall be issuable;
(9) if other than in U.S. Dollars, the currency or currencies (including
currency unit or units) in which the principal of (and premium, if any) and
interest, if any, on the Junior Subordinated Debentures shall be payable, or in
which such Junior Subordinated Debentures shall be denominated; (10) any
additions, modifications or deletions in the events of default under the
Indenture or in the covenants of the Corporation specified in the Indenture with
respect to such Junior Subordinated Debentures; (11) if other than the principal
amount thereof, the portion of the principal amount of such Junior Subordinated
Debentures that shall be payable upon declaration of acceleration of the
maturity thereof; (12) any additions or changes to the Indenture with respect to
such Junior Subordinated Debentures as shall be necessary to permit or
facilitate the issuance of such Junior Subordinated Debentures in bearer form,
registrable or not registrable as to principal, and with or without interest
coupons; (13) any index or indices used to determine the amount of payments of
principal of and premium, if any, on such Junior Subordinated Debentures and the
manner in which such amounts will be determined; (14) the terms and conditions
relating to the issuance of a temporary Global Security representing all of such
Junior Subordinated Debentures and the exchange of such temporary Global
Security for definitive Junior Subordinated Debentures of such series; (15)
subject to the terms described herein under "-- Global Junior Subordinated
Debentures," whether such Junior Subordinated Debentures shall be issued in
whole or in part in the form of one or more Global Securities and, in such case,
the depositary for such Global Securities, which depositary shall be a clearing
agency registered under the Exchange Act; (16) the appointment of any paying
agent or agents; (17) the terms and conditions of any obligation or right of the
Corporation or a holder to convert or exchange such Junior Subordinated
Debentures into Preferred Securities; (18) the form of Trust Agreement and
Guarantee Agreement, if applicable; and (19) any other terms of the Junior
Subordinated Debentures not inconsistent with the provisions of the Indenture.
Junior Subordinated Debentures may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain United States federal
income tax consequences and special considerations applicable to any such Junior
Subordinated Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, premium, if any, or interest on any
Junior Subordinated Debentures is payable in one or more foreign currencies or
currency units, the restrictions, elections, certain United States federal
income tax consequences, specific terms and other information with respect to
such series of Junior Subordinated Debentures and such foreign currency or
currency units will be set forth in the applicable Prospectus Supplement.
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If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debentures,
special United States federal income tax, accounting and other considerations
applicable thereto will be described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issuable only in registered form without
coupons. Junior Subordinated Debentures of any series will be exchangeable for
other Junior Subordinated Debentures of the same issue and series, of any
authorized denominations, of a like aggregate principal amount, of the same
original issue date and stated maturity and bearing the same interest rate.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the appropriate securities registrar or at the
office of any transfer agent designated by the Corporation for such purpose with
respect to any series of Junior Subordinated Debentures and referred to in the
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. The
Corporation will appoint the Debenture Trustee as securities registrar under the
Indenture. If the applicable Prospectus Supplement refers to any transfer agents
(in addition to the securities registrar) initially designated by the
Corporation with respect to any series of Junior Subordinated Debentures, the
Corporation may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent acts,
provided that the Corporation maintains a transfer agent in each place of
payment for such series. The Corporation may at any time designate additional
transfer agents with respect to any series of Junior Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of any series during a period beginning at the
opening of business 15 days before the day of selection for redemption of Junior
Subordinated Debentures of that series and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Junior Subordinated Debentures that will
be deposited with, or on behalf of, a depositary (the "Depositary") identified
in the Prospectus Supplement relating to such series. Global Junior Subordinated
Debentures may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual definitive Junior Subordinated Debentures represented thereby, a
Global Junior Subordinated Debenture may not be transferred except as a whole by
the Depositary for such Global Junior Subordinated Debenture to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Junior Subordinated Debentures will be described in the Prospectus Supplement
relating to such series. The Corporation anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, and the
deposit of such Global Junior Subordinated Debenture with or on behalf of the
Depositary, the Depositary for such Global Junior Subordinated Debenture or its
nominee will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture to the accounts of
persons that have accounts with such Depositary, which may include the accounts
of Morgan Guaranty Trust Company of New York, Brussels office, as operator of
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the Euroclear System ("Euroclear"), and Cedelbank, societe anonyme ("Cedel")
("Participants"). Such accounts shall be designated by the dealers, underwriters
or agents with respect to such Junior Subordinated Debentures or by the
Corporation if such Junior Subordinated Debentures are offered and sold directly
by the Corporation. Ownership of beneficial interests in a Global Junior
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants, including Euroclear and Cedel and their
participants. Ownership of beneficial interests in such Global Junior
Subordinated Debenture will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Junior Subordinated Debenture.
So long as the Depositary for a Global Junior Subordinated Debenture, or
its nominee, is the registered owner of such Global Junior Subordinated
Debenture, such Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture for all purposes under
the Indenture. Except as provided below, owners of beneficial interests in a
Global Junior Subordinated Debenture will not be entitled to have any of the
individual Junior Subordinated Debentures of the series represented by such
Global Junior Subordinated Debenture registered in their names, will not receive
or be entitled to receive physical delivery of any such Junior Subordinated
Debentures of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner of
the Global Junior Subordinated Debenture representing such Junior Subordinated
Debentures. None of the Corporation, the Debenture Trustee, any Paying Agent, or
the Securities Registrar for such Junior Subordinated Debentures will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Junior
Subordinated Debenture representing such Junior Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Corporation expects that the Depositary for a series of Junior
Subordinated Debentures or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of a permanent Global Junior
Subordinated Debenture representing any of such Junior Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
such Global Junior Subordinated Debenture for such Junior Subordinated
Debentures as shown on the records of such Depositary or its nominee. The
Corporation also expects that payments by Participants to owners of beneficial
interests in such Global Junior Subordinated Debenture held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Corporation within 90 days, the Corporation
will issue individual Junior Subordinated Debentures of such series in exchange
for the Global Junior Subordinated Debenture representing such series of Junior
Subordinated Debentures. In addition, the Corporation may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Junior Subordinated Debentures, determine not to
have any Junior Subordinated Debentures of such series represented by one or
more Global Junior Subordinated Debentures and, in such event, will issue
certificated Junior Subordinated Debentures of such series in exchange for the
Global Junior Subordinated Debenture. Further, if the Corporation so specifies
with respect to the Junior Subordinated Debentures of a series, an owner of a
beneficial interest in a Global Junior Subordinated Debenture representing
Junior Subordinated Debentures of such series may, on terms acceptable to the
Corporation, the Debenture Trustee and the
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Depositary for such Global Junior Subordinated Debenture, receive certificated
Junior Subordinated Debentures of such series in exchange for such beneficial
interests, subject to any limitations described in the Prospectus Supplement
relating to such Junior Subordinated Debentures. In any such instance, an owner
of a beneficial interest in a Global Junior Subordinated Debenture will be
entitled to physical delivery of certificated Junior Subordinated Debentures of
the series represented by such Global Junior Subordinated Debenture equal in
aggregate principal amount to such beneficial interest and to have such Junior
Subordinated Debentures registered in its name. Individual Junior Subordinated
Debentures of such series so issued will be issued in the denominations
specified for such series in the applicable Prospectus Supplement.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Junior Subordinated
Debentures (other than any Junior Subordinated Debentures represented by Global
Junior Subordinated Debentures) will be made at the office of the Debenture
Trustee in the City of New York or at the office of such paying agent or paying
agents as the Corporation may designate from time to time, except that at the
option of the Corporation payment of any interest may be made (i) except in the
case of Global Junior Subordinated Debentures, by check mailed to the address of
the person entitled thereto as such address shall appear in the securities
register or (ii) by transfer to an account maintained by the person entitled
thereto as specified in the securities register, provided that proper transfer
instructions have been received by the Regular Record Date. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of any interest on
Junior Subordinated Debentures will be made to the person in whose name such
Junior Subordinated Debentures are registered at the close of business on the
Regular Record Date for such interest, except in the case of defaulted interest.
The Corporation may at any time designate additional paying agents or rescind
the designation of any paying agent; however, the Corporation will at all times
be required to maintain a paying agent in each place of payment for each series
of Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Corporation will
have the right at any time and from time to time during the term of any series
of Junior Subordinated Debentures to defer payment of interest for up to such
number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided, that such Extension Period may not extend beyond the
Stated Maturity of such series of Junior Subordinated Debentures. Certain United
States federal income tax consequences and special considerations applicable to
any such Junior Subordinated Debentures will be described in the applicable
Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, Junior
Subordinated Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation may, at its option and subject to receipt of prior approval by the
Federal Reserve if then required under applicable capital guidelines or
policies, redeem the Junior Subordinated Debentures of any series in whole at
any time or in part from time to time. If the Junior Subordinated Debentures of
any series are so redeemable only on or after a specified date or upon the
satisfaction of additional conditions, the applicable Prospectus Supplement will
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specify such date or describe such conditions. Except as otherwise specified in
the applicable Prospectus Supplement, the redemption price for any Junior
Subordinated Debenture so redeemed shall equal any accrued and unpaid interest
thereon to the redemption date, plus 100% of the principal amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Tax Event (as defined below) in respect of a series of Junior Subordinated
Debentures or a Capital Treatment Event (as defined below) shall occur and be
continuing, the Corporation may, at its option and subject to receipt of prior
approval by the Federal Reserve if then required under applicable capital
guidelines or policies, redeem such series of Junior Subordinated Debentures in
whole (but not in part) at any time within 90 days following of the occurrence
of such Tax Event or Capital Treatment Event, at a redemption price equal to
100% of the principal amount of such Junior Subordinated Debentures then
outstanding plus accrued and unpaid interest to the date fixed for redemption,
except as otherwise specified in the applicable Prospectus Supplement.
"Tax Event" means the receipt by the Issuer of a series of Preferred
Securities of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement or decision is announced on or
after the date of issuance of such Preferred Securities, there is more than an
insubstantial risk that (i) such Issuer is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the corresponding series of Corresponding
Junior Subordinated Debentures, (ii) interest payable by the Corporation on such
series of Corresponding Junior Subordinated Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Corporation, in
whole or in part, for United States federal income tax purposes, or (iii) such
issuer is, or will be within 90 days of the date of such opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement, action or decision is
announced on or after the date of issuance of the applicable Preferred
Securities under the applicable Trust Agreement, there is more than an
insubstantial risk that the Corporation will not be entitled to treat an amount
equal to the Liquidation Amount of the applicable Preferred Securities as "Tier
I Capital" (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Corporation
defaults in payment of the redemption price, on and after the redemption date,
interest will cease to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation will also covenant, as to each series of Junior
Subordinated Debentures, that it will not, and will not permit any subsidiary of
the Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Corporation (including other series of Junior Subordinated Debentures) that rank
pari passu with or junior in interest to the Junior Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in capital stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the redemption or
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repurchase of any such rights pursuant thereto, (c) payments under any Guarantee
with respect to the series of Related Preferred Securities and (d) purchases of
common stock related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees, related to
the issuance of common stock or rights under a dividend reinvestment and stock
purchase plan, or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period) if at such time (i) there shall have occurred any event of
which the Corporation has actual knowledge (a) that with the giving of notice or
the lapse of time, or both, would constitute a "Debenture Event of Default"
under the Indenture with respect to the Junior Subordinated Debentures of such
series and (b) in respect of which the Corporation shall not have taken
reasonable steps to cure, (ii) if such Junior Subordinated Debentures are held
by an Issuer of a series of Related Preferred Securities, the Corporation shall
be in default with respect to its payment of any obligations under the Guarantee
relating to such Related Preferred Securities or (iii) the Corporation shall
have given notice of its election of an Extension Period as provided in the
Indenture with respect to the Junior Subordinated Debentures of such series and
shall not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of any series of Junior Subordinated Debentures,
amend, waive or supplement the Indenture for specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies (provided
that any such action does not materially adversely affect the interests of the
holders of any series of Junior Subordinated Debentures or, in the case of
Corresponding Junior Subordinated Debentures, the holders of the Related
Preferred Securities so long as they remain outstanding) and qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act.
The Indenture contains provisions permitting the Corporation and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of each outstanding series of Junior Subordinated Debentures
affected, to modify the Indenture in a manner adversely affecting the rights of
the holders of such series of the Junior Subordinated Debentures in any material
respect; provided, that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Debenture so affected, (i) change
the Stated Maturity of any series of Junior Subordinated Debentures (except as
otherwise specified in the applicable Prospectus Supplement), or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures of any series, the holders of which are required to
consent to any such modification of the Indenture, provided further that, in the
case of Corresponding Junior Subordinated Debentures, so long as any Related
Preferred Securities remain outstanding, (a) no such modification may be made
that adversely affects the holders of such Preferred Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
event of default or compliance with any covenant under the Indenture may be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount of all outstanding Related Preferred Securities
affected unless and until the principal of the Corresponding Junior Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions have been satisfied, and (b) where a consent under
the Indenture would require the consent of each holder of Corresponding Junior
Subordinated Debentures, no such consent shall be given by the Property Trustee
without the prior consent of each holder of Related Preferred Securities.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debentures, any supplemental
Indenture for the purpose of creating any new series of Junior Subordinated
Debentures.
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DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on such series of Junior
Subordinated Debentures when due (subject to the deferral of any interest
payment in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series
of Junior Subordinated Debentures when due whether at maturity or upon
redemption; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Corporation from the Debenture Trustee or the holders of at least
25% in aggregate outstanding principal amount of such affected series of
outstanding Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures of each series affected have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Debenture Trustee. The Debenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of Junior Subordinated Debentures
of each series affected may declare the principal due and payable immediately
upon a Debenture Event of Default, and, in the case of Corresponding Junior
Subordinated Debentures, should the Debenture Trustee or such holders of such
Corresponding Junior Subordinated Debentures fail to make such declaration, the
holders of at least 25% in aggregate Liquidation Amount of the Related Preferred
Securities shall have such right. The holders of a majority in aggregate
outstanding principal amount of Junior Subordinated Debentures of each series
affected may annul such declaration. In the case of Corresponding Junior
Subordinated Debentures, should the holders of such Corresponding Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the Related
Preferred Securities affected shall have such right.
The holders of a majority in aggregate outstanding principal amount of each
series of the Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures of such series, waive any
default, except a default in the payment of principal or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Junior Subordinated Debenture. In the case of
Corresponding Junior Subordinated Debentures, should the holders of such
Corresponding Junior Subordinated Debentures fail to waive such default, the
holders of a majority in aggregate Liquidation Amount of the Related Preferred
Securities affected shall have such right. The Corporation is required to file
annually with the Debenture Trustee a certificate as to whether or not the
Corporation is in compliance with all the conditions and covenants applicable to
it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing as to a
series of Corresponding Junior Subordinated Debentures, the Property Trustee
will have the right to declare the principal of and the interest on such
Corresponding Junior Subordinated Debentures, and any other amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Corresponding Junior Subordinated
Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debentures has occurred and is continuing and such event is
attributable to the failure of the Corporation to pay interest or principal on
such Corresponding Junior Subordinated Debentures on the date such interest or
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principal is due and payable, a holder of Related Preferred Securities may
institute a legal proceeding directly against the Corporation for enforcement of
payment to such holder of the principal of or interest on such Corresponding
Junior Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Related Preferred Securities of such holder (a "Direct
Action"). The Corporation may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Preferred Securities outstanding. If the right to bring a Direct
Action is removed, the applicable Issuer may become subject to the reporting
obligations under the Exchange Act. The Corporation shall have the right under
the Indenture to set-off any payment made to such holder of Preferred Securities
by the Corporation in connection with a Direct Action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an event of default under the Trust Agreement. See "Description
of Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties and assets substantially as an entirety to the Corporation, unless
(i) in case the Corporation consolidates with or merges into another Person or
conveys or transfers its properties and assets substantially as an entirety to
any Person, the successor Person is organized under the laws of the United
States or any state or the District of Columbia, and such successor Person
expressly assumes the Corporation's obligations on the Junior Subordinated
Debentures issued under the Indenture; (ii) immediately after giving effect
thereto, no Debenture Event of Default, and no event which, after notice or
lapse of time or both, would become a Debenture Event of Default, shall have
occurred and be continuing; (iii) in the case of Corresponding Junior
Subordinated Debentures, such transaction is permitted under the related Trust
Agreement and Guarantee and does not give rise to any breach or violation of the
related Trust Agreement or Guarantee, and (iv) certain other conditions as
prescribed by the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and the Corporation deposits or causes
to be deposited with the Debenture Trustee funds, in trust, for the purpose and
in an amount in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal (and premium, if any) and interest
to the date of the deposit or to the Stated Maturity, as the case may be, then
the Indenture will cease to be of further effect (except as to the Corporation's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Corporation will be deemed to have satisfied and discharged the Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or exchangeable
into Junior Subordinated Debentures of another series or into Preferred
Securities of another series. The specific terms on which Junior Subordinated
Debentures of any series may be so converted or exchanged will be set forth in
the applicable Prospectus
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Supplement. Such terms may include provisions for conversion or exchange, either
mandatory, at the option of the holder, or at the option of the Corporation, in
which case the number of shares of Preferred Securities or other securities to
be received by the holders of Junior Subordinated Debentures would be calculated
as of a time and in the manner stated in the applicable Prospectus Supplement.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets of the Corporation upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Debt will first
be entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of Junior Subordinated
Debentures will be entitled to receive or retain any payment in respect of the
principal of (and premium, if any) or interest, if any, on the Junior
Subordinated Debentures; provided, however, that holders of Senior Debt shall
not be entitled to receive payment of any such amounts to the extent that such
holders would be required by the subordination provisions of such Senior Debt to
pay such amounts over to the obligees on trade accounts payable or other
liabilities arising in the ordinary course of the Corporation's business.
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon (including any amounts due upon acceleration thereof) before the
holders of Junior Subordinated Debentures will be entitled to receive or retain
any payment in respect of the principal of (or premium, if any) or interest, if
any, on the Junior Subordinated Debentures; provided, however, that holders of
Senior Debt shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions of
such Senior Debt to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of the Corporation's
business.
No payments on account of principal (or premium, if any) or interest in
respect of the Junior Subordinated Debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior Debt
or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) every
obligation of such Person for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; and (vii) every obligation of the type referred to in clauses (i)
through (vi) of another Person and all dividends of another Person the payment
of which, in either case, such Person has guaranteed or is responsible or liable
for, directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Corporation whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in
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right of payment to the Junior Subordinated Debentures or to other Debt which is
pari passu with, or subordinated to, the Junior Subordinated Debentures;
provided, however, that Senior Debt shall not be deemed to include (i) any Debt
of the Corporation which when incurred and without respect to any election under
Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was
without recourse to the Corporation, (ii) any Debt of the Corporation to any of
its subsidiaries, (iii) Debt to any employee of the Corporation, (iv) Debt which
by its terms is subordinated to trade accounts payable or accrued liabilities
arising in the ordinary course of business to the extent that payments made to
the holders of such Debt by the holders of the Junior Subordinated Debentures as
a result of the subordination provisions of the Indenture would be greater than
such payments otherwise would have been as a result of any obligation of such
holders of such Debt to pay amounts over to the obligees on such trade accounts
payable or accrued liabilities arising in the ordinary course of business as a
result of subordination provisions to which such Debt is subject, and (v) any
other debt securities issued pursuant to the Indenture.
The Indenture places no limitation on the amount of Senior Debt that may be
incurred by the Corporation. The Corporation expects from time to time to incur
additional indebtedness and other obligations constituting Senior Debt.
The Indenture provides that the foregoing subordination provisions, insofar
as they relate to any particular issue of Junior Subordinated Debentures, may be
changed prior to such issuance. Any such change would be described in the
applicable Prospectus Supplement.
TRUST EXPENSES
Pursuant to the Indenture, the Corporation as borrower, has agreed to pay
all debts and other obligations (other than with respect to the Preferred
Securities) and all costs and expenses of each Issuer (including costs and
expenses relating to the organization of each Issuer, the fees and expenses of
the Issuer Trustees and the cost and expenses relating to the operation of each
Issuer) and to pay any and all taxes and all costs and expenses with respect
thereto (other than United States withholding taxes) to which each Issuer might
become subject.
GOVERNING LAW
The Indenture is, and the Junior Subordinated Debentures will be, governed
by and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In that
event, concurrently with the issuance of each Issuer's Preferred Securities,
such Issuer will invest the proceeds thereof and the consideration paid by the
Corporation for the Common Securities of such Issuer in such series of
Corresponding Junior Subordinated Debentures issued by the Corporation to such
Issuer. Each series of Corresponding Junior Subordinated Debentures will be in
the principal amount equal to the aggregate stated Liquidation Amount of the
Related Preferred Securities and the Common Securities of such Issuer and will
rank pari passu with all other series of Junior Subordinated Debentures. Holders
of the Related Preferred Securities for a series of Corresponding Junior
Subordinated
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Debentures will have the rights, in connection with modifications to the
Indenture or upon occurrence of Debenture Events of Default, as described under
"-- Modification of Indenture", " -- Debenture Events of Default" and
"-- Enforcement of Certain Rights by Holders of Preferred Securities," unless
provided otherwise in the Prospectus Supplement for such Related Preferred
Securities.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Tax Event in respect of an Issuer shall occur and be continuing, the Corporation
may, at its option and subject to prior approval of the Federal Reserve if then
so required under applicable capital guidelines or policies, redeem the
Corresponding Junior Subordinated Debentures at any time within 90 days of the
occurrence of such Tax Event, in whole but not in part, subject to the
provisions of the Indenture and whether or not such Corresponding Junior
Subordinated Debentures are then otherwise redeemable at the option of the
Corporation. The redemption price for any Corresponding Junior Subordinated
Debentures shall be equal to 100% of the principal amount of such Corresponding
Junior Subordinated Debentures then outstanding plus accrued and unpaid interest
to the date fixed for redemption. For so long as the applicable Issuer is the
holder of all the outstanding Corresponding Junior Subordinated Debentures of
such series, the proceeds of any such redemption will be used by the Issuer to
redeem the corresponding Trust Securities in accordance with their terms. The
Corporation may not redeem a series of Corresponding Junior Subordinated
Debentures in part unless all accrued and unpaid interest has been paid in full
on all outstanding Corresponding Junior Subordinated Debentures of such series
for all interest periods terminating on or prior to the Redemption Date.
The Corporation will covenant, as to each series of Corresponding Junior
Subordinated Debentures, (i) to maintain directly or indirectly 100% ownership
of the Common Securities of the Issuer to which such Corresponding Junior
Subordinated Debentures have been issued, provided that certain successors which
are permitted pursuant to the Indenture may succeed to the Corporation's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind up
or liquidate any Issuer, except (a) in connection with a distribution of
Corresponding Junior Subordinated Debentures to the holders of the Preferred
Securities in exchange therefor upon liquidation of such Issuer, or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the related Trust Agreement, in either such case, if so specified in the
applicable Prospectus Supplement upon prior approval of the Federal Reserve if
then so required under applicable capital guidelines or policies, and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
related Trust Agreement, to cause such Issuer to remain classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Issuer, the Issuer
Trustees on behalf of such Issuer will issue the Preferred Securities and the
Common Securities. The Preferred Securities of a particular issue will represent
beneficial ownership interests in the Issuer and the holders thereof will be
entitled to a preference in certain circumstances with respect to Distributions
and amounts payable on redemption or liquidation over the Common Securities of
such Issuer, as well as other benefits as described in the corresponding Trust
Agreement. This summary of certain provisions of the Preferred Securities and
each Trust Agreement, which summarizes the material terms thereof, does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of each Trust Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act, to each of
which reference is hereby made. Wherever particular defined terms of a Trust
Agreement (as amended or supplemented from time to time) are referred to herein
or in a Prospectus Supplement, such defined terms are incorporated herein or
therein by reference. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each of the Issuers is a legally separate entity and the assets of one are not
available to satisfy the obligations of any of the others or of any other
statutory business trust whose Common Securities are owned by the Corporation.
GENERAL
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer except
as described under "-- Subordination of Common
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Securities." Legal title to the Corresponding Junior Subordinated Debentures
will be held by the Property Trustee in trust for the benefit of the holders of
the related Preferred Securities and Common Securities. Each Guarantee Agreement
executed by the Corporation for the benefit of the holders of an Issuer's Trust
Securities (the "Guarantee") will be a guarantee on a subordinated basis with
respect to the related Trust Securities but will not guarantee payment of
Distributions or amounts payable on redemption or liquidation of such Trust
Securities when the related Issuer does not have funds on hand available to make
such payments. See "Description of Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. In the event that any date
on which Distributions are payable on the Preferred Securities is not a Business
Day (as defined below), payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect to any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in either case with the same
force and effect as if made on such date (each date on which Distributions are
payable in accordance with the foregoing, a "Distribution Date"). A "Business
Day" shall mean any day other than a Saturday or a Sunday, or a day on which
banking institutions in The City of New York are authorized or required by law
or executive order to remain closed or a day on which the corporate trust office
of the Property Trustee or the Debenture Trustee is closed for business.
Each Issuer's Preferred Securities represent beneficial ownership interests
in the applicable Issuer, and the Distributions on each Preferred Security will
be payable at a rate specified in the applicable Prospectus Supplement for such
Preferred Securities. The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months unless otherwise
specified in the applicable Prospectus Supplement. Distributions to which
holders of Preferred Securities are entitled will accumulate additional
Distributions at the rate per annum if and as specified in the applicable
Prospectus Supplement. The term "Distributions" as used herein includes any such
additional Distributions unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Corporation has
the right under the Indenture, pursuant to which it will issue the Corresponding
Junior Subordinated Debentures, to defer the payment of interest at any time or
from time to time on any series of the Corresponding Junior Subordinated
Debentures for up to such number of consecutive interest payment periods which
will be specified in such Prospectus Supplement relating to such series (each,
an "Extension Period"), provided, that no Extension Period may extend beyond the
Stated Maturity of the Corresponding Junior Subordinated Debentures. As a
consequence of any such deferral, Distributions on the Related Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the Issuer of such Preferred
Securities during any such Extension Period. During such Extension Period, the
Corporation may not, and may not permit any subsidiary of the Corporation to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Corporation's
capital stock, (ii) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Corporation that
rank pari passu with or junior in interest to the Corresponding Junior
Subordinated Debentures or (iii) make any guarantee payments with respect to any
guarantee by the Corporation of debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in interest to the
Corresponding Junior Subordinated Debentures (other than (a) dividends or
distributions in capital stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee with respect to such Preferred Securities and (d)
purchases of common stock related to the issuance of common stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees, related to the issuance of common stock or rights under a dividend
reinvestment and stock purchase plan, or related to the issuance of common stock
(or securities convertible into or exchangeable for common stock) as
consideration in an acquisition transaction that was entered into prior to the
commencement of such Extension Period).
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The revenue of each Issuer available for distribution to holders of its
Preferred Securities will be limited to payments under the Corresponding Junior
Subordinated Debentures in which the Issuer will invest the proceeds from the
issuance and sale of its Trust Securities. See "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures." If the
Corporation does not make interest payments on such Corresponding Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Related Preferred Securities. The payment of
Distributions (if and to the extent the Issuer has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by the Corporation on the basis set forth herein under "Description
of Guarantees."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day prior to the relevant Distribution Date. Subject to any
applicable laws and regulations and the provisions of the applicable Trust
Agreement, each such payment will be made as described under "Book-Entry
Issuance." In the event any Preferred Securities are not in book-entry form, the
relevant record date for such Preferred Securities shall be the date at least 15
days prior to the relevant Distribution Date, as specified in the applicable
Prospectus Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Corresponding Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days notice, at a redemption price (the "Redemption Price")
equal to the aggregate Liquidation Amount of such Trust Securities plus
accumulated but unpaid Distributions thereon to the date of redemption (the
"Redemption Date") and the related amount of the premium, if any, paid by the
Corporation upon the concurrent redemption of such Corresponding Junior
Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Redemption." If less than all of any series of Corresponding
Junior Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the Related Preferred Securities and the Common
Securities. The amount of premium, if any, paid by the Corporation upon the
redemption of all or any part of any series of any Corresponding Junior
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall be
allocated to the redemption pro rata of the Related Preferred Securities and the
Common Securities.
The Corporation will have the right to redeem any series of Corresponding
Junior Subordinated Debentures (i) on or after such date as may be specified in
the applicable Prospectus Supplement, in whole at any time or in part from time
to time, or (ii) at any time, in whole (but not in part), upon the occurrence of
a Tax Event or Capital Treatment Event, in either case subject to receipt of
prior approval by the Federal Reserve if then required under applicable capital
guidelines or policies.
Distribution of Corresponding Junior Subordinated Debentures. Subject to
the Corporation's having received prior approval of the Federal Reserve to do so
if then required under applicable capital guidelines or policies, the
Corporation has the right at any time to terminate any Issuer and, after
satisfaction of the liabilities of creditors of such Issuer as provided by
applicable law, cause such Corresponding Junior Subordinated Debentures in
respect of the Related Preferred Securities and Common Securities issued by such
Issuer to be distributed to the holders of such Related Preferred Securities and
Common Securities in exchange therefor upon liquidation of such Issuer.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Preferred Securities (i) such
series of Preferred Securities will no longer be deemed to be outstanding, (ii)
the depositary or its nominee, as the record holder of such series of Preferred
Securities, will receive a registered global certificate or certificates
representing the Corresponding Junior Subordinated Debentures to be delivered
upon such distribution and (iii) any certificates representing such series of
Preferred Securities not held by The Depository Trust Company ("DTC") or its
nominee will be deemed to
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represent the Corresponding Junior Subordinated Debentures having a principal
amount equal to the stated Liquidation Amount of such series of Preferred
Securities, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on such series of Preferred Securities until
such certificates are presented to the Administrative Trustees or their agent
for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of an Issuer were to occur. Accordingly, the Preferred Securities
that an investor may purchase, or the Corresponding Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of an
Issuer, may trade at a discount to the price that the investor paid to purchase
the Preferred Securities offered hereby.
Tax Event or Capital Treatment Event Redemption. If a Tax Event or Capital
Treatment Event in respect of a series of Preferred Securities and Common
Securities shall occur and be continuing, the Corporation has the right to
redeem the Corresponding Junior Subordinated Debentures in whole (but not in
part) and thereby cause a mandatory redemption of such Preferred Securities and
Common Securities in whole (but not in part) at the Redemption Price within 90
days following the occurrence of such Tax Event or Capital Treatment Event. In
the event a Tax Event or Capital Treatment Event in respect of a series of
Preferred Securities and Common Securities has occurred and is continuing and
the Corporation does not elect to redeem the Corresponding Junior Subordinated
Debentures and thereby cause a mandatory redemption of such Preferred Securities
and Common Securities or to terminate the related Issuer and cause the
Corresponding Junior Subordinated Debentures to be distributed to holders of
such Preferred Securities and Common Securities in exchange therefor upon
liquidation of the Issuer as described above, such Preferred Securities will
remain outstanding.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to that portion of the principal amount of Corresponding
Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Indenture, the proceeds of which will be used to pay the Redemption
Price of such Trust Securities, and (ii) with respect to a distribution of
Corresponding Junior Subordinated Debentures to holders of any series of Trust
Securities in exchange therefor in connection with a dissolution or liquidation
of the related Issuer, Corresponding Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Corresponding Junior Subordinated Debentures would be
distributed.
"Liquidation Amount" means the stated amount per Trust Security as set
forth in the applicable Prospectus Supplement.
"Tax Event" with respect to an Issuer means the receipt by the Issuer of a
series of Preferred Securities of an opinion of counsel experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced proposed change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of issuance of such
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) such Issuer is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the corresponding series of Corresponding
Junior Subordinated Debentures, (ii) interest payable by the Corporation on such
series of Corresponding Junior Subordinated Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Corporation, in
whole or in part, for United States federal income tax purposes, or (iii) such
Issuer is, or will be within 90 days of the date of such opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
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REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Corresponding Junior Subordinated Debentures. Redemptions of
the Preferred Securities shall be made and the Redemption Price shall be payable
on each Redemption Date only to the extent that the related Issuer has funds on
hand available for the payment of such Redemption Price. See also
"-- Subordination of Common Securities."
If an Issuer gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, the Property Trustee will deposit irrevocably
with DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price to the
holders of such Preferred Securities. See "Book-Entry Issuance." If such
Preferred Securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for such Preferred Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of such Preferred Securities so called for redemption will cease, except
the right of the holders of such Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price, and such Preferred
Securities will cease to be outstanding. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not paid
either by the Issuer or by the Corporation pursuant to the relevant Guarantee as
described under "Description of Guarantees," Distributions on such Preferred
Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Issuer for such Preferred
Securities to the date such Redemption Price is actually paid, in which case the
actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debentures to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the relevant record
date, which shall be one Business Day prior to the relevant Redemption Date or
liquidation date, as applicable; provided, however, that in the event that any
Preferred Securities are not in book-entry form, the relevant record date for
such Preferred Securities shall be a date at least 15 days prior to the
Redemption Date or liquidation date, as applicable, as specified in the
applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities issued
by an Issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property Trustee
from the outstanding Preferred Securities not previously called for redemption,
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions of the Liquidation
Amount of Preferred Securities in such minimum amounts as shall be specified in
the applicable Prospectus Supplement. The Property Trustee shall promptly notify
the trust
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registrar in writing of the Preferred Securities selected for redemption and, in
the case of any Preferred Securities selected for partial redemption, the
Liquidation Amount thereof to be redeemed. For all purposes of each Trust
Agreement, unless the context otherwise requires, all provisions relating to the
redemption of Preferred Securities shall relate, in the case of any Preferred
Securities redeemed or to be redeemed only in part, to the portion of the
aggregate Liquidation Amount of Preferred Securities which has been or is to be
redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Issuer's
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the Issuer's outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the Issuer's
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Issuer's Preferred Securities then due and payable.
In the case of any event of default under the applicable Trust Agreement
resulting from a Debenture Event of Default, the Corporation as holder of such
Issuer's Common Securities will be deemed to have waived any right to act with
respect to any such event of default under the applicable Trust Agreement until
the effect of all such events of default with respect to such Preferred
Securities have been cured, waived or otherwise eliminated. Until all events of
default under the applicable Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the holders of such Preferred Securities
and not on behalf of the Corporation as holder of the Issuer's Common
Securities, and only the holders of such Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each Issuer shall automatically terminate
upon expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Corresponding Junior Subordinated
Debentures to the holders of its Trust Securities, if the Corporation, as
Depositor, has given written direction to the Property Trustee to terminate such
Issuer (subject to the Corporation having received prior approval of the Federal
Reserve if so required under applicable capital guidelines or policies); (iii)
redemption of all of the Issuer's Preferred Securities as described under
"-- Redemption or Exchange -- Mandatory Redemption"; and (iv) the entry of an
order for the dissolution of the Issuer by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of such Issuer as provided by applicable law, to the
holders of such Trust Securities in exchange therefor a Like Amount of the
Corresponding Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Issuer available
for distribution to holders, after satisfaction of liabilities to creditors of
such Issuer as provided by applicable law, an amount equal to, in the case of
holders of Preferred Securities, the aggregate Liquidation Amount plus accrued
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution
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can be paid only in part because such Issuer has insufficient assets available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by such Issuer on its Preferred Securities shall be paid on a pro rata
basis. The holder(s) of such Issuer's Common Securities will be entitled to
receive distributions upon any such liquidation pro rata with the holders of its
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over the
Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
each Trust Agreement (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 90 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Trustees by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Preferred Securities of the applicable Issuer, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under such
Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Corporation to
appoint a successor Property Trustee within 90 days thereof.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's Preferred
Securities, the Administrative Trustees and the Corporation, as Depositor,
unless such Event of Default shall have been cured or waived. The Corporation,
as Depositor, and the Administrative Trustees are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under each Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities as
described above. See "-- Subordination of Common Securities" and "-- Liquidation
Distribution Upon Termination." The existence of an Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until
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the acceptance of appointment by the successor trustee in accordance with the
provisions of the applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Corporation, as the holder of the
Common Securities, and the Administrative Trustees shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case a Debenture
Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under each Trust Agreement,
provided such Person shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUERS
An Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below or as otherwise described in the Trust Agreement. An Issuer may,
at the request of the Corporation, with the consent of the Administrative
Trustees and without the consent of the holders of the Preferred Securities,
merge with or into, consolidate, amalgamate, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an entirety to, a
trust organized as such under the laws of any State; provided, that (i) such
successor entity either (a) expressly assumes all of the obligations of such
Issuer with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Preferred Securities in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Corporation expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the
Corresponding Junior Subordinated Debentures, (iii) the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Preferred Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities to be downgraded by any nationally recognized statistical
rating organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose substantially identical to that of the Issuer, (vii) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
the Corporation has received an opinion from independent counsel to the Issuer
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Issuer nor such successor entity will be required
to register as an investment company under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and (viii) the Corporation or any
permitted successor or assignee owns all of the Common Securities of such
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successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, an Issuer shall not, except with the consent of
holders of 100% in Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease would cause the Issuer or the successor entity to be
classified as other than a grantor trust for United States federal income tax
purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of Guarantees -- Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
Each Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under such Trust Agreement, which shall not be inconsistent
with the other provisions of such Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of such Trust Agreement to such extent as shall be
necessary to ensure that the Issuer will be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are outstanding or to ensure that the Issuer will not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that in the case of either clause (i) or clause (ii), such action shall not
adversely affect in any material respect the interests of any holder of
Preferred Securities, and any such amendments of such Trust Agreement shall
become effective when notice thereof is given to the holders of Trust
Securities. Each Trust Agreement may be amended by the Issuer Trustees and the
Corporation with (i) the consent of holders representing not less than a
majority (based upon Liquidation Amounts) of the outstanding Trust Securities,
and (ii) receipt by the Issuer Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the Issuer Trustees
in accordance with such amendment will not affect the Issuer's status as a
grantor trust for United States federal income tax purposes or the Issuer's
exemption from status as an "investment company" under the Investment Company
Act, provided that without the consent of each holder of Trust Securities, such
Trust Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
So long as any Corresponding Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on the Property Trustee with
respect to such Corresponding Junior Subordinated Debentures, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the corresponding
Junior Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or such Corresponding
Junior Subordinated Debentures, where such consent shall be required, without,
in each case, obtaining the prior approval of the holders of a majority in
aggregate Liquidation Amount of all outstanding Preferred Securities; provided,
however, that where a consent under the Indenture would require the consent of
each holder of Corresponding Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior consent of
each holder of the corresponding Preferred Securities. The Issuer Trustees shall
not revoke any action previously authorized or approved by a vote of the holders
of the Preferred Securities except by subsequent vote of the holders of the
Preferred Securities. The Property Trustee shall notify each holder of Preferred
Securities of any notice of default with respect to the Corresponding Junior
Subordinated Debentures. In addition to obtaining the foregoing approvals of the
holders of the Preferred Securities, prior to taking any of
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the foregoing actions, the Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that such action would not cause the
Issuer to be classified as other than a grantor trust for United States federal
income tax purposes.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each holder of record of Preferred Securities in the manner set forth in each
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for an Issuer to redeem and cancel its Preferred Securities in accordance with
the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited with,
or on behalf of, the Depositary, which unless otherwise indicated in the
applicable Prospectus Supplement for such series will be DTC. Global Preferred
Securities may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual Preferred Securities represented thereby, a Global Preferred Security
may not be transferred except as a whole by the Depositary for such Global
Preferred Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series
of Preferred Securities will be described in the Prospectus Supplement relating
to such series. The Corporation anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-entry
registration and transfer system, the respective aggregate Liquidation Amounts
of the individual Preferred Securities represented by such Global Preferred
Securities to the accounts of Participants, which may include Euroclear and
Cedel. Such accounts shall be designated by the dealers, underwriters or agents
with respect to such Preferred Securities or by the Corporation if such
Preferred Securities are offered and sold directly by the Corporation. Ownership
of beneficial interests in a Global Preferred Security will be limited to
Participants or persons that may hold interests through Participants including
Euroclear and Cedel. Ownership of beneficial interests in such Global Preferred
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Preferred
Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Preferred Securities represented by such Global Preferred Security for all
purposes under the Indenture governing such Preferred Securities. Except as
provided below, owners of beneficial interests in a Global Preferred Security
will not be entitled to have any of the individual Preferred Securities of the
series represented by such Global Preferred Security registered in their names,
will not receive or be
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entitled to receive physical delivery of any such Preferred Securities of such
series in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Corporation, the
Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
Redemption Price, premium or Distributions in respect of a permanent Global
Preferred Security representing any of such Preferred Securities, immediately
will credit Participants' accounts with payments in amounts proportionate to
their respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security for such Preferred Securities as shown on the records
of such Depositary or its nominee. The Corporation also expects that payments by
Participants to owners of beneficial interests in such Global Preferred Security
held through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling, unable
or ineligible to continue as depositary and a successor depositary is not
appointed by the Issuer within 90 days, the Issuer will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security representing such series of Preferred Securities. In addition, the
Issuer may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities,
determine not to have any Preferred Securities of such series represented by one
or more Global Preferred Securities and, in such event, will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security or Securities representing such series of Preferred Securities.
Further, if the Issuer so specifies with respect to the Preferred Securities of
a series, an owner of a beneficial interest in a Global Preferred Security
representing Preferred Securities of such series may, on terms acceptable to the
Issuer, the Property Trustee and the Depositary for such Global Preferred
Security, receive individual Preferred Securities of such series in exchange for
such beneficial interests, subject to any limitations described in the
Prospectus Supplement relating to such Preferred Securities. In any such
instance, an owner of a beneficial interest in a Global Preferred Security will
be entitled to physical delivery of individual Preferred Securities of the
series represented by such Global Preferred Security equal in principal amount
to such beneficial interest and to have such Preferred Securities registered in
its name.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Issuer's Preferred Securities are not
held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Corporation. In the event that the Property Trustee shall no longer be
the Paying Agent, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the Administrative Trustees and
the Corporation) to act as Paying Agent.
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REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuers will not be required to register or cause to be registered
the transfer of their Preferred Securities after such Preferred Securities have
been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the powers vested in
it by the applicable Trust Agreement at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
applicable Trust Agreement or is unsure of the application of any provision of
the applicable Trust Agreement, and the matter is not one on which holders of
Preferred Securities are entitled under such Trust Agreement to vote, then the
Property Trustee shall take such action as is directed by the Corporation and if
not so directed, shall take such action as it deems advisable and in the best
interests of the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuers in such a way that no Issuer will be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as other than a grantor trust for United
States federal income tax purposes and so that the Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the Corporation for
United States federal income tax purposes. In this connection, the Corporation
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of each Issuer or
each Trust Agreement, that the Corporation and the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer may borrow money or issue debt or mortgage or pledge any of its
assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred Securities
and the Junior Subordinated Debentures, unless otherwise referred to in the
Prospectus Supplement relating to an offering of Preferred Securities or Junior
Subordinated Debentures. The Preferred Securities and the Junior Subordinated
Debentures will be issued only as fully-registered securities registered in the
name of Cede & Co. (DTC's nominee). One or more fully-registered global
certificates will be issued for the Preferred Securities of each Issuer and the
Junior Subordinated Debentures, representing in the aggregate the total number
of such Issuer's Preferred Securities or aggregate principal balance of Junior
Subordinated Debentures, respectively, and will be deposited with the Property
Trustee as custodian for DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities
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transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. "Direct
Participants" include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain custodial relationships with Direct Participants, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated Debentures
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security and each Junior Subordinated Debenture ("Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records,
including Euroclear and Cedel. Beneficial Owners will not receive written
confirmation from DTC of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners purchased Preferred Securities or Junior
Subordinated Debentures. Transfers of ownership interests in the Preferred
Securities or Junior Subordinated Debentures are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Preferred Securities or Junior Subordinated Debentures, except in
the event that use of the book-entry system for the Preferred Securities of such
Issuer or Junior Subordinated Debentures is discontinued.
Transfers between Participants will be effected in accordance with DTC's
procedures and will be settled in same-day funds. Transfers between participants
in Euroclear and Cedel will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
Cross-market transfers between Participants, on the one hand, and Euroclear
participants or Cedel participants, on the other hand, will be effected in DTC
in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may
be, by its respective depositary; however, such cross-market transactions will
require delivery of instructions to Euroclear or Cedel, as the case may be, by
the counterparty in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system. Euroclear or
Cedel, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the Preferred Securities or Junior Subordinated Debentures in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Cedel participants may
not deliver instructions directly to the depositaries for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Preferred Security or Junior
Subordinated Debenture from a Participant in DTC will be credited, and any such
crediting will be reported to the relevant Euroclear participant or Cedel
participant, during the securities settlement processing day (which must be a
business day for Euroclear and Cedel, as the case may be) immediately following
the DTC settlement date. Cash received in Euroclear or Cedel as a result of
sales of interests in a Preferred Security or Junior Subordinated Debenture by
or through a Euroclear or Cedel participant to a Participant in DTC will be
received with value on the DTC settlement date but will be available in the
relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following the DTC settlement date.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
or Junior Subordinated Debentures are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
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Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all of
an Issuer's Preferred Securities or the Junior Subordinated Debentures are being
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Preferred Securities or Junior Subordinated Debentures. Under its usual
procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts such Preferred Securities or Junior Subordinated Debentures are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, the relevant Trustee, the Issuer thereof or the
Corporation, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of Distributions to DTC is the responsibility
of the relevant Trustee, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursements of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities or the Junior Subordinated Debentures
at any time by giving reasonable notice to the relevant Trustee and the
Corporation. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Corporation, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through DTC. In any such event,
definitive certificates for such Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and the Corporation believe to
be accurate, but the Issuers and the Corporation assume no responsibility for
the accuracy thereof. Neither the Issuers nor the Corporation has any
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
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DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Corporation concurrently
with the issuance by each Issuer of its Preferred Securities for the benefit of
the holders from time to time of such Preferred Securities and Common
Securities. The Bank of New York will act as indenture trustee ("Guarantee
Trustee") under each Guarantee for the purposes of compliance with the Trust
Indenture Act and each Guarantee will be qualified as an indenture under the
Trust Indenture Act. This summary of certain provisions of the Guarantees, which
summarizes the material terms thereof, does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the provisions
of each Guarantee, including the definitions therein of certain terms, and the
Trust Indenture Act, to each of which reference is hereby made. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Reference in this summary to Preferred Securities
means that Issuer's Preferred Securities to which a Guarantee relates. The
Guarantee Trustee will hold each Guarantee for the benefit of the holders of the
related Issuer's Preferred Securities and Common Securities.
GENERAL
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Trust Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that such Issuer may have or assert
other than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of the related
Issuer (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on such Preferred
Securities, to the extent that such Issuer has funds on hand available therefor
at such time, (ii) the Redemption Price with respect to any Preferred Securities
called for redemption, to the extent that such Issuer has funds on hand
available therefor at such time, or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of such Issuer (unless the Corresponding
Junior Subordinated Debentures are distributed to holders of such Preferred
Securities in exchange therefor), the lesser of (a) the Liquidation Distribution
and (b) the amount of assets of such Issuer remaining available for distribution
to holders of Trust Securities after satisfaction of liabilities to creditors of
such Issuer as required by applicable law. The Corporation's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by the Corporation to the holders of the applicable Trust Securities or by
causing the Issuer to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Issuer's obligations under the Trust Securities, but will apply only
to the extent that such related Issuer has funds sufficient to make such
payments, and is not a guarantee of collection.
If the Corporation does not make interest payments on the Corresponding
Junior Subordinated Debentures held by the Issuer, the Issuer will not be able
to pay Distributions on the Preferred Securities and will not have funds legally
available therefor. Each Guarantee will rank subordinate and junior in right of
payment to all Senior Debt of the Corporation. See "-- Status of the
Guarantees." Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary, upon
such subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the Guarantees will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and claimants should look only to the assets of the
Corporation for payments thereunder. Except as otherwise provided in the
applicable Prospectus Supplement, the Guarantees do not limit the incurrence or
issuance of other secured or unsecured debt of the Corporation, including Senior
Debt, whether under the Indenture, any other existing indenture or any other
indenture that the Corporation may enter into in the future or otherwise.
The Corporation has, through the applicable Guarantee, the applicable Trust
Agreement, the applicable series of Corresponding Junior Subordinated Debentures
and the Indenture, taken together, fully, irrevocably and unconditionally
guaranteed all of the Issuer's obligations under the Preferred Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes
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such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the Preferred Securities. See "Relationship Among the
Preferred Securities, the Corresponding Junior Subordinated Debentures and the
Guarantees."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior Debt of
the Corporation in the same manner as the Junior Subordinated Debentures.
Each Guarantee will rank pari passu with all other Guarantees issued by the
Corporation. Each Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the related Trust
Securities. Each Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer or upon
distribution to the holders of the Trust Securities of the Corresponding Junior
Subordinated Debentures. None of the Guarantees places a limitation on the
amount of additional Senior Debt that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional indebtedness
constituting Senior Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Trust Securities (in which case no vote
will be required), no Guarantee may be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of such
outstanding Trust Securities. The manner of obtaining any such approval will be
as set forth under "Description of Preferred Securities -- Voting Rights;
Amendment of Each Trust Agreement." All guarantees and agreements contained in
each Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the related Trust Securities then outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
related Trust Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the Trust Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under such Guarantee
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of any Guarantee, undertakes to
perform only such duties as are specifically set forth in each Guarantee and,
after default with respect to any Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any
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Guarantee at the request of any holder of any Trust Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Trust Securities, upon full
payment of the amounts payable upon liquidation of the related Issuer or upon
distribution of Corresponding Junior Subordinated Debentures to the holders of
the related Trust Securities in exchange therefor. Each Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of the related Trust Securities must restore payment of any sums paid
under such Trust Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions and other amounts) are irrevocably guaranteed by the Corporation
as and to the extent set forth under "Description of Guarantees." Taken
together, the Corporation's obligations under each series of Corresponding
Junior Subordinated Debentures, the Indenture, the related Trust Agreement and
the related Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of Distributions and other amounts due on
the Related Preferred Securities. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the Related Preferred Securities. If and to the
extent that the Corporation does not make payments on any series of
Corresponding Junior Subordinated Debentures, such Issuer will not pay
Distributions or other amounts due on the Related Preferred Securities. The
Guarantees do not cover payment of Distributions when the related Issuer does
not have sufficient funds to pay such Distributions. In such event, the remedy
of a holder of a series of Preferred Securities is to institute a legal
proceeding directly against the Corporation pursuant to the terms of the
Indenture for enforcement of payment of amounts equal to such Distributions to
such holder. The obligations of the Corporation under each Guarantee are
subordinate and junior in right of payment to all Senior Debt of the
Corporation.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Subordinated Debentures, such payments will
be sufficient to cover Distributions and other payments due on the Related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debentures will be equal to the
sum of the aggregate stated Liquidation Amount of the Related Preferred
Securities and related Common Securities; (ii) the interest rate and interest
and other payment dates on each series of Corresponding Junior Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Related Preferred Securities; (iii) the Corporation shall pay for
all and any costs, expenses and liabilities of such Issuer except the Issuer's
obligations to holders of its Preferred Securities under such Preferred
Securities; and (iv) each Trust Agreement further provides that the Issuer will
not engage in any activity that is not consistent with the limited purposes of
such Issuer.
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Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Corporation has theretofore made, or is concurrently
on the date of such payment making, a payment under the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any related Preferred Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the related
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related Issuer or any other person or entity.
A default or event of default under any Senior Debt of the Corporation
would not constitute a default or Event of Default under the Indenture. However,
in the event of payment defaults under, or acceleration of, Senior Debt of the
Corporation, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Corresponding Junior Subordinated
Debentures until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on any
series of Corresponding Junior Subordinated Debentures would constitute an Event
of Default under the Indenture.
LIMITED PURPOSE OF ISSUERS
Each Issuer's Preferred Securities evidence a beneficial interest in such
Issuer, and each Issuer exists for the sole purpose of issuing its Preferred
Securities and Common Securities and investing the proceeds thereof in
Corresponding Junior Subordinated Debentures. A principal difference between the
rights of a holder of a Preferred Security and a holder of a Corresponding
Junior Subordinated Debenture is that a holder of a Corresponding Junior
Subordinated Debenture is entitled to receive from the Corporation the principal
amount of and interest accrued on Corresponding Junior Subordinated Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions from such Issuer (or from the Corporation under the applicable
Guarantee) if and to the extent such Issuer has funds available for the payment
of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding up or liquidation of
any Issuer involving the liquidation of the Corresponding Junior Subordinated
Debentures, after satisfaction of liabilities to creditors of the Issuer as
required by applicable law, the holders of the related Preferred Securities will
be entitled to receive, out of the assets held by such Issuer, the Liquidation
Distribution in cash. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination." Upon any voluntary or involuntary liquidation or
bankruptcy of the Corporation, the Property Trustee, as holder of the
Corresponding Junior Subordinated Debentures, would be a subordinated creditor
of the Corporation, subordinated in right of payment to all Senior Debt as set
forth in the Indenture, but entitled to receive payment in full of principal and
interest, before any stockholders of the Corporation receive payments or
distributions. Since the Corporation is the guarantor under each Guarantee and
has agreed to pay for all costs, expenses and liabilities of each Issuer (other
than the Issuer's obligations to the holders of its Preferred Securities), the
positions of a holder of such Preferred Securities and a holder of such
Corresponding Junior Subordinated Debentures relative to other creditors and to
stockholders of the Corporation in the event of liquidation or bankruptcy of the
Corporation are expected to be substantially the same.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures or the Preferred Securities may be sold
in a public offering to or through underwriters or dealers designated from time
to time. The Corporation and each Issuer may sell its Junior Subordinated
Debentures and Preferred Securities, respectively, as soon as practicable after
effectiveness of the Registration Statement of which this Prospectus forms a
part. The names of any underwriters or dealers involved in the sale of the
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is delivered, the amount or number of Junior Subordinated Debentures
and Preferred
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Securities to be purchased by any such underwriters and any applicable
commissions or discounts will be set forth in the applicable Prospectus
Supplement.
Underwriters may offer and sell Junior Subordinated Debentures or Preferred
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In connection with the sale of
Preferred Securities, underwriters may be deemed to have received compensation
from the Corporation and/or the applicable Issuer in the form of underwriting
discounts or commissions and may also receive commissions. Underwriters may sell
Junior Subordinated Debentures or Preferred Securities to or through dealers,
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters.
Any underwriting compensation paid by the Corporation and/or the applicable
Issuer to underwriters in connection with the offering of Junior Subordinated
Debentures or Preferred Securities, and any discounts, concessions or
commissions allowed by such underwriters to participating dealers, will be
described in an accompanying Prospectus Supplement. Underwriters and dealers
participating in the distribution of Junior Subordinated Debentures or Preferred
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of such Junior
Subordinated Debentures or Preferred Securities may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters and dealers
may be entitled, under agreement with the Corporation and the applicable Issuer,
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by the
Corporation for certain expenses.
In connection with the offering of the Preferred Securities of any Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set forth
in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set forth
in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, the Corporation and/or the applicable Issuer and/or any of their
affiliates in the ordinary course of business.
The Junior Subordinated Debentures and the Preferred Securities will be new
issues of securities and will have no established trading market. Any
underwriters to whom Junior Subordinated Debentures or Preferred Securities are
sold for public offering and sale may make a market in such Junior Subordinated
Debentures and Preferred Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. Such
Junior Subordinated Debentures or Preferred Securities may or may not be listed
on a national securities exchange or the Nasdaq National Market. No assurance
can be given as to the liquidity of or the existence of trading markets for any
Junior Subordinated Debentures or Preferred Securities.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed upon for the Corporation by Simpson Thacher &
Bartlett (a partnership which includes professional corporations), counsel to
the Corporation, and for the Issuers by Richards, Layton & Finger, special
Delaware counsel to the Issuers and the Corporation. The validity of the
Guarantees and the Junior Subordinated Debentures will be passed upon for the
Underwriters by Cravath, Swaine & Moore. Simpson Thacher & Bartlett and Cravath,
Swaine & Moore will rely on the opinion of Richards, Layton & Finger as to
matters of Delaware law.
EXPERTS
The consolidated financial statements and schedules of the Corporation and
subsidiaries appearing in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1997 have been audited by Price Waterhouse LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedules are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
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