<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 1996
REG. NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------
MELLON CAPITAL I
MELLON CAPITAL II
MELLON BANK CORPORATION MELLON CAPITAL III
(Exact name of registrant as specified (Exact name of each registrant as
in its charter) specified in its Trust Agreements)
--------------
PENNSYLVANIA DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation
25-1233834 or organization of each registrant)
(I.R.S. Employer Identification No.) EACH TO BE APPLIED FOR
(I.R.S. Employer Identification No.)
ONE MELLON BANK CENTER C/O MELLON BANK CORPORATION
500 GRANT STREET ONE MELLON BANK CENTER
PITTSBURGH, PENNSYLVANIA 15258 500 GRANT STREET
(412) 234-5000 PITTSBURGH, PENNSYLVANIA 15258
(Address, including zip code, and (412) 234-5000
telephone number, including (Address, including zip code, and
area code, of registrant's principal telephone number, including
executive offices) area code, of each registrant's
principal executive offices)
--------------
CARL KRASIK, ESQ.
ASSOCIATE GENERAL COUNSEL
ONE MELLON BANK CENTER
500 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15258
(412) 234-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service of each registrant)
WITH COPIES TO:
ROBERT K. MORRIS, ESQ. MARK J. WELSHIMER
REED SMITH SHAW & MCCLAY SULLIVAN & CROMWELL
435 SIXTH AVENUE 125 BROAD STREET
PITTSBURGH, PENNSYLVANIA 15219 NEW YORK, NEW YORK 10004
(412) 288-3131 (212) 558-4000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: from time
to time after the Registration Statement becomes effective.
--------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Junior Subordinated Deferrable
Interest Debenture of Mellon Bank
Corporation(2)..................... $500,000,000 $25 $500,000,000 N/A
- ---------------------------------------------------------------------------------------------------------
Preferred Securities of Mellon
Capital I, Mellon Capital II,
Mellon Capital III................. 20,000,000 shs $25 $500,000,000 $151,515.15
- ---------------------------------------------------------------------------------------------------------
Mellon Bank Corporation Guarantee
with respect to Preferred
Securities(3)(4)................... N/A N/A N/A N/A
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Total............................... $500,000,000(5) 100% $500,000,000(5) $151,515.15
</TABLE>
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(1) Estimated solely for the purpose of computing the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures will be purchased
by Mellon I, II and III with the proceeds of the sale of the Preferred
Securities.
(3) No separate consideration will be received for Mellon Bank Corporation
Guarantee.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of Mellon Bank Corporation, the rights of
holders of Junior Subordinated Deferrable Interest Debentures of Mellon
Bank Corporation, under the Indenture, the rights of holders of Preferred
Securities of Mellon Capital I, Mellon Capital II and Mellon Capital III
under each Trust Agreement, the rights of holders of the Preferred
Securities under the Guarantees, the Express Agreement entered into by
Mellon Bank Corporation and certain backup undertakings as described
herein.
(5) Such amount represents the principal amount of Junior Subordinated
Deferrable Interest Debentures issued at their principal amount and the
issue price rather than the principal amount of Junior Subordinated
Deferrable Interest Debentures issued at an original issue discount. This
amount represents the initial public offering price of the Mellon Capital
I, II and III Preferred Securities.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS TO +
+WHICH IT RELATES SHALL CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN +
+OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN +
+WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO +
+REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 1996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1996
,000,000 PREFERRED SECURITIES
[MELLON LOGO] MELLON CAPITAL I
% CUMULATIVE TRUST PREFERRED SECURITIES, SERIES A
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY) FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
MELLON BANK CORPORATION
----------
The % Cumulative Trust Preferred Securities, Series A (the "Series A
Preferred Securities"), offered hereby represent beneficial interests in Mellon
Capital I, a trust formed under the laws of the State of Delaware (the "Series
A Issuer"). Mellon Bank Corporation, a Pennsylvania corporation (the
"Corporation"), will be the owner of all of the beneficial interests
represented by common securities of the Series A Issuer ("Series A Common
Securities" and, collectively with the Series A Preferred Securities, the
"Series A Securities"). is the Property Trustee of the Series A
Issuer. The Series A Issuer exists for the sole purpose of issuing the Series A
Securities
(Continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-4 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES A PREFERRED SECURITIES.
THESE SECURITIES ARE NOT DEPOSITS AND ARE NOT INSURED BY THE FDIC
OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------
<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING THE SERIES A
OFFERING PRICE COMMISSION(1) ISSUER(2)(3)
-------------- ------------- ------------
<S> <C> <C> <C>
Per Preferred Security................ $ (2) $
Total................................. $ (2) $
</TABLE>
- -----
(1) The Series A Issuer and the Corporation have each agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the Series A Preferred
Securities will be invested in the Series A Subordinated Debentures, the
Corporation has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment therein
of such proceeds $ . per Series A Preferred Securities (or $ in the
aggregate). See "Underwriting."
(3) Expenses of the offering which are payable by the Corporation, are
estimated to be $ .
----------
The Series A Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that the Series A Preferred Securities will be ready for delivery in
book-entry form only through the facilities of The Depository Trust Company in
New York, New York, on or about , 1996, against payment therefor in
immediately available funds.
----------
The date of this Prospectus Supplement is , 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
----------------
(cover page continued)
and investing the proceeds thereof in % Junior Subordinated Deferrable
Interest Debentures, Series A (the "Series A Subordinated Debentures"), to be
issued by the Corporation. The Series A Subordinated Debentures will mature on
[insert date 30 years from first payment date], which date may be (i)
shortened to a date not earlier than [insert date 5 years after date of
issuance] or (ii) extended to a date not later than [insert date 49 years from
first payment date], in each case if certain conditions are met (including, in
the case of a shortening of the Stated Maturity (as defined herein), the
Corporation having received prior approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") to do so if then required under
applicable capital guidelines or policies of the Federal Reserve). The Series
A Preferred Securities will have a preference under certain circumstances with
respect to cash distributions and amounts payable on liquidation, redemption
or otherwise over the Series A Common Securities. See "Description of
Preferred Securities--Subordination of Common Securities" in the accompanying
Prospectus.
Holders of the Series A Preferred Securities will be entitled to receive
preferential cumulative cash distributions accruing from the date of original
issuance and payable quarterly in arrears on the last day of March, June,
September and December of each year, commencing , 199 , at the annual
rate of % of the Liquidation Amount of $25 per Series A Preferred Securities
("Distributions"). The Corporation has the right to defer payment of interest
on the Series A Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period may
extend beyond the Stated Maturity of the Series A Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all
amounts then due, the Corporation may elect to begin a new Extension Period
subject to the requirements set forth herein. If interest payments on the
Series A Subordinated Debentures are so deferred, Distributions on the Series
A Preferred Securities will also be deferred and the Corporation will not be
permitted, subject to certain exceptions described herein, to declare or pay
any cash distributions with respect to the Corporation's capital stock or debt
securities of the Corporation that rank pari passu with or junior to the
Series A Subordinated Debentures. During an Extension Period, interest on the
Series A Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Series A Preferred Securities are
entitled will accumulate) at the rate of % per annum, compounded quarterly,
and holders of Series A Preferred Securities will be required to accrue
interest income for United States federal income tax purposes. See "Certain
Terms of Series A Subordinated Debentures--Option to Extend Interest Payment
Period" and "Certain Federal Income Tax Consequences--Original Issue
Discount."
The Corporation has, through the Series A Guarantee, the Trust Agreement,
the Series A Subordinated Debentures, the Indenture and the Expense Agreement
(each as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed all of the Series A Issuer's obligations under the
Series A Preferred Securities. See "Relationship Among the Preferred
Securities, the Corresponding Junior Subordinated Debentures and the
Guarantees--Full and Unconditional Guarantee" in the accompanying Prospectus.
The Series A Guarantee of the Corporation guarantees the payment of
Distributions and payments on liquidation or redemption of the Series A
Preferred Securities, but only in each case to the extent of funds held by the
Series A Issuer, as described herein (the "Series A Guarantee"). See
"Description of Guarantees" in the accompanying Prospectus. If the
S-2
<PAGE>
(cover page continued)
Corporation does not make interest payments on the Series A Subordinated
Debentures held by the Series A Issuer, the Series A Issuer will have
insufficient funds to pay Distributions on the Series A Preferred Securities.
The Series A Guarantee does not cover payment of Distributions when the Series
A Issuer does not have sufficient funds to pay such Distributions. In such
event, a holder of Series A Preferred Securities may institute a legal
proceeding directly against the Corporation to enforce payment of such
Distributions to such holder. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights By Holders of Preferred Securities"
in the accompanying Prospectus. The obligations of the Corporation under the
Series A Guarantee and the Series A Preferred Securities are subordinate and
junior in right of payment to all Senior Debt (as defined in "Description of
Junior Subordinated Debentures--Subordination" in the accompanying Prospectus)
of the Corporation.
The Series A Preferred Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series A Subordinated Debentures at
maturity or their earlier redemption. Subject to the Corporation having
received prior approval of the Federal Reserve to do so if then required under
applicable capital guidelines or policies of the Federal Reserve, the Series A
Subordinated Debentures are redeemable prior to maturity at the option of the
Corporation (i) on or after [insert date 5 years after date of issuance], 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 and continuation of a Tax Event (as
defined herein), in each case at a redemption price equal to the accrued and
unpaid interest on the Series A Subordinated Debentures so redeemed to the
date fixed for redemption, plus 100% of the principal amount thereof. See
"Certain Terms of the Series A Preferred Securities--Redemption."
The Corporation will have the right at any time to terminate the Series A
Issuer and cause the Series A Subordinated Debentures to be distributed to the
holders of the Series A Preferred Securities in liquidation of the Series A
Issuer, subject to the Corporation having received prior approval of the
Federal Reserve to do so if then required under applicable capital guidelines
or policies of the Federal Reserve. See "Certain Terms of Series A Preferred
Securities--Liquidation of Series A Issuer and Distribution of Series A
Subordinated Debentures to Holders."
The Series A Subordinated Debentures are unsecured and subordinated to all
Senior Debt.
In the event of the termination of the Series A Issuer, after satisfaction
of liabilities to creditors of the Series A Issuer as required by applicable
law, the holders of the Series A Preferred Securities will be entitled to
receive a Liquidation Amount of $25 per Series A Preferred Securities plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of such amount in Series A Subordinated
Debentures, subject to certain exceptions. See "Description of Preferred
Securities--Liquidation Distribution Upon Termination" in the accompanying
Prospectus.
[The Series A Preferred Securities have been approved for listing, subject
to official notice of issuance, on the New York Stock Exchange under the
symbol " Pr".] [Application will be made to list the Series A Preferred
Securities on the New York Stock Exchange under the symbol " Pr".] If the
Series A Subordinated Debentures are distributed to the holders of Series A
Preferred Securities upon the liquidation of the Series A Issuer, the
Corporation will use its best efforts to list the Series A Subordinated
Debentures on the New York Stock Exchange or such other stock exchanges or
other automated quotation systems, if any, on which the Series A Preferred
Securities are then listed or traded.
The Series A Preferred Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Series A Preferred Securities will be shown on,
and transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described in the accompanying Prospectus,
Series A Preferred Securities in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Issuance" in the
accompanying Prospectus.
S-3
<PAGE>
The information in this Prospectus Supplement supplements and should be read
in conjunction with the information contained in the accompanying Prospectus.
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture,
as amended and supplemented from time to time, between the Corporation and
[insert name of Debenture Trustee], as trustee (the "Debenture Trustee"), and
(ii) the "Trust Agreement" means the Amended and Restated Trust Agreement
relating to the Series A Issuer among the Corporation, as Depositor, [insert
name of Property Trustee], as Property Trustee (the "Property Trustee"),
[insert name of Delaware Trustee], as Delaware Trustee (the "Delaware
Trustee"), and the Administrative Trustees named therein (collectively, with
the Property Trustee and Delaware Trustee, the "Issuer Trustees"). Each of the
other capitalized terms used in this Prospectus Supplement and not otherwise
defined in this Prospectus Supplement has the meaning set forth in the
accompanying Prospectus.
RISK FACTORS
Prospective purchasers of the Series A Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and
in the accompanying Prospectus and should particularly consider the following
matters.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE
SERIES A SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series A Guarantee issued by
the Corporation for the benefit of the holders of Series A Preferred
Securities are unsecured and rank subordinate and junior in right of payment
to all Senior Debt of the Corporation. The obligations of the Corporation
under the Series A Subordinated Debentures are subordinate and junior in right
of payment to all such Senior Debt of the Corporation. See "Description of
Junior Subordinated Debentures--Subordination" in the accompanying Prospectus.
At September 30, 1996, the aggregate outstanding Senior Debt of the
Corporation was approximately $ billion. Because the Corporation is a
holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary, including Mellon Bank, N.A., The
Dreyfus Corporation and The Boston Company, Inc., upon such subsidiary's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Series A Preferred Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary,
except to the extent that the Corporation may itself be recognized as a
creditor of that subsidiary. Accordingly, the Series A Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Series A Subordinated Debentures
should look only to the assets of the Corporation for payments on the Series A
Subordinated Debentures. See "the Corporation." None of the Indenture, the
Series A Guarantee or the Trust Agreement places any limitation on the amount
of secured or unsecured debt, including Senior Debt, that may be incurred by
the Corporation. See "Description of Guarantees--Status of the Guarantees" and
"Description of Junior Subordinated Debentures--Subordination" in the
accompanying Prospectus.
The ability of the Series A Issuer to pay amounts due on the Series A
Preferred Securities is solely dependent upon the Corporation making payments
on the Series A Subordinated Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Event of Default under the Indenture has occurred or is
continuing, the Corporation has the right under the Indenture to defer the
payment of interest on the Series A Subordinated
S-4
<PAGE>
Debentures at any time or from time to time for a period not exceeding 20
consecutive quarters with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the Series A
Subordinated Debentures. As a consequence of any such deferral, quarterly
Distributions on the Series A Preferred Securities by the Series A Issuer will
be deferred (and the amount of Distributions to which holders of the Series A
Preferred Securities are entitled will accumulate additional Distributions
thereon at the rate of % per annum, compounded quarterly from the relevant
payment date for such Distributions) during any such Extension Period. During
any such Extension Period, the Corporation may not, and may not permit any
subsidiary of the Corporation to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Corporation's capital stock or (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Corporation (including other Junior
Subordinated Debentures) that rank pari passu with or junior in interest to
the Series A Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation if such guarantee ranks pari passu with or
junior in interest to the Series A Subordinated Debentures (other than (a)
dividends or distributions in common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under any Guarantee and (d) purchases of common stock related to
the issuance of common stock or rights under any of the Corporation's benefit
plans for its directors, officers or employees). Prior to the termination of
any such Extension Period, the Corporation may further defer the payment of
interest, provided that no Extension Period may exceed 20 consecutive quarters
or extend beyond the Stated Maturity of the Series A Subordinated Debentures.
Upon the termination of any Extension Period and the payment of all interest
then accrued and unpaid (together with interest thereon at the annual rate of
%, compounded quarterly, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period subject to the above
requirements. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period. See "Certain Terms of
Series A Preferred Securities--Distributions" and "Certain Terms of Series A
Subordinated Debentures--Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Series A Preferred Securities
will continue to accrue income (in the form of original issue discount) in
respect of its pro rata share of the Series A Subordinated Debentures held by
the Series A Issuer for United States federal income tax purposes. As a
result, a holder of Series A Preferred Securities will include such income in
gross income for United States federal income tax purposes in advance of the
receipt of cash, and will not receive the cash related to such income from the
Series A Issuer if the holder disposes of the Series A Preferred Securities
prior to the record date for the payment of Distributions. See "Certain
Federal Income Tax Consequences--Interest Income and Original Issue Discount"
and "--Sale or Redemption of Series A Preferred Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Subordinated Debentures. However, should the Corporation elect to exercise
such right in the future, the market price of the Series A Preferred
Securities is likely to be affected. A holder that disposes of its Series A
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Series A Preferred Securities. In addition, as a result of the existence of
the Corporation's right to defer interest payments, the market price of the
Series A Preferred Securities (which represent preferred beneficial interests
in the Series A Issuer) may be more volatile than the market prices of other
securities on which original issue discount accrues that are not subject to
such deferrals.
S-5
<PAGE>
TAX EVENT--REDEMPTION
Upon the occurrence and continuation of a Tax Event, the Corporation has the
right to redeem the Series A Subordinated Debentures in whole (but not in
part) within 90 days following the occurrence of such Tax Event and therefore
cause a mandatory redemption of the Series A Preferred Securities before, as
well as after, [insert date 5 years from date of issuance]. The exercise of
such right is subject to the Corporation having received prior approval of the
Federal Reserve to do so if then required under applicable guidelines or
policies of the Federal Reserve.
A "Tax Event" means the receipt by the Series A Issuer of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective 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
such pronouncement or decision is announced on or after the date of issuance
of the Series A Preferred Securities under the Trust Agreement, there is more
than an insubstantial risk that (i) the Series A Issuer is, or will be within
90 days of the date of such opinion, subject to United States Federal income
tax with respect to income received or accrued on the Series A Subordinated
Debentures, (ii) interest payable by the Corporation on the Series A
Subordinated Debentures is not, or within 90 days of such opinion, will not
be, deductible by the Corporation, in whole or in part, for United States
Federal income tax purposes, or (iii) the Series A Issuer is, or will be
within 90 days of the date of the opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
See "Risk Factors--Possible Tax Law Changes Affecting the Series A Preferred
Securities" for a discussion of certain legislative proposals that, if
adopted, could give rise to a Tax Event, which may permit the Corporation to
cause a redemption of the Series A Preferred Securities prior to [insert date
5 years from date of issuance].
EXCHANGE OF SERIES A PREFERRED SECURITIES FOR SERIES A SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series A
Issuer and cause the Series A Subordinated Debentures to be distributed to the
holders of the Series A Preferred Securities in liquidation of the Series A
Issuer. The exercise of such right is subject to the Corporation having
received prior approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve. See "Certain
Terms of Series A Preferred Securities--Liquidation of Series A Issuer and
Distribution of Series A Subordinated Debentures to Holders."
SHORTENING OF STATED MATURITY OF SERIES A SUBORDINATED DEBENTURES
The Corporation will have the right at any time to shorten the maturity of
the Series A Subordinated Debentures to a date not earlier than [insert date 5
years after date of issuance]. The exercise of such right is subject to the
Corporation having received prior approval of the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal
Reserve.
EXTENSION OF STATED MATURITY OF SERIES A SUBORDINATED DEBENTURES
The Corporation will also have the right to extend the maturity of the
Series A Subordinated Debentures whether or not the Series A Issuer is
terminated and the Series A Subordinated Debentures are distributed to holders
of the Series A Preferred Securities to a date no later than the 49th
anniversary of the initial issuance of the Series A Preferred Securities,
provided that the Corporation can extend the maturity only if at the time such
election is made and at the time of such extension (i) the Corporation is not
in bankruptcy, otherwise insolvent or in liquidation, (ii) the
S-6
<PAGE>
Corporation is not in default in the payment of any interest or principal on
the Series A Subordinated Debentures, (iii) the Series A Issuer is not in
arrears on payments of Distributions on the Series A Preferred Securities and
no deferred Distributions are accumulated and (iv) the Series A Subordinated
Debentures are rated not less than BBB- by Standard & Poor's Ratings Services
or Baa3 by Moody's Investors Service, Inc. or the equivalent by any other
nationally recognized statistical rating organization.
MARKET PRICES
There can be no assurance as to the market prices for Series A Preferred
Securities or Series A Subordinated Debentures that may be distributed in
exchange for Series A Preferred Securities if a liquidation of the Series A
Issuer occurs. Accordingly, the Series A Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Series A Subordinated Debentures that a holder of Series A
Preferred Securities may receive on liquidation of the Series A Issuer, may
trade at a discount to the price that the investor paid to purchase the Series
A Preferred Securities offered hereby. In addition, because the Corporation
has the right (i) to shorten the Stated Maturity of the Series A Subordinated
Debentures (subject to prior approval of the Federal Reserve if then required
under applicable guidelines or policies of the Federal Reserve) or (ii) to
extend the maturity of the Series A Subordinated Debentures (subject to the
conditions described above), there can be no assurance that the Corporation
will not exercise its option to change the maturity of the Series A
Subordinated Debentures as permitted by the terms thereof and of the
Indenture. Because holders of Series A Preferred Securities may receive Series
A Subordinated Debentures on termination of the Series A Issuer, prospective
purchasers of Series A Preferred Securities are also making an investment
decision with regard to the Series A Subordinated Debentures and should
carefully review all the information regarding the Series A Subordinated
Debentures contained herein. See "Certain Terms of the Series A Subordinated
Debentures" and "Description of Junior Subordinated Debentures--Corresponding
Junior Subordinated Debentures" in the accompanying Prospectus.
RIGHTS UNDER THE SERIES A GUARANTEE
The Series A Guarantee will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). [Insert name of
Indenture Trustee] will act as the indenture trustee under the Series A
Guarantee (the "Guarantee Trustee") for the purposes of compliance with the
Trust Indenture Act and will hold the Series A Guarantee for the benefit of
the holders of the Series A Preferred Securities. [Insert name of Debenture
Trustee] will also act as Debenture Trustee for the Series A Subordinated
Debentures and as Property Trustee and [insert name of Delaware Trustee] will
act as Delaware Trustee under the Trust Agreement. The Series A Guarantee
guarantees to the holders of the Series A Preferred Securities the following
payments, to the extent not paid by the Series A Issuer: (i) any accumulated
and unpaid Distributions required to be paid on the Series A Preferred
Securities, to the extent that the Series A Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Series A
Preferred Securities called for redemption, to the extent that the Series A
Issuer has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of the Series
A Issuer (unless the Series A Subordinated Debentures are distributed to
holders of the Series A Preferred Securities), the lesser of (a) the aggregate
of the Liquidation Amount and all accumulated and unpaid Distributions to the
date of payment to the extent that the Series A Issuer has funds on hand
available therefor at such time and (b) the amount of assets of the Series A
Issuer remaining available for distribution to holders of the Series A
Preferred Securities. The holders of not less than a majority in aggregate
liquidation amount of the Series A Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Series A Guarantee or to
direct the exercise of any trust power conferred upon the Guarantee Trustee
under the Series A Guarantee. Any holder of the Series A Preferred Securities
may institute a legal
S-7
<PAGE>
proceeding directly against the Corporation to enforce its rights under the
Series A Guarantee without first instituting a legal proceeding against the
Series A Issuer, the Guarantee Trustee or any other person or entity. If the
Corporation were to default on its obligation to pay amounts payable under the
Series A Subordinated Debentures, the Series A Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Series A
Preferred Securities or otherwise, and, in such event, holders of the Series A
Preferred Securities would not be able to rely upon the Series A Guarantee for
payment of such amounts. Instead, in the event a Debenture Event of Default
shall have occurred and be continuing and such event is attributable to the
failure of the Corporation to pay interest on or principal of the Series A
Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Series A 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 Series A Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Series A Preferred Securities of such holder (a "Direct Action"). In
connection with such Direct Action, the Corporation will have a right of set-
off under the Indenture to the extent of any payment made by the Corporation
to such holder of Series A Preferred Securities in the Direct Action. Except
as described herein, holders of Series A Preferred Securities will not be able
to exercise directly any other remedy available to the holders of the Series A
Subordinated Debentures or assert directly any other rights in respect of the
Series A Subordinated Debentures. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights of Holders of Preferred Securities,"
"Description of Junior Subordinated Debentures--Debenture Events of Default"
and "Description of Guarantees" in the accompanying Prospectus. The Trust
Agreement provides that each holder of Series A Preferred Securities by
acceptance thereof agrees to the provisions of the Series A Guarantee and the
Indenture.
LIMITED VOTING RIGHTS
Holders of Series A Preferred Securities will generally have limited voting
rights relating only to the modification of the Series A Preferred Securities
and the exercise of the Series A Issuer's rights as holder of Series A
Subordinated Debentures and the Guarantees. Holders of Series A Preferred
Securities will not be entitled to vote to appoint, remove or replace the
Property Trustee or the Delaware Trustee, and such voting rights are vested
exclusively in the holder of the Series A Common Securities except upon the
occurrence of certain events described herein. The Property Trustee, the
Administrative Trustees and the Corporation may amend the Trust Agreement
without the consent of holders of Series A Preferred Securities to ensure that
the Series A Issuer will be classified for United States federal income tax
purposes as a grantor trust even if such action adversely affects the
interests of such holders. See "Description of Preferred Securities--Voting
Rights; Amendment of Each Trust Agreement" and "--Removal of Issuer Trustees"
in the accompanying Prospectus.
TRADING CHARACTERISTICS OF SERIES A PREFERRED SECURITIES
[The Series A Preferred Securities have been approved for listing, upon
official notice of issuance, on the New York Stock Exchange.] [Application
will be made to list the Series A Preferred Securities on the New York Stock
Exchange.] The Series A Preferred Securities may trade at prices that do not
fully reflect the value of accrued but unpaid interest with respect to the
underlying Series A Subordinated Debentures. A holder of Series A Preferred
Securities that disposes of its Series A Preferred Securities between record
dates for payments of Distributions (and consequently does not receive a
Distribution from the Series A Issuer for the period prior to such
disposition) will nevertheless be required to include accrued but unpaid
interest on the Series A Subordinated Debentures through the date of
disposition in income as ordinary income and to add such amount to its
adjusted tax basis in the Series A Preferred Securities disposed of. Such
holder will recognize a capital loss to the extent the selling price (which
may not fully reflect the value of accrued but unpaid interest) is less than
its adjusted tax basis (which will include accrued but unpaid interest).
Subject to certain limited
S-8
<PAGE>
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Sale or Redemption of Series A Preferred Securities."
[As indicated above, the Series A Preferred Securities have been approved
for listing on the New York Stock Exchange.] [As indicated above, application
will be made to list the Series A Preferred Securities on the New York Stock
Exchange.] If the Series A Preferred Securities are not listed on a national
securities exchange or the NASDAQ National Market and the underwriters do not
make a market for the securities, the liquidity of the Series A Preferred
Securities could be adversely affected.
POSSIBLE TAX LAW CHANGES AFFECTING THE SERIES A PREFERRED SECURITIES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
released which would, among other things, generally deny interest deductions
for interest on an instrument issued by a corporation that has a maximum
weighted average maturity of more than 40 years. The Bill would also generally
deny interest deductions for interest on an instrument, issued by a
corporation, that has a maximum term of more than 20 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where
the instrument is issued to a related party (other than a corporation), where
the holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. If either
provision were to apply to the Series A Subordinated Debentures, the
Corporation would be unable to deduct interest on the Series A Subordinated
Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance and
House Ways and Means Committees issued a joint statement to the effect that it
was their intention that the effective date of the President's legislative
proposals, if adopted, will be no earlier than the date of appropriate
Congressional action. Under current law, the Corporation will be able to
deduct interest on the Series A Subordinated Debentures. There can be no
assurance, however, that current or future legislative proposals or final
legislation will not affect the ability of the Corporation to deduct interest
on the Series A Subordinated Debentures. Such a change could give rise to a
Tax Event, which may permit the Corporation, upon approval of the Federal
Reserve if then required under applicable capital guidelines or policies of
the Federal Reserve, to cause a redemption of the Series A Preferred
Securities before, as well as after, [insert date 5 years from date of
issuance]. See "Certain Terms of Series A Subordinated Debentures--Redemption"
in this Prospectus Supplement and "Description of Preferred Securities--
Redemption or Exchange--Tax Event Redemption" in the accompanying Prospectus.
See also "Certain Federal Income Tax Consequences--Possible Tax Law Changes."
MELLON CAPITAL I
Mellon Capital I is a statutory business trust formed under Delaware law
pursuant to (i) the Trust Agreement executed by the Corporation, as Depositor,
[insert name of Property Trustee], as Property Trustee, [insert name of
Delaware Trustee], Delaware Trustee, and the Administrative Trustees named
therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on , 1996. The Series A Issuer's business and
affairs are conducted by the Issuer Trustees: [Insert name of Property
Trustee], as Property Trustee, and [insert name of Delaware Trustee], Delaware
Trustee, and two individual Administrative Trustees who are employees or
officers of or affiliated with the Corporation. The Series A Issuer exists for
the exclusive purposes of (i) issuing and selling the Series A Preferred
Securities and Series A Securities, (ii) using the proceeds from the sale of
Series A Securities to acquire Series A Subordinated Debentures issued by the
Corporation and (iii) engaging in only those other activities necessary,
advisable or incidental thereto (such as registering the transfer of the
Series A Securities). Accordingly, the Series A Subordinated Debentures will
be the sole assets of the Series A Issuer, and payments under the Series A
Subordinated Debentures will be the sole revenue of the Series A Issuer. All
of the Series A Common Securities will be owned by the
S-9
<PAGE>
Corporation. The Series A Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Series A Preferred Securities, except
that upon the occurrence and continuance of an event of default under the
Trust Agreement resulting from an Event of Default under the Indenture, the
rights of the Corporation as holder of the Series A Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the Series A
Preferred Securities. See "Description of Preferred Securities--Subordination
of Common Securities" in the accompanying Prospectus. The Corporation will
acquire Series A Common Securities in an aggregate liquidation amount equal to
3% of the total capital of the Series A Issuer. The Series A Issuer has a term
of 55 years, but may terminate earlier as provided in the Trust Agreement. The
principal executive office of the Series A Issuer is
, Attention: Secretary, and its
telephone number is ( ) - . See "The Issuers" in the accompanying
Prospectus.
MELLON BANK CORPORATION
Mellon Bank Corporation (the "Corporation") is a multibank holding company
incorporated under the laws of Pennsylvania in August 1971 and registered
under the Federal Bank Holding Company Act of 1956, as amended. The
Corporation provides a comprehensive range of financial products and services
in domestic and selected international markets. The Corporation's banking
subsidiaries are located in Pennsylvania, Massachusetts, Delaware, Maryland,
and New Jersey. Other subsidiaries are located in key business centers
throughout the United States and abroad. At September 30, 1996, the
Corporation was the largest bank holding company in the United States in
terms of assets.
The Corporation's principal direct subsidiaries are Mellon Bank, N.A.
("Mellon Bank"), The Boston Company, Inc. ("TBC"), Mellon Bank (DE) National
Association, Mellon Bank (MD), Mellon PSFS (NJ) National Association and a
number of companies known as Mellon Financial Services Corporations. The
Corporation also owns a federal savings bank headquartered in New Jersey,
Mellon Bank, F.S.B. The Dreyfus Corporation ("Dreyfus"), one of the nation's
largest mutual fund companies, is a wholly owned subsidiary of Mellon Bank.
The Corporation's banking subsidiaries engage in retail financial services,
commercial banking, trust and investment management services, residential real
estate loan financing, mortgage servicing, mutual fund activities, equipment
leasing and various securities-related activities.
Mellon Bank, which has its executive offices in Pittsburgh, Pennsylvania,
became a subsidiary of the Corporation in November 1972. With its
predecessors, Mellon Bank has been in business since 1869. Mellon Bank is
comprised of six operating regions throughout Pennsylvania. Dreyfus,
headquartered in New York, New York, serves primarily as an investment
adviser, manager and administrator of mutual funds. TBC, through Boston Safe
Deposit and Trust Company ("BSDT") and other subsidiaries, engages in the
business of institutional trust and custody, institutional asset management,
private asset management and banking services. TBC is headquartered in Boston,
Massachusetts. Mellon Bank (DE) National Association, headquartered in
Wilmington, Delaware, serves consumer and small to midsize commercial markets
throughout Delaware and provides nationwide cardholder processing services.
Mellon Bank (MD) is headquartered in Rockville, Maryland, and serves consumer
and small to midsize commercial markets throughout Maryland. Mellon Bank (MD)
has a Maryland state charter and is a member of the Federal Reserve System.
Mellon Bank, F.S.B., headquartered in Paramus, New Jersey, provides corporate
trust and personal trust services and serves consumer and small to midsize
commercial markets. Mellon PSFS (NJ) National Association serves consumer and
small to midsize commercial markets in southern New Jersey.
The Corporation's banking subsidiaries operate domestic retail banking
locations, including retail offices. The deposits of the national banking
subsidiaries, BSDT, Mellon Bank (MD) and Mellon Bank, F.S.B. are insured by
the Federal Deposit Insurance Corporation ("FDIC") to the extent provided by
law.
S-10
<PAGE>
Other subsidiaries of the Corporation provide a broad range of bank-related
services, including equipment leasing, commercial loan financing, stock
transfer services, cash management and numerous trust and investment
management services. The types of financial products and services offered by
the Corporation's subsidiaries are subject to change.
For analytical purposes, management has focused the Corporation into four
core business sectors: Consumer Investment Services, Consumer Banking
Services, Corporate/Institutional Investment Services and
Corporate/Institutional Banking Services. There is considerable
interrelationship among these sectors.
CONSUMER INVESTMENT SERVICES
The Corporation provides a broad array of personal trust services,
investment services and retail mutual funds to consumers. These products and
services are offered principally through the private asset management trust
group of Mellon Bank and BSDT, through Dreyfus and throughout the
Corporation's retail banking network.
CONSUMER BANKING SERVICES
The Consumer Banking Services sector includes consumer lending and deposit
products, business banking, credit card, mortgage loan origination and
servicing, and jumbo residential mortgage lending. The consumer lending and
deposit products and small business banking services primarily are offered
through the Corporation's retail banking network, which is composed of
retail branches, supermarket facilities, ATM's, loan sales offices
and a telephone banking center. This network is primarily located in the
Central Atlantic region of the United States. This banking network provides a
full range of products to individuals including short- and long-term credit
facilities, credit cards, mortgages, safe deposit facilities and access to
ATM's. Jumbo residential mortgage lending is offered nationally through the
private asset management representative offices. This sector also includes the
core servicing function of the Corporation's mortgage banking operations
located in Kansas City, Houston, Denver, Cleveland and Paramus, through which
the Corporation originates and services residential and commercial mortgages
for institutional investors and makes residential loans nationwide.
CORPORATE/INSTITUTIONAL INVESTMENT SERVICES
The Corporate/Institutional Investment Services sector serves the
institutional markets (including employee benefit plans) by providing
institutional trust and custody, institutional asset and institutional mutual
fund management and administration, securities lending, foreign exchange, cash
management, stock transfer and corporate trust services. The Corporation's
subsidiaries provide trust and investment management services while operating
under the umbrella name "Mellon Trust". In addition, the subsidiaries provide
institutional mutual fund management through Dreyfus. The Corporation also
owns a number of subsidiaries that provide a variety of active and passive
equity and fixed income investment management services, including management
of international securities. Through the Global Cash Management department,
the Corporation offers a broad range of cash management services, including
remittance processing, collections and disbursements, check processing and
electronic services. The Corporation's subsidiaries also provide services
relating primarily to defined contribution employee benefit plans under the
umbrella name "Dreyfus Retirement Services." Stock transfer services are
provided in the United States through its joint venture operating under the
name of Chase Mellon Shareholder Services and in Canada through The R-M Trust
Company.
CORPORATE/INSTITUTIONAL BANKING SERVICES
Corporate/Institutional Banking Services includes large corporate and
middle-market lending, asset-based lending, lease financing, commercial real
estate lending, insurance premium financing
S-11
<PAGE>
and securities underwriting and trading. The Corporation provides lending and
other institutional banking services to domestic and selected international
markets through its Corporate Banking, Institutional Banking, Capital Markets
and Leasing departments. These markets generally include large domestic
commercial and industrial customers, U.S. operations of foreign companies,
multinational corporations, state and local governments and various financial
institutions (including banks, securities broker/dealers, insurance companies,
finance companies and mutual funds). The Corporation also offers corporate
finance and rate risk management products; syndicates, participates out and
sells loans; offers a variety of capital markets products and services,
including private placement and money market transactions; and provides
equipment leasing, financing and lease advisory services. The Corporation
maintains foreign offices in London, Tokyo, Hong Kong, Toronto, and Grand
Cayman, British West Indies. Through these offices, the Corporation conducts
trade finance activities, engages in correspondent banking and provides
corporate banking and capital markets services. Included in this sector is a
nationwide asset-based lending division which provides secured lending,
principally through accounts receivable and inventory financing. As part of
this sector, Middle Market Banking serves companies with annual sales between
$10 million and $250 million and the health care industry on a national basis.
Real Estate lending consists of the Corporation's commercial real estate
lending activities, through which it originates financing for residential,
commercial, multi-family and other products. The Corporation provides property
and casualty insurance premium financing to small, midsize and large companies
in the United States through the AFCO Credit Corporation and in Canada through
CAFO.
S-12
<PAGE>
MELLON BANK CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE CORPORATION
The following table presents summary consolidated financial data derived
from the consolidated financial statements of the Corporation. This summary is
qualified in its entirety by the detailed information and financial statements
included in the documents incorporated herein by reference. See "Incorporation
of Certain Documents by Reference."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- -------- -------- -------- -------- --------
(DOLLAR AMOUNTS IN
MILLIONS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net Interest revenue.... $ 1,107 $ 1,166 $ 1,548 $ 1,508 $ 1,329 $ 1,182 $ 1,012
Provision for credit
losses................. 75 70 105 70 125 185 250
Net interest revenue
after provision for
losses................. 1,032 1,096 1,443 1,438 1,204 997 762
Fee revenue............. 1,453 1,226 1,670 1,652 1,538 1,154 1,007
Gains (losses) on sales
of securities.......... 1 -- 6 (5) 100 129 81
Operating expense....... 1,636 1,501 2,027 2,374 2,084 1,648 1,440
Provision for income
taxes.................. 311 304 401 278 298 104 62
------- ------- -------- -------- -------- -------- --------
Net income.............. $ 539 $ 517 $ 691 $ 433 $ 460 $ 528 $ 348
Net income applicable to
common stock........... 510 488 652 358 397 477 299
CONSOLIDATED PER COMMON
SHARE DATA:
Primary net income...... $ 3.81 $ 3.32 $ 4.50 $ 2.42 $ 2.73 $ 3.56 $ 2.39
Fully diluted net
income................. 3.81 3.30 4.46 2.42 2.73 3.53 2.37
Dividends............... 1.75 1.45 2.00 1.57 1.01 0.93 0.93
Book value at period-
end.................... 26.26 26.13 26.17 25.06 24.28 21.37 18.44
Average common shares
and equivalents
outstanding--
Primary (in thousands). 133,769 146,916 145,074 149,069 147,083 134,858 126,554
Average common shares
and equivalents
outstanding--
Fully diluted (in
thousands)............. 134,122 147,935 146,182 149,230 147,293 137,338 127,403
RESULTS EXCLUDING
CERTAIN ITEMS (A):
Net income.............. $ 539 $ 517 $ 691 $ 652 $ 519 $ 398 $ 259
Net income per common
share--Primary......... 3.81 3.32 4.50 4.00 3.14 2.60 1.69
Return on average common
shareholders'
equity(B).............. 20.2% 17.7% 17.8% 16.0% 13.7% 13.1% 9.0%
Return on average
assets(B).............. 1.72 1.74 1.72 1.71 1.46 1.29 0.87
CONSOLIDATED BALANCE
SHEET--AVERAGE BALANCES
(B):
Money market
investments............ $ 1,417 $ 1,228 $ 1,222 $ 1,656 $ 3,821 $ 1,905 $ 1,566
Securities.............. 6,180 4,836 4,922 5,149 4,804 6,500 5,778
Loans................... 27,009 27,177 27,321 25,097 21,763 18,235 18,514
Total interest-earning
assets................. 34,769 33,541 33,761 32,282 30,657 26,948 26,167
Total assets............ 41,804 39,745 40,097 38,106 35,635 30,758 29,878
Deposits................ 30,592 27,615 27,951 27,248 26,541 22,684 21,438
Notes and debentures
(with original
maturities over one
year).................. 1,877 1,678 1,670 1,768 1,991 1,365 1,448
Redeemable preferred
stock.................. -- -- -- -- -- -- 51
Common shareholders'
equity................. 3,371 3,691 3,671 3,691 3,323 2,603 2,190
Total shareholders'
equity................. 3,806 4,126 4,106 4,277 3,964 3,112 2,614
CONSOLIDATED
PERCENTAGES:
Return on average common
shareholders'
equity(B).............. 20.2% 17.7% 17.8% 9.8% 12.1% 18.5% 13.8%
Return on average
assets(B).............. 1.72 1.74 1.72 1.14 1.29 1.72 1.16
Net interest margin(B):
Taxable equivalent
basis(C)............... 4.28 4.68 4.62 4.71 4.39 4.46 3.99
Without taxable
equivalent increments.. 4.25 4.65 4.58 4.67 4.34 4.39 3.86
Dividends per common
share as a percentage
of primary net income
per common share....... 45.44 43.19 44.18 54.66 31.28 21.11 29.52
CAPITAL RATIOS:
Common shareholders'
equity to assets(D).... 7.78% 8.81% 8.83% 9.54% 9.57% 8.85% 7.91%
Average common
shareholders' equity to
average assets(B)...... 8.06 9.29 9.15 9.68 9.32 8.46 7.33
Tier I capital ratio(D). 6.70(F) 8.77 8.14 9.48 9.70 10.20 9.05
Total (Tier I plus Tier
II) capital ratio(D)... 11.20(F) 12.00 11.29 12.90 13.22 13.83 13.16
Leverage capital
ratio(D)............... 6.70(F) 8.20 7.80 8.67 9.00 9.45 8.62
ASSET QUALITY RATIOS(E):
Reserve for credit
losses as a percentage
of:
Total loans(D)......... 1.69% 2.04% 1.70% 2.27% 2.45% 2.54% 3.12%
Nonperforming loans(D). 364 313 282 403 297 152 113
Net credit losses as a
percentage of average
loans(B)............... 0.44 0.55 0.91 0.27 0.64 1.52 1.24
Nonperforming assets as
a percentage of total
loans and net acquired
property(D)............ 0.74 0.93 0.85 0.89 1.39 2.94 4.78
</TABLE>
Footnotes on following page.
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<PAGE>
- --------
Note: The comparability of the information on the prior page has been affected
by the Corporation's September 30, 1996 acquisition of the business
equipment financing unit of USL Capital Corporation, the December 1993
acquisition of AFCO Credit Corporation and CAFO, Inc., the May 1993
acquisition of The Boston Company, the December 1992 acquisition of
certain assets and deposit liabilities of Meritor Savings Bank and the
December 1991 acquisition of United Penn Bank. These acquisitions, as
well as other less material acquisitions and divestitures, are described
in detail in the Corporation's Annual Reports on Form 10-K for the years
ended December 31, 1991 through 1995, or other documents incorporated by
reference herein.
(A) Results for 1994 exclude a $130 million after tax securities lending
charge, $79 million after tax of Dreyfus merger-related expenses, $10
million after tax of one-time losses on the disposition of securities
available for sale previously owned by Dreyfus and $16 million of
preferred stock dividends recorded in connection with the redemption of
the Series H preferred stock. Results for 1993 exclude $112 million after
tax of merger expenses and $53 million after tax of gains on the sale of
securities related to the acquisition of The Boston Company. Results for
periods prior to 1993 were calculated by applying a normalized effective
tax rate of approximately 38% to pretax income. The unrecorded tax benefit
that existed at the beginning of the periods prior to 1993 was included in
the determination of the return on common shareholders' equity.
(B) Computed on a daily average basis.
(C) Calculated on a taxable equivalent basis, at tax rates approximating 35%
for the nine months ended September 30, 1996 and 1995, and the full years
ended 1995, 1994 and 1993 and 34% in all other years presented. Loan fees,
nonaccrual loans and the related effect on income have been included in
the calculation of the net interest margin.
(D) Period-end ratio.
(E) Segregated assets acquired in the 1992 Meritor acquisition are not
reported as loans and therefore are not included in nonperforming loans.
The reserve for segregated assets is not included in the reserve for
credit losses. In December 1995, the Corporation segregated certain
CornerStoneSM credit card loans, which had a history of delinquency, into
an accelerated resolution portfolio, which is included in Other Assets on
the balance sheet. Interest and principal receipts, fees and loan loss
recoveries on loans in this portfolio are applied to reduce the carrying
value of this portfolio.
(F) Estimated.
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<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Corporation's ratios of earnings to fixed
charges and ratio of earnings to combined fixed charges and preferred stock
dividends for the years and periods indicated:
MELLON BANK CORPORATION
AND ITS SUBSIDIARIES(A)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN
THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income.................. $ 539,703 $ 517,227 $ 691,534 $ 433,365 $ 460,213 $ 527,955 $ 347,451
Provision for income
taxes.................. 310,223 303,768 400,058 278,040 298,034 104,099 62,199
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before provision
for income taxes....... $ 849,926 $ 820,995 $1,091,592 $ 711,405 $ 758,247 $ 632,054 $ 409,650
---------- ---------- ---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest expense
(excluding interest on
deposits)............. $ 270,141 $ 300,362 $ 401,700 $ 263,054 $ 200,915 $ 211,998 $ 326,437
One-third of rental
expense
(net of income from
subleases)
and amortization of
debt
issuance costs........ 33,085 32,763 44,303 40,140 38,190 29,446 30,300
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges
(excluding interest on
deposits)............. 303,226 333,125 446,003 303,194 239,105 241,444 356,737
Interest on deposits... 662,711 652,074 888,580 538,715 454,458 636,719 1,006,566
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges.... $ 965,937 $ 985,199 $1,334,583 $ 841,909 $ 693,563 $ 878,163 $1,363,303
---------- ---------- ---------- ---------- ---------- ---------- ----------
Preferred stock dividend
requirements (b)....... $ 46,417 $ 46,786 $ 62,035 $ 124,260 $ 103,792 $ 61,197 $ 57,618
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before provision
for income taxes, plus
total fixed charges:
Excluding interest on
deposits.............. $1,153,152 $1,154,120 $1,537,595 $1,014,599 $ 997,352 $ 873,498 $ 766,387
---------- ---------- ---------- ---------- ---------- ---------- ----------
Including interest on
deposits.............. $1,815,863 $1,806,194 $2,426,175 $1,553,314 $1,451,810 $1,510,217 $1,772,953
---------- ---------- ---------- ---------- ---------- ---------- ----------
Ratio of earnings (as
defined) to fixed
charges:
Excluding interest on
deposits.............. 3.80 3.46 3.45 3.35 4.17 3.62 2.15
Including interest on
deposits.............. 1.88 1.83 1.82 1.84 2.09 1.72 1.30
Ratio of earnings (as
defined) to combined
fixed charges and
preferred stock
dividends:
Excluding interest on
deposits.............. 3.30 3.04 3.03 2.37 2.91 2.89 1.85
Including interest on
deposits.............. 1.79 1.75 1.74 1.61 1.82 1.61 1.25
</TABLE>
- --------
(a) For purposes of computing these ratios, earnings represent consolidated
income before income taxes plus consolidated fixed charges. Fixed charges,
excluding interest on deposits, include interest expense (other than on
deposits), one-third (the proportion deemed representative of the interest
factor) of rental expense net of income from subleases, and amortization
of debt issuance costs. Fixed charges, including interest on deposits,
include all interest expense, one-third (the proportion deemed
representative of the interest factor) of rental expense net of income
from subleases, and amortization of debt issuance costs.
(b) Preferred stock dividend requirements for all years presented represent
the pretax amount required to cover preferred stock dividends.
S-15
<PAGE>
MELLON BANK CORPORATION
(PARENT CORPORATION) (A)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- --------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(DOLLAR AMOUNTS IN
THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income before income
taxes and equity in
undistributed net
income (loss) of
subsidiaries........... $266,816 $279,942 $473,554 $434,035 $224,869 $137,594 $145,777
Fixed charges: interest
expense, one-third of
rental expense net of
income from subleases,
and amortization of
debt issuance costs.... 75,510 73,295 96,971 95,193 110,739 79,709 103,001
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes and equity in
undistributed net
income (loss) of
subsidiaries, plus
fixed charges.......... $342,326 $353,237 $570,525 $529,228 $335,608 $217,303 $248,778
-------- -------- -------- -------- -------- -------- --------
Preferred stock dividend
requirements (b)....... $ 46,417 $ 46,786 $ 62,035 $124,260 $103,792 $ 61,197 $ 57,618
-------- -------- -------- -------- -------- -------- --------
Ratio of earnings (as
defined) to fixed
charges................ 4.53 4.82 5.88 5.56 3.03 2.73 2.42
Ratio of earnings (as
defined) to combined
fixed charges and
preferred stock
dividends.............. 2.81 2.94 3.59 2.41 1.56 1.54 1.55
</TABLE>
- --------
(a) The parent Corporation ratios include the accounts of the Corporation and
Mellon Financial Company, a wholly owned subsidiary of the Corporation
that functions as a financing entity for the Corporation and its
subsidiaries by issuing commercial paper and other debt guaranteed by the
Corporation. For purposes of computing these ratios, earnings represent
parent Corporation income before taxes and equity in undistributed net
income (loss) of subsidiaries, plus the fixed charges of the parent
Corporation. Fixed charges represent interest expense, one-third (the
proportion deemed representative of the interest factor) of rental expense
net of income from subleases, and amortization of debt issuance costs.
Because the ratio excludes from earnings the equity in undistributed net
income (loss) of subsidiaries, the ratio varies with the payment of
dividends by such subsidiaries.
(b) Preferred stock dividend requirements for all years presented represent
the pretax amount required to cover preferred stock dividends.
USE OF PROCEEDS
All of the proceeds from the sale of Series A Preferred Securities will be
invested by the Series A Issuer in Series A Subordinated Debentures. The
Corporation intends that the proceeds from the sale of such Series A
Subordinated Debentures will be added to its general corporate funds and will
be used for general corporate purposes, including funding the redemption of
the Corporation's Series I Preferred Stock, which is currently scheduled for
December 16, 1996.
S-16
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of September 30, 1996 and as adjusted to
give effect to the consummation of the offering of the Series A Preferred
Securities. The following data should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation and its
subsidiaries incorporated herein by reference.
CAPITALIZATION TABLE
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
SEPTEMBER 30, SEPTEMBER 30,
1996 1996(A)
(DOLLAR AMOUNTS IN MILLIONS) ------------- -------------
<S> <C> <C>
Commercial paper....................................... $ 170 $ 170
Notes and debentures:
Parent Corporation (B):
6.70% Subordinated Debentures due 2008.............. 249 249
6.30% Senior Notes due 2000......................... 200 200
7 5/8% Senior Notes due 1999........................ 200 200
6 1/2% Senior Notes due 1997........................ 200 200
6 7/8% Subordinated Debentures due 2003............. 150 150
9 1/4% Subordinated Debentures due 2001............. 100 100
9 3/4% Subordinated Debentures due 2001............. 100 100
Medium Term Notes, Series A, due 1997-2001
(10.00% to 10.50% at September 30, 1996)........... 27 27
7 1/4% Convertible Subordinated Capital Notes due
1999............................................... 3 3
Subsidiaries:
7% Subordinated Notes due 2006...................... 300 300
7 5/8% Subordinated Notes due 2007.................. 250 250
6 1/2% Subordinated Notes due 2005.................. 249 249
6 3/4% Subordinated Notes due 2003.................. 149 149
Medium Term Bank Notes due 1997-2007
(6.10% to 8.55% at September 30, 1996)............. 337 337
Various notes and obligations under capital leases
due
1996-2001 (3.92% to 10.50% at September 30, 1996).. 5 5
------ ------
Total notes and debentures......................... 2,519 2,519
------ ------
Total commercial paper, notes and debentures....... 2,689 2,689
------ ------
Corporation Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trust Holding
Solely Junior Subordinated Deferrable Interest
Debentures of the Corporation....................... --
Shareholders' equity:
9.60% Preferred Stock--$1.00 par value and $25.00
liquidation value Authorized and issued--6,000,000
shares (Series I).................................. 145 --(c)
8.50% Preferred Stock--$1.00 par value and $25.00
liquidation value Authorized and issued--4,000,000
shares (Series J).................................. 97 97
8.20% Preferred Stock--$1.00 par value and $25.00
liquidation value Authorized and issued--8,000,000
shares (Series K).................................. 193 193
Common Stock--$.50 par value
Authorized--200,000,000 shares
Issued--147,165,480 shares......................... 74 74
Additional paid-in capital.......................... 1,858 1,858
Retained earnings................................... 2,390 2,390
Net unrealized loss on assets available for sale,
net of tax......................................... (20) (20)
Treasury stock of 17,750,459 shares at cost......... (903) (903)
------ ------
Total shareholders' equity......................... 3,834 3,689
------ ------
Total capitalization............................... $6,523 $
====== ======
</TABLE>
- --------
(A) Reflects the anticipated proceeds of approximately $ million from the
issuance of ,000,000 shares of Series A Preferred Securities offered
hereby, net of $ million in estimated transaction costs.
(B) Parent Corporation includes the accounts of the Corporation and Mellon
Financial Company, a wholly owned subsidiary of the Corporation that
functions as a financing entity for the Corporation and its subsidiaries
by issuing commercial paper and other debt guaranteed by the Corporation.
(C) On October 29, 1996, the Corporation announced that it intends to redeem
the Series I Preferred Stock on December 16, 1996, pending Federal Reserve
Board approval.
S-17
<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Series A Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Series A
Issuer will be included in the consolidated financial statements of the
Corporation. The Series A Preferred Securities will be presented as a separate
line item in the consolidated balance sheet of the Corporation, entitled
"Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary
Trust Holding Solely Junior Subordinated Deferrable Interest Debentures of the
Company" and appropriate disclosures about the Series A Preferred Securities,
the Series A Guarantee and the Series A Subordinated Debentures will be
included in the notes to the consolidated financial statements. For financial
reporting purposes, the Corporation will record Distributions payable on the
Series A Preferred Securities as an expense in the consolidated statement of
income.
CERTAIN TERMS OF SERIES A PREFERRED SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series A
Preferred Securities supplements the description of the terms and provisions
of the Preferred Securities set forth in the accompanying Prospectus under the
heading "Description of Preferred Securities," to which description reference
is hereby made. This summary of certain terms and provisions of the Series A
Preferred Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Trust Agreement. The form of
the Trust Agreement has been filed as an exhibit to the Registration Statement
of which this Prospectus Supplement and accompanying Prospectus form a part.
DISTRIBUTIONS
The Series A Preferred Securities represent beneficial interests in the
Series A Issuer, and Distributions on each Series A Preferred Securities will
be payable at the annual rate of % of the stated Liquidation Amount of $25,
payable quarterly in arrears on March 31, June 30, September 30 and December
31 of each year, to the holders of the Series A Preferred Securities on the
relevant record dates. The record dates will be, for so long as the Series A
Preferred Securities remain in book-entry form, one Business Day prior to the
relevant Distribution payment date and, in the event the Series A Preferred
Securities are not in book-entry form, the 15th day of the month in which the
relevant Distribution payment date occurs. Distributions will accumulate from
the date of original issuance. The first Distribution payment date for the
Series A Preferred Securities will be , 199 . The amount of
Distributions payable for any period will be computed on the basis of a 360-
day year of twelve 30-day months. In the event that any date on which
Distributions are payable on the Series A Preferred Securities is not a
Business Day, then payment of the Distributions payable on such date will be
made on the next succeeding day that is a Business Day (and without any
additional Distributions or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the date such payment was
originally payable. See "Description of Preferred Securities--Distributions"
in the accompanying Prospectus.
So long as no Event of Default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer the
payment of interest on the Series A Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive quarters with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Series A Subordinated Debentures. As a
consequence of any such election,
S-18
<PAGE>
quarterly Distributions on the Series A Preferred Securities will be deferred
by the Series A Issuer during any such Extension Period. Distributions to
which holders of the Series A Preferred Securities are entitled will
accumulate additional Distributions thereon at the rate per annum of %
thereof, compounded quarterly from the relevant payment date for such
Distributions. The term "Distributions" as used herein shall include any such
additional Distributions. During any such Extension Period, the Corporation
may not, and may not permit any subsidiary of the Corporation to, (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or
make a liquidation payment with respect to, any of the Corporation's capital
stock or (ii) make any payment of principal, interest or premium, if any, on
or repay, repurchase or redeem any debt securities of the Corporation
(including other Junior Subordinated Debentures) that rank pari passu with or
junior in interest to the Series A Subordinated Debentures or make any
guarantee payments with respect to any guarantee by the Corporation of the
debt securities of any subsidiary of the Corporation if such guarantee ranks
pari passu with or junior in interest to the Series A Subordinated Debentures
(other than (a) dividends or distributions in common stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under any Guarantee and (d) purchases of common stock related to
the issuance of common stock or rights under any of the Corporation's benefit
plans for its directors, officers or employees). Prior to the termination of
any such Extension Period, the Corporation may further defer the payment of
interest, provided that no Extension Period may exceed 20 consecutive quarters
or extend beyond the Stated Maturity of the Series A Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all
amounts then due, the Corporation may elect to begin a new Extension Period.
There is no limitation on the number of times that the Corporation may elect
to begin an Extension Period. See "Certain Terms of Series A Subordinated
Debentures--Option to Extend Interest Payment Period" and "Certain Federal
Income Tax Consequences--Interest Income and Original Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Subordinated Debentures.
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series A
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined
in the accompanying Prospectus) of the Series A Securities, upon not less than
30 nor more than 60 days notice prior to the date fixed for repayment or
redemption, at a redemption price, with respect to the Series A Preferred
Securities (the "Redemption Price"), equal to the aggregate Liquidation Amount
of such Series A Preferred Securities plus accumulated and unpaid
Distributions thereon to the date of redemption (the "Redemption Date"). See
"Description of Preferred Securities--Redemption or Exchange" in the
accompanying Prospectus. For a description of the Stated Maturity and
redemption provisions of the Series A Subordinated Debentures, see "Certain
Terms of Series A Subordinated Debentures--General" and "--Redemption."
LIQUIDATION OF SERIES A ISSUER AND DISTRIBUTION OF SERIES A SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to terminate the Series A
Issuer and cause the Series A Subordinated Debentures to be distributed to the
holders of the Series A Preferred Securities in liquidation of the Series A
Issuer. Such right is subject to the Corporation having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve.
S-19
<PAGE>
Under current United States Federal income tax law and interpretations and
assuming, as expected, the Series A Issuer is treated as a grantor trust, a
distribution of the Series A Subordinated Debentures should not be a taxable
event to holders of the Series A Preferred Securities. Should there be a
change in law, a change in legal interpretation, a Tax Event or other
circumstances, however, the distribution could be a taxable event to holders
of the Series A Preferred Securities. See "Certain Federal Income Tax
Consequences--Distribution of Series A Subordinated Debentures to Holders of
Series A Preferred Securities." If the Corporation elects neither to redeem
the Series A Subordinated Debentures prior to maturity nor to liquidate the
Series A Issuer and distribute the Series A Subordinated Debentures to holders
of the Series A Preferred Securities, the Series A Preferred Securities will
remain outstanding until the repayment of the Series A Subordinated
Debentures.
If the Corporation elects to liquidate the Series A Issuer and thereby
causes the Series A Subordinated Debentures to be distributed to holders of
the Series A Preferred Securities in liquidation of the Series A Issuer, the
Corporation shall continue to have the right to shorten or extend the maturity
of such Series A Subordinated Debentures, subject to certain conditions as
described under "Certain Terms of Series A Subordinated Debentures--General."
LIQUIDATION VALUE
The amount payable on the Series A Preferred Securities in the event of any
liquidation of the Series A Issuer is $25 per Series A Preferred Securities
plus accumulated and unpaid Distributions, which may be in the form of a
distribution of such amount in Series A Subordinated Debentures, subject to
certain exceptions. See "Description of Preferred Securities--Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
REGISTRATION OF SERIES A PREFERRED SECURITIES
The Series A Preferred Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the
Series A Preferred Securities will be shown on, and transfers thereof will be
effected only through, records maintained by participants in DTC. Except as
described below and in the accompanying Prospectus, Series A Preferred
Securities in certificated form will not be issued in exchange for the global
certificates. See "Book-Entry Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Series A Preferred Securities
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Corporation that it is unwilling or unable to continue as a
depository for such global security and no successor depository shall have
been appointed, or if at any time DTC ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, at a time
when DTC is required to be so registered to act as such depository, (ii) the
Corporation in its sole discretion determines that such global security shall
be so exchangeable, or (iii) there shall have occurred and be continuing an
Event of Default under the Indenture with respect to the Series A Subordinated
Debentures. Any global security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for definitive certificates registered in such
names as DTC shall direct. It is expected that such instructions will be based
upon directions received by DTC from its Participants (as defined in the
accompanying Prospectus) with respect to ownership of beneficial interests in
such global security. In the event that Series A Preferred Securities are
issued in definitive form, such Series A Preferred Securities will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
Payments on Series A Preferred Securities represented by a global security
will be made to DTC, as the depositary for the Series A Preferred Securities.
In the event Series A Preferred Securities are issued in definitive form, the
Redemption Price and Distributions will be payable, the transfer of the Series
A Preferred Securities will be registrable, and Series A Preferred Securities
will be
S-20
<PAGE>
exchangeable for Series A Preferred Securities of other denominations of a
like aggregate principal amount, at the corporate office of the Property
Trustee in New York, New York, or at the offices of any paying agent or
transfer agent appointed by the Administrative Trustees, provided that payment
of any Distribution may be made at the option of the Administrative Trustees
by check mailed to the address of the persons entitled thereto or by wire
transfer. In addition, if the Series A Preferred Securities are issued in
certificated form, the record dates for payment of Distributions will be the
15th day of the last month of each calendar quarter. For a description of DTC
and the terms of the depositary arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-
Entry Issuance" in the accompanying Prospectus.
CERTAIN TERMS OF SERIES A SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series A
Subordinated Debentures supplements the description of the terms and
provisions of the Corresponding Junior Subordinated Debentures set forth in
the accompanying Prospectus under the headings "Description of Junior
Subordinated Debentures" and "Description of Junior Subordinated Debentures--
Corresponding Junior Subordinated Debentures", to which description reference
is hereby made. The summary of certain terms and provisions of the Series A
Subordinated Debentures set forth below does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Indenture. The
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus Supplement and accompanying Prospectus form a part.
Concurrently with the issuance of the Series A Preferred Securities, the
Series A Issuer will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series A Common Securities, in
the Series A Subordinated Debentures issued by the Corporation. The Series A
Subordinated Debentures will bear interest at the annual rate of % of the
principal amount thereof, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing , 199 , to the person in whose name each Series A
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment
Date. It is anticipated that, until the liquidation, if any, of the Series A
Issuer, each of the Series A Subordinated Debentures will be held in the name
of the Property Trustee in trust for the benefit of the holders of the Series
A Preferred Securities. The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on the Series A Subordinated
Debentures is not a Business Day, then payment of the interest 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 of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable
Interest Payment Date will bear additional interest on the amount thereof (to
the extent permitted by law) at the rate per annum of % thereof, compounded
quarterly. The term "interest" as used herein shall include quarterly interest
payments, interest on quarterly interest payments not paid on the applicable
Interest Payment Date and Additional Sums (as defined below), as applicable.
The Series A Subordinated Debentures will be issued as a series of junior
subordinated debentures under the Indenture. The Series A Subordinated
Debentures will mature on [insert date 30 years from first payment date] (such
date, as it may be shortened or extended as hereinafter described, the "Stated
Maturity"). Such date may be shortened at any time by the Corporation to any
date not earlier than [insert date 5 years after date of issuance], subject to
the Corporation having
S-21
<PAGE>
received prior approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve. Such date
may also be extended at any time at the election of the Corporation for one or
more periods, but in no event to a date later than [insert date 49 years from
first payment date], provided that at the time such election is made and at
the time of extension (i) the Corporation is not in bankruptcy, otherwise
insolvent or in liquidation, (ii) the Corporation is not in default in the
payment of any interest or principal on the Series A Subordinated Debentures,
(iii) the Series A Issuer is not in arrears on payments of Distributions on
the Series A Preferred Securities and no deferred Distributions are
accumulated and (iv) the Series A Subordinated Debentures are rated not less
than BBB- by Standard & Poor's Ratings Services or Baa3 by Moody's Investors
Service, Inc. or the equivalent by any other nationally recognized statistical
rating organization. In the event the Corporation elects to shorten or extend
the Stated Maturity of the Series A Subordinated Debentures, it shall give
notice to the Debenture Trustee, and the Debenture Trustee shall give notice
of such shortening or extension to the holders of the Series A Subordinated
Debentures no more than and no less than days prior to the effectiveness
thereof.
The Series A Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt of the Corporation.
Because the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subisidiary, including Mellon
Bank, N.A., The Dreyfus Corporation and The Boston Company, Inc., upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability
of holders of the Series A Preferred Securities to benefit indirectly from
such distribution), is subject to the prior claims of creditors of that
subsidiary, except to the extent that the Corporation may itself be recognized
as a creditor of that subsidiary. Accordingly, the Series A Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Series A
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Series A Subordinated Debentures. The Indenture does not limit
the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Debt, whether under the Indenture or any
existing or other indenture that the Corporation may enter into in the future
or otherwise. See "Description of Junior Subordinated Debentures--
Subordination" in the accompanying Prospectus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Event of Default under the Indenture has occurred or is
continuing, the Corporation has the right under the Indenture at any time
during the term of the Series A Subordinated Debentures to defer the payment
of interest at any time or from time to time for a period not exceeding 20
consecutive quarters with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the Series A
Preferred Securities. At the end of such Extension Period, the Corporation
must pay all interest then accrued and unpaid (together with interest thereon
at the annual rate of %, compounded quarterly, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Series A Subordinated Debentures (or holders of Series A
Preferred Securities while such series is outstanding) will be required to
accrue interest income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
During any such Extension Period, the Corporation may not, and may not
permit any subsidiary of the Corporation to, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Corporation's capital stock or (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation (including other Junior
Subordinated Debentures) that rank pari passu with or junior in interest to
the Series A Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of
S-22
<PAGE>
the Corporation if such guarantee ranks pari passu with or junior in interest
to the Series A Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under any
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Corporation's benefit plans for its
directors, officers or employees). Prior to the termination of any such
Extension Period, the Corporation may further defer the payment of interest,
provided that no Extension Period may exceed 20 consecutive quarters or extend
beyond the Stated Maturity of the Series A Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all amounts then
due on any Interest Payment Date, the Corporation may elect to begin a new
Extension Period subject to the above requirements. No interest shall be due
and payable during an Extension Period, except at the end thereof. The
Corporation must give the Property Trustee, the Administrative Trustees and
the Debenture Trustee notice of its election of such Extension Period at least
one Business Day prior to the earlier of (i) the date the Distributions on the
Series A Preferred Securities would have been payable except for the election
to begin such Extension Period or (ii) the date the Administrative Trustees
are required to give notice to the New York Stock Exchange, the Nasdaq
National Market or other applicable self-regulatory organization or to holders
of such Series A Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Debenture Trustee shall give notice of the
Corporation's election to begin a new Extension Period to the holders of the
Series A Preferred Securities. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period. See "Description
of Junior Subordinated Debentures--Option to Extend Interest Payment Date" in
the accompanying Prospectus.
ADDITIONAL SUMS
If the Series A Issuer is required to pay any additional taxes, duties or
other governmental charges as a result of a Tax Event, the Corporation will
pay as additional amounts on the Series A Subordinated Debentures such amounts
as shall be required so that the Distributions payable by the Series A Issuer
shall not be reduced as a result of any such additional taxes, duties or other
governmental charges.
REDEMPTION
Subject to the Corporation having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of
the Federal Reserve, the Series A Subordinated Debentures are redeemable prior
to maturity at the option of the Corporation (i) on or after [insert date 5
years after date of issuance], 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 and
continuation of a Tax Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Series A Subordinated Debentures so
redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof. See "Description of Junior Subordinated Debentures--Redemption" in
the accompanying Prospectus.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES
As described under "Certain Terms of Series A Preferred Securities--
Liquidation of Issuer and Distribution of Series A Subordinated Debentures to
Holders", under certain circumstances involving the termination of the Series
A Issuer, Series A Subordinated Debentures may be distributed to the holders
of the Series A Preferred Securities in liquidation of the Series A Issuer
after satisfaction of liabilities to creditors of the Series A Issuer as
provided by applicable law. If distributed to holders of Series A Preferred
Securities in liquidation, the Series A Subordinated Debentures will initially
be issued in the form of one or more global securities and DTC, or any
successor depositary for the
S-23
<PAGE>
Series A Preferred Securities, will act as depositary for the Series A
Subordinated Debentures. It is anticipated that the depositary arrangements
for the Series A Subordinated Debentures would be substantially identical to
those in effect for the Series A Preferred Securities. If the Series A
Subordinated Debentures are distributed to the holders of Series A Preferred
Securities upon the liquidation of the Series A Issuer, the Corporation will
use its best efforts to list the Series A Subordinated Debentures on the New
York Stock Exchange or such other stock exchanges, if any, on which the Series
A Preferred Securities are then listed. There can be no assurance as to the
market price of any Series A Subordinated Debentures that may be distributed
to the holders of Series A Preferred Securities.
REGISTRATION OF SERIES A SUBORDINATED DEBENTURES
The Series A Subordinated Debentures will be represented by global
certificates registered in the name of DTC or its nominee. Beneficial
interests in the Series A Subordinated Debentures will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described below and in the accompanying
Prospectus, Series A Subordinated Debentures in certificated form will not be
issued in exchange for the global certificates. See "Book-Entry Issuance" in
the accompanying Prospectus.
A global security shall be exchangeable for Series A Subordinated Debentures
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Corporation that it is unwilling or unable to continue as a
depository for such global security and no successor depository shall have
been appointed, or if at any time DTC ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, at a time
when DTC is required to be so registered to act as such depository, (ii) the
Corporation in its sole discretion determines that such global security shall
be so exchangeable, or (iii) there shall have occurred and be continuing an
Event of Default under the Indenture with respect to such global security. Any
global security that is exchangeable pursuant to the preceding sentence shall
be exchangeable for definitive certificates registered in such names as DTC
shall direct. It is expected that such instructions will be based upon
directions received by DTC from its Participants (as defined in the
accompanying Prospectus) with respect to ownership of beneficial interests in
such global security. In the event that Series A Subordinated Debentures are
issued in definitive form, such Series A Subordinated Debentures will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
Payments on Series A Subordinated Debentures represented by a global
security will be made to DTC, as the depositary for the Series A Subordinated
Debentures. In the event Series A Subordinated Debentures are issued in
definitive form, principal and interest will be payable, the transfer of the
Series A Subordinated Debentures will be registrable, and Series A
Subordinated Debentures will be exchangeable for Series A Subordinated
Debentures of other denominations of a like aggregate principal amount, at the
corporate office of the Debenture Trustee in New York, New York, or at the
offices of any paying agent or transfer agent appointed by the Corporation,
provided that payment of interest may be made at the option of the Corporation
by check mailed to the address of the persons entitled thereto or by wire
transfer. In addition, if the Series A Subordinated Debentures are issued in
certificated form, the record dates for payment of interest will be the 15th
day of the last month of each calendar quarter. For a description of DTC and
the terms of the depositary arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-
Entry Issuance" in the accompanying Prospectus.
S-24
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Series A Preferred
Securities. This summary only addresses the tax consequences to a person that
acquires Series A Preferred Securities on their original issue at their
original offering price and that is (i) an individual citizen or resident of
the United States, (ii) a corporation or partnership organized in or under the
laws of the United States or any state thereof or the District of Columbia or
(iii) an estate or trust the income of which is subject to United States
federal income tax regardless of source (a "United States Person"). This
summary does not address all tax consequences that may be applicable to a
United States Person that is a beneficial owner of Series A Preferred
Securities, nor does it address the tax consequences to (i) persons that are
not United States Persons, (ii) persons that may be subject to special
treatment under United States federal income tax law, such as banks, insurance
companies, thrift institutions, regulated investment companies, real estate
investment trusts, tax-exempt organizations and dealers in securities or
currencies, (iii) persons that will hold Series A Preferred Securities as part
of a position in a "straddle" or as part of a "hedging," "conversion" or other
integrated investment transaction for federal income tax purposes, (iv)
persons whose functional currency is not the United States dollar or (v)
persons that do not hold Series A Preferred Securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Sullivan & Cromwell, special tax counsel to the
Corporation and the Series A Issuer. This summary is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, Internal
Revenue Service rulings and pronouncements and judicial decisions now in
effect, all of which are subject to change at any time. Such changes may be
applied retroactively in a manner that could cause the tax consequences to
vary substantially from the consequences described below, possibly adversely
affecting a beneficial owner of Series A Preferred Securities. In particular,
legislation has been proposed that could adversely affect the Corporation's
ability to deduct interest on the Series A Subordinated Debentures, which may
in turn permit the Corporation to cause a redemption of the Series A Preferred
Securities. See "--Possible Tax Law Changes." The authorities on which this
summary is based are subject to various interpretations, and it is therefore
possible that the federal income tax treatment of the purchase, ownership and
disposition of Series A Preferred Securities may differ from the treatment
described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES A PREFERRED SECURITIES,
AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE SERIES A ISSUER
In the opinion of Sullivan & Cromwell, under current law the Series A Issuer
will not be classified as an association taxable as a corporation for United
States federal income tax purposes. As a result, each beneficial owner of
Series A Preferred Securities (a "Securityholder") will be required to include
in its gross income its pro rata share of the interest income, including
original issue discount, paid or accrued with respect to the Series A
Subordinated Debentures whether or not cash is actually distributed to the
Securityholders. See "Interest Income and Original Issue Discount." No amount
included in income with respect to the Series A Preferred Securities will be
eligible for the dividends-received deduction.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a "remote" contingency
that stated interest will not be timely paid
S-25
<PAGE>
will be ignored in determining whether a debt instrument is issued with
original issue discount ("OID"). The Corporation believes that the likelihood
of its exercising its option to defer payments is remote. Based on the
foregoing, the Corporation believes that the Junior Subordinated Debt
Securities will not be considered to be issued with OID at the time of their
original issuance and, accordingly, a holder of the Preferred Securities
should include in gross income such holder's allocable share of interest on
the Junior Subordinated Debt Securities in accordance with such holder's
method of tax accounting.
Under the Regulations, if the Corporation exercised its option to defer any
payment of interest, the Junior Subordinated Debt Securities would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debt Securities would thereafter be treated as OID as long as the
Junior Subordinated Debt Securities remained outstanding. In such event, all
of a holder's taxable interest income with respect to the Junior Subordinated
Debt Securities would be accounted for as OID on an economic accrual basis
regardless of such holder's method of tax accounting, and actual distributions
of stated interest would not be reported as taxable income. Consequently, a
holder of Preferred Securities would be required to include in gross income
OID even though the Corporation would not make any actual cash payments during
an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the Internal Revenue Service (the "IRS"), and it is
possible that the IRS could take a position contrary to the interpretation
herein.
Because income on the Preferred Securities will constitute interest or OID,
corporate holders of Preferred Securities will not be entitled to a dividends-
received deduction with respect to any income recognized with respect to the
Preferred Securities.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES TO HOLDERS OF SERIES A
PREFERRED SECURITIES
Under current law, a distribution by the Series A Issuer of the Series A
Subordinated Debentures as described under the caption "Certain Terms of
Series A Preferred Securities--Tax Event Redemption or Distribution of Series
A Subordinated Debentures" will be non-taxable and will result in the
Securityholder receiving directly his pro rata share of the Series A
Subordinated Debentures previously held indirectly through the Series A
Issuer, with a holding period and aggregate tax basis equal to the holding
period and aggregate tax basis such Securityholder had in its Series A
Preferred Securities before such distribution. A Securityholder will accrue
interest in respect of Series A Subordinated Debentures received from the
Series A Issuer in the manner described above under "Interest Income and
Original Issue Discount."
SALES OR REDEMPTION OF SERIES A PREFERRED SECURITIES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Preferred Securities
and the amount realized on the sale of such Preferred Securities. Assuming
that the Corporation does not exercise its option to defer payment of interest
on the Junior Subordinated Debt Securities, and the Preferred Securities are
not considered issued with OID, a holder's adjusted tax basis in the Preferred
Securities generally will be its initial purchase price. If the Junior
Subordinated Debt Securities are deemed to be issued with OID as a result of
the Corporation's deferral of any interest payment, a holder's tax basis in
the Preferred Securities generally will be its initial purchase price,
increased by OID previously includible in such holder's gross income to the
date of disposition and decreased by distributions or other payments received
on the Preferred Securities since and including the date of the first
Extension Period. Such gain or loss generally will be a capital gain or loss
(except to the extent of any accrued interest with respect to such holder's
pro rata share of the Junior Subordinated Debt Securities required to be
included in income) and generally will be a long-term capital gain or loss if
the Preferred Securities have been held for more than one year.
S-26
<PAGE>
Should the Corporation exercise its option to defer any payment of interest
on the Junior Subordinated Debt Securities, the Preferred Securities may trade
at a price that does not accurately reflect the value of accrued but unpaid
interest with respect to the underlying Junior Subordinated Debt Securities.
In the event of such a deferral, a holder who disposes of its Preferred
Securities between record dates for payments of distributions thereon will be
required to include in income as ordinary income accrued but unpaid interest
on the Junior Subordinated Debt Securities to the date of disposition and to
add such amount to its adjusted tax basis in its pro rata share of the
underlying Junior Subordinated Debt Securities deemed disposed of. To the
extent the selling price is less than the holder's adjusted tax basis, such
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of OID accrued on the Series A Preferred Securities held of
record by United States Persons (other than corporations and other exempt
Securityholders) will be reported to the Internal Revenue Service. "Backup"
withholding at a rate of 31% will apply to payments of interest to non- exempt
United States Persons unless the Securityholder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Series A Preferred
Securities to or through the United States office of a broker is subject to
information reporting and backup withholding unless the holder or beneficial
owner establishes an exemption from information reporting and backup
withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information
is furnished to the Internal Revenue Service.
It is anticipated that income on the Series A Preferred Securities will be
reported to holders on Form 1099 and mailed to holders of the Series A
Preferred Securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, President Clinton proposed legislation (the "Proposed
Legislation") that would, among other things, generally deny corporate issuers
a deduction for interest in respect of certain debt obligations, such as the
Junior Subordinated Debt Securities, issued on or after December 7, 1995. On
March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr. and
House Ways and Means Committee Chairman Bill Archer issued the Joint Statement
indicating their intent that the Proposed Legislation, if adopted by either of
the tax-writing committees of Congress, would have an effective date that is
no earlier than the date of "appropriate Congressional action." Based upon the
Joint Statement, it is expected that if the Proposed Legislation were to be
enacted, such legislation would not apply to the Junior Subordinated Debt
Securities. There can be no assurances, however, that the effective date
guidance contained in the Joint Statement will be incorporated into the
Proposed Legislation, if enacted, or that other legislation enacted after the
date hereof will not otherwise adversely affect the ability of the Corporation
to deduct the interest payable on the Junior Subordinated Debt Securities.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"Description of the Preferred Securities--Special Event Redemption or
Distribution."
S-27
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Corporation and the Series A Issuer have agreed that the Series A Issuer will
sell to each of the Underwriters named below, and each of such Underwriters,
for whom are acting as representatives, have severally agreed to
purchase from the Series A Issuer, the respective number of Series A Preferred
Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SERIES A
PREFERRED
UNDERWRITER SECURITIES
----------- -----------
<S> <C>
-----------
Total........................................................ ,000,000
===========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Series A Preferred
Securities offered hereby, if any are taken.
The Underwriters propose initially to offer the Series A Preferred
Securities to the public at the public offering price set forth on the cover
page of this Prospectus Supplement and to certain dealers at such price less a
concession not in excess of $. per Series A Preferred Securities. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $. per Series A Preferred Securities to certain other dealers. After the
initial public offering, the public offering price, concession and discount
may be changed.
In view of the fact that the proceeds from the sale of the Series A
Preferred Securities will be used to purchase the Series A Subordinated
Debentures issued by the Corporation, the Underwriting Agreement provides that
the Corporation will pay as Underwriters' Compensation for the Underwriters'
arranging the investment therein of such proceeds an amount of $. per Series
A Preferred Securities for the accounts of the several Underwriters.
The Corporation and the Series A Issuer have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing to and
including the earlier of (i) the termination of trading restrictions on the
Series A Preferred Securities, as determined by the Underwriters, and (ii) 30
days after the closing date, they will not offer, sell, contract to sell or
otherwise dispose of any Preferred Securities, any other beneficial interests
in the assets of the Series A Issuer, or any preferred securities or any other
securities of the Series A Issuer or the Corporation which are substantially
similar to the Series A Preferred Securities, including any guarantee of such
securities, or any securities convertible into or exchangeable for or
representing the right to receive securities, preferred securities or any such
substantially similar securities of either the Series A Issuer or the
Corporation, without the prior written consent of the Underwriters, except for
the Series A Preferred Securities offered in connection with the offering.
Prior to this offering, there has been no public market for the Series A
Preferred Securities. [The Series A Preferred Securities have been approved
for listing, subject to official notice of issuance, on the New York Stock
Exchange.] [Application will be made to list the Series A Preferred Securities
on the New York Stock Exchange.] Trading of the Series A Preferred Securities
on the New York Stock Exchange is expected to commence within a 30-day period
after the initial delivery of the Series A
S-28
<PAGE>
Preferred Securities. The Underwriters have advised the Corporation that they
intend to make a market in the Series A Preferred Securities prior to
commencement of trading on the New York Stock Exchange, but are not obligated
to do so and may discontinue market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
Series A Preferred Securities.
In order to meet one of the requirements for listing the Series A Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Series A Preferred Securities to a minimum of 400
beneficial holders.
The Corporation and the Series A Issuer have agreed to indemnify the several
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series A
Preferred Securities, the enforceability of the Trust Agreement and the
formation of the Series A Issuer will be passed upon by [insert name of
Delaware counsel], special Delaware Counsel to the Corporation and the Series
A Issuer. The validity of the Series A Guarantee and the Series A Subordinated
Debentures will be passed upon for the Corporation by Carl Krasik, Esq.,
Associate General Counsel and Secretary of the Corporation, One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258, and for the Underwriters by Sullivan &
Cromwell, 125 Broad Street, New York, New York 10004. Mr. Krasik and Sullivan
& Cromwell will rely on the opinion of as to matters of
Delaware law, and Sullivan & Cromwell will rely on the opinion of Mr. Krasik
as to matters of Pennsylvania law. Certain matters relating to United States
federal income tax considerations will be passed upon for the Corporation by
Sullivan & Cromwell, as special tax counsel for the Corporation. Sullivan &
Cromwell from time to time performs legal services for the Corporation. At
September 30, 1996, Mr. Krasik held options covering 5,950 shares of the
Corporation's Common Stock.
S-29
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 1996
$
MELLON BANK CORPORATION
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES
MELLON CAPITAL I
MELLON CAPITAL II
MELLON CAPITAL III
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
MELLON BANK CORPORATION
Mellon Bank Corporation, a Pennsylvania 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 all 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 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"). See "Description of Junior Subordinated Debentures--Option to Extend
Interest Payment Date".
Mellon Capital I, Mellon Capital II and Mellon Capital III, each a trust
formed 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 preferred beneficial
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") of each Issuer. The payment of periodic
cash distributions ("Distributions") with respect to the Preferred Securities
of each Issuer and payments on liquidation or redemption with respect to such
Preferred Securities, in each case out of funds held by such Issuer, are each
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 subordinate and junior in right of
payment to all Senior Debt of the Corporation. Concurrently with the issuance
by an Issuer of its Preferred Securities, such Issuer will invest the proceeds
thereof and any contributions made 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"). The Corresponding Junior Subordinated Debentures will be 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 , 1996.
<PAGE>
(cover page continued)
sole assets of each Issuer, and payments under the Corresponding Junior
Subordinated Debentures and the related Expense Agreement (as defined herein)
will be the only revenue of each Issuer. If provided in an accompanying
Prospectus Supplement, the Corporation may, upon receipt of approval of the
Federal Reserve (if such approval is then required), redeem the Corresponding
Junior Subordinated Debentures (and cause the redemption of the Trust
Securities) or may terminate each Issuer and cause the Corresponding Junior
Subordinated Debentures to be distributed to the holders of Preferred
Securities in liquidation of their interests in such Issuer. See "Description
of Preferred Securities--Liquidation Distribution Upon Termination".
Holders of the Preferred Securities will be entitled to receive preferential
cumulative cash Distributions accumulating from the date of original issuance
and payable periodically as specified in an accompanying Prospectus
Supplement. If provided in an accompanying Prospectus Supplement, the
Corporation will have the right to defer payments of interest on any series of
Corresponding Junior Subordinated Debentures by extending the interest payment
period thereon at any time or from time to time for one or more Extension
Periods (which shall not extend beyond the Stated Maturity of the
Corresponding Junior Subordinated Debentures). If interest payments are so
deferred, Distributions on the Related Preferred Securities will also be
deferred and the Corporation will not be permitted, subject to certain
exceptions set forth herein, to declare or pay any cash distributions with
respect to the Corporation's capital stock or debt securities that rank pari
passu with or junior to the Corresponding Junior Subordinated Debentures.
During an Extension Period, Distributions will continue to accumulate (and the
Preferred Securities will accumulate additional Distributions thereon 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 Junior
Subordinated Debentures, the Indenture, the related Trust Agreement, the
related Expense Agreement and the related Guarantee (each, as defined herein),
in the aggregate, provide a full, irrevocable and unconditional guarantee of
payments of distributions and other amounts due on the related series of
Preferred Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures and the Guarantees--Full and
Unconditional Guarantee".
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 $ . 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 amount,
stated liquidation preference, number of securities, Distribution rate or
method of calculating such rate, applicable Extension Period or Distribution
deferral terms, if any, place or places where Distributions will be payable,
any terms of redemption, exchange, initial offering or purchase price, methods
of distribution and any other special terms.
2
<PAGE>
(cover page continued)
The Prospectus Supplement also will contain information, as applicable,
about certain United States Federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution". The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which
this Prospectus is being delivered and any applicable fee, commission or
discount arrangements with them will be set forth in a Prospectus Supplement.
The Prospectus Supplement will state whether the Junior Subordinated
Debentures or Preferred Securities will be listed on any national securities
exchange or automated quotation system. If the Junior Subordinated Debentures
or Preferred Securities are not listed on any national securities exchange or
automated quotation system, there can be no assurance that there will be a
secondary market for the Junior Subordinated Debentures or Preferred
Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
No dealer, salesperson or other person has been authorized to give any
information or make any representations, other than those contained in this
Prospectus and the applicable Prospectus Supplement, and if given or made such
information or representations must not be relied upon as having been
authorized by the Corporation or any agent, underwriter or dealer. This
Prospectus and the applicable Prospectus Supplement do not constitute an offer
of any securities other than those to which they relate, or an offer to sell
or a solicitation of an offer to buy those to which they relate, in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus and/or the
applicable Prospectus Supplement at any time does not imply that the
information herein or therein is correct as of any time subsequent to its
date.
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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., 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., 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.
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) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995, filed pursuant to Section 13 of the Exchange Act.
(2) The Corporation's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996, filed pursuant to Section 13 of the
Exchange Act.
(3) The Corporation's Current Reports on Form 8-K dated January 10, 1996,
February 27, 1996, February 29, 1996, April 16, 1996, May 21, 1996,
July 16, 1996, August 6, 1996, August 26, 1996, September 30, 1996,
October 15, 1996 and October 30, 1996, each filed pursuant to Section
13 of the Exchange Act.
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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:
Secretary, Mellon Bank Corporation, One Mellon Bank Center, 500 Grant Street,
Pittsburgh, Pennsylvania 15258, telephone number (412) 234-5000.
MELLON BANK CORPORATION
The Corporation is a multibank holding company incorporated under the laws
of Pennsylvania in August 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Its principal, wholly owned subsidiaries are
Mellon Bank, N.A. (the "Bank"), The Boston Company, Inc., Mellon Bank (DE)
National Association, Mellon Bank (MD), Mellon PSFS (NJ) National Association
and a number of companies known as the Mellon Financial Services Corporations.
The Corporation also owns Mellon Bank, F.S.B., a federal savings bank
headquartered in New Jersey. The Dreyfus Corporation ("Dreyfus"), one of the
nation's largest mutual fund companies, is a wholly-owned subsidiary of the
Bank.
The Corporation's banking subsidiaries engage in retail financial services,
commercial banking, trust and investment management services, residential real
estate loan financing, mortgage servicing, mutual fund activities, equipment
leasing and various securities-related activities. The Mellon Financial
Services Corporations, through their subsidiaries and joint ventures, provide
a broad range of bank-related services, including equipment leasing,
commercial loan financing, stock transfer services, cash management and
numerous trust and investment management services.
The Corporation's principal executive office is located at One Mellon Bank
Center, 500 Grant Street, Pittsburgh, Pennsylvania 15258 (telephone (412) 234-
5000).
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
The Corporation (sometimes referred to herein as the "parent Corporation")
is a legal entity separate and distinct from its bank subsidiaries, although
the principal source of the parent Corporation's cash revenues are payments of
interest and dividends from such subsidiaries. There are various legal and
regulatory limitations on the extent to which the Corporation's bank
subsidiaries can finance or otherwise supply funds to the Corporation and
certain of its other affiliates.
The prior approval of the Comptroller of the Currency (the "Comptroller") is
required if the total of all dividends declared by any such national bank
subsidiary in any calendar year exceeds its net profits (as defined by the
Comptroller) for that year combined with its retained net profits for the
preceding
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two calendar years. Additionally, national bank subsidiaries may not declare
dividends in excess of net profits on hand (as defined), after deducting the
amount by which the principal amount of all loans on which interest is past
due for a period of six months or more exceeds the reserve for credit losses.
Under the first and currently more restrictive of the foregoing dividend
limitations, the Corporation's national bank subsidiaries can, without prior
regulatory approval, declare dividends for the remainder of 1996, subsequent
to September 30, 1996 of up to approximately $317 million of their retained
earnings of approximately $2.264 billion at September 30, 1996, less any
dividends declared and plus or minus net profits or losses, as defined,
between October 1, 1996, and the date of any such dividend declaration. The
payment of dividends is also limited by minimum capital requirements imposed
on all national bank subsidiaries by the Comptroller. The capital of the
Corporation's national bank subsidiaries exceed these minimum requirements.
The national bank subsidiaries declared dividends to the parent Corporation of
$300 million in the first nine months of 1996, $501 million in 1995, $366
million in 1994 and $185 million in 1993. Dividends paid to the parent
Corporation by nonbank subsidiaries totaled $16 million in the first nine
months of 1996, $30 million in 1995, $122 million in 1994 and $116 million in
1993. In addition, Mellon Bank, N.A. returned $200 million and $300 million of
capital to the parent Corporation in the first nine months of 1996 and full
year 1995, respectively, and The Boston Company returned $150 million of
capital to the parent Corporation in the first nine months of 1996 and $100
million and $300 million in 1994 and 1993, respectively.
The Federal Reserve Board and the Comptroller also have issued guidelines
that require bank holding companies and national banks to continuously
evaluate the level of cash dividends in relation to the organization's
operating income, capital needs, asset quality and overall financial
condition. The Comptroller also has authority under the Financial Institutions
Supervisory Act to prohibit national banks from engaging in any activity
which, in the Comptroller's opinion, constitutes an unsafe or unsound practice
in conducting their businesses. The payment of a dividend by a bank could,
depending upon the financial condition of such bank and other factors, be
construed by the Comptroller to be such an unsafe or unsound practice. The
Comptroller has stated that a dividend by a national bank should bear a direct
correlation to the level of the bank's current and expected earnings stream,
the bank's need to maintain an adequate capital base and the marketplace's
perception of the bank and should not be governed by the financing needs of
the bank's parent corporation. If the ability of such subsidiaries to pay
dividends to the Corporation were to become restricted, the Corporation would
need to rely on alternative means of raising funds to satisfy its cash
requirements, which might include, but would not be restricted to, nonbank
subsidiary dividends, asset sales or other capital market transactions.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
contains a "cross-guarantee" provision that could result in any insured
depository institution owned by the Corporation (i.e., any bank subsidiary)
being assessed for losses incurred by the Federal Deposit Insurance
Corporation (the "FDIC") in connection with assistance provided to, or the
failure of, any other depository institution owned by the Corporation. Under
Federal Reserve Board policy, the Corporation may be expected to act as a
source of financial strength to each of its bank subsidiaries and to commit
resources to support each such bank in circumstances where such bank might not
be in a financial position to do so.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
substantially revised the bank regulatory and funding provisions of the
Federal Deposit Insurance Act and made revisions to several other federal
banking statutes. Among other things, FDICIA requires the federal banking
agencies to take "prompt corrective action" in respect of depository
institutions that do not meet minimum capital requirements. FDICIA establishes
five capital tiers: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized."
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Rules adopted by the federal banking agencies under FDICIA provide that an
institution is deemed to be: "well capitalized" if the institution has a total
(Tier I plus Tier II) risk-based capital ratio of 10.0% or greater, a Tier I
risk-based ratio of 6.0% or greater, and a leverage ratio of 5.0% or greater,
and the institution is not subject to an order, written agreement, capital
directive or prompt corrective action directive to meet and maintain a
specific level for any capital measure; "adequately capitalized" if the
institution has a total risk-based capital ratio of 8.0% or greater, a Tier I
risk-based capital ratio of 4.0% or greater, and a leverage ratio of 4.0% or
greater (or a leverage ratio of 3.0% or greater if the institution is rated
composite 1 in its most recent report of examination, subject to appropriate
federal banking agency guidelines), and the institution does not meet the
definition of a well-capitalized institution; "undercapitalized" if the
institution has a total risk-based capital ratio that is less than 8.0%, a
Tier I risk-based capital ratio that is less than 4.0% or a leverage ratio
that is less than 4.0% (or a leverage ratio that is less than 3.0% if the
institution is rated composite 1 in its most recent report of examination,
subject to appropriate federal banking agency guidelines) and the institution
does not meet the definition of a significantly undercapitalized or critically
undercapitalized institution; "significantly undercapitalized" if the
institution has a total risk-based capital ratio that is less than 6.0%, a
Tier I risk-based capital ratio that is less than 3.0%, or a leverage ratio
that is less than 3.0% and the institution does not meet the definition of a
critically undercapitalized institution; and "critically undercapitalized" if
the institution has a ratio of tangible equity to total assets that is equal
to or less than 2.0%. FDICIA imposes progressively more restrictive
constraints on operations, management and capital distributions, depending on
the capital category in which an institution is classified.
At September 30, 1996, all of the Corporation's banking subsidiaries
qualified as well capitalized based on the ratios and guidelines noted above.
A bank's capital category, however, is determined solely for the purpose of
applying the prompt corrective action rules and may not constitute an accurate
representation of the bank's overall financial condition or prospects.
The appropriate federal banking agency may, under certain circumstances,
reclassify a well capitalized insured depository institution as adequately
capitalized. The appropriate agency is also permitted to require an adequately
capitalized or undercapitalized institution to comply with the supervisory
provisions as if the institution were in the next lower category (but not
treat a significantly undercapitalized institution as critically
undercapitalized) based on supervisory information other than the capital
levels of the institution.
The statute provides that an institution may be reclassified if the
appropriate federal banking agency determines (after notice and opportunity
for hearing) that the institution is in an unsafe or unsound condition or
deems the institution to be engaging in an unsafe or unsound practice.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
growth limitations and are required to submit a capital restoration plan. The
federal banking agencies may not accept a capital restoration plan without
determining, among other things, that the plan is based on realistic
assumptions and is likely to succeed in restoring the depository institution's
capital. In addition, for a capital restoration plan to be acceptable, the
depository institution's parent holding company must guarantee that the
institution will comply with such capital restoration plan. T~he aggregate
liability of the parent holding company is limited to the lesser of (i) an
amount equal to 5.0% of the depository institution's total assets at the time
it became undercapitalized, and (ii) the amount which is necessary (or would
have been necessary) to bring the institution into compliance with all capital
standards applicable with respect to such institution as of the time it fails
to comply with the plan. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
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Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
FDICIA also contains a variety of other provisions that may affect the
operation of the Corporation, and its subsidiaries and affiliates, including
new reporting requirements, regulatory standards for real estate lending,
"truth in savings" provisions, and the requirement that a depository
institution give 90 days prior notice to customers and regulatory authorities
before closing any branch.
CAPITAL
The risk-based capital guidelines for bank holding companies and banks
adopted by the federal banking agencies were fully phased in at the end of
1992. The minimum ratio of qualifying total capital to risk-weighted assets
(including certain off-balance sheet items, such as standby letters of credit)
under the fully phased in guidelines is 8.0%. At least half of the total
capital is to be comprised of common stock, retained earnings, noncumulative
perpetual preferred stock, minority interests and, for bank holding companies,
a limited amount of qualifying cumulative perpetual preferred stock, less
goodwill and certain other intangibles ("Tier I capital"). The remainder
("Tier II capital") may consist of other preferred stock, certain other
instruments, and limited amounts of subordinated debt and the reserve for
credit losses.
In addition, the federal banking agencies have established minimum leverage
ratio (Tier I capital to total average assets less goodwill and certain other
intangibles) guidelines for bank holding companies and banks. These guidelines
provide for a minimum leverage ratio of 3.0% for bank holding companies and
banks that meet certain specified criteria, including that they have the
highest regulatory rating. All other banking organizations are required to
maintain a leverage ratio of 3.0% plus an additional cushion of at least 100
to 200 basis points. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum supervisory
levels, without significant reliance on intangible assets. Furthermore, the
guidelines indicate that the Federal Reserve Board will continue to consider a
"tangible Tier I leverage ratio" in evaluating proposals for expansion or new
activities. The tangible Tier I leverage ratio is the ratio of Tier I capital,
less intangibles not deducted from Tier I capital, to total assets, less all
intangibles. Neither the Corporation nor any of its banking subsidiaries has
been advised of any specific minimum leverage ratio applicable to it.
The federal banking agencies have revised their risk-based capital standards
to ensure that such standards take adequate account of concentrations of
credit risk and the risks of nontraditional activities. Institutions with high
or moderate levels of risks are expected to operate above minimum capital
standards.
In November 1994, the federal banking agencies announced that they
determined not to amend regulatory capital regulations to incorporate the
change in generally accepted accounting principles made by Statement of
Financial Accounting Standards No. 115, which requires that unrealized gains
and losses, net of the related tax effect, on securities classified as
available for sale be reported as a separate component of stockholders'
equity.
The federal banking agencies have adopted rules to incorporate market and
interest rate risk components into their risk-based capital standards.
Certain consolidated ratios of the Corporation are included herein under
"Mellon Bank Corporation--Consolidated Summary Financial Data."
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FDIC INSURANCE ASSESSMENTS; DIFA
The FDIC significantly reduced the insurance premiums it charges on bank
deposits insured by the Bank Insurance Fund ("BIF") to the statutory minimum
of $2,000.00 annually for "well capitalized" banks, effective January 1, 1996.
Premiums related to savings association deposits acquired by banks continued
to be assessed at the rate of 23 cents to 31 cents per $100.00 of deposits. On
September 30, 1996, the Deposit Insurance Funds Act of 1996 ("DIFA") was
enacted and signed into law. DIFA is expected to reduce the amount of semi-
annual FDIC insurance premiums for savings association deposits acquired by
banks to the same levels assessed for deposits insured by BIF.
DIFA also provides for a special one-time assessment imposed on deposits
insured by the Savings Association Insurance Fund ("SAIF"), including such
deposits held by banks, to recapitalize the SAIF to bring the SAIF up to
statutory required levels. The Corporation's one time assessment, was minimal.
DIFA further provides for assessments to be imposed on insured depository
institutions with respect to deposits insured by the BIF (in addition to
assessments currently imposed on depository institutions with respect to SAIF-
insured deposits) to pay for the cost of Financing Corporation funding. Based
on September 30, 1996 deposit levels, the Corporation currently estimates
assessments will amount to approximately $3 million pre-tax in 1997.
INTERSTATE BANKING AND BRANCHING LEGISLATION
On September 29, 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Act") was enacted into Federal law.
Under the Interstate Act, commencing on September 29, 1995, bank holding
companies are permitted to acquire banks located in any state regardless of
the state law in effect at the time. The Interstate Act also provides for the
nationwide interstate branching of banks. Under the Interstate Act, both
national and state-chartered banks will be permitted to merge across state
lines (and thereby create interstate branches) commencing June 1, 1997. States
are permitted to "opt-out" of the interstate branching authority by taking
action prior to the commencement date. States may also "opt-in" early (i.e.,
prior to June 1, 1997) to the interstate branching provisions. Pennsylvania
has chosen to "opt-in" early, effective July 6, 1995, thereby enabling
Pennsylvania banks, including national banks having their main office in
Pennsylvania, to merge with out-of-state banks to create interstate branches
inside or outside Pennsylvania. In addition, Pennsylvania has permitted de
novo branching into and out of Pennsylvania as long as the law of the other
state involved is reciprocal in this regard.
THE ISSUERS
Each Issuer is a statutory business trust formed under Delaware law pursuant
to (i) a trust agreement executed by the Corporation, as sponsor of the
Issuer, and the Delaware Trustee (as defined herein) of such Issuer and (ii)
the filing of a certificate of trust with the Delaware Secretary of State.
Each trust agreement will be amended and restated in its entirety (each, as so
amended and restated, a "Trust Agreement") 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 corresponding series of Corresponding Junior
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Subordinated Debentures issued by the Corporation, and (iii) engaging in only
those other activities necessary, convenient or incidental thereto.
Accordingly, the Corresponding Junior Subordinated Debentures and the right to
reimbursement of expenses under the related Expense Agreement will be the sole
assets of each Issuer, and payments under the Corresponding Junior
Subordinated Debentures and the related Expense Agreement 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 a Debenture Event of Default (as
defined herein), the rights of the Corporation as holder of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the 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 [insert name of
Property Trustee], as the Property Trustee (the "Property Trustee"), [insert
name of Delaware Trustee], 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"). [Insert name of Property Trustee], as Property Trustee, will act
as sole indenture trustee under each Trust Agreement for purposes of
compliance with the Trust Indenture Act. [Insert name of Indenture Trustee]
will also act as trustee under the Guarantees and the Indenture (each as
defined herein). 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 preference of the Related Preferred
Securities if a Debenture 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.
The principal executive office of each Issuer is One Mellon Bank Center, 500
Grant Street, Pittsburgh, Pennsylvania 15258, Attention: Secretary and its
telephone number is (412) 234-5000.
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 Preferred Securities) for
general corporate purposes, including working capital, capital expenditures,
investments in or loans to subsidiaries, refinancing of debt, including
outstanding commercial paper and other short-term bank indebtedness,
redemption 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. A more detailed description
of the use of proceeds of any specific offering will be set forth in the
Prospectus Supplement pertaining to such offering.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under a Junior Subordinated Indenture, as supplemented from time to time (as
so supplemented, the "Indenture"), between the Corporation and [insert name
Debenture Trustee], as trustee (the "Debenture Trustee"). This summary of
certain terms and provisions of the Junior Subordinated Debentures,
Corresponding Junior Subordinated Debentures and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and to the Trust
Indenture Act. 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 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 of the Corporation. See "--
Subordination". The Corporation is a non-operating holding company and almost
all of the operating assets of the Corporation and its consolidated
subsidiaries are owned by such subsidiaries. The Corporation relies primarily
on dividends from such subsidiaries to meet its obligations. The Corporation's
national bank subsidiaries are subject to certain regulatory restrictions on
the amount of dividends they may pay to the Corporation as described under
"Certain Regulatory Considerations--General." 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
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 the Senior Debt, whether under the Indenture, any other indenture
that the Corporation may enter into in the future or otherwise. See "--
Subordination" and the Prospectus Supplement relating to any offering of
Securities.
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 or Prospectus Supplements will describe
the following terms of the Junior Subordinated Debentures: (1) the title of
the Junior Subordinated Debentures; (2) any limit upon the aggregate principal
amount of the Junior Subordinated Debentures; (3) the date or dates on which
the principal of the Junior Subordinated Debentures is payable (the "Stated
Maturity") or the method of determination thereof; (4) the rate or rates, if
any, at which the Junior Subordinated Debentures shall bear interest, the
Interest Payment Dates on which any such interest shall be payable, the right,
if any, of the Corporation to defer or extend an Interest Payment Date, and
the Regular Record Date for any interest payable on any Interest Payment Date
or 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 the Junior Subordinated Debentures will be payable and where,
subject to the terms of the Indenture as described below under "--
Denominations, Registration and Transfer," the 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 the
Junior
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Subordinated Debentures and the Indentures may be made ("Place of Payment");
(6) any period or periods within or date or dates on which, the price or
prices at which and the terms and conditions upon which 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 the 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 the Junior Subordinated
Debentures shall be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation; (8) the denominations in which any Junior
Subordinated Debentures shall be issuable if other than denominations of $25
and any integral multiple thereof; (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 the Junior Subordinated
Debentures shall be denominated; (10) any additions, modifications or
deletions in the Events of Default or covenants of the Corporation specified
in the Indenture with respect to the Junior Subordinated Debentures; (11) if
other than the principal amount thereof, the portion of the principal amount
of 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 a series of Junior Subordinated Debentures as shall
be necessary to permit or facilitate the issuance of such series 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 the 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 the Junior Subordinated Debentures of such series and the
exchange of such temporary Global Security for definitive Junior Subordinated
Debentures of such series; (15) subject to the terms described under "--Global
Junior Subordinated Debentures", whether the Junior Subordinated Debentures of
the series 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 the Junior Subordinated Debentures into Preferred
Securities; (18) the form of Trust Agreement and Guarantee Agreement, if
applicable; (19) the relative degree, if any, to which such Junior
Subordinated Debentures of the series shall be senior to or be subordinated to
other series of such Junior Subordinated Debentures or other indebtedness of
the Corporation in right of payment, whether such other series of Junior
Subordinated Debentures or other indebtedness are outstanding or not; and (20)
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, if any,
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 issue of Junior Subordinated Debentures and such foreign
currency or currency units will be set forth in the applicable Prospectus
Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debentures,
special United States Federal income tax,
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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 in denominations of $25 and any integral multiple thereof.
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 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 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.
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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 ("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. 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
governing such Junior Subordinated Debentures. 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 of 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 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
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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 individual Junior Subordinated Debentures of such
series in exchange for the Global Junior Subordinated Debenture or Securities
representing such series of Junior Subordinated Debentures. Further, if the
Corporation so specifies with respect to the Junior Subordinated Debentures of
a series, an owner of a beneficial interest in a Global Junior Subordinated
Debenture representing Junior Subordinated Debentures of such series may, on
terms acceptable to the Corporation, the Debenture Trustee and the Depositary
for such Global Junior Subordinated Debenture, receive individual 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 individual Junior Subordinated Debentures
of the series represented by such Global Junior Subordinated Debenture equal
in 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 denominations, unless
otherwise specified by the Corporation, of $25 and integral multiples thereof.
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 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 in the applicable Prospectus
Supplement, 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 Debenture is 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 EXTEND INTEREST PAYMENT DATE
If provided in the applicable Prospectus Supplement, the Corporation shall
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 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
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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
Board of Governors of the Federal Reserve System (the "Federal Reserve") if
then required under applicable capital guidelines or policies, redeem the
Junior Subordinated Debentures of any series in whole at any time or in part
from time to time. If the Junior Subordinated Debentures of any series are so
redeemable only on or after a specified date or upon the satisfaction of
additional conditions, the applicable Prospectus Supplement will specify such
date or describe such conditions. Junior Subordinated Debentures in
denominations larger than $25 may be redeemed in part but only in integral
multiples of $25. 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 the principal amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Debenture Tax Event (as defined below) in respect of a series of Junior
Subordinated Debentures 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 of the occurrence of such Debenture Tax 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.
"Debenture Tax Event" means the receipt by the Corporation of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective 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 pronouncement or decision is announced on or after the date of issuance
of the applicable series of Junior Subordinated Debentures under the
Indenture, there is more than an insubstantial risk that interest payable by
the Corporation on such series of 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.
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 ceases 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
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the Corporation's capital stock or (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 Junior Subordinated Debentures)
that rank pari passu with or junior in interest to the Junior Subordinated
Debentures or 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 common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under any Guarantee and (d) purchases of
common stock related to the issuance of common stock or rights under any of
the Corporation's benefit plans for its directors, officers or employees) if
at such time (i) there shall have occurred any event of which the Corporation
has actual knowledge that (a) with the giving of notice or the lapse of time,
or both, would constitute an "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 selection 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 interest 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 affecting the rights of the
holders of such series of the Junior Subordinated Debentures; 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 that, in the case
of Corresponding Junior Subordinated Debentures, so long as any of the Related
Preferred Securities remain outstanding, 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
Debenture 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 preference of such Related Preferred
Securities 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 are satisfied.
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 the Junior
Subordinated Debentures, when due (subject to the deferral of any due
date 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, upon
redemption by declaration or otherwise; 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 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 such
series of Junior Subordinated Debentures 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 such series of Junior
Subordinated Debentures 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 preference of the Related
Preferred Securities shall have such right. The holders of a majority in
aggregate outstanding principal amount of such series of Junior Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of such series of Junior
Subordinated Debentures which has become due solely by such acceleration) 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. 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 preference of the Related Preferred
Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders
of all the Junior Subordinated Debentures, waive any past 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 annul such declaration
and waive such default, the holders of a majority in aggregate liquidation
preference of the Related Preferred Securities 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
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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 has occurred and is continuing and such
event is attributable to the failure of the Corporation to pay interest or
principal on the related Junior Subordinated Debentures on the date such
interest or principal is otherwise payable, a holder of 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
related 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. If the right to
bring a Direct Action is removed, the applicable Issuer may become subject to
the reporting obligations under the Securities Exchange Act of 1934, as
amended. 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 would 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 happened 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 in 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 trust 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)
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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 Preferred Securities or other securities. The specific terms
on which Junior Subordinated Debentures of any series may be so converted or
exchanged will be set forth in the applicable Prospectus Supplement. Such
terms may include provisions for conversion or exchange, either mandatory, at
the option of the holder, or at the option of the Corporation, in which case
the number of shares of Preferred Securities or other securities to be
received by the Holders of Junior Subordinated Debentures would be calculated
as of a time and in the manner stated in the applicable Prospectus Supplement.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets to creditors 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 or, in the case of Corresponding Junior Subordinated
Debentures, the Property Trustee on behalf of the holders, 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.
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) 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.
No payments on account of principal (or premium, if any) or interest, if
any, 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; [(vi) all indebtedness of the
Corporation whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward contracts, options
and swaps and similar arrangements;] and [(vi)] [(vii)] every obligation of
the type referred to in clauses (i) through [(v)] [(vi)] of another Person and
all dividends of another Person
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the payment of which, in either case, such Person has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Corporation whether or not
such claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Junior Subordinated
Debentures or to other Debt which is pari passu with, or subordinated to, the
Junior Subordinated Debentures; provided, however, that Senior Debt shall not
be deemed to include (i) any Debt of the Corporation which when incurred and
without respect to any election under Section 1111(b) of the United States
Bankruptcy Code of 1978, as amended, was without recourse to the Corporation,
(ii) any Debt of the Corporation to any of its subsidiaries, (iii) Debt to any
employee of the Corporation or (iv) any other debt securities issued pursuant
to the Indenture.
The Indenture places no 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.
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.
GOVERNING LAW
The Indenture 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 in a series of Corresponding
Junior Subordinated Debentures issued by the Corporation to such Issuer. Each
series of Corresponding Junior Subordinated Debentures will be in the
principal amount equal to the aggregate stated Liquidation Amount of the
Related Preferred Securities and the Common Securities of such Issuer and will
rank pari passu with all other series of Junior Subordinated Debentures.
Holders of the Related Preferred Securities for a series of Corresponding
Junior Subordinated Debentures will have the rights in connection with
modifications to the Indenture or upon occurrence of Debenture Events of
Default described under "--Modification of
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Indenture" and "--Debenture Events of Default", 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 of Related Preferred Securities 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
series of Corresponding Junior Subordinated Debentures, 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 in the Indenture as to each series of
Corresponding Junior Subordinated Debentures, that if and so long as (i) the
Issuer of the related series of Trust Securities is the holder of all such
Corresponding Junior Subordinated Debentures, (ii) a Tax Event in respect of
such Issuer has occurred and is continuing and (iii) the Corporation has
elected, and has not revoked such election, to pay Additional Sums (as defined
under "Description of Preferred Securities-- Redemption or Exchange") in
respect of such Trust Securities, the Corporation will pay to such Issuer such
Additional Sums. The Corporation will also 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
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 upon prior
approval of the Federal Reserve if then so required under applicable capital
guidelines or policies of the Federal Reserve, and (a) in connection with a
distribution of Corresponding Junior Subordinated Debentures to the holders of
the Preferred Securities in liquidation of such Issuer, or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the related
Trust Agreement 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 preferred beneficial 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 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. 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
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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.
GENERAL
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer
except as described under "--Subordination of Common Securities". Legal title
to the Corresponding Junior Subordinated Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the related
Preferred Securities and Common Securities. Each Guarantee Agreement executed
by the Corporation for the benefit of the holders of an Issuer's Preferred
Securities (the "Guarantee" for such Preferred Securities) will be a guarantee
on a subordinated basis with respect to the related Preferred Securities but
will not guarantee payment of Distributions or amounts payable on redemption
or liquidation of such Preferred 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
each 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 preferred beneficial interests
in the applicable Issuer, and the Distributions on each Preferred Security
will be payable at a rate specified in the 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 a period 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 extension,
Distributions on the corresponding 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
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capital stock or (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 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 common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under any
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Corporation's benefit plans for its
directors, officers or employees).
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 a limited basis as 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, (ii) at any time, in whole (but not in part), upon the
occurrence of a Tax Event (as defined below), or (iii) as may be otherwise
specified in the applicable
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Prospectus Supplement, in each case subject to receipt of prior approval by
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve.
Tax Event Redemption. If a Tax 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. In the event a Tax 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 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 liquidation of the Issuer as described above, such
Preferred Securities will remain outstanding and Additional Sums (as defined
below) may be payable on the Corresponding Junior Subordinated Debentures.
Distribution of Corresponding Junior Subordinated Debentures. Subject to the
Corporation having received prior approval on the Federal Reserve to do so if
then required under applicable capital guidelines or policies of the Federal
Reserve, 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 Preferred Securities and Common Securities owned
by such Issuer, to be distributed to the holders of such Preferred Securities
and Common Securities in liquidation of the Issuer.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by an Issuer on the
outstanding Preferred Securities and Common Securities of the Issuer shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which such Issuer has become subject as a result of a Tax Event.
"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, allocated to the Common Securities and to the Preferred
Securities based upon the relative Liquidation Amounts of such classes and 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
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 are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"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
prospective 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 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
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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.
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 Depository Trust Company ("DTC") 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 DTC or its
nominee will be deemed to represent the Corresponding Junior Subordinated
Debentures having a principal amount equal to the stated liquidation
preference 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.
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
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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 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
(equal to $25 or an integral multiple of $25 in excess thereof) of the
Liquidation Amount of Preferred Securities of a denomination larger than $25.
The Property Trustee shall promptly notify the trust registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of each Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be
redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Trust Securities to be
redeemed at its registered address. Unless the Corporation defaults in payment
of the Redemption Price on the Corresponding Junior Subordinated Debentures,
on and after the Redemption Date interest will cease to accrue on such Junior
Subordinated Debentures or portions thereof (and distributions will cease to
accrue on the Related Preferred Securities or portions thereof) called for
redemption.
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,
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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 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 any such 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 (which direction is optional and wholly within the
discretion of the Corporation, as Depositor); (iii) redemption of all of the
Issuer's Preferred Securities as described under "Description of Preferred
Securities--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 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 of the Liquidation Amount plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Distribution can be
paid only in part because such Issuer has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by such Issuer on its Preferred Securities shall be paid on a pro
rata basis. The holder(s) of such Issuer's Common Securities will be entitled
to receive distributions upon any such liquidation pro rata with the holders
of its Preferred Securities, except that if a Debenture Event of Default has
occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities. A supplemental Indenture may provide that if an
early termination occurs as described in clause (iv) above, the Corresponding
Junior Subordinated Debentures may be subject to optional redemption in whole
(but not in part).
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under each
Trust Agreement (an "Event of Default") with respect to the Preferred
Securities issued thereunder (whatever the reason for
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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 60 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
preference 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 60 days thereof.
Within five 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 upon
termination of each Issuer as described above. See "--Liquidation Distribution
Upon Termination". The existence of an Event of Default does not entitle the
holders of Preferred Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by
the holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
applicable Trust Agreement.
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CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, 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 corporation 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 corporation resulting from any
merger, conversion or consolidation to which such Trustee shall be a party, or
any corporation 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 corporation 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. 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 rank 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 (including any Successor 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 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)
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the Corporation or any permitted successor or assignee owns all of the Common
Securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, an Issuer shall not,
except with the consent of holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Issuer or the successor entity to be classified as other
than a grantor trust for United States Federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of Guarantees--Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
Each Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of
the holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under such Trust Agreement, which shall not be
inconsistent with the other provisions of such Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of such Trust Agreement to such
extent as shall be necessary to ensure that the Issuer will be classified for
United States Federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that the Issuer will not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of any holder of Trust
Securities, and any 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 Section 513 of the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the 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
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thereby, no such consent shall be given by the Property Trustee without the
prior consent of each holder of the corresponding Preferred Securities. The
Issuer Trustees shall not revoke any action previously authorized or approved
by a vote of the holders of the Preferred Securities except by subsequent vote
of the holders of the Preferred Securities. The Property Trustee shall notify
each holder of Preferred Securities of any notice of default with respect to
the Corresponding Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the holders of the Preferred Securities, prior to
taking any of the foregoing actions, the Issuer Trustees shall obtain an
opinion of counsel experienced in such matters to the effect that the Issuer
will not be classified as an association taxable as a corporation for United
States Federal income tax purposes on account of such action.
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 identified in the Prospectus Supplement
relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement for such series, the Depositary 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. 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. 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
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(with respect to interests of persons who hold through Participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Preferred
Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Preferred Securities represented by such Global Preferred Security for
all purposes under the Indenture governing such Preferred Securities. Except
as provided below, owners of beneficial interests in a Global Preferred
Security will not be entitled to have any of the individual Preferred
Securities of the series represented by such Global Preferred Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Preferred Securities of such series in definitive form
and will not be considered the owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Corporation, the
Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
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 Corporation within 90 days, the Corporation will issue
individual Preferred Securities of such series in exchange for the Global
Preferred Security representing such series of Preferred Securities. 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
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 Corporation 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 Corporation, 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. Individual
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Preferred Securities of such series so issued will be issued in denominations,
unless otherwise specified by the Corporation, of $25 and integral multiples
thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Issuer's Preferred Securities are not
held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Corporation. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees shall appoint
a successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Corporation) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuers will not be required to register or cause to be
registered the transfer of their Preferred Securities after such Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision,
the Property Trustee is under no obligation to exercise any of the powers
vested in it by the applicable Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between 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 an association taxable as a
corporation 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
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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 DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. "Direct Participants" include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated
Debentures on DTC's records. The ownership interest of each actual purchaser
of each Preferred Security and each Junior Subordinated Debenture ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants'
records. 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.
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
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accounts such Preferred Securities or Junior Subordinated Debentures are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all
of an Issuer's Preferred Securities or the Junior Subordinated Debentures are
being redeemed, DTC's current practice is to determine by lot the amount of
the interest of each Direct Participant to be redeemed.
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.
36
<PAGE>
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. [Insert name of
Indenture Trustee] 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 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 Agreement, including the definitions
therein of certain terms, and the Trust Indenture Act. 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.
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 Preferred 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), the lesser of (a) the Liquidation Distribution and
(b) the amount of assets of such Issuer remaining available for distribution
to holders of Preferred Securities. 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 Preferred 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 Preferred 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. See "The Corporation." 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
indenture that the Corporation may enter into in the future or otherwise. See
the Prospectus Supplement relating to any offering of Preferred Securities.
37
<PAGE>
The Corporation has, through the applicable Guarantee, the applicable Trust
Agreement, the Junior Subordinated Debentures, the Indenture and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed
all of the Issuer's obligations under the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer's obligations under the Preferred
Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures and the Guarantee".
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 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 Preferred 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 Preferred 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 Preferred 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 Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of the 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 Preferred 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 Preferred 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 Preferred 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.
38
<PAGE>
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Corporation in performance of any Guarantee, undertakes to
perform only such duties as are specifically set forth in each Guarantee and,
after default with respect to any Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by any Guarantee at
the request of any holder of any Preferred 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 Preferred 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 Preferred Securities. 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 Preferred Securities must restore payment of any sums
paid under such Preferred 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.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by the Corporation under each
Trust Agreement (the "Expense Agreement"), the Corporation will irrevocably
and unconditionally guarantee to each person or entity to whom the Issuer
becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Issuer, other than obligations of the Issuer to pay to the
holders of any Preferred Securities or other similar interests in the Issuer
of the amounts due such holders pursuant to the terms of the Preferred
Securities or such other similar interests, as the case may be.
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) 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 Junior Subordinated Debentures,
the Indenture, the related Trust Agreement, the related Expense 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 series of Preferred Securities. No single document standing alone
or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer's obligations under the Preferred
Securities. 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 its Preferred Securities.
39
<PAGE>
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 for enforcement of payment of 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.
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.
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. 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.
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.
40
<PAGE>
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, the holders of the related Preferred Securities will be entitled
to receive, out of 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 or Preferred Securities as soon as practicable after effectiveness
of the Registration Statement of which this Prospectus is a part. The names of
any underwriters or dealers involved in the sale of the Junior Subordinated
Debentures or Preferred Securities in respect of which this Prospectus is
delivered, the amount or number of Junior Subordinated Debentures and
Preferred Securities to be purchased by any such underwriters and any
applicable commissions or discounts will be set forth in the 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 a 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
41
<PAGE>
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
matters of Delaware law relating to the validity of the Preferred Securities,
the enforceability of the Trust Agreements and the formation of the Issuers
will be passed upon by [insert name of Delaware counsel], special Delaware
counsel to the Corporation and the Issuers. Unless otherwise indicated in the
applicable Prospectus Supplement, the validity of the Guarantees and the
Junior Subordinated Debentures will be passed upon for the Corporation by Carl
Krasik, Esq., Associate General Counsel and Secretary of the Corporation, One
Mellon Bank Center, Pittsburgh, Pennsylvania 15258, and for the Underwriters
by Sullivan & Cromwell, 125 Broad Street, New York, New York 10004. Mr. Krasik
and Sullivan & Cromwell will rely on the opinion of as to matters of
Delaware law, and Sullivan & Cromwell will rely on the opinion of Mr. Krasik
as to matters of Pennsylvania law. Certain matters relating to United States
federal income tax considerations will be passed upon for the Corporation by
Sullivan & Cromwell, as special tax counsel for the Corporation. Sullivan &
Cromwell from time to time performs legal services for the Corporation. At
September 30, 1996, Mr. Krasik held options covering 5,950 shares of the
Corporation's Common Stock.
EXPERTS
The consolidated financial statements of the Corporation and subsidiaries
appearing in the Corporation's Annual Report (Form 10-K) for the year ended
December 31, 1995, have been audited by KPMG Peat Marwick LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
42
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPEC-
TUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RE-
LIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE ISSUERS OR BY THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUM-
STANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE CORPORATION OR THE ISSUERS SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLE-
MENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-----------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................... S-4
Mellon Capital I........................................................... S-9
Mellon Bank Corporation.................................................... S-10
Selected Consolidated Financial Information
of the Corporation........................................................ S-13
Ratio of Earnings to Fixed Charges......................................... S-15
Use of Proceeds............................................................ S-16
Capitalization............................................................. S-17
Accounting Treatment....................................................... S-18
Certain Terms of Series A Preferred Securities............................. S-18
Certain Terms of Series A Subordinated Debentures.......................... S-21
Certain Federal Income Tax Consequences.................................... S-25
Underwriting............................................................... S-28
Validity of Securities..................................................... S-29
<CAPTION>
PROSPECTUS
<S> <C>
Available Information...................................................... 4
Incorporation of Certain Documents by Reference............................ 4
Mellon Bank Corporation.................................................... 5
Certain Regulatory Considerations.......................................... 5
The Issuers................................................................ 9
Use of Proceeds............................................................ 10
Description of Junior Subordinated Debentures.............................. 11
Description of Preferred Securities........................................ 22
Book-Entry Issuance........................................................ 35
Description of Guarantees.................................................. 37
Relationship Among the Preferred Securities,
the Corresponding Junior Subordinated Debentures and the Guarantees....... 39
Plan of Distribution....................................................... 41
Validity of Securities..................................................... 42
Experts.................................................................... 42
</TABLE>
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PREFERRED SECURITIES
MELLON CAPITAL I
% CUMULATIVE TRUST PREFERRED SECURITIES, SERIES A
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
MELLON BANK CORPORATION
-----------
[MELLON LOGO]
-----------
REPRESENTATIVES OF THE UNDERWRITERS
, 1996
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate of the expenses which will be incurred in
connection with the issuance and distribution of the securities being
registered, other than underwriting discounts and commissions;
To be borne by the Corporation:
<TABLE>
<S> <C>
Registration Fee................................................ $151,515
Rating Agency Fees.............................................. *
Transfer Agent and Registrar Fees............................... *
Printing and Engraving.......................................... *
Legal Fees and Expenses......................................... *
Accounting Fees................................................. *
Listing Fees.................................................... *
Blue Sky Fees and Expenses...................................... *
Miscellaneous................................................... *
--------
Total....................................................... *
========
</TABLE>
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*To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Articles of Incorporation, as amended, of the Corporation (the
"Articles") provide that, except as prohibited by law, every director and
officer of the Corporation shall be entitled as of right to be indemnified by
the Corporation against expenses and any liability paid or incurred by such
person in connection with any actual or threatened claim, action, suit or
proceeding, civil, criminal, administrative, investigative or other, whether
brought by or in the right of the Corporation or otherwise, in which such
person may be involved (subject to certain limitations in the case of actions
by such person against the Corporation) by reason of such person being or
having been a director or officer of the Corporation or serving or having
served at the request of the Corporation as a director, officer, employee,
fiduciary or other representative of another entity. The Articles also give to
indemnitees the right to have their expenses in defending such actions paid in
advance by the Corporation, subject to any obligation imposed by law or
otherwise to reimburse the Corporation in certain events. The Corporation has
entered into an indemnity agreement (the "Indemnity Agreement") with each
director and certain of its officers which provides a contractual right to
indemnification against such expenses and liabilities (subject to certain
limitations and exceptions) and a contractual right to advancement of expenses
and contains additional provisions regarding determination of entitlement,
defense of claims, rights of contribution and other matters.
The Pennsylvania Business Corporation Law permits a corporation to indemnify
its directors and officers, and to pay their expenses in advance, subject to
certain limitations and exceptions. The specific indemnity provisions, which
are by their terms not intended to be exclusive, are, in general, not as broad
as the provisions of the Articles and the Indemnity Agreement; however, one
provision would preclude indemnification in any case where the act or failure
to act giving rise to the claim for indemnification is determined by a court
to have constituted willful misconduct or recklessness, and another provision
requires that advances of expenses may be made by a corporation only upon
receipt of an undertaking to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the
corporation.
The Corporation has purchased liability insurance policies covering its
directors and officers to insure against claims arising out of certain alleged
wrongful acts on the part of such directors and officers and against claims
arising out of certain alleged breaches of fiduciary duty under the Employee
Retirement Income Security Act of 1974 on the part of such directors and
officers.
II-1
<PAGE>
Article Seventh of the Articles and Article Two of the Corporation's By-
Laws, as amended, both adopted by the shareholders of the Corporation at their
annual meeting on April 20, 1987, further provide that, to the fullest extent
that the laws of Pennsylvania, as in effect on January 27, 1987 or as
thereafter amended, permit elimination or limitation of the liability of
directors, no director of the Corporation shall be personally liable for
monetary damages as such for any action taken, or any failure to take any
action, as a director. The Pennsylvania Business Corporation Law provides that
whenever the by-laws of a corporation by a vote of the shareholders so
provide, a director shall not be personally liable for monetary damages as
such for any action taken, or failure to take any action, unless (i) the
director has breached or failed to perform the duties of his office under the
standard of care and justifiable reliance specified in the Act and (ii) the
breach or failure to perform constitutes self-dealing, willful misconduct or
recklessness. These provisions do not apply to (i) responsibility or liability
of a director pursuant to any criminal statute or (ii) the liability of a
director for payment of taxes.
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by reference herein
as part of this Registration Statement:
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
1.1 Form of Underwriting Agreement*
4.1 Mellon Bank Corporation's Restated Articles of Incorporation, as
amended and restated as of September 2, 1993
4.2 Statement Affecting Series I Preferred Stock, $1.00 Par Value
4.3 Statement Affecting Series J Preferred Stock, $1.00 Par Value
4.4 Statement Affecting Series K Preferred Stock, $1.00 Par Value
4.5 Mellon Bank Corporation's By-Laws, as amended
4.6 Form of Junior Subordinated Indenture, dated as of , 1996,
between Mellon Bank Corporation and [ ], as Debenture Trustee*
4.7 Certificate of Trust of Mellon Capital I*
4.8 Trust Agreement of Mellon Capital I*
4.9 Certificate of Trust of Mellon Capital II*
4.10 Trust Agreement of Mellon Capital II*
4.11 Certificate of Trust of Mellon Capital III
4.12 Trust Agreement of Mellon III*
4.13 Form of Amended and Restated Trust Agreement of Mellon Capital I*
4.14 Form of Amended and Restated Trust Agreement of Mellon Capital II*
4.15 Form of Amended and Restated Trust Agreement of Mellon Capital III*
4.16 Form of Preferred Security Certificate for Mellon Capital I (included
as Exhibit D of Exhibit 4.13)*
4.17 Form of Preferred Security Certificate for Mellon Capital II
(included as Exhibit D of Exhibit 4.14)*
4.18 Form of Preferred Security Certificate for Mellon Capital III
(included as Exhibit D of Exhibit 4.15)*
4.19 Form of Guarantee Agreement for Mellon Capital I*
4.20 Form of Guarantee Agreement for Mellon Capital II*
4.21 Form of Guarantee Agreement of Mellon Capital III*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
5.1 Opinion of Carl Krasik, Esq. as to legality of the Junior
Subordinated Debentures and the Guarantees to be issued by Mellon Bank
Corporation*
5.2 Opinion of special Delaware counsel as to legality of the Preferred
Securities to be issued by Mellon Capital I, Mellon Capital II and
Mellon Capital III*
8 Opinion of counsel as to certain federal income tax matters*
12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio of Earn-
ings to Combined Fixed Charges and Preferred Stock Dividends (parent
Corporation)
12.2 Computation of Ratio of Earnings to Fixed Charges and Ratio of Earn-
ings to Combined Fixed Charges and Preferred Stock Dividends (Mellon
Bank Corporation and subsidiaries)
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Carl Krasik, Esq. (included in Exhibit 5.1)*
23.3 Consent of Special Delaware Counsel*
24.1 Power of Attorney
25.1 Form T-1 Statement of Eligibility of [ ] to act as trustee under
the Junior Subordinated Indenture*
25.2 Form T-1 Statement of Eligibility of [ ] to act as trustee under
the Amended and Restated Trust Agreement of Mellon Capital I*
25.3 Form T-1 Statement of Eligibility of [ ] to act as trustee under
the Amended and Restated Trust Agreement of Mellon Capital II*
25.4 Form T-1 Statement of Eligibility of [ ] to act as trustee under
the Amended and Restated Trust Agreement of Mellon Capital III*
25.5 Form T-1 Statement of Eligibility of [ ] under the Guarantee for
the benefit of the holders of Preferred Securities of Mellon Capital
I*
25.6 Form T-1 Statement of Eligibility of [ ] under the Guarantee for
the benefit of the holders of Preferred Securities of Mellon Capital
II*
25.7 Form T-1 Statement of Eligibility of [ ] under the Guarantee for
the benefit of the holders of Preferred Securities of Mellon Capital
III*
</TABLE>
- --------
* To be filed by amendment.
ITEM 17. UNDERTAKING
(a) Rule 415 Offering.
The undersigned Corporation hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933, unless the information required to be included
in such post-effective amendment is contained in a periodic report filed
by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 and incorporated herein by reference;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in
II-3
<PAGE>
the registration statement unless the information required to be
included in such post-effective amendment is contained in a periodic
report filed with or furnished to the Commission by Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
and incorporated herein by reference. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculated
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned Corporation hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Corporation's Annual Report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Acceleration of Effectiveness.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Corporation pursuant to the provisions described in Item 15 above, or
otherwise, the Corporation has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Corporation of expenses incurred or paid by a director, officer
or controlling person of the Corporation in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Corporation will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
II-4
<PAGE>
SIGNATURES
MELLON BANK CORPORATION
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MELLON BANK
CORPORATION CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF PITTSBURGH, COMMONWEALTH OF
PENNSYLVANIA, ON THE 31ST DAY OF OCTOBER, 1996.
Mellon Bank Corporation
/s/ Frank V. Cahouet
By___________________________________
Frank V. Cahouet
Chairman, President and Chief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 31ST DAY OF OCTOBER, 1996.
/s/ Frank V. Cahouet
By___________________________________
Frank V. Cahouet
Principal Executive Officer and
Director
/s/ Steven G. Elliott
By___________________________________
Steven G. Elliott
Principal Financial Officer and
Principal Accounting Officer
By___________________________________
Dwight L. Allison, Jr.
Director
By___________________________________
Burton C. Borgelt
Director
/s/ *Carol R. Brown
By___________________________________
Carol R. Brown
Director
By___________________________________
J. W. Connolly
Director
/s/ *Charles A. Corry
By___________________________________
Charles A. Corry
Director
II-5
<PAGE>
/s/ *C. Frederick Fetterolf
By___________________________________
C. Frederick Fetterolf
Director
/s/ *Ira J. Gumberg
By___________________________________
Ira J. Gumberg
Director
/s/ *Pemberton Hutchinson
By___________________________________
Pemberton Hutchinson
Director
By___________________________________
Rotan E. Lee
Director
/s/ *Andrew W. Mathieson
By___________________________________
Andrew W. Mathieson
Director
/s/ *Edward J. McAniff
By___________________________________
Edward J. McAniff
Director
/s/ *Robert Mehrabian
By___________________________________
Robert Mehrabian
Director
/s/ *Seward Prosser Mellon
By___________________________________
Seward Prosser Mellon
Director
/s/ *David S. Shapira
By___________________________________
David S. Shapira
Director
/s/ *W. Keith Smith
By___________________________________
W. Keith Smith
Director
By___________________________________
Joab L. Thomas
Director
/s/ *Wesley W. von Schack
By___________________________________
Wesley W. von Schack
Director
II-6
<PAGE>
*William J. Young
By___________________________________
William J. Young
Director
/s/ Carl Krasik
*By__________________________________
Carl Krasik
Attorney-in-fact
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MELLON CAPITAL I
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN PITTSBURGH, PENNSYLVANIA ON THE 31ST DAY OF OCTOBER, 1996.
Mellon Capital I
By: Mellon Bank Corporation, as
Depositor
/s/ Frank V. Cahouet
By: _________________________________
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MELLON CAPITAL
II CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN PITTSBURGH, PENNSYLVANIA ON THE 31ST DAY OF OCTOBER, 1996.
Mellon Capital II
By: Mellon Bank Corporation, as
Depositor
/s/ Frank V. Cahouet
By: _________________________________
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MELLON CAPITAL
III CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN PITTSBURGH, PENNSYLVANIA ON THE 31ST DAY OF OCTOBER, 1996.
Mellon Capital III
By: Mellon Bank Corporation, as
Depositor
/s/ Frank V. Cahouet
By: _________________________________
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION METHOD OF FILING PAGE NO.
------ ----------- ---------------- --------
<C> <S> <C> <C>
1.1 Form of Underwriting
Agreement*
4.1 Mellon Bank Filed as Exhibit 3.1 to the Corporation's
Corporation's Quarterly Report on Form 10-Q (File No.
Restated Articles of 1-7410) for the quarter ended September 30,
Incorporation, 1993, and incorporated herein by reference.
as amended and restated
as of September 2, 1993
4.2 Statement Affecting
Series I Preferred
Stock, $1.00 Par Value*
4.3 Statement Affecting
Series J Preferred
Stock, $1.00 Par Value*
4.4 Statement Affecting
Series K Preferred
Stock, $1.00 Par Value*
4.5 Mellon Bank Previously filed as Exhibit 3.2 to the
Corporation's Corporation's Annual Report on Form 10-K
By-Laws, as amended (File No. 1-7410) for the year ended
December 31, 1990, and incorporated herein
by reference.
4.6 Form of Junior
Subordinated Indenture,
dated as of October ,
1996, between Mellon
Bank Corporation and
[ ], as Debenture
Trustee*
4.7 Certificate of Trust of
Mellon Capital I*
4.8 Trust Agreement of
Mellon Capital I*
4.9 Certificate of Trust of
Mellon Capital II*
4.10 Trust Agreement of
Mellon Capital II*
4.11 Certificate of Trust of
Mellon Capital III
4.12 Trust Agreement of
Mellon III*
4.13 Form of Amended and
Restated Trust Agreement
of Mellon Capital I*
4.14 Form of Amended and
Restated Trust Agreement
of Mellon Capital II*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION METHOD OF FILING PAGE NO.
------ ----------- ---------------- --------
<C> <S> <C> <C>
4.15 Form of Amended and
Restated Trust Agreement
of Mellon Capital III*
4.16 Form of Preferred
Security Certificate for
Mellon Capital I
(included as Exhibit D
of Exhibit 4.13)*
4.17 Form of Preferred
Security Certificate for
Mellon Capital II
(included as Exhibit D
of Exhibit 4.14)*
4.18 Form of Preferred
Security Certificate for
Mellon Capital III
(included as Exhibit D
of Exhibit 4.15)*
4.19 Form of Guarantee
Agreement for Mellon
Capital I*
4.20 Form of Guarantee
Agreement for Mellon
Capital II*
4.21 Form of Guarantee
Agreement of Mellon
Capital III*
5.1 Opinion of Carl Krasik,
Esq. as to legality of
the Junior Subordinated
Debentures and the
Guarantees to be issued
by Mellon Bank
Corporation*
5.2 Opinion of special
Delaware counsel as to
legality of the
Preferred Securities to
be issued by Mellon
Capital I, Mellon
Capital II and Mellon
Capital III*
8 Opinion of counsel as to
certain federal income
tax matters*
12.1 Computation of Ratio of Previously filed as Exhibit 12.1 to the
Earnings to Fixed Corporation's Annual Report on Form 10-K
Charges and Ratio of (File No. 1-7410) for the year ended
Earnings to Combined December 31, 1995, and incorporated herein
Fixed Charges and Pre- by reference.
ferred Stock Dividends
(parent Corporation)
12.2 Computation of Ratio of Previously filed as Exhibit 12.2 to the
Earnings to Fixed Corporation's Annual Report on Form 10-K
Charges and Ratio of (File No. 1-7410) for the year ended
Earnings to Combined December 31, 1995, and incorporated herein
Fixed Charges and Pre- by reference.
ferred Stock Dividends
(Mellon Bank Corporation
and subsidiaries)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
METHOD OF
NUMBER DESCRIPTION FILING PAGE NO.
------ ----------- --------- --------
<S> <C> <C> <C>
23.1 Consent of KPMG Peat Marwick Filed herewith
LLP
23.2 Consent of Carl Krasik, Esq.
(included in Exhibit 5.1)*
23.3 Consent of Special Delaware
Counsel*
24.1 Power of Attorney
25.1 Form T-1 Statement of
Eligibility of [ ] to act as
trustee under the Junior
Subordinated Indenture*
25.2 Form T-1 Statement of
Eligibility of [ ] to act as
trustee under the Amended and
Restated Trust Agreement of
Mellon Capital I*
25.3 Form T-1 Statement of
Eligibility of [ ] to act as
trustee under the Amended and
Restated Trust Agreement of
Mellon Capital II*
25.4 Form T-1 Statement of
Eligibility of [ ] to act as
trustee under the Amended and
Restated Trust Agreement of
Mellon Capital III*
25.5 Form T-1 Statement of
Eligibility of [ ] under the
Guarantee for the benefit of
the holders of Preferred
Securities of Mellon Capital I*
25.6 Form T-1 Statement of
Eligibility of [ ] under the
Guarantee for the benefit of
the holders of Preferred
Securities of Mellon Capital
II*
25.7 Form T-1 Statement of
Eligibility of [ ] under the
Guarantee for the benefit of
the holders of Preferred
Securities of Mellon Capital
III*
</TABLE>
- --------
* To be filed by amendment.
<PAGE>
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) of Mellon Bank Corporation for the
registration of up to $500,000,000 of trust preferred securities and to the
incorporation by reference therein of our report dated January 10, 1996, with
respect to the consolidated financial statements of Mellon Bank Corporation
included in its Annual Report (Form 10-K) for the year ended December 31,
1995, filed with the Securities and Exchange Commission.
Pittsburgh, Pennsylvania
October 31, 1996
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
MELLON BANK CORPORATION
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Carl Krasik and William E. Marquis, and each of
them, such person's true and lawful attorney-in-fact and agent, with full
power of substitution and revocation, for such person and in such person's
name, place and stead, in any and all capacities, to sign one or more
Registration Statements pursuant to the Securities Act of 1933, as amended,
with respect to the registration of up to $500 million aggregate principal
amount of subordinated debt securities, which subordinated debt securities are
to be issued to one or more trusts created by the Corporation in connection
with the issuance of preferred securities of such trusts, and any and all
amendments (including post-effective amendments) thereto, and to file the same
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, and to sign and file any and all
documents and instruments required by state securities or blue sky laws in
connection with such subordinated debt securities, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection with any of the above, as fully to all intents and purposes as such
person might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents and each of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
This power of attorney shall be effective as of October 25, 1996 and shall
continue in full force and effect until revoked by the undersigned in a
writing filed with the Secretary of the Corporation.
<TABLE>
<S> <C>
/s/ Frank V. Cahouet /s/ Ira J. Gumberg
- ------------------------------------ ------------------------------------
Frank V. Cahouet, Director and Ira J. Gumberg, Director
Principal Executive Officer
/s/ Pemberton Hutchinson
- ------------------------------------ ------------------------------------
Dwight L. Allison, Jr., Director Pemberton Hutchinson, Director
- ------------------------------------ ------------------------------------
Burton C. Borgelt, Director Rotan E. Lee, Director
/s/ Carol R. Brown /s/ Andrew W. Mathieson
- ------------------------------------ ------------------------------------
Carol R. Brown, Director Andrew W. Mathieson, Director
/s/ Edward J. McAniff
- ------------------------------------ ------------------------------------
J. W. Connolly, Director Edward J. McAniff, Director
/s/ Charles A. Corry /s/ Robert Mehrabian
- ------------------------------------ ------------------------------------
Charles A. Corry, Director Robert Mehrabian, Director
/s/ C. Frederick Fetterolf /s/ Seward Prosser Mellon
- ------------------------------------ ------------------------------------
C. Frederick Fetterolf, Director Seward Prosser Mellon, Director
</TABLE>
<PAGE>
/s/ David S. Shapira /s/ Wesley W. von Schack
- ------------------------------------ ------------------------------------
David S. Shapira, Director Wesley W. von Schack, Director
/s/ W. Keith Smith /s/ William J. Young
- ------------------------------------ ------------------------------------
W. Keith Smith, Director William J. Young, Director
- ------------------------------------
Joab L. Thomas, Director
-2-
