<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1997
REGISTRATION NOS. 333-31827 AND 333-31827-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
<TABLE>
<S> <C>
NATIONAL CITY CORPORATION NATIONAL CITY CAPITAL TRUST I
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
DELAWARE DELAWARE
(State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization)
6712 6719
(Primary Standard Industrial Classification Code Number) (Primary Standard Industrial Classification Code Number)
34-1111088 31-1547502
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1900 E. Ninth Street 1900 E. Ninth Street
Cleveland, Ohio 44114-3484 Cleveland, Ohio 44114-3484
(216) 575-2000 (216) 575-2000
(Address, including zip code, and (Address, including zip code, and
telephone number, including area code, of telephone number, including area code, of
Registrant's principal executive offices) Registrant's principal executive offices)
</TABLE>
DAVID L. ZOELLER, ESQ.
National City Corporation
1900 E. Ninth Street
Cleveland, Ohio 44114-3484
(216) 575-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies To:
DENNIS W. LABARRE, ESQ.
CHRISTOPHER M. KELLY, ESQ.
Jones, Day, Reavis & Pogue
901 Lakeside Avenue
Cleveland, Ohio 44114
(216) 586-3939
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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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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PROSPECTUS
$500,000,000
NATIONAL CITY CAPITAL TRUST I
OFFER TO EXCHANGE ITS RESET ASSET CAPITAL SECURITIES (RACS), WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OF THE OUTSTANDING
RESET ASSET
CAPITAL SECURITIES OF NATIONAL CITY CAPITAL TRUST I
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
NATIONAL CITY CORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON NOVEMBER 3, 1997, UNLESS EXTENDED.
National City Capital Trust I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), and National City Corporation, a
Delaware corporation, as guarantor ("National City" or the "Corporation"),
hereby offer, upon the terms and subject to the conditions set forth in this
Prospectus (as the same may be amended or supplemented from time to time, the
"Prospectus") and in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange up to $500,000,000 aggregate
Liquidation Amount (as defined herein) of the Reset Asset Capital Securities
(Liquidation Amount $1,000 per Reset Asset Capital Security) (the "Exchange
Capital Securities") of the Trust, which have been registered under the
Securities Act of 1933 (the "Securities Act"), pursuant to a Registration
Statement (as defined herein) of which this Prospectus constitutes a part, for a
like Liquidation Amount of the outstanding Reset Asset Capital Securities
(Liquidation Amount $1,000 per outstanding Reset Asset Capital Security) (the
"Old Capital Securities") of the Trust, of which $500,000,000 aggregate
Liquidation Amount is outstanding. The Exchange Capital Securities will have the
benefit of the Exchange Guarantee (as defined herein) of the Corporation, which
will be identical in all material respects (except as described herein) to the
Old Guarantee (as defined herein) relating to the Old Capital Securities. The
Trust will hold Junior Subordinated Debt Securities of the Corporation (the
"Exchange Junior Subordinated Debt Securities") in an aggregate principal amount
equal to the aggregate Liquidation Amount of the Exchange Capital Securities
issued pursuant to the Exchange Offer and the Common Securities (as defined
herein) currently outstanding, which will have terms identical in all material
respects (except as described herein) to the Corporation's outstanding Junior
Subordinated Debt Securities (the "Old Junior Subordinated Debt Securities"), of
which $515,464,000 aggregate principal amount is outstanding. The Exchange
Guarantee relating to the Exchange Capital Securities and $500,000,000 aggregate
principal amount of the Exchange Junior Subordinated Debt Securities also have
been registered under the Securities Act. The Old Capital Securities, the Old
Guarantee and the Old Junior Subordinated Debt Securities are collectively
referred to herein as the "Old Securities," and the Exchange Capital Securities,
the Exchange Guarantee and the Exchange Junior Subordinated Debt Securities are
collectively referred to herein as the "Exchange Securities." (continued on
next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 13 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE EXCHANGE CAPITAL SECURITIES.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October 2, 1997.
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(cover page continued)
Each Participating Broker-Dealer (as defined herein) that receives Exchange
Capital Securities for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer during the period
referenced herein in connection with resales of Exchange Capital Securities
received in exchange for Old Capital Securities acquired by such Participating
Broker-Dealer as a result of market-making activities or other trading
activities. Subject to certain provisions set forth in the Registration
Agreement (as defined herein), the Corporation and the Trust have agreed that,
starting on the Expiration Date (as defined herein) and ending on the close of
business on the first anniversary following the Expiration Date, or, if earlier,
when all such Exchange Capital Securities have been disposed of by such
Participating Broker-Dealer, this Prospectus may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Capital Securities.
See "Plan of Distribution."
The terms of the Exchange Securities are identical in all material respects
to the respective terms of the Old Securities, except that (i) the Exchange
Securities have been registered under the Securities Act and therefore will not
be subject to certain of the restrictions on transfer applicable to the Old
Securities, (ii) other than any possible increase in the Applicable Rate (as
defined herein) pursuant to the Rate Reset Auction (as defined herein), the
Exchange Capital Securities will not provide for any increase in the rate at
which Distributions (as defined herein) accumulate thereon and (iii) other than
any possible increase in the Applicable Rate pursuant to the Rate Reset Auction,
the Exchange Junior Subordinated Debt Securities will not provide for any
increase in the interest rate thereon. See "Description of Exchange Capital
Securities," "Description of Exchange Junior Subordinated Debt Securities,"
"Description of Exchange Guarantee," "Description of Old Securities" and "Rate
Reset Auction." The Exchange Capital Securities are being offered for exchange
in order to satisfy certain obligations of the Corporation and the Trust under
the Registration Agreement, dated as of June 6, 1997 (the "Registration
Agreement"), by and among the Corporation, the Trust and UBS Securities LLC (the
"Initial Purchaser").
The Exchange Capital Securities offered hereby and the Old Capital
Securities (together, the "Capital Securities") represent beneficial ownership
interests in the Trust. The Corporation is the direct owner of all of the
beneficial ownership interests represented by common securities of the Trust
(the "Common Securities" and, collectively with the Capital Securities, the
"Trust Securities"). The Bank of New York is the property trustee of the Trust.
The Trust exists for the exclusive purposes of issuing the Trust Securities,
investing the proceeds of the Old Capital Securities and the Common Securities
in the Old Junior Subordinated Debt Securities, exchanging the Exchange Capital
Securities for the Old Capital Securities, exchanging the Exchange Junior
Subordinated Debt Securities for the Old Junior Subordinated Debt Securities,
making Distributions and certain other limited activities described herein. The
Trust has heretofore issued the Old Capital Securities and the Common
Securities, and has invested the respective proceeds of the Old Capital
Securities and the Common Securities in the Old Junior Subordinated Debt
Securities. The Junior Subordinated Debt Securities (as defined herein) will
mature on June 1, 2029 (the "Stated Maturity"). The Capital Securities have a
preference under certain circumstances over the Common Securities with respect
to cash distributions and amounts payable on liquidation, redemption or
otherwise. See "Description of Exchange Capital Securities -- Subordination of
Common Securities."
As used herein, (i) the "Indenture" means the Junior Subordinated
Indenture, dated as of June 6, 1997, as amended and supplemented from time to
time, between the Corporation and The Bank of New York, as trustee (the
"Debenture Trustee"), (ii) the "Declaration" means the Amended and Restated
Declaration of Trust, dated as of June 6, 1997, among the Corporation, as
Depositor (the "Depositor"), The Bank of New York, as Property Trustee (the
"Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee (the
"Delaware Trustee"), and the individuals named as Administrative Trustees
therein (the "Administrative Trustees," and together with the Property Trustee
and the Delaware Trustee, the "Issuer Trustees"), (iii) the "Old Guarantee"
means the Guarantee Agreement, dated as of June 6, 1997, between
ii
<PAGE> 4
the Corporation and The Bank of New York, as Trustee (the "Guarantee Trustee"),
providing a guarantee, on the terms and conditions described herein, for the
benefit of holders of Old Capital Securities and the Common Securities and (iv)
the "Exchange Guarantee" means the Exchange Guarantee Agreement between the
Corporation and the Guarantee Trustee, providing a guarantee, on the terms and
conditions described herein, for the benefit of holders of the Capital
Securities and the Common Securities. In addition, as the context may require,
(i) "Junior Subordinated Debt Securities" includes the Old Junior Subordinated
Debt Securities and the Exchange Junior Subordinated Debt Securities and (ii)
"Guarantee" includes the Old Guarantee and the Exchange Guarantee.
Holders of Capital Securities are entitled to receive cumulative cash
distributions, in each case arising from the payment of interest on the Junior
Subordinated Debt Securities accruing from the date of original issuance of the
Trust Securities and payable semi-annually in arrears on the 1st day of June and
December of each year, commencing December 1, 1997, at the Applicable Rate
applied to the Liquidation Amount of $1,000 per Capital Security
("Distributions"). See "Description of Exchange Capital
Securities -- Distributions." Prior to the Rate Reset Date (as defined herein),
the Applicable Rate on the Junior Subordinated Debt Securities will be 6.75% per
annum. On and after the Rate Reset Date, the Applicable Rate on the Junior
Subordinated Debt Securities will be a rate per annum determined on the basis of
Orders (as defined herein) placed prior to the Submission Deadline (as defined
herein) in a Rate Reset Auction to be held on the Business Day (as defined
herein) three Business Days prior to the Rate Reset Date (the "Rate Reset
Pricing Date"). Pursuant to the Auction Procedures (as defined herein), each
Existing Holder (as defined herein) will indicate its desire to (i) continue to
hold Capital Securities without regard to the Applicable Rate that results from
the Rate Reset Auction, (ii) continue to hold Capital Securities if the
Applicable Rate that results from the Rate Reset Auction is equal to or greater
than the rate bid by such Existing Holder, and/or (iii) sell Capital Securities
without regard to the Applicable Rate that results from such Rate Reset Auction.
A Potential Holder (as defined herein) may also submit a Bid (as defined
herein). A Bid by an Existing Holder or a Potential Holder over the Treasury
Rate (as defined herein) on the Rate Reset Pricing Date, plus 5.0% per annum
will not be considered. Accordingly, the Auction Procedures establish the
maximum Applicable Rate per annum that can result from the Rate Reset Auction.
If Sufficient Clearing Bids (as defined herein) have been made in the Rate Reset
Auction, the Applicable Rate on the Junior Subordinated Debt Securities on and
after June 1, 1999 (or, if such date is not a Business Day, the succeeding
Business Day) (the "Rate Reset Date") will be equal to (i) the Winning Bid Rate
(as defined herein); or (ii) if all outstanding Capital Securities are subject
to Hold Orders (as defined herein), the Treasury Rate on the Rate Reset Date,
plus 1.15% per annum (the "Full Participation Rate"). See "Description of the
Rate Reset Auction." In the Event of a Failed Auction (as defined herein), the
Corporation will be required to redeem the Junior Subordinated Debt Securities
at par plus any accrued and unpaid interest thereon on the Rate Reset Date. See
"Description of the Rate Reset Auction -- Determination of Sufficient Clearing
Bids, Winning Bid Rate and Applicable Rate." Upon redemption of the Junior
Subordinated Debt Securities, the proceeds of such redemption shall concurrently
be applied to redeem, at the applicable redemption price, the Capital
Securities, upon the terms and conditions described herein. See "Description of
Exchange Capital Securities -- Mandatory Redemption."
Prior to the Rate Reset Date, the Indenture provides that the failure by
the Corporation to pay interest on the Junior Subordinated Debt Securities when
due is a Debenture Event of Default (as defined herein) in which case the
Property Trustee may declare the principal of and the interest on the Junior
Subordinated Debt Securities due and payable. See "Description of Exchange
Junior Subordinated Debt Securities -- Debenture Events of Default; Notice."
After the Rate Reset Date and subject to certain exceptions, the Corporation has
the right to defer payments of interest on the Junior Subordinated Debt
Securities at any time or from time to time for a period not exceeding ten
consecutive semi-annual periods with respect to each deferral period (each, an
"Extension Period"); provided, however, that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all interest then accrued
and unpaid (together with interest thereon accumulated at the Applicable Rate,
compounded semi-annually, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period, subject to the
requirements set forth herein. If interest payments on the Junior Subordinated
Debt Securities are so deferred, during any Extension Period, Distributions on
the Capital
iii
<PAGE> 5
Securities and on the Common 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, or make
purchases of, the Corporation's capital stock (which includes common and
preferred stock) or to make any payment with respect to debt securities of the
Corporation that rank pari passu in all respects with or junior to the Junior
Subordinated Debt Securities. During an Extension Period, interest on the Junior
Subordinated Debt Securities will continue to accrue (and the amount of
Distributions to which holders of the Capital Securities are entitled will
accumulate) at the Applicable Rate compounded semi-annually, and holders of
Capital Securities will be required to accrue interest income for United States
federal income tax purposes. See "Description of Exchange Junior Subordinated
Debt Securities -- Option to Extend Interest Payment Date" and "Certain United
States Federal Income Tax Consequences -- Interest and Original Issue Discount."
Taken together, the Corporation's obligations under the Guarantee, the
Declaration, the Junior Subordinated Debt Securities and the Indenture,
including the Corporation's obligation to pay the costs, expenses and
liabilities of the Trust (other than the Trust's obligations to holders of the
Trust Securities under such Trust Securities), provide, in the aggregate, a full
and unconditional guarantee, to the extent described herein, of all of the
payments of Distributions and other amounts due on the Capital Securities. See
"Relationship Among the Capital Securities, the Junior Subordinated Debt
Securities and the Guarantee -- Full and Unconditional Guarantee." The
Corporation has agreed to guarantee the payment of Distributions and payments on
liquidation or redemption of the Capital Securities, but only in each case to
the extent of funds held by the Trust, as described herein. See "Description of
Exchange Guarantee." If the Corporation does not make interest payments on the
Junior Subordinated Debt Securities held by the Trust, the Trust will have
insufficient funds to pay Distributions on the Capital Securities. The Guarantee
does not cover the payment of Distributions when the Trust does not have
sufficient funds to pay such Distributions. In such event, a holder of Capital
Securities may institute a legal proceeding directly against the Corporation for
enforcement of payment to such holder of the principal of or interest on Junior
Subordinated Debt Securities having a principal amount equal to the aggregate
Liquidation Amount of the Capital Securities held by such holder (a "Direct
Action"). See "Description of Exchange Junior Subordinated Debt
Securities -- Enforcement of Certain Rights by Holders of Capital Securities."
The obligations of the Corporation under the Guarantee and the Junior
Subordinated Debt Securities are subordinate and junior in right of payment to
all Senior Debt (as defined herein) of the Corporation. See "Description of
Exchange Junior Subordinated Debt Securities." In addition, because the
Corporation is a holding company, the Junior Subordinated Debt Securities and
the Guarantee are effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, including deposits. See "Risk
Factors -- Ranking of Obligations Under the Guarantee and the Junior
Subordinated Debt Securities" and "Status of the Corporation as a Bank Holding
Company."
Prior to the Rate Reset Date, the Corporation may not redeem the Junior
Subordinated Debt Securities for any reason. The Corporation must redeem the
Junior Subordinated Debt Securities in whole, but not in part, in the event of a
Failed Auction on the Rate Reset Date, at a redemption price equal to the
principal amount of, plus accrued and unpaid interest on, the Junior
Subordinated Debt Securities (the "Early Mandatory Redemption Price"). See
"Description of the Rate Reset Auction" and "Description of Exchange Junior
Subordinated Debt Securities -- Redemption -- Mandatory Redemption." The
Corporation may redeem the Junior Subordinated Debt Securities in whole, but not
in part, on the Rate Reset Date at a redemption price equal to the principal
amount of, plus accrued and unpaid interest on, the Junior Subordinated Debt
Securities (the "Early Optional Redemption Price"). In addition, subject to the
Corporation having received prior approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") to do so, if then required under
applicable capital guidelines or policies of the Federal Reserve, the
Corporation may redeem the Junior Subordinated Debt Securities (i) in whole or
in part, at any time on or after June 1, 2009, at the Optional Redemption Price
(as defined herein) or (ii) in whole, but not in part, after the Rate Reset
Date, in certain circumstances described herein upon the occurrence and
continuation of a Tax Event, '40 Act Event or Capital Treatment Event (each, a
"Special Event" and each as defined herein) within 90 days after the occurrence
of such Special Event, at a redemption price (the "Special Event Redemption
Price") equal to (A) the Make-Whole Amount (as defined herein) upon the
occurrence of a Special Event prior to June 1, 2009, or (B) the Optional
Redemption Price upon the occurrence of a
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Special Event on or after June 1, 2009. See "Description of Exchange Junior
Subordinated Debt Securities -- Redemption -- Optional Redemption" and " -- Tax
Event, '40 Act Event and Capital Treatment Event Redemption." Each of the Early
Mandatory Redemption Price, the Early Optional Redemption Price, the Optional
Redemption Price and the Special Event Redemption Price is referred to herein as
the "Redemption Price." Upon repayment in full at Stated Maturity or redemption
of any Junior Subordinated Debt Securities (other than following the
distribution of the Junior Subordinated Debt Securities to the holders of the
Capital Securities), the proceeds from such repayment or redemption shall
concurrently be applied to redeem, at the applicable Redemption Price, Capital
Securities having a Liquidation Amount equal to the aggregate principal amount
of Junior Subordinated Debt Securities so redeemed, upon the terms and
conditions described herein. See "Description of Exchange Capital
Securities -- Mandatory Redemption."
The Corporation, as the holder of the outstanding Common Securities, has
the right at any time (including, without limitation, upon the occurrence of a
Tax Event, '40 Act Event or a Capital Treatment Event) to terminate the Trust
and cause a Like Amount (as defined herein) of the Junior Subordinated Debt
Securities to be distributed to the holders of the Capital Securities upon
liquidation of the Trust, subject to prior approval of the Federal Reserve to do
so, if then required under applicable capital guidelines or policies of the
Federal Reserve. In the event of such termination of the Trust, after
satisfaction of liabilities to creditors of the Trust as required by applicable
law, the holders of the Capital Securities generally will be entitled to receive
a Liquidation Amount of $1,000 per Capital Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of a Like Amount of Junior Subordinated Debt Securities in certain
circumstances. See "Description of Exchange Capital Securities -- Liquidation of
the Trust and Distribution of Junior Subordinated Debt Securities."
Except as provided below, the Capital Securities will be represented by
global certificates in fully registered form, deposited with a custodian for and
registered in the name of Cede & Co., as nominee for The Depository Trust
Company ("DTC" or the "Depository"). Beneficial interests in such Capital
Securities will be shown on, and transfers thereof will be effected through,
records maintained by DTC and its participants. Beneficial interests in such
Capital Securities will trade in DTC's Same-Day Funds Settlement System and
secondary market trading activity in such interests will therefore settle in
immediately available funds. The Capital Securities will be issued, and may be
transferred, only in a block having a Liquidation Amount of not less than
$100,000 (100 Capital Securities). Any transfer, sale or other disposition of
Capital Securities in a block having a liquidation amount of less than $100,000
shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Capital Securities for
any purpose, including but not limited to the receipt of distributions on such
Capital Securities, and such transferee shall be deemed to have no interest
whatsoever in such Exchange Capital Securities.
The Corporation and the Trust are making the Exchange Offer of the Exchange
Capital Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Securities and Exchange Commission (the "Commission")
as set forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Corporation nor the Trust has sought its own
interpretive letter, and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance of the Commission, and subject to the two
immediately following sentences, the Corporation and the Trust believe that
Exchange Capital Securities issued pursuant to this Exchange Offer in exchange
for Old Capital Securities may be offered for resale, resold and otherwise
transferred by holders thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of the Corporation or the Trust within
the meaning of Rule 405 under the Securities Act (an "Affiliate") or who intends
to participate in the Exchange Offer for the purpose of distributing Exchange
Capital Securities, or any broker-dealer who purchased Old Capital Securities
from the Trust to resell pursuant to Rule 144A under the Securities Act
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("Rule 144A") or any other available exemption under the Securities Act, (i)
will not be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (ii) will not be entitled to tender such Old Capital
Securities in the Exchange Offer and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or other transfer of such Old Capital Securities unless such sale or other
transfer is made pursuant to an exemption from such requirements. In addition,
as described below, if any broker-dealer holds Old Capital Securities acquired
for its own account as a result of market-making or other trading activities and
exchanges such Old Capital Securities for Exchange Capital Securities (such
broker-dealer referred to herein as a "Participating Broker-Dealer"), then such
Participating Broker-Dealer must deliver a prospectus meeting the requirements
of the Securities Act in connection with any resales of such Exchange Capital
Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for Exchange Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an Affiliate of the Trust or the
Corporation, (ii) any Exchange Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Capital Securities and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such Exchange Capital Securities. The Letter of Transmittal contains the
foregoing representations. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility to participate
in the Exchange Offer, to furnish to the Corporation and the Trust (or an agent
thereof) in writing information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) on behalf of whom such holder holds the Capital Securities
to be exchanged in the Exchange Offer. Each Participating Broker-Dealer must
acknowledge that it acquired the Old Capital Securities for its own account as
the result of market-making activities or other trading activities and must
agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Capital
Securities. See "Plan of Distribution." The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, the Corporation and the Trust believe that Participating Broker-Dealers
who acquired Old Capital Securities for their own accounts as a result of
market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the Exchange Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of the Securities
Act, which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such Exchange Capital Securities. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
Exchange Capital Securities received in exchange for Old Capital Securities
where such Old Capital Securities were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration
Agreement, the Corporation and the Trust have agreed that this Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Capital Securities for
a period commencing on the Expiration Date (as defined herein) and ending one
year after the Expiration Date or, if earlier, when all such Exchange Capital
Securities have been disposed of by such Participating Broker-Dealer. See "Plan
of Distribution." Any person, including a Participating Broker-Dealer, who is an
Affiliate of the Trust or the Corporation may not rely on such interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
See "The Exchange Offer -- Resales of Exchange Capital Securities."
Each Participating Broker-Dealer who surrenders Old Capital Securities
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, or delivery of an Agent's Message
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(as defined herein), that, upon receipt of notice from the Corporation or the
Trust of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Agreement, such Participating Broker-Dealer will suspend the
sale of Exchange Capital Securities pursuant to this Prospectus until the
Corporation or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer, or the Corporation
or the Trust has given notice that the sale of the Exchange Capital Securities.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The Exchange Capital
Securities will be a new issue of securities for which there currently is no
market. The Initial Purchaser informed the Corporation and the Trust in
connection with the offering of the Old Capital Securities that it intended to
make a market in the Old Capital Securities and, if issued, the Exchange Capital
Securities. However, the Initial Purchaser is not obligated to do so, and any
such market-making may be discontinued at any time without notice. Accordingly,
there can be no assurance as to the development or liquidity of any market for
the Exchange Capital Securities.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all of the same rights and will
be subject to the same limitations applicable to the Old Capital Securities
under the Declaration (except for those rights relating to the Registration
Agreement, which terminate upon consummation of the Exchange Offer). Following
consummation of the Exchange Offer, the holders of Old Capital Securities will
continue to be subject to all of the existing restrictions upon transfer thereof
and neither the Corporation nor the Trust will have any further obligation to
such holders (other than under certain limited circumstances) to provide for
registration under the Securities Act of the Old Capital Securities held by
them. Even though a market might develop for the Exchange Capital Securities,
holders of Old Capital Securities will not be permitted or entitled to utilize
that market. To the extent that Old Capital Securities are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Capital
Securities could be adversely affected. See "Risk Factors -- Consequences of a
Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on November 3, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation and the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time prior to the Expiration
Date. The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered for exchange. However, the Exchange
Offer is subject to certain events and conditions which may be waived by the
Corporation or the Trust and to the terms and provisions of the Registration
Agreement. Old Capital Securities may be tendered in whole or in part having a
Liquidation Amount of not less than $100,000 (100 Old Capital Securities) or any
integral multiple of $100,000 Liquidation Amount (100 Old Capital Securities) in
excess thereof. The Corporation has agreed to pay all expenses of the Exchange
Offer (other than certain transfer taxes relating to changes of ownership). See
"The Exchange Offer -- Fees and Expenses." Each Exchange Capital Security will
pay cumulative Distributions from the most recent Distribution Date (as defined
herein) on the Old Capital Securities surrendered in exchange for such Exchange
Capital Securities or, if no Distribution Date has occurred, from June 6, 1997.
Holders of the Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date with respect
to such Old Capital Securities, prior to the
vii
<PAGE> 9
original issue date of the Exchange Capital Securities or, if no such
Distributions have been paid, will not receive any accumulated Distributions on
such Old Capital Securities, and will be deemed to have waived the right to
receive any Distributions on such Old Capital Securities accumulated from and
after such Distribution Date or, if no Distributions have been paid or duly
provided for, from and after June 6, 1997. This Prospectus, together with the
Letter of Transmittal, is being sent to all registered holders of Old Capital
Securities as of October 3, 1997.
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See "Use of
Proceeds From Sale of Old Capital Securities" and "Plan of Distribution."
---------------------
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
NATIONAL CITY CORPORATION, INVESTOR INFORMATION, 1900 EAST NINTH STREET,
CLEVELAND, OHIO 44114-3484, TELEPHONE NUMBER (216) 575-9297. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY OCTOBER 27,
1997.
---------------------
THE JUNIOR SUBORDINATED DEBT SECURITIES ARE DIRECT AND UNSECURED
OBLIGATIONS OF THE CORPORATION, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC") OR ANY OTHER INSURER OR
GOVERNMENTAL AGENCY. THE JUNIOR SUBORDINATED DEBT SECURITIES ARE SUBORDINATE TO
THE CLAIMS OF DEPOSITORS AND GENERAL CREDITORS OF THE CORPORATION.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A "PLAN"), NO ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN
THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN ASSETS" OF ANY
PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST THEREIN, UNLESS
SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23,
95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY
PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST THEREIN WILL BE
DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT EITHER
(A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING SUCH SECURITIES
ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH
RESPECT TO SUCH PURCHASE OR HOLDING.
---------------------
THE EXCHANGE CAPITAL SECURITIES WILL BE ISSUED, AND MAY BE TRANSFERRED,
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF $100,000 OR AN INTEGRAL MULTIPLE
OF $100,000 IN EXCESS THEREOF. ANY TRANSFER, SALE OR OTHER DISPOSITION OF
EXCHANGE CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN
$100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH EXCHANGE CAPITAL
SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF
DISTRIBUTIONS ON SUCH EXCHANGE CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE
DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH EXCHANGE CAPITAL SECURITIES.
viii
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................................. 2
Incorporation of Certain Documents by Reference....................................... 3
Prospectus Summary.................................................................... 4
Risk Factors.......................................................................... 13
Use of Proceeds From Sale of Old Capital Securities................................... 19
National City Capital Trust I......................................................... 19
National City Corporation............................................................. 20
Recent Events......................................................................... 20
Ratio of Earnings to Fixed Charges.................................................... 22
Selected Historical Consolidated Financial Information................................ 23
Capitalization........................................................................ 24
Accounting Treatment.................................................................. 25
Regulatory Treatment.................................................................. 25
The Exchange Offer.................................................................... 25
Description of the Rate Reset Auction................................................. 34
Description of Exchange Capital Securities............................................ 40
Description of Exchange Junior Subordinated Debt Securities........................... 52
Description of Exchange Guarantee..................................................... 63
Description of Old Securities......................................................... 66
Relationship Among the Capital Securities, the Junior Subordinated Debt Securities and
the Guarantee....................................................................... 66
Certain United States Federal Income Tax Consequences................................. 67
Certain ERISA Considerations.......................................................... 70
Plan of Distribution.................................................................. 72
Validity of Exchange Securities....................................................... 73
Independent Auditors.................................................................. 73
</TABLE>
---------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE HEREBY EXCEPT AS CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, NO SUCH INFORMATION OR REPRESENTATIONS
SHOULD BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE TRUST OR
ANY OF THEIR RESPECTIVE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS
OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE CAPITAL
SECURITIES 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 ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
1
<PAGE> 11
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Exchange Act, and in accordance therewith, files reports, proxy statements and
other information with 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 information may also be accessed electronically by means of the
Commission's home page on the Internet (http://www.sec.gov.).
The Corporation and the Trust have filed with the Commission a Registration
Statement on Form S-4 (together with all amendments and exhibits thereto, the
"Registration Statement") under 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, the Trust and the securities
offered hereby, reference is made to the Registration Statement and the exhibits
and the financial statements, notes and schedules filed as 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 the Trust have been included herein.
The Corporation and the Trust do not consider that such financial statements
would be material to holders of the Capital Securities because the Trust 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 Junior Subordinated Debt Securities and
issuing the Trust Securities. See "National City Capital Trust I," "Description
of Exchange Capital Securities," "Description of Exchange Junior Subordinated
Debt Securities," "Description of Exchange Guarantee," and "Description of Old
Securities." In addition, the Corporation does not expect that the Trust will
file reports under the Exchange Act with the Commission.
2
<PAGE> 12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
The Corporation's Annual Report on Form 10-K for the year ended December
31, 1996;
The Corporation's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997, as amended on Form 10-Q/A on May 1, 1997;
The Corporation's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997;
The Corporation's Current Report on Form 8-K dated as of February 3, 1997;
The Corporation's Current Report on Form 8-K dated as of April 17, 1997;
and
The Corporation's Current Report on Form 8-K dated as of May 6, 1997.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of 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 this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document. 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:
Investor Information
National City Corporation
1900 East Ninth Street
Cleveland, Ohio 44114-3484
Telephone: (216) 575-9297
3
<PAGE> 13
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and in the documents
incorporated by reference in this Prospectus.
NATIONAL CITY CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Declaration and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on May 29, 1997. The Trust's business and affairs
are conducted by the Issuer Trustees: The Bank of New York, as Property Trustee,
The Bank of New York (Delaware), as Delaware Trustee, and three individual
Administrative Trustees who are employees or officers of or affiliated with the
Corporation. The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Old Junior Subordinated Debt Securities issued by the
Corporation and (iii) engaging in only those other activities necessary,
advisable or incidental thereto, which includes engaging in this Exchange Offer.
The Junior Subordinated Debt Securities are the sole assets of the Trust, and
payments under the Junior Subordinated Debt Securities will be the sole revenues
of the Trust. All of the Common Securities are owned by the Corporation. The
Trust's executive offices are located at 1900 East Ninth Street, Cleveland, Ohio
44114-3484. Its mailing address is c/o National City Corporation, 1900 East
Ninth Street, Cleveland, Ohio 44114-3484 and its telephone number is (216)
575-2000.
NATIONAL CITY CORPORATION
National City is a $52 billion diversified financial services company based
in Cleveland, Ohio. At December 31, 1996, National City was the third largest
bank holding company headquartered in the State of Ohio and approximately the
19th largest in the United States on the basis of total assets. National City
owns and operates 11 commercial banks and 885 banking offices in Ohio, Kentucky,
Indiana and Pennsylvania. National City's five largest subsidiary banks (and
only significant subsidiaries) are National City Bank of Pennsylvania, National
City Bank, National City Bank of Columbus, National City Bank of Indiana and
National City Bank of Kentucky. The banks and other subsidiaries and divisions
are engaged in a variety of financial services businesses. In addition to a
general commercial banking business, National City or its subsidiaries are
engaged in trust, mortgage banking, merchant banking, leasing, item processing,
venture capital, insurance and other financial-related businesses.
National City, a Delaware corporation, is a bank holding company registered
with the Federal Reserve under the Bank Holding Company Act of 1956, as amended.
National City's executive offices are located at 1900 East Ninth Street,
Cleveland, Ohio 44114-3484, and its telephone number is (216) 575-2000.
THE EXCHANGE OFFER
The Exchange Offer.............. Up to $500,000,000 aggregate Liquidation
Amount of Exchange Capital Securities are
being offered in exchange for a like
aggregate Liquidation Amount of Old Capital
Securities. Holders may tender their Old
Capital Securities in whole or in part in a
Liquidation Amount of $100,000 (100 Capital
Securities), or any integral multiple of
$100,000 in excess thereof. The Corporation
and the Trust are making the Exchange Offer
in order to satisfy their obligations under
the Registration Agreement relating to the
Old Capital Securities. For a description of
the procedures for tendering Old Capital
Securities, see "The Exchange
Offer -- Procedures for Tendering Old Capital
Securities."
4
<PAGE> 14
Expiration Date................. 5:00 p.m., New York City time, on November 3,
1997 unless the Exchange Offer is extended by
the Corporation and the Trust. See "The
Exchange Offer -- Expiration Date;
Extensions; Amendments."
Conditions to the Exchange
Offer......................... The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Trust in their sole
discretion. The Exchange Offer is not
conditioned upon any minimum Liquidation
Amount of Old Capital Securities being
tendered. See "The Exchange
Offer -- Conditions to the Exchange Offer."
The Corporation and the Trust reserve the
right in their sole and absolute discretion,
subject to applicable law, at any time and
from time to time, (i) to delay the
acceptance of the Old Capital Securities for
exchange, (ii) to terminate the Exchange
Offer if certain specified conditions have
not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and
retain all Old Capital Securities tendered
pursuant to the Exchange Offer, subject,
however, to the right of holders of Old
Capital Securities to withdraw their tendered
Old Capital Securities and (iv) to waive any
condition or otherwise amend the terms of the
Exchange Offer in any respect. See "The
Exchange Offer -- Expiration Date;
Extensions; Amendments."
Withdrawal Rights............... Tenders of Old Capital Securities may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written
notice of such withdrawal to the Exchange
Agent (as defined herein) in conformity with
certain procedures set forth below under "The
Exchange Offer -- Withdrawal Rights."
Procedures for Tendering
Old Capital Securities........ To participate in the Exchange Offer, holders
of Old Capital Securities must tender by (a)
book-entry transfer pursuant to the
procedures set forth under "The Exchange
Offer -- Procedures for Tendering Old Capital
Securities" or (b) forwarding certificates
representing such Old Capital Securities with
the Letter of Transmittal. Holders who are
participants in DTC tendering by book-entry
transfer must execute such tender through the
DTC's ATOP (as defined herein) procedures. A
holder using ATOP should transmit its
acceptance to DTC on or prior to the
Expiration Date. DTC will verify such
acceptance, execute a book-entry transfer of
the tendered Old Capital Securities into the
Exchange Agent's account at DTC and then send
to the Exchange Agent confirmation of such
book-entry transfer, including an Agent's
Message confirming that DTC has received an
express acknowledgment from such holder that
such holder has received and agrees to be
bound by the Letter of Transmittal and that
the Corporation and the Trust may enforce the
Letter of Transmittal against such holder.
The book-entry confirmation must be received
by the Exchange Agent in order for the tender
relating thereto to be effective.
If the tender is not made through ATOP,
certificates for such Old Capital Securities,
as well as the Letter of Transmittal (or
facsimile thereof), properly completed and
duly executed, with any required signature
guarantees, and any other documents required
by the Letter of Transmittal, must be
received by the
5
<PAGE> 15
Exchange Agent at its address set forth in
the Letter of Transmittal on or prior to the
Expiration Date in order for such tender to
be effective. See "The Exchange
Offer -- Procedures for Tendering Old Capital
Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should
not be sent to the Corporation or the Trust.
Such documents should only be sent to the
Exchange Agent. Questions regarding how to
tender and requests for information should be
directed to the Exchange Agent. See "The
Exchange Offer -- Exchange Agent."
Resales of Exchange Capital
Securities.................... The Corporation and the trust are making the
Exchange Offer of the Exchange Capital
Securities in reliance on the position of the
staff of the Division of Corporation Finance
of the Commission as set forth in certain
interpretive letters addressed to third
parties in other transactions. However,
neither the Corporation nor the Trust has
sought its own interpretive letter, and there
can be no assurance that the staff of the
Division of Corporation Finance of the
Commission would make a similar determination
with respect to the Exchange Offer as it has
in such interpretive letters to third
parties. Based on these interpretations by
the staff of the Division of Corporation
Finance of the Commission, and subject to the
two immediately following sentences, the
Corporation and the Trust believe that
Exchange Capital Securities issued pursuant
to this Exchange Offer in exchange for Old
Capital Securities may be offered for resale,
resold and otherwise transferred by a holder
thereof (other than a holder who is an
Affiliate or a broker-dealer) without further
compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such Exchange
Capital Securities are acquired in the
ordinary course of such holder's business and
that such holder is not participating, and
has no arrangement or understanding with any
person to participate, in a distribution
(within the meaning of the Securities Act) of
such Exchange Capital Securities. However,
any holder of Old Capital Securities who is
an Affiliate or who intends to participate in
the Exchange Offer for the purpose of
distributing Exchange Capital Securities, or
any broker-dealer who purchased the Old
Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will
not be able to rely on the interpretations of
the staff of the Division of Corporation
Finance of the Commission set forth in the
above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender
such Old Capital Securities in the Exchange
Offer and (c) must comply with the
registration and prospectus delivery
requirements or other transfer of such Old
Capital Securities unless such sale or other
transfer is made pursuant to an exemption
from such requirements. In addition, as
described below, if any Participating
Broker-Dealer holds Old Capital Securities
acquired for its own account as a result of
market-making or other trading activities and
exchanges such Old Capital Securities for
Exchange Capital Securities, then such
Participating Broker-
6
<PAGE> 16
Dealer must deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resales of such Exchange
Capital Securities.
Each holder of Old Capital Securities who
wishes to exchange Old Capital Securities for
Exchange Capital Securities in the Exchange
Offer will be required to represent that (i)
it is not an Affiliate, (ii) any Exchange
Capital Securities to be received by it are
being acquired in the ordinary course of its
business, (iii) it has no arrangement or
understanding with any person to participate
in a distribution (within the meaning of the
Securities Act) of such Exchange Capital
Securities and (iv) if such holder is not a
broker-dealer, such holder is not engaged in,
and does not intend to engage in, a
distribution (within the meaning of the
Securities Act) of such Exchange Capital
Securities. The Letter of Transmittal
contains the foregoing representations. Each
Participating Broker-Dealer must acknowledge
that it acquired the Old Capital Securities
for its own account as the result of
market-making activities or other trading
activities and must agree that it will
deliver a prospectus meeting the requirements
of the Securities Act in connection with any
resale of such Exchange Capital Securities.
See "Plan of Distribution." The Letter of
Transmittal states that by so acknowledging
and by delivering a prospectus, a
Participating Broker-Dealer will not be
deemed to admit that it is an "underwriter"
within the meaning of the Securities Act.
Based on the position taken by the staff of
the Division of Corporation Finance of the
Commission in the interpretive letters
referred to above, the Corporation and the
Trust believe that Participating
Broker-Dealers may fulfill their prospectus
delivery requirements with respect to the
Exchange Capital Securities received upon
exchange of such Old Capital Securities
(other than Old Capital Securities which
represent an unsold allotment from the
original sale of the Old Capital Securities)
with a prospectus meeting the requirements of
the Securities Act, which may be the
prospectus prepared for an exchange offer so
long as it contains a description of the plan
of distribution with respect to the resale of
such Exchange Capital Securities.
Accordingly, this Prospectus, as it may be
amended or supplemented from time to time,
may be used by a Participating Broker-Dealer
in connection with resales of Exchange
Capital Securities received in exchange for
Old Capital Securities where such Old Capital
Securities were acquired by such
Participating Broker-Dealer for its own
account as a result of market-making or other
trading activities. Subject to certain
provisions set forth in the Registration
Agreement, the Corporation and the Trust have
agreed that this Prospectus, as it may be
amended or supplemented from time to time,
may be used by a Participating Broker-Dealer
in connection with resales of such Exchange
Capital Securities for a period ending on the
close of business on the first anniversary
following the Expiration Date or, if earlier,
when all such Exchange Capital Securities
have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution."
Any person, including any Participating
7
<PAGE> 17
Broker-Dealer, who is an Affiliate may not
rely on such interpretive letters and must
comply with the registration and prospectus
delivery requirements of the Securities Act
in connection with any resale transaction.
See "The Exchange Offer -- Resales of
Exchange Capital Securities."
Exchange Agent.................. The Exchange Agent with respect to the
Exchange Offer is The Bank of New York (the
"Exchange Agent"). The addresses, and
telephone and facsimile numbers of the
Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the Letter of
Transmittal.
Federal Income Tax
Consequences.................. The exchange of an Old Capital Security for
an Exchange Capital Security should not
constitute a taxable exchange. See "Certain
United States Federal Income Tax
Consequences -- Exchange Offer."
THE EXCHANGE CAPITAL SECURITIES
Securities Offered.............. $500,000,000 aggregate Liquidation Amount of
Reset Asset Capital Securities (Liquidation
Amount $1,000 per Capital Security).
Distributions................... Holders of Exchange Capital Securities will
be entitled to receive cumulative cash
distributions arising from the payment of
interest on the Junior Subordinated Debt
Securities accruing from the date of original
issuance of the Old Capital Securities and
payable semi-annually in arrears on the 1st
day of June and December of each year,
commencing December 1, 1997, at the
Applicable Rate applied to the Liquidation
Amount of $1,000 per Capital Security. See
"Description of Exchange Capital
Securities -- Distributions." Prior to the
Rate Reset Date, the Applicable Rate on the
Junior Subordinated Debt Securities will be
6.75% per annum. On and after the Rate Reset
Date, the Applicable Rate on the Junior
Subordinated Debt Securities will be a rate
per annum determined on the basis of Orders
placed in a Rate Reset Auction to be held
three Business Days prior to the Rate Reset
Date. Pursuant to the Auction Procedures,
each Existing Holder will indicate its desire
to (i) continue to hold Capital Securities
without regard to the Applicable Rate that
results from the Rate Reset Auction, (ii)
continue to hold Capital Securities if the
Applicable Rate that results from the Rate
Reset Auction is equal to or greater than the
rate bid by such Existing Holder, and/or
(iii) sell Capital Securities without regard
to the Applicable Rate that results from such
Rate Reset Auction. A Bid by an Existing
Holder or a Potential Holder over the
Treasury Rate on the Rate Reset Pricing Date
plus 5.0% per annum will not be considered.
Accordingly, the Auction Procedures establish
the maximum applicable rate per annum that
can result from the Rate Reset Auction. If
Sufficient Clearing Bids have been made in
the Rate Reset Auction, the Applicable Rate
on the Junior Subordinated Debt Securities on
and after the Rate Reset Date will be equal
to (i) the Winning Bid Rate or (ii) if all
Capital Securities are subject to Hold
Orders, the Treasury Rate on the Rate Reset
8
<PAGE> 18
Date plus 1.15% per annum. See "Description
of the Rate Reset Auction."
Extension Periods............... Prior to the Rate Reset Date, the Indenture
provides that the failure by the Corporation
to pay interest on the Junior Subordinated
Debt Securities when due is a Debenture Event
of Default in which case the Property Trustee
may declare the principal of and the interest
on the Junior Subordinated Debt Securities
due and payable. See "Description of Exchange
Junior Subordinated Debt
Securities -- Debenture Events of Default;
Notice." After the Rate Reset Date,
distributions on Capital Securities will be
deferred for the duration of any Extension
Period elected by the Corporation with
respect to the payment of interest on the
Junior Subordinated Debt Securities. No
Extension Period will exceed ten consecutive
semi-annual periods or extend beyond the
Stated Maturity of the Junior Subordinated
Debt Securities. See "Description of Exchange
Junior Subordinated Debt Securities -- Option
to Extend Interest Payment Date" and "Certain
United States Federal Income Tax
Consequences -- Interest and Original Issue
Discount."
Ranking......................... The Exchange Capital Securities will rank
pari passu, and payments thereon will be made
pro rata, with the Common Securities except
as described under "Description of Exchange
Capital Securities -- Subordination of Common
Securities." The Exchange Junior Subordinated
Debt Securities will rank pari passu with all
other junior subordinated debt securities
with substantially similar subordination
terms issued by the Corporation pursuant to
the Indenture ("Other Debentures"), and which
may be issued and sold (if at all) to other
trusts to be established by the Corporation
(if any), in each case similar to the Trust
("Other Trusts"), 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 "Description of Exchange
Junior Subordinated Debt Securities." The
Exchange Guarantee will rank pari passu with
all other guarantees (if any) which may be
issued by the Corporation with respect to
capital securities (if any) which may be
issued by Other Trusts ("Other Guarantees")
and will constitute an unsecured obligation
of the Corporation and will rank subordinate
and junior in right of payment to the extent
and in the manner set forth in the Exchange
Guarantee to all Senior Debt of the
Corporation. See "Description of Exchange
Guarantee." In addition, because the
Corporation is a holding company, the
Exchange Junior Subordinated Debt Securities
and the Exchange Guarantee are effectively
subordinated to all existing and future
liabilities of the Corporation's
subsidiaries, including deposits. See "Risk
Factors -- Status of the Corporation as a
Bank Holding Company."
Mandatory Redemption............ The Corporation must redeem the Junior
Subordinated Debt Securities, in whole but
not in part, in the event of a Failed
Auction, on the Rate Reset Date at a
redemption price equal to the principal
amount of, plus accrued and unpaid interest
on, the Junior Subordinated Debt Securities.
See "Description of the
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<PAGE> 19
Rate Reset Auction" and "Description of
Exchange Junior Subordinated Debt
Securities -- Redemption -- Mandatory
Redemption." Upon the redemption of the
Junior Subordinated Debt Securities, the
proceeds of such redemption shall
concurrently be applied to redeem, at the
applicable Redemption Price, the Capital
Securities, upon the terms and conditions
described herein. See "Description of
Exchange Capital Securities -- Mandatory
Redemption."
Optional Redemption............. Prior to the Rate Reset Date, the Corporation
may not redeem the Junior Subordinated Debt
Securities for any reason. The Corporation
may redeem the Junior Subordinated Debt
Securities (i) in whole, but not in part, on
the Rate Reset Date at a redemption price
equal to the principal amount of, plus
accrued interest on, the Junior Subordinated
Debt Securities and (ii) in whole or in part
at any time on or after June 1, 2009, at the
Optional Redemption Price, 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
"Description of Exchange Junior Subordinated
Debt Securities -- Redemption -- Optional
Redemption." Upon the redemption in whole or
in part of the Junior Subordinated Debt
Securities, the proceeds of such redemption
shall concurrently be applied to redeem, at
the applicable Redemption Price, Capital
Securities having an aggregate Liquidation
Amount equal to the aggregate principal
amount of the Junior Subordinated Debt
Securities so redeemed, upon the terms and
conditions described herein. See "Description
of Exchange Capital Securities -- Mandatory
Redemption."
Tax Event, '40 Act Event and
Capital Treatment Event
Redemption.................... Prior to the Rate Reset Date, the Corporation
may not redeem the Junior Subordinated Debt
Securities for any reason, including the
occurrence of a Tax Event, '40 Act Event or
Capital Treatment Event. If at any time after
the Rate Reset Date a Tax Event, '40 Act
Event or Capital Treatment Event should occur
and be continuing, the Corporation may,
within 90 days following the occurrence of
such Special Event, redeem the Junior
Subordinated Debt Securities, in whole but
not in part, at a redemption price equal to
(i) the Make-Whole Amount upon the occurrence
of a Special Event prior to June 1, 2009, and
(ii) the Optional Redemption Price upon the
occurrence of a Special Event on or after
June 1, 2009, subject to the Corporation
having received prior approval from the
Federal Reserve if then required under
applicable capital guidelines or policies of
the Federal Reserve. See "Description of
Exchange Junior Subordinated Debt
Securities -- Redemption -- Tax Event, '40
Act Event and Capital Treatment Event
Redemption." Upon the redemption of the
Junior Subordinated Debt Securities, the
proceeds of such redemption shall
concurrently be applied to redeem, at the
Special Event Redemption Price, the Trust
Securities, upon the terms and conditions
described herein. See "Description of
Exchange Capital Securities -- Mandatory
Redemption."
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<PAGE> 20
Ratings......................... The Exchange Capital Securities are expected
to be rated "A-" by Standard & Poor's Ratings
Services and "a1" by Moody's Investors
Service, Inc. A security rating is not a
recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning
rating organization. There can be no
assurance that the Exchange Capital
Securities will continue to be so rated in
the future or that such ratings will not be
adversely affected by certain changes in the
terms of the Exchange Junior Subordinated
Debt Securities after the Rate Reset Date.
ERISA Considerations............ Prospective Purchasers must carefully
consider the restrictions on purchase set
forth under "Certain ERISA Considerations."
Absence of Market for the
Capital Securities............ The Exchange Capital Securities will be a new
issue of securities for which there is
currently no market. Although the Initial
Purchaser informed the Corporation and the
Trust in connection with the offering of the
Old Capital Securities that it intended to
make a market in the Old Capital Securities
and, if issued, the Exchange Capital
Securities, the Initial Purchaser is not
obligated to do so, and any such market
making may be discontinued at any time
without notice. Accordingly, there can be no
assurance as to the development or liquidity
of any market for the Old Capital Securities
or the Exchange Capital Securities. See "Plan
of Distribution."
Use of Proceeds................. Neither the Corporation nor the Trust will
receive any cash proceeds from the issuance
of the Exchange Capital Securities offered
hereby. See "Use of Proceeds from Sale of Old
Capital Securities."
Other........................... For additional information regarding the
Capital Securities, see "Description of the
Rate Reset Auction," "Description of Exchange
Capital Securities," "Description of Exchange
Junior Subordinated Debt Securities,"
"Description of Exchange Guarantee,"
"Description of Old Capital Securities" and
"Certain United States Federal Income Tax
Consequences."
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<PAGE> 21
RATE RESET AUCTION
RATE RESET AUCTION PROCEDURES
Prior to the Submission Deadline for the Rate Reset Auction, each Existing
Holder of Capital Securities may submit to the Remarketing Agent (as defined
herein), one or more of the following Orders:
- Hold Order -- indicating a desire to hold a specified amount of
outstanding Capital Securities without regard to the Applicable Rate on
and after the Rate Reset Date.
- Bid -- indicating a desire to hold a specified amount of outstanding
Capital Securities if the Applicable Rate on and after the Rate Reset
Date is not less than the rate specified in such Bid.
- Sell Order -- indicating a desire to sell a specified amount of
outstanding Capital Securities without regard to the Applicable Rate on
and after the Rate Reset Date.
Potential Holders of Capital Securities may submit Bids, to the Remarketing
Agent, in which they will offer to purchase Capital Securities if the Applicable
Rate on and after the Rate Reset Date is not less than the rate specified in
such Bid. The Remarketing Agent will submit the Bids to the Auction Agent (as
defined herein) by 10:00 a.m. on the Business Day following the Submission
Deadline. The Auction Agent will determine if Sufficient Clearing Bids have been
made and, if so, the Winning Bid Rate in accordance with the procedures set
forth herein.
An Order may be submitted only in a stated Liquidation Amount of $100,000
or an integral multiple of $100,000 in excess thereof. An Existing Holder may
submit different types of Orders in the Rate Reset Auction with respect to
Capital Securities then held by such Existing Holder, provided that the total
stated Liquidation Amount of Capital Securities covered by such Orders does not
exceed the stated Liquidation Amount of Capital Securities held by such Existing
Holder. An Existing Holder that offers to purchase additional Capital Securities
is, for purposes of such offer, treated as a Potential Holder as described
below. Bids by Existing Holders with rates higher than the Treasury Rate on the
Rate Reset Pricing Date plus 5.0% per annum (the "Maximum Applicable Rate") will
be treated as Sell Orders, and Bids by a Potential Holder with a rate higher
than the Maximum Applicable Rate will not be considered. Accordingly, the
Auction Procedures establish the maximum applicable rate per annum that can
result from the Rate Reset Auction. A Sell Order will be deemed to have been
submitted on behalf of an Existing Holder if an Order is not submitted on behalf
of such Existing Holder for any reason.
If Sufficient Clearing Bids have been made (that is, the aggregate
principal amount of Capital Securities subject to Bids by Potential Holders with
rates equal to or lower than the Maximum Applicable Rate is at least equal to
the aggregate principal amount of Capital Securities subject to Sell Orders by
Existing Holders), the Applicable Rate on and after the Rate Reset Date will be
the lowest rate specified in the Submitted Bids, which, taking into account such
rate and all lower rates bid by Existing Holders and Potential Holders, would
result in Existing Holders that have placed Submitted Bids and Potential Holders
owning all of the Capital Securities available for purchase in the Rate Reset
Auction. If Sufficient Clearing Bids have not been made (a "Failed Auction"),
the Corporation will be required on the Rate Reset Date to redeem the Junior
Subordinated Debt Securities at par plus any accrued and unpaid interest
thereon. See "Description of Exchange Junior Subordinated
Debentures -- Redemption -- Mandatory Redemption." If all outstanding Capital
Securities are subject to Hold Orders, the Applicable Rate on and after the Rate
Reset Date will be the Full Participation Rate, which is the Treasury Rate on
the Rate Reset Date plus 1.15% per annum.
The Auction Procedures include a pro rata allocation of Capital Securities
for purchase, which may result in an Existing Holder or a Potential Holder
purchasing a stated Liquidation Amount of Capital Securities that is less than
the principal amount of Capital Securities specified in its Order. Existing
Holders electing to hold or sell Capital Securities will not be subject to
proration procedures.
RISK FACTORS
Holders tendering Old Capital Securities in the Exchange Offer should
carefully consider the matters set forth under "Risk Factors."
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<PAGE> 22
RISK FACTORS
Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters prior to tendering Old Capital Securities in the
Exchange Offer.
RANKING OF OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR SUBORDINATED DEBT
SECURITIES
The obligations of the Corporation under the Guarantee issued by the
Corporation for the benefit of the holders of Capital Securities and under the
Junior Subordinated Debt Securities are unsecured and rank subordinate and
junior in right of payment to all Senior Debt (which, as defined, includes
without limitation all outstanding subordinated debt of the Corporation) of the
Corporation. At June 30, 1997, the aggregate outstanding Senior Debt of the
Corporation, on an unconsolidated basis, was approximately $833 million. The
obligations of the Corporation under the Guarantee also rank subordinate and
junior in right of payment to creditors of the Corporation's subsidiaries. See
"-- Status of the Corporation as a Bank Holding Company." The Corporation will
not have any indebtedness that ranks pari passu with or junior to its
obligations under the Guarantee and the Junior Subordinated Debt Securities.
None of the Indenture, the Guarantee or the Declaration places any limitation on
the amount of secured or unsecured debt, including Senior Debt, that may be
incurred by the Corporation or any subsidiary. See "Description of Exchange
Junior Subordinated Debt Securities -- Subordination" and "Description of
Exchange Guarantee -- Status of the Guarantee."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Junior Subordinated
Debt Securities as and when required.
STATUS OF THE CORPORATION AS A BANK HOLDING COMPANY
The Corporation is a legal entity separate and distinct from its
subsidiaries, although the principal source of the Corporation's cash revenues
is dividends from its subsidiaries. The right of the Corporation to participate
in the distribution of assets of any subsidiary, upon the latter's liquidation,
reorganization or otherwise (and thus the ability of the holders of Capital
Securities to benefit indirectly from any such distribution) will be subject to
the prior claims of such subsidiary's creditors, which will take priority except
to the extent that the Corporation may itself be a creditor of such subsidiary
with a recognized claim. As of June 30, 1997, the Corporation's subsidiaries had
indebtedness and other liabilities of approximately $46.1 billion. Accordingly,
the Junior Subordinated Debt Securities will be effectively subordinated to all
existing and future liabilities of the Corporation's subsidiaries, and holders
of Junior Subordinated Debt Securities should look only to the assets of the
Corporation for payments on the Junior Subordinated Debt Securities. Because the
Corporation is a holding company with limited assets and liabilities, a
substantial portion of the consolidated liabilities of the Corporation are
liabilities of its subsidiaries. The Guarantee constitutes an unsecured
obligation of the Corporation and ranks subordinate and junior in right of
payment to all Senior Debt in the same manner as the Junior Subordinated Debt
Securities.
As a holding company, the Corporation conducts its operations principally
through its subsidiaries and, therefore, its principal source of cash, other
than its investing and financing activities, is receipt of dividends from its
subsidiaries. However, there are legal limitations on the source and amount of
dividends that a national bank is permitted to pay. A national bank may pay
dividends only to the extent that retained net profits (including the portion
transferred to surplus) exceed bad debts (as defined by regulation). Moreover,
unless a national bank's surplus fund equals its common capital, dividends may
be paid only after 10 percent of its net profits (as defined by regulation) for
the specified preceding period have been transferred to the bank's surplus fund.
In addition, prior approval of the Office of Comptroller of the Currency (the
"OCC") is required if the total of all dividends declared by a national bank in
any calendar year will exceed the sum of that bank's net profits for that year
and its retained net profits for the preceding two calendar years, less any
required transfers to either surplus or any fund for retirement of any preferred
stock. At June 30, 1997 the Corporation's bank subsidiaries could have paid $664
million in dividends to the Corporation without prior OCC approval. The payment
of dividends by the Corporation's subsidiaries will also be affected by other
factors, such as requirements for the maintenance of adequate capital. In
addition, the OCC is authorized to
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<PAGE> 23
determine, under certain circumstances relating to the financial condition of a
national bank, whether the payment of dividends would be an unsafe or unsound
banking practice and to prohibit payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
After the Rate Reset Date and so long as no Debenture Event of Default has
occurred and is continuing, the Corporation has the right under the Indenture to
defer the payment of interest on the Junior Subordinated Debt Securities at any
time or from time to time for a period not exceeding ten consecutive semi-annual
periods with respect to each Extension Period; provided, however, that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debt Securities. As a consequence of any such deferral, semi-annual
Distributions on the Capital Securities by the Trust will also be deferred (and
the amount of Distributions to which holders of the Capital Securities are
entitled will accumulate additional Distributions thereon at the Applicable Rate
thereof, compounded semi-annually from the relevant payment date for such
Distributions during any such Extension Period). During any Extension Period,
the Corporation may not (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 (which includes common and preferred stock),
(ii) make any payment of principal, interest or premium, if any, on, or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in interest to, the Junior
Subordinated Debt Securities or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of the debt securities of any subsidiary of
the Corporation (including Other Guarantees) if such guarantee ranks pari passu
with or junior in interest to the Junior Subordinated Debt Securities (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 the Guarantee, (d) purchases or acquisitions of shares of the
Corporation's common stock in connection with the satisfaction by the
Corporation of its obligations under any employee benefit plan or any other
contractual obligation of the Corporation (other than a contractual obligation
ranking pari passu with or junior to the Junior Subordinated Debt Securities),
(e) as a result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
for another class or series of the Corporation's capital stock or (f) the
purchase of fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged). Prior to the termination of any
Extension Period, the Corporation may further extend such Extension Period;
provided, however, that such extension does not cause such Extension Period to
exceed ten consecutive semi-annual periods or to extend beyond the Stated
Maturity of the Junior Subordinated Debt Securities. Upon the termination of any
Extension Period and the payment of all interest then accrued and unpaid on the
Junior Subordinated Debt Securities (together with interest thereon accrued at
the Applicable Rate compounded semi-annually, to the extent permitted by
applicable law), and subject to the foregoing limitations, 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
"Description of Exchange Capital Securities -- Distributions" and "Description
of Exchange Junior Subordinated Debt Securities -- Option to Extend Interest
Payment Date."
The Corporation believes, and will take the position, that the Junior
Subordinated Debt Securities will be considered to be issued without "original
issue discount" ("OID") for United States federal income tax purposes based on
applicable Treasury Regulations. Based on this position, holders of Capital
Securities generally will include their allocable share of the interest on the
Junior Subordinated Debt Securities in taxable income under their own methods of
tax accounting (i.e., cash or accrual). Under applicable Treasury Regulations,
however, if the Corporation were to exercise its right to defer payments of
interest, the Junior Subordinated Debt Securities would become OID instruments
and would remain as such for as long as the Junior Subordinated Debt Securities
remained outstanding. Consequently, for United States federal income tax
purposes, holders of Capital Securities would be required to include their pro
rata share of OID in gross income as it accrues in advance of the receipt of
cash attributable to such interest income. Such holders would not receive the
cash related to such income if they dispose of the Capital Securities prior to
the record date for
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<PAGE> 24
payment of distributions thereafter. See "Certain United States Federal Income
Tax Consequences -- Interest and Original Issue Discount" and "-- Disposition of
the Capital Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debt Securities in the future, the market
price of the Capital Securities is likely to be affected. A holder that disposes
of its Capital Securities during an Extension Period, therefore, might not
receive the same return on its investment as a holder that continues to hold its
Capital Securities. In addition, as a result of the existence of the
Corporation's right to defer interest payments on the Junior Subordinated Debt
Securities after the Rate Reset Date, the market price of the Capital Securities
(which represent beneficial ownership interests in the Trust holding the Junior
Subordinated Debt Securities as its sole assets) may be more volatile than the
market prices of other securities that are not subject to such deferrals.
TAX EVENT, '40 ACT EVENT OR CAPITAL TREATMENT EVENT REDEMPTION
After the Rate Reset Date and upon the occurrence and continuation of a Tax
Event, '40 Act Event or Capital Treatment Event (each a "Special Event"), the
Corporation may, at its option within 90 days following the occurrence of such
Special Event and subject to receipt of prior approval of the Federal Reserve if
such approval is then required under applicable capital guidelines or policies,
redeem the Junior Subordinated Debt Securities in whole, but not in part, at the
Special Event Redemption Price. In such event, the Trust will redeem the Capital
Securities. See "Description of Exchange Junior Subordinated Debt
Securities -- Redemption -- Tax Event, '40 Act Event and Capital Treatment Event
Redemption," "Description of Exchange Capital Securities -- Mandatory
Redemption" and "Description of Exchange Capital Securities -- Liquidation of
the Trust and Distribution of Junior Subordinated Debt Securities."
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
On February 6, 1997, the revenue portion of President Clinton's fiscal year
1998 budget proposal (the "Budget Proposal") was released. If enacted, the
Budget Proposal would generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 15 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 Corporation's consolidated
balance sheet. The above described provision of the Budget Proposal is proposed
to be effective generally for instruments issued on or after the date of first
Congressional committee action. No such action has yet occurred and neither the
House of Representatives nor the Senate has included the above described
provision of the Budget Proposal in the revenue provisions of H.R. 2014 (as
approved by the House of Representatives on June 26, 1997 and by the Senate on
June 27, 1997). If the above described provision were to apply to the Junior
Subordinated Debt Securities, the Corporation would be unable to deduct interest
on the Junior Subordinated Debt Securities. Under current law, the Corporation
will be able to deduct interest on the Junior Subordinated Debt Securities.
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 Junior Subordinated Debt Securities. Such a change could give
rise to a Tax Event, which, after the Rate Reset Date, may permit the
Corporation to cause a redemption of the Capital Securities, as described more
fully under "Description of Exchange Capital Securities -- Mandatory Redemption"
and "Description of Exchange Junior Subordinated Debt Securities --
Redemption -- Tax Event, '40 Act Event and Capital Treatment Event Redemption."
See also "Certain United States Federal Income Tax Consequences -- Possible Tax
Law Changes."
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The Corporation, as the holder of the outstanding Common Securities, has
the right at any time to terminate the Trust and cause the Junior Subordinated
Debt Securities to be distributed to the holders of the Capital Securities.
Under current United States federal income tax law and interpretations thereof
and assuming, as expected, that the Trust is treated as a grantor trust for
United States federal income tax purposes, a distribution by the Trust of the
Junior Subordinated Debt Securities pursuant to a liquidation of the Trust would
not be a taxable event to the Trust or to holders of the Capital Securities and
would result in a
15
<PAGE> 25
holder of a Capital Securities receiving directly such holder's pro rata share
of the Junior Subordinated Debt Securities (previously held indirectly through
the Trust). If, however, the liquidation of the Trust were to occur because the
Trust is subject to United States federal income tax with respect to income
accrued or received on the Junior Subordinated Debt Securities as a result of
the occurrence of a Tax Event or otherwise, the distribution of Junior
Subordinated Debt Securities to holders of the Capital Securities by the Trust
would be a taxable event to the Trust and each holder of Capital Securities, and
such holders would recognize gain or loss as if they had exchanged their Capital
Securities for the Junior Subordinated Debt Securities they received upon the
liquidation of the Trust. See "Certain United States Federal Income Tax
Consequences -- Distribution of Junior Subordinated Debt Securities or Cash Upon
Liquidation of the Trust."
There can be no assurance as to the market prices for Capital Securities,
or Junior Subordinated Debt Securities that may be distributed in exchange for
Capital Securities, if a liquidation of the Trust occurs. Accordingly, the
Capital Securities or the Junior Subordinated Debt Securities may trade at a
discount to the price that the investor paid to purchase the Capital Securities
offered hereby. Because holders of Capital Securities may receive Junior
Subordinated Debt Securities on termination of the Trust, prospective purchasers
of Capital Securities are also making an investment decision with regard to the
Junior Subordinated Debt Securities and should carefully review all the
information regarding the Junior Subordinated Debt Securities contained herein.
See "Description of Exchange Capital Securities -- Liquidation of the Trust and
Distribution of the Junior Subordinated Debt Securities" and "Description of
Exchange Junior Subordinated Debt Securities -- General."
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Capital Securities the
following payments, to the extent not paid by the Trust: (i) any accumulated and
unpaid Distributions required to be paid on the Capital Securities, to the
extent that the Trust has funds on hand available therefor at such time,
(ii) the applicable Redemption Price with respect to any Capital Securities
called for redemption, to the extent that the Trust has funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary dissolution,
winding-up or liquidation of the Trust (unless the Junior Subordinated Debt
Securities are distributed to holders of the Capital 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 Trust has funds on
hand available therefor at such time, and (b) the amount of assets of the Trust
remaining available for distribution to holders of the Capital Securities after
the satisfaction of liabilities to creditors of the Trust as provided by
applicable law.
The holders of not less than a majority in aggregate Liquidation Amount of
the Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of the Capital
Securities may institute a legal proceeding directly against the Corporation to
enforce its rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If the Corporation were to default on its obligation to pay amounts
payable under the Junior Subordinated Debt Securities, the Trust would lack
funds for the payment of Distributions or amounts payable on redemption of the
Capital Securities or otherwise, and, in such event, holders of the Capital
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, 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 principal of or interest on the Junior Subordinated Debt
Securities on the applicable payment date, then a holder of Capital Securities
may institute a Direct Action. Notwithstanding any payments made to a holder of
Capital Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of and interest on the
Junior Subordinated Debt Securities, and the Corporation shall be subrogated to
the rights of the holder of such Capital Securities with respect to payments on
the Capital Securities to the extent of any payments made by the Corporation to
such holder in any Direct Action. Except as described herein, holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debt Securities or assert directly any
other rights in respect of the Junior Subordinated Debt Securities. See
"Description of Exchange Junior Subordinated Debt
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<PAGE> 26
Securities -- Enforcement of Certain Rights by Holders of Capital Securities,"
"Description of Exchange Junior Subordinated Debt Securities -- Debenture Events
of Default" and "Description of Exchange Guarantee." The Declaration provides
that each holder of Capital Securities by acceptance thereof agrees to the
provisions of the Guarantee and the Indenture. The Bank of New York will act as
Guarantee Trustee under the Guarantee and will hold the Guarantee for the
benefit of the holders of the Capital Securities. The Bank of New York will also
act as Property Trustee under the Declaration and as Debenture Trustee under the
Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities generally have limited voting rights relating
only to the modification of the Capital Securities, the dissolution, winding-up
or liquidation of the Trust, and the exercise of the Trust's rights as holder of
Junior Subordinated Debt Securities. The right to vote to appoint, remove or
replace the Property Trustee, the Delaware Trustee or the Administrative
Trustees is vested exclusively in the holder of the Common Securities except,
with respect to the Property Trustee and the Delaware Trustee, upon the
occurrence of certain events described herein. The Property Trustee, the
Administrative Trustees and the Corporation may amend the Declaration without
the consent of holders of Capital Securities to ensure that the Trust 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 Exchange Capital Securities -- Removal of Issuer Trustees" and
" -- Voting Rights; Amendment of the Declaration."
REGULATORY CAPITAL REQUIREMENTS
The Corporation is subject to regulatory capital guidelines. At June 30,
1997, the Corporation was in compliance with applicable regulatory capital
requirements. The Corporation, at that date, had a total capital to
risk-weighted assets ratio of 13.85% and a Tier 1 Capital to risk-weighted
assets ratio of 9.01%, both above the minimum requirements of 8.0% and 4.0%,
respectively. The Corporation's leverage ratio at that date was 7.56%.
Although the minimum leverage ratio requirement is 3.00%, most bank holding
companies, including the Corporation, are expected to maintain an additional
cushion of at least 100 to 200 basis points above the minimum. However, the
Federal Reserve may assign a specific capital ratio to an individual bank
holding company, including the Corporation, based on its assessment of asset
quality, earnings performance, interest-rate risk and liquidity. As of the date
of this Prospectus, the Federal Reserve has not advised the Corporation of a
specific leverage ratio requirement.
There can be no assurance that the Corporation will continue to be able to
meet its respective minimum capital ratios. In the event that the Corporation
falls below the minimum capital requirements described above, agencies may take
regulatory action. Such actions could impair the Corporation's ability to make
principal and interest payments on the Junior Subordinated Debt Securities.
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities that remain outstanding after consummation of the Exchange Offer will
continue to bear a legend reflecting such restrictions on transfer. In addition,
upon consummation of the Exchange Offer, holders of Old Capital Securities that
remain outstanding will not be entitled to any rights to have such Old Capital
Securities registered under the Securities Act or to any similar rights under
the Registration Agreement (subject to certain limited exceptions). The
Corporation and the Trust do not intend to register under the Securities Act any
Old Capital Securities that remain outstanding after consummation of the
Exchange Offer (subject to such limited exceptions, if applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities that remain outstanding after the
Exchange Offer could be adversely affected.
17
<PAGE> 27
The Exchange Capital Securities and any Old Capital Securities that remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Declaration and, accordingly, will vote
together as a single class for purposes of determining whether holders of the
requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Declaration. See
"Description of Exchange Capital Securities -- General."
The Registration Agreement provides that if the Exchange Offer is not
consummated by December 3, 1997, the Distribution rate borne by the holders of
Old Capital Securities will increase by 0.25% per annum commencing on December
4, 1997 until the Exchange Offer is consummated. The aggregate amount of such
additional Distributions payable pursuant to the foregoing provisions will in no
event exceed 0.50% per annum. See "Description of Old Capital Securities." Upon
consummation of the Exchange Offer, the holders of Capital Securities will not
be entitled to any such increase in the Distribution rate thereon.
ABSENCE OF PUBLIC MARKET
The Old Capital Securities have not been registered under the Securities
Act and will be subject to significant restrictions on resale to the extent that
they are not exchanged for Exchange Capital Securities. Although the Exchange
Capital Securities will generally be permitted to be resold or otherwise
transferred by the holders (who are not Affiliates of the Corporation or the
Trust) without compliance with the registration requirements under the
Securities Act, they will constitute a new issue of securities with no
established trading market. The Capital Securities may be transferred only in
blocks having a stated Liquidation Amount of $100,000 (100 Capital Securities or
Exchange Capital Securities, as the case may be) or an integral multiple of
$100,000 in excess thereof. There is no existing market for the Exchange Capital
Securities and there can be no assurance as to the liquidity of any markets that
may develop for the Exchange Capital Securities or the ability of the holders to
sell their Exchange Capital Securities or at what price holders of the Exchange
Capital Securities will be able to sell such Exchange Capital Securities. Future
trading prices of the Exchange Capital Securities will depend on many factors
including, among other things, prevailing interest rates, the Corporation's
operating results and the market for similar securities. The Initial Purchaser
informed the Corporation and the Trust in connection with the offering of the
Old Capital Securities that the Initial Purchaser intended to make a market in
the Old Capital Securities and, if issued, the Exchange Capital Securities;
however, the Initial Purchaser is not obligated to do so and any such market
making activity may be terminated at any time without notice to the holders of
the Exchange Capital Securities.
Notwithstanding the registration of the Exchange Capital Securities
pursuant to the Exchange Offer, holders who are Affiliates of the Corporation or
the Trust may publicly offer for sale or resell the Exchange Capital Securities
only in compliance with the provisions of Rule 144 under the Securities Act.
Each Participating Broker-Dealer that receives Exchange Capital Securities
for its own account in exchange for Old Capital Securities, where such Old
Capital Securities were acquired by such Participating Broker-Dealer as a result
of market-making activities or other trading activities, must acknowledge that
it acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it will
deliver a prospectus in connection with any resale of such Exchange Capital
Securities. See "Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Subject to certain exceptions more fully described under "The Exchange
Offer -- Acceptance for Exchange and Issuance of Exchange Capital Securities,"
issuance of the Exchange Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Exchange Agent of such Old Capital Securities (unless such holder
complies with the procedures specified for guaranteed delivery of the Old
Capital Securities), a properly completed and duly executed Letter of
Transmittal or Agent's Message in lieu thereof and all other required documents.
Therefore, holders of the Old Capital Securities desiring to tender such Old
Capital Securities in exchange for Exchange Capital Securities should allow
sufficient time to ensure timely delivery. None of the Corporation, the Trust or
the Exchange Agent is under any duty to give notification of defects or
irregularities with respect to the tenders of Old Capital Securities for
exchange.
18
<PAGE> 28
USE OF PROCEEDS FROM SALE OF OLD CAPITAL SECURITIES
Neither the Trust nor the Corporation will receive cash proceeds from the
issuance of the Exchange Capital Securities offered hereby. In consideration for
issuing the Exchange Capital Securities in exchange for Old Capital Securities
as described in this Prospectus, the Trust will receive Old Capital Securities
in like Liquidation Amount. The Old Capital Securities surrendered in exchange
for the Exchange Capital Securities will be retired and canceled.
The net proceeds to the Trust from the offering of the Old Capital
Securities were $498,910,000.
All of the proceeds from the sale of the Old Capital Securities and the
Common Securities were invested by the Trust in the Old Junior Subordinated Debt
Securities. The Corporation has applied the net proceeds from the sale of the
Old Junior Subordinated Debt Securities to its general funds to be used for
general corporate purposes, including, from time to time, the repurchase of
shares of the common stock of the Corporation, in the open market or in
privately negotiated transactions, and the making of advances to its
subsidiaries. A portion of such net proceeds could be used in connection with
one or more future acquisitions. From time to time, the Corporation investigates
and holds discussions and negotiations in connection with possible transactions
with other banks. As of the date of this Prospectus, the Corporation has not
entered into any agreements or understandings with respect to any potential
acquisitions or any other material transactions of the type referred to above
and no discussions or negotiations are taking place. Pending any such
application by the Corporation, the net proceeds may be invested in short-term
interest-bearing securities, invested in equity securities, or used to reduce
short-term borrowings.
NATIONAL CITY CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the original declaration of trust executed by the Corporation, as
Depositor, The Bank of New York (Delaware), as Delaware Trustee, and the
Administrative Trustees named therein, which original declaration of trust was
amended and restated and executed on June 6, 1997, by the Corporation, as
Depositor, The Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative Trustees named therein
(the "Declaration"), and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on May 29, 1997. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities (ii) using the proceeds
from the sale of the Trust Securities to acquire the Old Junior Subordinated
Debt Securities and (iii) engaging in only those other activities necessary,
advisable or incidental thereto, which includes engaging in this Exchange Offer.
Accordingly, the Junior Subordinated Debt Securities are the sole assets of the
Trust, and payments under the Junior Subordinated Debt Securities will be the
sole revenues of the Trust. All of the Common Securities are owned by the
Corporation. The Common Securities rank pari passu, and payments will be made
thereon pro rata, with the Capital Securities, except that upon the occurrence
and continuance of an Event of Default (or an event that, with notice or the
passage of time, would become such an Event of Default) under the Declaration
resulting from a Debenture Event of Default, the rights of the Corporation as
holder of the Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption or otherwise are subordinated to the
rights of the holders of the Capital Securities. See "Description of Exchange
Capital Securities -- Subordination of Common Securities." The Corporation has
acquired Common Securities in an aggregate Liquidation Amount equal to 3% of the
total capital of the Trust. The Trust has a term of 40 years, but may terminate
earlier as provided in the Declaration. The Trust's business and affairs are
conducted by its trustees, each appointed by the Corporation as holder of the
Common Securities. The trustees for the Trust are The Bank of New York, as the
Property Trustee, The Bank of New York (Delaware), as the Delaware Trustee, and
three individual trustees as Administrative Trustees who are employees or
officers of or affiliated with the Corporation (collectively, the "Issuer
Trustees"). The Bank of New York, as Property Trustee, acts as sole indenture
trustee under the Declaration. The Bank of New York also acts as trustee under
the Old Guarantee and will act as trustee under the Exchange Guarantee. See
"Description of Exchange Junior Subordinated Debt Securities" and "Description
of Exchange Guarantee." The holder of the Common Securities, or the holders of a
majority in Liquidation Amount of the Capital Securities, if an Event of Default
under the Declaration resulting from a
19
<PAGE> 29
Debenture Event of Default has occurred and is continuing, will be entitled to
appoint, remove or replace the Property Trustee and/or the Delaware Trustee. In
no event will the holders of the Capital 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 Declaration. Pursuant to
the expense provisions under the Indenture, the Corporation, as obligor on the
Junior Subordinated Debt Securities, will pay all fees and expenses related to
the Trust and the offering of the Capital Securities and will pay, directly or
indirectly, all ongoing costs, expenses and liabilities of the Trust. See
"Description of Exchange Capital Securities -- Expenses and Taxes." The address
and telephone number of the principal executive office of the Trust is 1900 East
Ninth Street, Cleveland, Ohio 44114-3484, and its telephone number is (216)
575-2000.
NATIONAL CITY CORPORATION
National City is a $52 billion diversified financial services company based
in Cleveland, Ohio. At December 31, 1996, National City was the third largest
bank holding company headquartered in the State of Ohio and approximately the
19th largest in the United States on the basis of total assets. National City
owns and operates 11 commercial banks and 885 banking offices in Ohio, Kentucky,
Indiana and Pennsylvania. National City's five largest subsidiary banks (and
only significant subsidiaries) are National City Bank of Pennsylvania, National
City Bank, National City Bank of Columbus, National City Bank of Indiana and
National City Bank of Kentucky. The banks and other subsidiaries and divisions
are engaged in a variety of financial services businesses. In addition to a
general commercial banking business, National City or its subsidiaries are
engaged in trust, mortgage banking, merchant banking, leasing, item processing,
venture capital, insurance and other financial-related businesses.
National City, a Delaware corporation, is a bank holding company registered
with the Federal Reserve under the Bank Holding Company Act of 1956, as amended.
National City's executive offices are located at 1900 East Ninth Street,
Cleveland, Ohio 44114-3484, and its telephone number is (216) 575-2000.
RECENT EVENTS
CONSOLIDATED RESULTS OF THE SIX MONTHS ENDED JUNE 30, 1997
The Corporation reported net income of $394.4 million for the first six
months of 1997, an increase of 9.7% over the $359.7 million earned in the first
half of 1996. Fully-diluted net income per common share was $1.77 for the first
six months of 1997, up 10.6% over $1.60 earned in 1996. The growth in net income
was due to loan growth, strong fee income and ongoing management of expenses
On a tax-equivalent basis, net interest income was $971.8 million in the
first six months of 1997, down $3.7 million from $975.5 million in the first six
months of 1996. The Corporation's net interest margin was 4.28%, down 0.13% from
the comparable period in 1996. Although average total loans were up 4.9%, the
lower net interest income and resulting contraction of the margin was due to the
sale of a $400 million private label credit card portfolio, overall tighter
spreads on loans, and the use of higher cost funding to support earning asset
growth.
Non-interest income totaled $598.4 million for the period ended June 30,
1997. This represented an increase of 12.0% over the same period last year. The
increase was driven by gains in card-related fees, trust fees, item processing
fees, bank office fees and service charges. Securities gains totaled $47.2
million during the 1997 period compared to $81.4 million in 1996.
For the first six months of 1997 and 1996, noninterest expense totaled
$957.7 million and $989.1 million, respectively. Excluding merger and
restructuring expenses of $39.6 million in 1997 and $74.7 million in 1996,
noninterest expense totaled $918.1 million and $914.4 million for those periods,
respectively. The increase in operating expenses reflects business growth. The
1997 merger and restructuring charges included a one-time charge of $33.3
million to cover costs of reorganizing National City's six Ohio banking
subsidiaries under a
20
<PAGE> 30
single charter, and a one-time charge of $6.3 million relating to organizational
restructuring at National City's item processing subsidiary. The 1996 merger and
restructuring charges were incurred in connection with the Integra Financial
Corporation merger, which closed May 3, 1996.
The Corporation's efficiency ratio was 61.00% for the first half of 1997,
compared to 65.51% a year ago.
The return on average total equity and the return on average assets was
18.25% and 1.59%, respectively, for the six months ended June 30, 1997. This
compares to returns of 17.66% and 1.48%, respectively, for the same period in
1996.
Total assets as of June 30, 1997 were $52.0 billion. Earning assets at June
30, 1997 were $47.0 billion compared to earning assets of $44.2 billion at June
30, 1996. The increase in earning assets results primarily from an increase in
loans. Total loans at period end were $37.3 billion, up from total loans of
$35.1 billion a year ago. The most significant growth occurred in the commercial
and consumer loan portfolios. Deposits at June 30, 1997 totaled $35.6 billion
compared to $34.7 billion a year ago. The increase in deposits results from an
increase in core deposits as well as an increase in purchased deposits used to
support loan growth. At June 30, 1997, stockholders' equity was $4.3 billion, up
from $4.1 billion at June 30, 1996. During the first half of 1997, National City
purchased 10 million shares of its common stock in the open market or through
privately negotiated transactions. At June 30, 1997, 5 million shares remained
authorized for purchase.
The allowance for loan losses was $707.5 million at June 30, 1997, or 1.90%
of loans outstanding, compared to $709.1 million or 2.02% at June 30, 1996. The
provision for loan losses was $72.0 million for the six months ended June 30,
1997, up slightly from $69.4 million for the same period a year ago. The
provision for loan losses exceeded loan net charge-offs for the period. Loan net
charge-offs as a percentage of average loans were 0.36% for the first half of
1997, down from 0.38% for the comparable period in 1996. Non-performing assets
were $157.4 million at June 30, 1997, down $32.3 million from last year.
The following unaudited consolidated summary sets forth selected financial
data for the Corporation and subsidiaries for the six month periods ended June
30, 1997 and 1996. The summary should be read in conjunction with the financial
information incorporated by reference to other documents. See "Incorporation of
Certain Documents by Reference."
21
<PAGE> 31
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1997 1996
------- -------
(IN MILLIONS, EXCEPT
RATIOS
AND PER SHARE
AMOUNTS)
<S> <C> <C>
Summary of Operations:
Net interest income (tax-equivalent basis)......................... $ 972 $ 976
Provision for loan losses.......................................... 72 69
Noninterest income................................................. 646 616
Noninterest expense................................................ 958 989
Net income......................................................... 394 360
Net income applicable to common stock.............................. 394 356
Per Share Data:
Net income
Primary......................................................... $ 1.77 $ 1.62
Fully diluted................................................... 1.77 1.60
Book value......................................................... 19.79 18.60
Period-End Balance Sheet Data:
Assets............................................................. $52,027 $48,806
Loans.............................................................. 37,290 35,123
Securities......................................................... 8,865 8,561
Earning assets..................................................... 47,011 44,180
Deposits........................................................... 35,574 34,696
Long-term debt..................................................... 4,448 3,176
Total equity....................................................... 4,251 4,121
Common shares...................................................... 215 222
Key Performance Ratios:
Return on average assets........................................... 1.59% 1.48%
Return on average total equity..................................... 18.25 17.66
Net interest margin................................................ 4.28 4.41
Efficiency......................................................... 61.00 65.51
Allowance for loan losses as a percentage of loans................. 1.90 2.02
Average equity to average assets................................... 8.73 8.39
Capital Ratios:
Tier 1 capital to risk-weighted assets............................. 9.01% 10.13%
Total risk based capital to risk-weighted assets................... 13.85 15.00
Leverage ratio..................................................... 7.56 7.85
</TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ------------------------------------
JUNE 30, 1997 1996 1995 1994 1993 1992
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits............ 3.06 3.05 2.55 3.50 4.08 3.26
Including interest on deposits............ 1.65 1.67 1.47 1.69 1.69 1.41
</TABLE>
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<PAGE> 32
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following unaudited consolidated summary sets forth selected financial
information for National City and its subsidiaries for each of the years in the
five-year period ending December 31, 1996. The following summary should be read
in conjunction with the financial information incorporated herein by reference
to other documents. See "Incorporation of Certain Documents by Reference."
NATIONAL CITY CORPORATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Interest income........................................ $ 3,655 $ 3,604 $ 3,003 $ 2,868 $ 3,041
Interest expense....................................... 1,713 1,776 1,237 1,125 1,381
------- ------- ------- ------- -------
Net interest income.................................... 1,942 1,828 1,766 1,743 1,660
Provision for loan losses.............................. 146 113 110 143 226
------- ------- ------- ------- -------
Net interest income after provision for loan losses.... 1,796 1,715 1,656 1,600 1,434
Noninterest income..................................... 1,273 1,069 1,006 953 925
Noninterest expense.................................... 2,011 1,939 1,803 1,761 1,787
------- ------- ------- ------- -------
Income before income taxes and cumulative effect of
accounting changes................................. 1,058 845 859 792 572
Income taxes........................................... 321 254 261 235 164
------- ------- ------- ------- -------
Net income before cumulative effect of accounting
changes.............................................. 737 591 598 557 408
Cumulative effect of accounting changes, net........... -- -- -- 60 --
------- ------- ------- ------- -------
Net income............................................. $ 737 $ 591 $ 598 $ 617 $ 408
======= ======= ======= ======= =======
Per Share Data:
Net income
Primary.............................................. $ 3.29 $ 2.68 $ 2.64 $ 2.62 $ 1.76
Fully diluted........................................ 3.27 2.64 2.60 2.59 1.76
Dividends paid per common share........................ 1.47 1.30 1.18 1.06 .94
Book value............................................. 19.86 18.33 15.35 15.94 13.42
Average shares outstanding
Primary.............................................. 222.67 215.10 220.82 228.79 221.28
Fully diluted........................................ 225.50 224.00 229.84 238.31 232.12
Period-End Balance Sheet Data:
Total assets........................................... $50,856 $50,542 $45,869 $45,165 $42,322
Loans.................................................. 35,830 34,466 30,701 28,602 25,952
Allowance for loan losses.............................. 706 706 707 685 623
Securities............................................. 8,997 10,345 9,637 11,323 10,898
Deposits............................................... 36,000 35,581 34,555 33,144 33,192
Long-term debt......................................... 2,994 3,025 2,012 1,261 1,010
Common equity.......................................... 4,432 3,878 3,272 3,597 3,008
Total equity........................................... 4,432 4,064 3,460 3,795 3,245
Performance Ratios:
Return on average assets............................... 1.51% 1.23% 1.35% 1.46% .99%
Return on average total equity......................... 17.55 15.78 16.81 17.95 13.18
Net interest margin.................................... 4.44 4.22 4.50 4.63 4.54%
Efficiency (excl. merger charges)...................... 61.88 66.57 64.70 65.19 69.96
Dividend payout........................................ 44.68 48.51 44.70 40.46 53.41
Asset Quality Ratios:
Nonperforming assets to loans and foreclosed
properties........................................... .47% .61% .74% 1.34% 2.27%
Net charge-offs to average loans....................... .42 .38 .34 .49 .75
Allowance to loans..................................... 1.97 2.05 2.30 2.40 2.40
Allowance to nonperforming loans....................... 493x 377x 398x 254x 167x
Liquidity and Capital Ratios:
Average loans to average deposits...................... 100.21% 94.40% 88.80% 83.77% 79.16%
Average equity to average assets....................... 8.61 7.80 8.05 8.11 7.47
Tangible equity to tangible assets..................... 7.81 7.09 6.66 7.54 6.87
Tier 1 capital to risk-weighted assets................. 9.84 9.14 9.12 9.36 9.69
Total risk-based capital to risk-weighted assets....... 14.79 13.47 12.45 12.27 12.13
Leverage............................................... 8.16 7.26 7.57 7.56 7.31
</TABLE>
23
<PAGE> 33
CAPITALIZATION
The following table sets forth the consolidated capitalization of National
City at June 30, 1997. The issuance of the Exchange Capital Securities in the
Exchange Offer will have no effect on the capitalization of National City. The
Capital Securities are treated as long-term debt. This table is based on, and is
qualified in its entirety by, the historical consolidated financial statements
of National City, including the related notes thereto, which are included in
documents incorporated by reference herein, and should be read in conjunction
therewith.
<TABLE>
<CAPTION>
JUNE 30,1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Long-Term Debt............................................................ $4,447,637(a)
Stockholders' Equity
Preferred stock, none issued............................................ --
Common stock, par value $4 per share, authorized 700,000,000 shares,
outstanding 214,859,868 shares....................................... 859,441
Capital surplus......................................................... 633,000
Retained earnings....................................................... 2,567,506
Unrealized gains on securities available for sale, net of income
taxes................................................................ 191,300
----------
Total Stockholders' Equity.............................................. 4,251,247
----------
Total Capitalization................................................. $8,698,884
==========
Consolidated Capital Ratios
Equity to assets........................................................ 8.17%
Tier 1 capital to risk-weighted assets.................................. 9.01
Total capital to risk-weighted assets................................... 13.85
</TABLE>
(a) Amount includes the Capital Securities which had an outstanding balance, net
of unamortized discount, of $499,890 at June 30, 1997.
24
<PAGE> 34
ACCOUNTING TREATMENT
For financial reporting purposes, the financial statements of the Trust are
consolidated into the Corporation's consolidated financial statements. The
Capital Securities are considered long-term debt for financial reporting
purposes and Distributions payable on the Capital Securities will be recorded as
interest expense in the consolidated statements of income.
REGULATORY TREATMENT
As a registered bank holding company, the Corporation is required by the
Federal Reserve to maintain certain levels of capital for bank regulatory
purposes. The Corporation expects that, after the Rate Reset Date, the Capital
Securities will be treated as "Tier 1 Capital" of the Corporation for such
purposes.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Corporation
and the Trust entered into the Registration Agreement with the Initial
Purchaser, pursuant to which the Corporation and the Trust agreed to file and to
use their best efforts to cause to be declared effective by the Commission a
Registration Statement with respect to the exchange of the Old Capital
Securities for capital securities with terms identical in all material respects
to the terms of the Old Capital Securities. A copy of the Registration Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Trust under the Registration Agreement. The form and
terms of the Exchange Capital Securities are the same as the form and terms of
the Old Capital Securities, except that the Exchange Capital Securities (i) will
have been issued in a transaction registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Capital Securities and (ii) other than any possible increase in the
Applicable Rate pursuant to the Rate Reset Auction, will not provide for any
increase in the Distribution rate thereon. In that regard, the Registration
Agreement provides, among other things, that, if the Exchange Offer is not
consummated by December 3, 1997, except in limited circumstances, the
Distribution rate borne by the Old Capital Securities will increase by 0.25% per
annum commencing on December 4, 1997 until the Exchange Offer is consummated.
The aggregate amount of such additional Distributions payable pursuant to the
foregoing provisions will in no event exceed 0.50% per annum. Upon consummation
of the Exchange Offer, holders of Old Capital Securities will not be entitled to
any such increase in the Distribution rate thereon or any further registration
rights under the Registration Agreement, except under limited circumstances. See
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities"
and "Description of Old Securities."
The Exchange Offer is not being made to, nor will the Trust or the
Corporation accept tenders for exchange from, holders of Old Capital Securities
in any jurisdiction in which the Exchange Offer or the acceptance thereof would
not be in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by DTC who desires to deliver such Old
Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof the Old Guarantee for the Exchange Guarantee
and $500,000,000 aggregate principal amount of the Old Junior Subordinated Debt
Securities for a like aggregate principal amount of the Exchange Junior
Subordinated Debt Securities. The Exchange Guarantee and the Exchange Junior
Subordinated Debt Securities have been registered under the Securities Act.
25
<PAGE> 35
TERMS OF EXCHANGE
The Trust and the Corporation hereby offer, upon the terms and subject to
the conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $500,000,000 aggregate Liquidation Amount of
Exchange Capital Securities for a like aggregate Liquidation Amount of Old
Capital Securities properly tendered on or prior to the Expiration Date and not
properly withdrawn in accordance with the procedures described below. The Trust
will issue, promptly after the Expiration Date, an aggregate Liquidation Amount
of up to $500,000,000 of Exchange Capital Securities in exchange for a like
Liquidation Amount of outstanding Old Capital Securities tendered and accepted
in connection with the Exchange Offer. Holders may tender their Old Capital
Securities in whole or in part in a Liquidation Amount of not less than $100,000
or any integral multiple of $100,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$500,000,000 aggregate Liquidation Amount of Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities that are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and will be entitled to the benefits of
the Declaration, but will not be entitled to any further registration rights
under the Registration Agreement, except under limited circumstances. See "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Corporation will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY TRUSTEE OF THE
TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on November
3, 1997, unless the Exchange Offer is extended by the Corporation and the Trust
(in which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole
discretion, subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) if the Corporation and the Trust
determine, in their sole discretion, that any of the events or conditions
referred to under "-- Conditions to the Exchange Offer" have occurred or exist,
(iii) to extend the Expiration Date of the Exchange Offer and retain all Old
Capital Securities tendered pursuant to
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<PAGE> 36
the Exchange Offer, subject, however, to the right of holders of Old Capital
Securities to withdraw their tendered Old Capital Securities as described under
" -- Withdrawal Rights," and (iv) to waive any condition or otherwise amend the
terms of the Exchange Offer in any respect. If the Exchange Offer is amended in
a manner determined by the Corporation and the Trust to constitute a material
change, or if the Corporation and the Trust waive a material condition of the
Exchange Offer, the Corporation and the Trust will promptly disclose such
amendment by means of an amended or supplemented Prospectus that will be
distributed to the registered holders of the Old Capital Securities, and the
Corporation and the Trust will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
Business Day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Trust may choose to make any public
announcement and subject to applicable law, the Corporation and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, Exchange Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of Exchange Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a Letter of
Transmittal, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal and (iii) any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Trust and the
Corporation may enforce such Letter of Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the Corporation
and the Trust will be deemed to have accepted for exchange, and thereby
exchanged, Old Capital Securities validly tendered and not withdrawn as, if and
when the Trust gives oral or written notice to the Exchange Agent of the
Corporation's and the Trust's acceptance of such Old Capital Securities for
exchange pursuant to the Exchange Offer. The Exchange Agent will act as agent
for the Corporation and the Trust for the purpose of receiving tenders of Old
Capital Securities, Letters of Transmittal and related documents, and as agent
for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting Exchange Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Corporation's and the Trust's
acceptance for exchange of Old Capital Securities) or the Corporation and the
Trust extend the Exchange Offer or are unable to accept for exchange or exchange
Old Capital Securities tendered pursuant to the Exchange Offer, then, without
prejudice to the Corporation's and the Trust's rights set forth herein, the
Exchange Agent may, nevertheless, on behalf of the Corporation and the Trust and
subject to Rule 14e-1(c) under the Exchange Act, retain tendered Old Capital
Securities and such Old Capital Securities may not be
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<PAGE> 37
withdrawn except to the extent tendering holders are entitled to withdrawal
rights as described under "-- Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal or Agent's Message, as the case may be, that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital Securities,
that the Trust will acquire good, marketable and unencumbered title to the
tendered Old Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and that the Old Capital Securities tendered for
exchange are not subject to any adverse claims or proxies. The holder also will
warrant and agree that it will, upon request, execute and deliver any additional
documents deemed by the Corporation, the Trust or the Exchange Agent to be
necessary or desirable to complete the exchange, sale, assignment and transfer
of the Old Capital Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry tender, an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at its address set forth under
" -- Exchange Agent," and either (i) tendered Old Capital Securities must be
received by the Exchange Agent, (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation, including an Agent's Message if the tendering holder
has not delivered a Letter of Transmittal, must be received by the Exchange
Agent, in each case on or prior to the Expiration Date, or (iii) the guaranteed
delivery procedures set forth below must be complied with.
If a tendering holder is tendering less than all of its Old Capital
Securities, the tendering holder should fill in the amount of Old Capital
Securities being tendered in the appropriate box on the Letter of Transmittal.
If fewer than all of the Old Capital Securities of a holder are tendered for
exchange, the untendered Liquidation Amount of the holder's remaining Old
Capital Securities must be $100,000 or any integral multiple of $100,000 in
excess thereof. The entire amount of Old Capital Securities delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. DELIVERY IS RECOMMENDED BY OVERNIGHT DELIVERY OR, IF DELIVERY IS BY MAIL,
REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY INSURED IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two Business Days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's Authorized Tender Offer Program ("ATOP") procedures for
transfers. Such holder of Old Capital Securities using ATOP should transmit its
acceptance to DTC on or prior to the Expiration Date (or comply with the
guaranteed delivery procedures set forth below). DTC will verify such
acceptance, execute a book-entry transfer of the tendered Old Capital Securities
into the Exchange Agent's account at DTC and then send to the Exchange Agent
confirmation of such book-entry transfer, including an Agent's Message
confirming that DTC has received an express acknowledgment from such holder that
such holder has received and agrees to be bound by the Letter of Transmittal and
that the Corporation and the Trust may enforce the Letter of Transmittal against
such holder.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
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Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (ii) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (i) or (ii) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of
Transmittal, is received by the Exchange Agent, as provided
below, on or prior to the Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer,
together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu
thereof), with any required signature guarantees and any other
documents required by the Letter of Transmittal, are received by
the Exchange Agent within three New York Stock Exchange trading
days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of Exchange
Capital Securities in exchange for Old Capital Securities tendered and accepted
for exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile thereof
or Agent's Message in lieu thereof), together with any required signature
guarantees and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of Exchange Capital Securities might be made to all
tendering holders at the same time, and will depend upon when Old Capital
Securities, book-entry confirmations with respect to Old Capital Securities and
other required documents are received by the Exchange Agent.
The Corporation's and the Trust's acceptance for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement among the tendering holder, the Corporation and
the Trust upon the terms and subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Trust reserve the absolute
right, in their sole discretion, to reject any and all tenders determined by
them not to be in proper form or the acceptance of which, or exchange for, may,
in the view of counsel to the Corporation or the Trust, be unlawful. The
Corporation and the Trust also reserve the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer as set forth
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under "-- Conditions to the Exchange Offer" or any condition or irregularity in
any tender of Old Capital Securities of any particular holder whether or not
similar conditions or irregularities are waived in the case of other holders.
The Corporation's and the Trust's interpretation of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Corporation,
the Trust, any affiliates or assigns of the Corporation or the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and unless waived by the Trust or the
Corporation, proper evidence satisfactory to the Corporation and the Trust, in
their sole discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF EXCHANGE CAPITAL SECURITIES
The Corporation and the Trust are making the Exchange Offer of the Exchange
Capital Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Corporation nor the Trust has sought its own interpretive letter, and there can
be no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance of the
Commission, and subject to the two immediately following sentences, the
Corporation and the Trust believe that Exchange Capital Securities issued
pursuant to this Exchange Offer in exchange for Old Capital Securities may be
offered for resale, resold and otherwise transferred by a holder thereof (other
than a holder who is an Affiliate or a broker-dealer) without further compliance
with the registration and prospectus delivery requirements of the Securities
Act, provided that such Exchange Capital Securities are acquired in the ordinary
course of such holder's business and that such holder is not participating, and
has no arrangement or understanding with any person to participate, in a
distribution (within the meaning of the Securities Act) of such Exchange Capital
Securities. However, any holder of Old Capital Securities who is an Affiliate or
who intends to participate in the Exchange Offer for the purpose of distributing
Exchange Capital Securities, or any broker-dealer who purchased Old Capital
Securities from the Trust to resell pursuant to Rule 144A or any other available
exemption under the Securities Act, (i) will not be able to rely on the
interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above- mentioned interpretive letters, (ii) will not
be entitled to tender such Old Capital Securities in the Exchange Offer and
(iii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other transfer of such Old
Capital Securities unless such sale or transfer is made pursuant to an exemption
from such requirements. In addition, as described below, Participating
Broker-Dealers must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of Exchange Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for Exchange Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an Affiliate, (ii) any Exchange Capital
Securities to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of such
Exchange Capital Securities and (iv) if such holder is not a broker-dealer, such
holder is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange Capital Securities.
The Letter of Transmittal contains the foregoing
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representations. In addition, the Corporation and the Trust may require such
holder, as a condition to such holder's eligibility to participate in the
Exchange Offer, to furnish to the Corporation and the Trust (or an agent
thereof) in writing information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Exchange Act) on behalf of whom such holder
holds the Old Capital Securities to be exchanged in the Exchange Offer. Each
Participating Broker-Dealer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Capital Securities. See "Plan of Distribution." The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Corporation and the Trust
believe that Participating Broker-Dealers may fulfill their prospectus delivery
requirements with respect to the Exchange Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such Exchange Capital Securities. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
Exchange Capital Securities received in exchange for Old Capital Securities
where such Old Capital Securities were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration
Agreement, the Corporation and the Trust have agreed that this Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Capital Securities for
a period ending on the close of business on the first anniversary following the
Expiration Date or, if earlier, when all such Exchange Capital Securities have
been disposed of by such Participating Broker-Dealer. See "Plan of
Distribution." Any person, including any Participating Broker-Dealer, who is an
Affiliate may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message in lieu
thereof, that, upon receipt of notice from the Corporation or the Trust of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in the light of the circumstances under which they were made, not
misleading, or of the occurrence of certain other events specified in the
Registration Agreement, such Participating Broker-Dealer will suspend the sale
of Exchange Capital Securities pursuant to this Prospectus until the Corporation
or the Trust has amended or supplemented this Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
Prospectus to such Participating Broker-Dealer, or the Corporation or the Trust
has given notice that the sale of the Exchange Capital Securities may be
resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under "-- Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate principal amount of Old Capital Securities to be withdrawn, and (if
certificates for such Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Old Capital
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Securities, if different from that of the person who tendered such Old Capital
Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the certificate numbers
shown on the particular Old Capital Securities to be withdrawn and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution,
except in the case of Old Capital Securities tendered for the account of an
Eligible Institution. If Old Capital Securities have been tendered pursuant to
the procedures for book-entry transfer set forth in "-- Procedures for Tendering
Old Capital Securities," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission
on or prior to the Expiration Date. Withdrawals of tenders of Old Capital
Securities may not be rescinded. Old Capital Securities properly withdrawn will
not be deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "-- Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Corporation, the Trust, any Affiliates or
assigns of the Corporation or the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities that have been tendered but which are
withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.
DISTRIBUTIONS ON THE EXCHANGE CAPITAL SECURITIES
Each Exchange Capital Security will pay cumulative Distributions from the
most recent Distribution Date on the Old Capital Securities, or if no
Distributions have been paid on such Old Capital Securities, from June 6, 1997.
Holders of Old Capital Securities whose Old Capital Securities are accepted for
exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date with respect
to such Old Capital Securities prior to the original issue date of the Exchange
Capital Securities or, if no such Distributions have been paid, will not receive
any accumulated Distributions on such Old Capital Securities, and will be deemed
to have waived the right to receive any Distributions on such Old Capital
Securities accumulated from and after such Distribution Date or, if no such
Distributions have been paid, from and after June 6, 1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any Exchange Capital Securities, and, as described below, may terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) or may waive any conditions to or amend the Exchange
Offer, if any of the following conditions has occurred or exists:
(i) there shall occur a change in the current interpretation by the
staff of the Division of Corporation Finance of the Commission
(including oral interpretations) which permits the Exchange
Capital Securities issued pursuant to the Exchange Offer in
exchange for Old Capital Securities to be offered for resale,
resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder which is an Affiliate)
without compliance with the registration and prospectus delivery
provisions in the ordinary course of such holders' business and
such holders have no arrangement or understanding with any
person to participate in the distribution of such Exchange
Capital Securities;
(ii) any action or proceeding shall have been instituted or
threatened in any court or by or before any governmental agency
or body with respect to the Exchange Offer which, in the
Corporation's and the Trust's judgment, would reasonably be
expected to impair the ability of the Trust or the Corporation
to proceed with the Exchange Offer;
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(iii) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Corporation's and the Trust's judgment,
would reasonably be expected to impair the ability of the Trust
or the Corporation to proceed with the Exchange Offer;
(iv) a banking moratorium shall have been declared by United States
federal or New York state authorities which, in the
Corporation's and the Trust's judgment, would reasonably be
expected to impair the ability of the Trust or the Corporation
to proceed with the Exchange Offer;
(v) trading on the New York Stock Exchange or generally in the
United States over-the-counter market shall have been suspended
by order of the Commission or any other governmental authority
which, in the Corporation's or the Trust's judgment, would
reasonably be expected to impair the ability of the Trust or the
Corporation to proceed with the Exchange Offer;
(vi) a stop order shall have been issued by the Commission or any
state securities authority suspending the effectiveness of the
Registration Statement or proceedings shall have been initiated
or, to the knowledge the Corporation or the Trust, threatened
for that purpose or any governmental approval has not been
obtained, which approval the Corporation and the Trust shall, in
their sole discretion, deem necessary for the consummation of
the Exchange Offer as contemplated hereby;
(vii) any change, or any development involving a prospective change,
in the business or financial affairs of the Trust or the
Corporation or any of its subsidiaries has occurred which, in
the judgment of the Corporation and the Trust, might materially
impair the ability of the Corporation or the Trust to proceed
with the Exchange Offer;
(viii) there shall occur any change in law or in currently prevailing
interpretations thereof by the staff of the Division of
Corporation Finance of the Commission (including oral
interpretations) which causes the Corporation and the Trust to
determine upon advice of their outside counsel that they are
not permitted to effect the Exchange Offer as contemplated by
this Prospectus; or
(ix) the Corporation shall have received an opinion of a nationally
recognized independent tax counsel to the Corporation
experienced in such matters to the effect that as a result of
the consummation of the Exchange Offer, there is more than an
insubstantial risk that (A) if the Junior Subordinated Debt
Securities are held by or on behalf of the Trust, (x) the Trust
is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to
interest accrued or received on the Junior Subordinated Debt
Securities or subject to more than a de minimis amount of other
taxes, duties or other governmental charges as determined by
such counsel or (y) any portion of interest payable by the
Corporation to the Trust on the Junior Subordinated Debt
Securities is not, or within 90 days of the date of such opinion
will not be, deductible by the Corporation in whole or in part
for United States federal income tax purposes or (B) with
respect to Junior Subordinated Debt Securities which are no
longer held by or on behalf of the Trust, any portion of
interest payable by the Corporation on the Junior Subordinated
Debt Securities 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.
If the Corporation and the Trust determine in their sole discretion that
any of the foregoing events or conditions has occurred or exists, the
Corporation and the Trust may, subject to applicable law, terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) or may waive any such condition or otherwise amend the terms of
the Exchange Offer in any respect. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Corporation and the Trust will
promptly disclose such waiver by means of an amended or supplemented Prospectus
that will be distributed to the registered holders of the Old Capital
Securities, and the Corporation and the Trust will extend the Exchange Offer to
the extent required by Rule 14e-1 under the Exchange Act.
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EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required documents,
questions, requests for assistance, and requests for additional copies of this
Prospectus or of the Letter of Transmittal, all whether by registered or
certified mail, by hand or by overnight courier, should be directed to the
Exchange Agent as follows:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Reorganization Section
Telephone: (212) 815-3428
Facsimile: (212) 815-6339
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for the Exchange Agent's services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith. The Corporation will
also pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
Prospectus and related documents to the beneficial owners of Old Capital
Securities, and in handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Old Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Old Capital Securities in connection with the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
DESCRIPTION OF THE RATE RESET AUCTION
RATE RESET AUCTION PROCEDURES
Holders of Capital Securities are entitled to receive Distributions, in
each case arising from the payment of interest on the Junior Subordinated Debt
Securities accruing from the date of original issuance of the Capital Securities
and payable semi-annually in arrears on the 1st day of June and December of each
year, commencing December 1, 1997, at the Applicable Rate applied to the
Liquidation Amount of $1,000 per Capital Security. Prior to the Rate Reset Date,
the Applicable Rate will be equal to 6.75% per annum. The Indenture described
under "Description of Exchange Junior Subordinated Debt Securities" provides
that the Applicable Rate on and after the Rate Reset Date will be equal to the
rate per annum that the Auction Agent advises has resulted on the Rate Reset
Pricing Date from the implementation of auction procedures (the "Auction
Procedures") pursuant to which persons determine to hold or offer to sell or,
based on interest rates offered to them, offer to purchase Capital Securities.
The implementation of the Auction Procedures is hereinafter referred to as the
"Rate Reset Auction." The Corporation has entered into an agreement (the
"Remarketing Agreement") with the Initial Purchaser (the "Remarketing Agent")
pursuant to which the Remarketing Agent has agreed to use its best efforts to
solicit Hold Orders from Existing Holders and Bids from Existing Holders and
Potential Holders so that there are Sufficient Clearing Bids in the Rate Reset
Auction. See "-- Remarketing Agreement." The Corporation has also entered into
an agreement (the "Auction Agency Agreement") with The Bank of New York
(together with any successor, the "Auction
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Agent") which provides, among other things, that the Auction Agent will follow
the Auction Procedures for the purposes of determining the Applicable Rate for
the Capital Securities. See "-- Auction Agency Agreement."
The Rate Reset Auction will be held on the third Business Day preceding the
Rate Reset Date (the "Rate Reset Pricing Date"). The Applicable Rate resulting
from the Rate Reset Auction will become effective on the Rate Reset Date.
Orders by Existing Holders and Potential Holders
Prior to 1:00 p.m. (New York City time) on the Business Day five Business
Days prior to the Rate Reset Date (the "Submission Deadline") each Existing
Holder of Capital Securities may submit to the Remarketing Agent and in
accordance with the procedures set forth under "-- Submission of Orders to
Auction Agent," one or more of the following Orders:
(i) Hold Order -- indicating the stated Liquidation Amount of
outstanding Capital Securities, if any, that such Existing Holder desires
to continue to hold without regard to the Applicable Rate on and after the
Rate Reset Date;
(ii) Bid -- indicating the stated Liquidation Amount of outstanding
Capital Securities, if any, that such Existing Holder desires to continue
to hold if the Applicable Rate on and after the Rate Reset Date is not less
than the rate per annum then specified by such Existing Holder; and/or
(iii) Sell Order -- indicating the stated Liquidation Amount of
Capital Securities, if any, that such Existing Holder offers to sell
without regard to the Applicable Rate on and after the Rate Reset Date.
Potential Holders of Capital Securities may submit Bids to the Remarketing
Agent, in which they will offer to purchase Capital Securities if the Applicable
Rate on and after the Rate Reset Date is not less than the rate per annum
specified in such Bid.
The communication of the foregoing information is hereinafter referred to
as an "Order" and collectively as "Orders." An Existing Holder or a Potential
Holder placing an Order is hereinafter referred to as a "Bidder" and
collectively as "Bidders." If an Order or Orders covering the entire outstanding
stated Liquidation Amount of Capital Securities held by any Existing Holder is
not submitted to the Remarketing Agent prior to the Submission Deadline, the
Remarketing Agent shall deem a Sell Order to have been submitted on behalf of
such Existing Holder covering the stated Liquidation Amount of Capital
Securities held by such Existing Holder and not subject to Orders submitted to
the Remarketing Agent.
An Order may be submitted only in a stated Liquidation Amount of $100,000
or an integral multiple of $100,000 in excess thereof.
An Existing Holder may submit different types of Orders to the Remarketing
Agent with respect to Capital Securities then held by such Existing Holder. (An
Existing Holder that offers to purchase additional Capital Securities is, for
purposes of such offer, treated as a Potential Holder as described below.) For
information concerning the priority given to different types of Orders placed by
Existing Holders, see "-- Submission of Orders to Auction Agent."
Any Bid specifying a rate higher than the Treasury Rate on the Rate Reset
Pricing Date plus 5.0% per annum (the "Maximum Applicable Rate") will (i) be
treated as a Sell Order if submitted by an Existing Holder and (ii) not be
accepted if submitted on behalf of a Potential Holder. Accordingly, the Auction
Procedures establish the Maximum Applicable Rate as the maximum rate per annum
that can result from the Rate Reset Auction. See "-- Determination of Sufficient
Clearing Bids, Winning Bid Rate and Applicable Rate" and "-- Acceptance and
Rejection of Submitted Bids and Submitted Sell Orders and Allocation of Capital
Securities."
Each Existing Holder and each Potential Holder, will be required to submit
any Orders to the Remarketing Agent in writing on a form provided by the
Corporation in which the holder will agree that (i) a Sell Order submitted by an
Existing Holder constitutes an irrevocable offer to sell the stated Liquidation
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Amount of Capital Securities subject thereto, (ii) a Bid submitted by an
Existing Holder constitutes an irrevocable offer to sell the stated Liquidation
Amount of Capital Securities subject thereto if the rate specified in such Bid
is greater than the Applicable Rate after the Rate Reset Date and (iii) a Bid
submitted by a Potential Holder constitutes an irrevocable offer to purchase the
stated Liquidation Amount of Capital Securities specified in such Bid if the
rate specified in the Bid is less than the Applicable Rate after the Rate Reset
Date. The stated Liquidation Amount of Capital Securities purchased by a Bidder
may be subject to proration procedures. See "-- Acceptance and Rejection of
Submitted Bids and Submitted Sell Orders and Allocation of Capital Securities."
Each purchase or sale of Capital Securities shall be made for settlement on the
Rate Reset Date at a price equal to 100% of the principal amount thereof. See
"-- Notification of Results; Settlement."
Neither the Corporation nor any affiliate thereof may submit an Order in
the Rate Reset Auction.
Submission of Orders to Auction Agent
Prior to the Submission Deadline each Existing Holder and Potential Holder
will submit to the Remarketing Agent in writing all Orders for the Rate Reset
Auction. The Remarketing Agent will provide these Orders to the Auction Agent on
the Business Day following the Submission Deadline prior to 10:00 a.m. (New York
City time).
If one or more Orders covering, in the aggregate, more than the stated
Liquidation Amount of outstanding Capital Securities held by any Existing Holder
are submitted to the Auction Agent on behalf of such Existing Holder, such
Orders will be considered valid in the following order of priority:
(i) All Hold Orders shall be considered valid, but only up to and
including the stated Liquidation Amount of outstanding Capital Securities
held by such Existing Holder;
(ii) (A) any Bid shall be considered valid up to and including the
excess of the stated Liquidation Amount of outstanding Capital Securities
held by such Existing Holder over the aggregate stated Liquidation Amount
of Capital Securities subject to any Hold Orders referred to in clause (i)
above;
(B) subject to subclause (A), if more than one Bid with the same
rate is submitted on behalf of such Existing Holder and the
aggregate stated Liquidation Amount of outstanding Capital
Securities subject to such Bids is greater than such excess, such
Bids shall be considered valid up to and including the amount of
such excess;
(C) subject to subclause (A), if more than one Bid with different
rates is submitted on behalf of such Existing Holder, such Bids
shall be considered valid in the ascending order of their respective
rates up to the amount of such excess; and
(D) in any such event, the aggregate stated Liquidation Amount of
outstanding Capital Securities, if any, subject to Bids not valid
under this clause (ii) shall be treated as the subject of a Bid by a
Potential Holder; and
(iii) All Sell Orders shall be considered valid but only up to and
including the excess of the stated Liquidation Amount of outstanding
Capital Securities held by such Existing Holder over the aggregate stated
Liquidation Amount of Capital Securities subject to Hold Orders referred to
in clause (i) above and valid Bids referred to in clause (ii) above.
If more than one Bid is submitted by any Potential Holder, each Bid
submitted shall be a separate Bid with the rate and stated Liquidation Amount of
Capital Securities specified.
If any rate specified in any Bid contains more than three figures to the
right of the decimal point, the Auction Agent will round such rate up to the
next highest one-thousandth (.001 ) of 1%. Any Order covering an aggregate
stated Liquidation Amount of Capital Securities not equal to $100,000 or an
integral multiple of $100,000 in excess thereof will be rejected.
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<PAGE> 46
Determination of Sufficient Clearing Bids, Winning Bid Rate and Applicable
Rate
Upon receipt of the Orders from the Remarketing Agent, the Auction Agent
will assemble all Orders submitted or deemed submitted to it on behalf of
Existing Holders and Potential Holders (each such Hold Order, Bid or Sell Order
as submitted or deemed submitted being hereinafter referred to as a "Submitted
Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may be,
or as a "Submitted Order" and collectively as "Submitted Hold Orders,"
"Submitted Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders") and will determine the excess of the stated Liquidation
Amount of outstanding Capital Securities over the stated Liquidation Amount of
outstanding Capital Securities subject to Submitted Hold Orders (such excess,
the "Available Capital Securities") and whether Sufficient Clearing Bids have
been made in the Rate Reset Auction. Sufficient Clearing Bids will have been
made if the stated Liquidation Amount of outstanding Capital Securities that is
the subject of Submitted Bids by Potential Holders with rates not higher than
the Maximum Applicable Rate equals or exceeds the stated Liquidation Amount of
outstanding Capital Securities that is the subject of Submitted Sell Orders
(including the stated Liquidation Amount of Capital Securities as to which Sell
Orders are deemed to have been submitted and the stated Liquidation Amount of
Capital Securities subject to Bids by Existing Holders specifying rates higher
than the Maximum Applicable Rate).
If Sufficient Clearing Bids have been made, the Auction Agent will
determine the lowest rate per annum specified in the Submitted Bids (the
"Winning Bid Rate") which, taking into account the rates in the Submitted Bids
of Existing Holders, would result in Existing Holders that placed Submitted Bids
continuing to hold an aggregate stated Liquidation Amount of outstanding Capital
Securities which, when added to the stated Liquidation Amount of outstanding
Capital Securities to be purchased by Potential Holders, based on the rates in
their Submitted Bids, would equal not less than the Available Capital
Securities. If Sufficient Clearing Bids have been made (other than because all
of the outstanding Capital Securities are subject to Submitted Hold Orders), the
Winning Bid Rate will be the Applicable Rate on or after the Rate Reset Date. If
the Winning Bid Rate is expressed as a spread over the yield on a United States
Treasury security (the "Winning Yield Spread"), the Winning Bid Rate shall be
equal to the sum of (i) the yield to maturity for the Comparable Treasury Issue
(as defined herein) based on the bid price for the Comparable Treasury Issue at
12:00 p.m. on the Rate Reset Pricing Date, plus (ii) the Winning Yield Spread.
If all of the outstanding Capital Securities are subject to Submitted Hold
Orders, the Applicable Rate after the Rate Reset Date will be equal to the Full
Participation Rate.
If Sufficient Clearing Bids have not been made (a "Failed Auction"), the
Corporation will be required to redeem on the Rate Reset Date the Junior
Subordinated Debt Securities at par plus any accrued and unpaid interest thereon
at the date of redemption. See "Description of Exchange Junior Subordinated Debt
Securities -- Redemption -- Mandatory Redemption." Upon redemption of the Junior
Subordinated Debt Securities, the proceeds of such redemption shall concurrently
be applied to redeem, at the applicable Redemption Price, the Trust Securities.
See "Description of Exchange Capital Securities -- Mandatory Redemption."
Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and
Allocation of Capital Securities
Based on the determinations made under "-- Determination of Sufficient
Clearing Bids, Winning Bid Rate and Applicable Rate" above, and subject to the
discretion of the Auction Agent to round as described below, Submitted Bids
shall be accepted or rejected in the order of priority set forth in the Auction
Procedures with the result that Existing Holders and Potential Holders of
Capital Securities shall sell, continue to hold and/or purchase Capital
Securities as set forth below. Existing Holders that submitted Hold Orders shall
continue to hold the Capital Securities subject to such Hold Orders.
If Sufficient Clearing Bids have been made (unless this results because all
outstanding Capital Securities are subject to Submitted Hold Orders):
(a) Each Existing Holder that placed a Submitted Sell Order or a
Submitted Bid specifying a rate higher than the Winning Bid Rate shall sell
the stated Liquidation Amount of outstanding Capital Securities subject to
such Submitted Sell Order or Submitted Bid;
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(b) Each Existing Holder that placed a Submitted Bid specifying a rate
lower than the Winning Bid Rate shall continue to hold the stated
Liquidation Amount of outstanding Capital Securities subject to such
Submitted Bid;
(c) Each Potential Holder that placed a Submitted Bid specifying a
rate lower than the Winning Bid Rate shall purchase the stated Liquidation
Amount of outstanding Capital Securities subject to such Submitted Bid;
(d) Each Existing Holder that placed a Submitted Bid specifying a rate
equal to the Winning Bid Rate shall continue to hold the stated Liquidation
Amount of outstanding Capital Securities subject to such Submitted Bid,
unless the stated Liquidation Amount of outstanding Capital Securities
subject to all such Submitted Bids is greater than the excess of the
Available Capital Securities over the stated Liquidation Amount of
outstanding Capital Securities accounted for in clauses (b) and (c) above,
in which event each Existing Holder with such a Submitted Bid shall sell a
stated Liquidation Amount of outstanding Capital Securities subject to such
Submitted Bid determined on a pro rata basis based on the aggregate stated
Liquidation Amount of outstanding Capital Securities subject to all such
Submitted Bids by such Existing Holders; and
(e) Each Potential Holder that placed a Submitted Bid specifying a
rate equal to the Winning Bid Rate shall purchase any Available Capital
Securities not accounted for in clauses (b), (c) or (d) above on a pro rata
basis based on the stated Liquidation Amount of outstanding Capital
Securities subject to all such Submitted Bids.
If Sufficient Clearing Bids have not been made, the Corporation will be
required to redeem on the Rate Reset Date the Junior Subordinated Debt
Securities at par plus any accrued and unpaid interest thereon at the date of
redemption. See "Description of Exchange Junior Subordinated Debt
Securities -- Redemption -- Mandatory Redemption." Upon redemption of the Junior
Subordinated Debt Securities, the proceeds of such redemption shall concurrently
be applied to redeem, at the applicable Redemption Price, the Capital Securities
upon the terms and conditions described herein. See "Description of Exchange
Capital Securities -- Mandatory Redemption."
If, as a result of the Auction Procedures, (i) any Existing Holder would be
entitled or required to sell, or any Potential Holder would be entitled or
required to purchase, a stated Liquidation Amount of Capital Securities that is
not equal to $100,000 or an integral multiple of $100,000 in excess thereof, the
Auction Agent shall, in such manner as, in its sole discretion, it shall
determine, round up or down the stated Liquidation Amount of Capital Securities
being sold or purchased in the Rate Reset Auction so that the stated Liquidation
Amount of Capital Securities sold or purchased by each Existing Holder or
Potential Holder shall be equal to $100,000 or an integral multiple of $100,000
in excess thereof or (ii) any Potential Holder would be entitled or required to
purchase less than $100,000 stated Liquidation Amount of Capital Securities, the
Auction Agent shall, in such manner as, in its sole discretion, it shall
determine, allocate stated Liquidation Amounts of Capital Securities for
purchase among Potential Holders so that only stated Liquidation Amounts of
Capital Securities equal to $100,000 or an integral multiple of $100,000 in
excess thereof are purchased by any such Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing
Capital Securities.
REMARKETING AGREEMENT
The Remarketing Agent has agreed to use its best efforts, on behalf of the
holders thereof, to solicit Hold Orders from Existing Holders and Bids from
Existing Holders and Potential Holders so that there are Sufficient Clearing
Bids in the Rate Reset Auction. The Initial Purchaser (or its successor) will be
the Remarketing Agent.
Pursuant to the Remarketing Agreement, the Remarketing Agent will act as
agent for the Corporation in the remarketing of the Capital Securities in the
Rate Reset Auction. If Sufficient Clearing Bids have been made in the Rate Reset
Auction, the Remarketing Agreement provides that the Remarketing Agent will
receive fees from the Corporation equal to .50% of the aggregate stated
Liquidation Amount of outstanding
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Capital Securities on the Rate Reset Date. In the event of a Failed Auction, the
remarketing fees will not be paid to the Remarketing Agent. The Corporation will
reimburse the Remarketing Agent for all out-of-pocket expenses reasonably
incurred in connection with the performance of its duties whether or not
Sufficient Clearing Bids have been made.
The Remarketing Agreement provides that the Remarketing Agent will not be
obligated to use its best efforts to solicit Hold Orders from Existing Holders
and Bids from Existing Holders and Potential Holders in the Rate Reset Auction
(i) if in the opinion of counsel to the Remarketing Agent, an effective
registration statement is required in connection with the offering of the
Capital Securities in the Rate Reset Auction and has not been provided by the
Corporation and the Trust; (ii) or there is a material misstatement or omission
in any disclosure document provided by the Corporation or the Trust in
connection with the Rate Reset Auction. In each case described above, a Failed
Auction will have been deemed to have occurred, and the Corporation will be
required to redeem the Junior Subordinated Debt Securities in whole, but not in
part, on the Rate Reset Date at par plus accrued and unpaid interest thereon to
the date of redemption. See "Description of Exchange Junior Subordinated Debt
Securities -- Redemption -- Mandatory Redemption." Upon the redemption of the
Junior Subordinated Debt Securities, the proceeds of such redemption shall
concurrently be applied to redeem, at the applicable Redemption Price, Capital
Securities having an aggregate Liquidation Amount equal to the aggregate
principal amount of the Junior Subordinated Debt Securities so redeemed. See
"Description of Exchange Capital Securities -- Mandatory Redemption."
If for any reason Sufficient Clearing Bids have been made and the
Remarketing Agent is unable to consummate the sale of one or more Capital
Securities because of a default in performance by the Potential Holder
purchasing such Capital Securities, the Remarketing Agent will purchase such
Capital Securities on the Rate Reset Date for their aggregated stated
Liquidation Amount.
AUCTION AGENCY AGREEMENT
The Bank of New York, as the Auction Agent, has entered into an Auction
Agency Agreement with the Corporation. Prior to 10:00 a.m. (New York City time)
on the Business Day following the Submission Deadline, the Remarketing Agent
will provide the Auction Agent with all orders (including Sell Orders which are
deemed to have been submitted by Existing Holders that did not place an Order
prior to the Submission Deadline) received by it prior to the Submission
Deadline. The Auction Agent will be entitled to rely upon the terms of any Order
submitted to it by the Remarketing Agent. The Auction Agency Agreement provides
that the Auction Agent is acting as agent for the Corporation in connection with
the Rate Reset Auction. In the absence of bad faith or negligence on its part,
the Auction Agent shall not be liable for any action taken, suffered, or omitted
or for any error of judgment made by it in the performance of its duties under
the Auction Agency Agreement and shall not be liable for any error of judgment
made in good faith unless the Auction Agent shall have been negligent in
ascertaining the pertinent facts.
NOTIFICATION OF RESULTS; SETTLEMENT
The Auction Agent will advise the Remarketing Agent, the Corporation, the
Issuer Trustees and the Debenture Trustee of the Winning Bid Rate by 9:00 a.m.
(New York City time) on the third Business Day prior to the Rate Reset Date (the
"Rate Reset Pricing Date"). On the Rate Reset Pricing Date, the Remarketing
Agent will (i) advise each Existing Holder or Potential Holder that submitted an
Order of the Applicable Rate and if such Order was a Bid, whether such Bid was
accepted or rejected, in whole or in part, and (ii) confirm purchases and sales
with each Bidder purchasing or selling Capital Securities as a result of the
Rate Reset Auction.
On the Rate Reset Pricing Date, the Remarketing Agent will advise DTC of
the purchase and sales resulting from the Rate Reset Auction, and such purchases
and sales will be executed through DTC and will settle on the Rate Reset Date in
immediately available funds, subject to the rules and procedures of DTC and its
Participants then in effect. For a more complete description of DTC and its
settlement procedures, see "Description of Exchange Capital Securities -- Form,
Denomination, Book-Entry Procedures and Transfer." In the case of a holder
(other than DTC) which has taken physical delivery of a certificate representing
its
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Capital Securities, payment will be made only upon surrender of the certificate
representing such Capital Securities properly endorsed for transfer in
accordance with procedures set forth by the Remarketing Agent.
Payments to Existing Holders selling Capital Securities will be made solely
from the proceeds from the sale of Capital Securities in the Rate Reset Auction.
None of the Trust, the Issuer Trustees, the Debenture Trustee, the Corporation
and the Remarketing Agent (except to the extent expressly provided under the
Remarketing Agreement) are obligated to provide or advance funds to make payment
to the holders selling Capital Securities for remarketing.
AUCTION PROCEDURES AFTER LIQUIDATION OF THE TRUST AND DISTRIBUTION OF THE JUNIOR
SUBORDINATED DEBT SECURITIES
The Corporation, as the holder of the outstanding Common Securities, has
the right at any time to terminate the Trust and cause the Junior Subordinated
Debt Securities to be distributed to holders of the Capital Securities. See
"Distribution of Capital Securities -- Liquidation of the Trust and Distribution
of Junior Debt Securities." If the Trust is liquidated and the Junior
Subordinated Debt Securities are distributed to the holders of Capital
Securities, Existing Holders and Potential Holders will submit Orders relating
to a Like Amount of outstanding Junior Subordinated Debt Securities, and the
Auction Procedures will be implemented in the same manner.
DESCRIPTION OF EXCHANGE CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Issuer Trustees on behalf of
the Trust have issued the Old Capital Securities and the Common Securities and
will issue the Exchange Capital Securities. The Exchange Capital Securities will
represent beneficial ownership interests in the Trust and the holders thereof
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption of the Capital Securities or
liquidation of the Trust over the Common Securities, as well as other benefits
as described in the Declaration. See "-- Subordination of Common Securities."
The Declaration has been qualified under the Trust Indenture Act of 1939 (the
"Trust Indenture Act"). This summary of certain provisions of the Capital
Securities, the Common Securities and the Declaration does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Declaration, including the definitions therein of
certain terms. The Declaration is attached as an exhibit to the Registration
Statement.
GENERAL
The Capital Securities (including the Old Capital Securities and the
Exchange Capital Securities) are limited to $500,000,000 aggregate Liquidation
Amount at any one time outstanding. The Capital Securities rank pari passu, and
payments will be made thereon pro rata, with the Common Securities except as
described under "-- Subordination of Common Securities." Legal title to the
Junior Subordinated Debt Securities is held by the Property Trustee on behalf of
the Trust in trust for the benefit of the holders of the Capital Securities and
Common Securities. The Guarantee provides for the guarantee on a subordinated
basis with respect to the Capital Securities but will not guarantee payment of
Distributions or amounts payable on redemption of the Capital Securities or on
liquidation of the Trust when the Trust does not have funds on hand available to
make such payments. See "Description of Exchange Guarantee."
DISTRIBUTIONS
The Capital Securities represent beneficial ownership interests in the
Trust, and Distributions on each Capital Security will be payable at the
Applicable Rate applied to the stated Liquidation Amount of $1,000, and will be
payable semi-annually in arrears on the 1st day of June and December of each
year to the holders of the Capital Securities at the close of business on the
Business Day immediately preceding such Distribution Date (each, a "record
date"). Distributions on the Capital Securities are cumulative. Distributions
accumulate from the original issue date of the Old Capital Securities. The first
Distribution Date for the Capital Securities will be December 1, 1997. The
amount of Distributions payable for any period will be computed on
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the actual number of days elapsed in a year of twelve 30-day months. In the
event that any date on which Distributions are payable on the Capital Securities
is not a Business Day, 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 payments in respect to any such delay) with
the same force and effect as if made on the date such payment was originally
payable (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.
Prior to the Rate Reset Date, the Indenture provides that the failure by
the Corporation to pay interest on the Junior Subordinated Debt Securities when
due is a Debenture Event of Default in which case the Property Trustee may
declare the principal of and the interest on the Junior Subordinated Debt
Securities due and payable. See "Description of Exchange Junior Subordinated
Debt Securities -- Debenture Events of Default; Notice." After the Rate Reset
Date and so long as no Debenture Event of Default has occurred and is
continuing, the Corporation has the right under the Indenture to defer the
payment of interest on the Junior Subordinated Debt Securities at any time or
from time to time for a period not exceeding ten consecutive semi-annual periods
with respect to each Extension Period, provided that no Extension Period may
extend beyond the Stated Maturity of the Junior Subordinated Debt Securities. As
a consequence of any such election, semi-annual Distributions on the Capital
Securities by the Trust will be deferred during any such Extension Period.
Distributions to which holders of the Capital Securities are entitled will
accumulate additional Distributions thereon at the Applicable Rate, compounded
semi-annually from the relevant payment date for such Distributions during any
such Extension Period, to the extent permitted by applicable law. The term
"Distributions" as used herein shall include any such additional Distributions.
During any such Extension Period, the Corporation may not (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
(which includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including Other Debentures) that rank pari passu
with or junior in interest to the Junior Subordinated Debt Securities, or (iii)
make any guarantee payments with respect to any guarantee by the Corporation of
the debt securities of any subsidiary of the Corporation (including Other
Guarantees) if such guarantee ranks pari passu with or junior in interest to the
Junior Subordinated Debt Securities (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 the
Guarantee, (d) purchases or acquisitions of shares of the Corporation's common
stock in connection with the satisfaction by the Corporation of its obligations
under any employee benefit plan or any other contractual obligation of the
Corporation (other than a contractual obligation ranking pari passu with or
junior to the Junior Subordinated Debt Securities), (e) as a result of a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock or (f) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged). Prior to the termination of any such Extension
Period, the Corporation may further extend such Extension Period, provided that
such extension does not cause such Extension Period to exceed ten consecutive
semi-annual periods or to extend beyond the Stated Maturity of the Junior
Subordinated Debt Securities. Upon the termination of any such Extension Period
and the payment of all amounts then accrued and unpaid on the Junior
Subordinated Debt Securities (together with interest thereon accrued at the
Applicable Rate compounded semi-annually, to the extent permitted by applicable
law), and subject to the foregoing limitations, the Corporation may elect to
begin a new Extension Period. No interest or other amounts 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 any such Extension Period at least three
Business Days prior to the earlier of (i) the date the Distributions on the
Capital Securities would have been payable except for the election to begin such
Extension Period or (ii) the date the Administrative Trustees are
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required to give notice to any automated quotation system or to holders of such
Capital Securities of the record date or the date such Distributions are
payable, but in any event not less than three Business Days prior to such record
date. The Debenture Trustee shall give notice of the Corporation's election to
begin or extend an Extension Period to the holders of the Capital Securities.
There is no limitation on the number of times that the Corporation may elect to
begin an Extension Period. See "Description of Exchange Junior Subordinated Debt
Securities -- Option to Extend Interest Payment Date" and "Certain United States
Federal Income Tax Consequences -- Interest and Original Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Junior Subordinated Debt Securities.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debt Securities in which the Trust has invested the proceeds from the issuance
and sale of the Trust Securities. See "Description of Exchange Junior
Subordinated Debt Securities -- General." If the Corporation does not make
interest payments on the Junior Subordinated Debt Securities, the Property
Trustee will not have funds available to pay Distributions on the Capital
Securities. The payment of Distributions (if and to the extent the Trust 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 to the extent set forth herein under "Description of Exchange Guarantee."
MANDATORY REDEMPTION
Upon the repayment in full at the Stated Maturity or a redemption at any
time of the Junior Subordinated Debt Securities (other than following the
distribution of the Junior Subordinated Debt Securities to the holders of the
Capital Securities), the proceeds from such repayment or redemption shall be
applied by the Property Trustee to redeem a Like Amount of Capital Securities,
on the Redemption Date, at the applicable Redemption Price, which shall be equal
to (i) par plus any accrued but unpaid interest on the Junior Subordinated Debt
Securities on the applicable Redemption Date in the case of (A) the repayment of
the Junior Subordinated Debt Securities at Stated Maturity, (B) an Early
Optional Redemption of the Junior Subordinated Debt Securities on the Rate Reset
Date or (C) an Early Mandatary Redemption of the Junior Subordinated Debt
Securities on the Rate Reset Date, (ii) in the case of the redemption of the
Junior Subordinated Debt Securities in connection with the occurrence of a Tax
Event, '40 Act Event or Capital Treatment Event after the Rate Reset Date and
prior to June 1, 2009, the Make-Whole Amount (as defined under "Description of
Exchange Junior Subordinated Debt Securities -- Tax Event, '40 Act Event or
Capital Treatment Event Redemption") or (iii) in the case of the optional
redemption of the Junior Subordinated Debt Securities on or after June 1, 2009
(including an optional redemption upon the occurrence of a Tax Event, '40 Act
Event or Capital Treatment Event), the Optional Redemption Price (as defined
under "Description of Exchange Junior Subordinated Debt Securities -- Redemption
- -- Optional Redemption").
If the Trust 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 Junior Subordinated Debt Securities the Additional
Sums (as defined below).
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Capital Securities and Common Securities shall not be reduced as a
result of any additional taxes, duties and other governmental charges (other
than United States withholding taxes) to which the Trust has become subject as a
result of a Tax Event.
REDEMPTION PROCEDURES
Capital Securities shall be redeemed, if at all, at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
redemption of the Junior Subordinated Debt Securities. Redemptions of the
Capital Securities shall be made and the applicable Redemption Price shall be
payable on each Redemption Date only to the extent that the Trust has funds on
hand available for the payment of such Redemption Price. See also
"-- Subordination of Common Securities."
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If the Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the date fixed for
redemption (the "Redemption Date"), to the extent funds are available, with
respect to the Capital Securities held in global form, 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
applicable Redemption Price to the holders of the Capital Securities. See
"-- Form, Denomination, Book-Entry Procedures and Transfer." With respect to the
Capital Securities held in certificated form, the Property Trustee, to the
extent funds are available, will irrevocably deposit with the paying agent for
the Capital 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 the Capital Securities. See "-- Payment and Paying Agency."
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of the Capital 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 the Capital Securities will
cease, except the right of the holders of the Capital Securities to receive the
applicable Redemption Price, but without interest on such Redemption Price, and
the Capital Securities will cease to be outstanding. In the event that any
Redemption Date is not a Business Day, then payment of the applicable Redemption
Price payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the applicable Redemption Price is improperly withheld or
refused and not paid either by the Trust or by the Corporation pursuant to the
Guarantee as described under "Description of Exchange Guarantee," Distributions
on Capital Securities will continue to accrue at the then Applicable Rate, from
the Redemption Date originally established by the Trust 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 Capital Securities by tender in the open
market or by private agreement.
Notice of any Early Optional Redemption (except in the limited
circumstances described in the following sentence), Optional Redemption or a
Special Event Redemption will be mailed to each holder of Trust Securities at
its registered address at least 30 but not more than 60 days before the
Redemption Date. Notice of an Early Optional Redemption may also be given at
least five days before the Redemption Date when a Tax Event, '40 Act Event or
Capital Treatment Event has occurred not more than 30 days prior to the
Submission Deadline. A Mandatory Redemption or repayment at Stated Maturity will
occur, if at all, in the circumstances set forth in this Prospectus, and,
accordingly, notice of any such redemption or repayment is given hereby and will
not be mailed to the holders of Trust Securities.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The Corporation, as the holder of the outstanding Common Securities, will
have the right at any time (including, without limitation, upon the occurrence
of a Tax Event, '40 Act Event or Capital Treatment Event) to terminate the Trust
and cause a Like Amount of the Junior Subordinated Debt Securities to be
distributed to the holders of the Trust Securities upon liquidation of the
Trust; provided, however, that following such distribution of the Junior
Subordinated Debt Securities, the Corporation agrees to use its best efforts to
maintain any ratings of such Junior Subordinated Debt Securities by any
nationally recognized rating agency for so long as any such Junior Subordinated
Debt Securities are outstanding. Such right to terminate is subject to prior
approval of the Federal Reserve, if then required under applicable capital
guidelines or policies of the Federal Reserve.
Upon liquidation of the Trust and certain other events, the Junior
Subordinated Debt Securities may be distributed to holders of the Capital
Securities. Under current United States federal income tax law, a distribution
of Junior Subordinated Debt Securities upon the dissolution of the Trust would
not be a taxable event to holders of the Capital Securities. If, however, the
Trust is characterized for United States federal
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income tax purposes as an association taxable as a corporation at the time of
dissolution of the Trust, the distribution of the Junior Subordinated Debt
Securities may constitute a taxable event to holders of Capital Securities.
Moreover, upon the occurrence of a Tax Event, '40 Act or a Capital Treatment
Event, a dissolution of the Trust in which holders of the Capital Securities
receive cash would be a taxable event to such holders. See "Certain United
States Federal Income Tax Consequences -- Distribution of Junior Subordinated
Debt Securities to Holders of Capital Securities."
The Trust shall automatically terminate upon 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 Junior Subordinated Debt
Securities to the holders of the Trust Securities if the Corporation, as
Depositor, has given written direction to the Property Trustee to terminate the
Trust (which direction is optional and, except as described above, wholly within
the discretion of the Corporation, as Depositor); (iii) redemption of all of the
Trust Securities as described under "-- Mandatory Redemption" above; (iv)
expiration of the term of the Trust; and (v) the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii), (iv) or
(v) above, the Trust 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 the Trust as provided by applicable
law, to the holders of such Trust Securities a Like Amount of the Junior
Subordinated Debt Securities, unless such distribution would not be practical,
in which event such holders will be entitled to receive out of the assets of the
Trust available for distribution to holders, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, an amount equal to, in
the case of holders of Capital Securities, the aggregate of the Liquidation
Amount plus accumulated 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 the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Capital Securities shall be paid on
a pro rata basis. The holder(s) of the Common Securities will be entitled to
receive distributions upon any such liquidation pro rata with the holders of the
Capital Securities, except that if a Debenture Event of Default (or an event
that, with notice or passage of time, would become such a Debenture Event of
Default) has occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities with respect to any such distributions. See
"-- Subordination of Common Securities." If an early termination occurs as
described in clause (v) above, the Junior Subordinated Debt Securities will be
subject to optional redemption in whole (but not in part).
"Like Amount" means (i) with respect to a redemption of Capital Securities,
Capital Securities having a Liquidation Amount equal to that portion of the
principal amount of Junior Subordinated Debt Securities to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Capital Securities based upon the relative Liquidation Amounts of
such classes and the proceeds of which will be used to pay the Redemption Price
of the Capital Securities and (ii) with respect to a distribution of Junior
Subordinated Debt Securities to holders of Capital Securities in connection with
a dissolution or liquidation of the Trust, Junior Subordinated Debt Securities
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Junior Subordinated Debt Securities are
distributed.
If the Corporation does not redeem the Junior Subordinated Debt Securities
prior to maturity and the Trust is not liquidated and the Junior Subordinated
Debt Securities are not distributed to holders of the Trust Securities, the
Capital Securities will remain outstanding until the repayment of the Junior
Subordinated Debt Securities at the Stated Maturity.
On and after the liquidation date fixed for any distribution of Junior
Subordinated Debt Securities to holders of the Trust Securities, (i) the Capital
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee,
as the record holder of the Capital Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debt Securities
to be delivered upon such distribution with respect to Capital Securities held
by DTC or its nominee and (iii) any certificates representing Capital Securities
not held by DTC or its nominee will be deemed to represent Junior
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Subordinated Debt Securities having a principal amount equal to the Liquidation
Amount of such Capital Securities and bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Capital
Securities until such certificates are presented to the Administrative Trustees
or their agent for cancellation, whereupon the Corporation will issue to such
holder, and the Debenture Trustee will authenticate, a certificate representing
such Junior Subordinated Debt Securities.
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for the Trust Securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Capital Securities that an investor may
purchase, or the Junior Subordinated Debt Securities that the investor may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Capital Securities offered
hereby.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata to the
holders of Capital Securities and Common Securities based on the Liquidation
Amount of the Trust Securities, provided that, if on any Distribution Date or
Redemption Date any Debenture Event of Default (or an event that, with notice or
passage of time, would become such an Event of Default) or an Event of Default
under the Declaration shall have occurred and be continuing, no payment of any
Distribution on, or applicable Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or, in the case of payment of the applicable Redemption Price,
the full amount of such Redemption Price on all of the outstanding Capital
Securities, 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 the applicable Redemption Price of, the Capital Securities
then due and payable.
In the case of any Event of Default under the Declaration resulting from a
Debenture Event of Default, the Corporation as holder of the Common Securities
will be deemed to have waived any right to act with respect to any such Event of
Default under the Declaration until the effect of all such Events of Default
have been cured, waived or otherwise eliminated. Until all such Events of
Default under the Declaration have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the holders of
such Capital Securities and not on behalf of the Corporation as holder of the
Common Securities, and only the holders of the Capital Securities will have the
right to direct the Property Trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Declaration (an "Event of Default") (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description
of Exchange Junior Subordinated Debt Securities -- Debenture Events of
Default"); or
(ii) default by the Trust 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 Trust 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 the Declaration
(other than a covenant or warranty, a default in the performance of which
or the breach of which is addressed 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 Issuer Trustees by the holders of at least 25% in aggregate
Liquidation
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Amount of the outstanding Capital Securities, 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 the Declaration; 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 the Capital 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 the Declaration.
If a Debenture Event of Default (or an event that with notice or the
passage of time, would become such an Event of Default) or an Event of Default
under the Declaration has occurred and is continuing, the Capital Securities
shall have a preference over the Common Securities as described above. See
"-- Liquidation of the Trust and Distribution of Junior Subordinated Debt
Securities" and "-- Subordination of Common Securities."
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 Capital
Securities. In no event will the holders of the Capital 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
Declaration.
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's 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's 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 Declaration. In case a Debenture Event of
Default has occurred and is continuing, the Property Trustee alone shall have
power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Declaration, provided such person shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below or as otherwise set forth in the Declaration. The Trust may, at
the request of the Corporation, as Depositor, with the consent of the
Administrative Trustees but without the consent of the holders of the
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Capital Securities, the Property Trustee or the Delaware Trustee, 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, however, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Capital Securities or (b) substitutes for the Capital Securities
other securities having substantially the same terms as the Capital Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Capital 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 Junior Subordinated Debt
Securities, (iii) the Successor Securities are listed or traded, or any
Successor Securities will be listed or traded upon notification of issuance, on
any national securities exchange or other organization on which the Capital
Securities are then listed or traded, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital 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
Capital Securities (including any Successor Securities) in any material respect,
(vi) such successor entity has a purpose identical and limited to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Corporation has received an opinion from
independent counsel to the Trust 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 Capital Securities (including any Successor Securities) in any
material respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act of 1940 (the "Investment Company Act") and (viii) the
Corporation or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in Liquidation Amount of the Trust
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 Trust or the
successor entity to be classified as an association taxable as a corporation (or
to substantially increase the likelihood that the Trust or the successor entity
would be classified as other than a grantor trust) for United States federal
income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below and under "Description of Exchange
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Declaration, the holders of the Capital Securities will have no voting rights.
The Declaration 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 Trust Securities, (i) to cure any ambiguity, correct or
supplement any provision in the Declaration that may be inconsistent with any
other provision, or to make any other provisions with respect to matters or
questions arising under the Declaration, which shall not be inconsistent with
the other provisions of the Declaration, or (ii) to modify, eliminate or add to
any provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust 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 Trust 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 the
Declaration shall become effective when notice thereof is given to the holders
of the Trust Securities. The Declaration 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 Capital
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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 Trust's
status as a grantor trust for United States federal income tax purposes or the
Trust's exemption from status as an "investment company" under the Investment
Company Act. In addition, without the consent of each holder of Trust
Securities, the Declaration 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 Junior Subordinated Debt Securities are held by the Trust,
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
the Junior Subordinated Debt Securities, (ii) waive any past default that is
waivable under Section 5.13 of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debt Securities shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated Debt
Securities, 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 Capital Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Junior Subordinated Debt Securities affected thereby, no such consent
shall be given by the Property Trustee without the prior consent of each holder
of the Capital Securities. The Issuer Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Capital
Securities except by subsequent vote of such holders. The Property Trustee shall
notify each holder of Capital Securities of any notice of default with respect
to the Junior Subordinated Debt Securities. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that such action will not
affect the Trust's status as a grantor trust for United States federal income
tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital 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 Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel the Capital Securities in accordance with the
Declaration.
Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
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.
EXPENSES AND TAXES
In the Indenture, the Corporation, as borrower, has agreed to pay all debts
and other obligations (other than with respect to payments of Distributions,
amounts payable upon redemption and the Liquidation Amount of the Trust
Securities) and all costs and expenses of the Trust (including costs and
expenses relating to the organization of the Trust, the fees and expenses of the
Issuer Trustees and the costs and expenses relating to the operation of the
Trust) and the offering of the Capital Securities, and to pay any and all taxes
and all costs and expenses with respect to the foregoing (other than United
States withholding taxes) to which the Trust might become subject. The foregoing
obligations of the Corporation under the Indenture are for the benefit of, and
shall be enforceable by, any person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor") whether or not such Creditor has
received notice thereof. Any such Creditor may enforce such obligations of the
Corporation directly against the Corporation, and the Corporation has
irrevocably waived any right or remedy to require that any such Creditor take
any action against the Trust or
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any other person before proceeding against the Corporation. The Corporation has
also agreed in the Indenture to execute such additional agreement(s) as may be
necessary or desirable to give full effect to the foregoing.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
Exchange Capital Securities will be represented by one or more Exchange
Capital Securities in registered, global form (collectively, the "Global Capital
Securities"). The Global Capital Securities will be deposited upon issuance with
the Property Trustee as custodian for DTC, in New York, New York, and registered
in the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole but not in part, only to another nominee of DTC or to a
successor of DTC or its nominee and only in amounts that would not cause a
holder to own less than 100 Exchange Capital Securities. Beneficial interests in
the Global Capital Securities may not be exchanged for Exchange Capital
Securities in certificated form except in the limited circumstances described
below. In addition, transfer of beneficial interests in the Global Capital
Securities will be subject to the applicable rules and procedures of DTC and its
direct or indirect participants which may change from time to time. See "--
Exchange of Book-Entry Capital Securities for Certificated Capital Securities."
In the event that Exchange Capital Securities are issued in certificated
form, such Exchange Capital Securities will be in blocks having a Liquidation
Amount of $100,000 (100 Capital Securities) and integral multiples of $100,000
in excess thereof and may be transferred or exchanged only in the manner and at
the offices described below.
Depositary Procedures
DTC has advised the Trust and the Corporation as follows: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve, a "clearing corporation" within the meaning of
the Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
to accounts of its Participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
Indirect access to DTC's system is also available to other entities such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
(collectively, the "Indirect Participants"). Persons who are not Participants
may beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interest and transfer
of ownership interest of each actual purchaser of each security held by or on
behalf of DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised the Corporation and the Trust that, pursuant to
procedures established by it, ownership of such interests in the Global Capital
Securities will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the Global Capital Securities).
Investors in the Global Capital Securities may hold their interests therein
directly through DTC, if they are Participants in DTC, or indirectly through
organizations that are Participants in such system. All interests in a Global
Capital Security will be subject to the procedures and requirements of DTC. The
laws of some states require that certain persons take physical delivery in
certificated form of certain securities, such as the Capital Securities, that
they own. Consequently, the ability to transfer beneficial interests in a Global
Capital Security to such persons will be limited to that extent. Because DTC can
act only on behalf of Participants, which in turn act on behalf of Indirect
Participants and certain banks, the ability of a person having beneficial
interests in a Global Capital Security to pledge such interests to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such interests, may be affected by the lack of a
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physical certificate evidencing such interests. For certain other restrictions
on the transferability of the Capital Securities, see "-- Exchange of
Book-Entry Capital Securities for Certificated Capital Securities."
EXCEPT AS DESCRIBED BELOW, OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL
CAPITAL SECURITIES WILL NOT BE ENTITLED TO HAVE CAPITAL SECURITIES REGISTERED IN
THEIR NAMES, WILL NOT RECEIVE OR BE ENTITLED TO RECEIVE PHYSICAL DELIVERY OF
CAPITAL SECURITIES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE
REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE DECLARATION FOR ANY PURPOSE.
Payments in respect of the Global Capital Securities registered in the name
of DTC or its nominee will be payable by the Property Trustee to DTC or its
nominee as the registered holder under the Declaration by wire transfer in
immediately available funds on each Distribution Date. Under the terms of the
Declaration, the Property Trustee will treat the persons in whose names the
Capital Securities, including the Global Capital Securities, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to, or payments made on account of, beneficial ownership interests in
the Global Capital Securities, or for maintaining, supervising or reviewing any
of DTC's records or any Participant's or Indirect Participant's records relating
to the beneficial ownership interests in the Global Capital Securities, or (ii)
any other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants. DTC has advised the Corporation and the
Trust that its current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the accounts of the
relevant Participants with the payment on the payment date, in amounts
proportionate to their respective holdings in Liquidation Amount of beneficial
interests in the Global Capital Securities, as shown on the records of DTC,
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Capital Securities represented by Global Capital Securities
held through such Participants will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Property
Trustee or the Trust. Neither the Trust nor the Property Trustee will be liable
for any delay by DTC or any of its Participants in identifying the beneficial
owners of the Capital Securities, and the Trust and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Interests in the Global Capital Securities will trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in such interests
will therefore settle in immediately available funds, subject in all cases to
the rules and procedures of DTC and its Participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds.
DTC has advised the Trust and the Corporation that it will take any action
permitted to be taken by a holder of Capital Securities (including, without
limitation, the presentation of Capital Securities for exchange as described
below) only at the direction of one or more Participants to whose account with
DTC interests in the Global Capital Securities are credited and only in respect
of such portion of the aggregate Liquidation Amount of the Capital Securities
represented by the Global Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Declaration, DTC reserves the right to exchange the Global
Capital Securities for legended Capital Securities in certificated form and to
distribute such Capital Securities to its Participants.
So long as DTC or its nominee is the registered owner of the Global Capital
Securities, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Capital Securities represented by the Global Capital
Securities for all purposes under the Declaration.
Neither DTC nor its nominee will consent or vote with respect to the
Capital Securities. Under its usual procedures, DTC would mail an omnibus proxy
to the Trust as soon as possible after the record date. The omnibus proxy
assigns the consenting or voting rights of DTC or its nominee to those
Participants to whose accounts the Capital Securities are credited on the record
date (identified in a listing attached to the omnibus proxy).
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The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Corporation and the Trust believe to be
reliable, but neither the Corporation nor the Trust takes responsibility for the
accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Capital Securities among Participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Trust nor the
Property Trustee will have any responsibility for the performance by DTC or its
Participants or Indirect Participants of their respective obligations under the
rules and procedures governing their operations.
Exchange of Book-Entry Capital Securities for Certificated Capital Securities
A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is no
longer willing or able to properly discharge its responsibilities with respect
to the Capital Securities and the Corporation is unable to locate a qualified
successor, or (y) has ceased to be a "clearing agency" registered under the
Exchange Act; (ii) the Trust at its sole option elects to terminate the
book-entry system through DTC; or (iii) there shall have occurred and be
continuing a Debenture Event of Default. In addition, beneficial interests in a
Global Capital Security may be exchanged by or on behalf of DTC for certificated
Capital Securities upon request by DTC, but only upon at least 20 days prior
written notice given to the Property Trustee in accordance with DTC's customary
procedures. In all cases, certificated Capital Securities delivered in exchange
for any Global Capital Security or beneficial interests therein will be
registered in the names, and issued in any approved denominations, requested by
or on behalf of DTC (in accordance with its customary procedures).
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities held in global form shall be
made to DTC, which shall credit the relevant accounts at DTC on the applicable
Distribution Dates or in respect of the Capital Securities that are not held by
DTC, such payments shall be made by check mailed to the address of the holder
entitled thereto as such address shall appear on the register. 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, the
Administrative Trustees 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.
The Property Trustee has informed the Trust that so long as it serves as
paying agent for the Capital Securities, it anticipates that information
regarding Distributions on the Capital Securities, including payment date,
record date and redemption information, will be made available through The Bank
of New York at 101 Barclay Street, New York, New York, 10286, Attn: Corporate
Trust Department.
RESTRICTIONS ON TRANSFER
The Exchange Capital Securities will be issued, and may be transferred
only, in blocks having a liquidation amount (the "Liquidation Amount") of
$100,000 (100 Capital Securities) and integral multiples of $100,000 in excess
thereof. Any attempted transfer, sale or other disposition of Exchange Capital
Securities in a block having a Liquidation Amount of other than an integral
multiple of $100,000 shall be deemed to be void and of no legal effect
whatsoever. Any such transferee shall be deemed not to be the holder of such
Exchange Capital Securities for any purpose, including but not limited to the
receipt of Distributions on such Exchange Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Exchange
Capital Securities.
REGISTRAR AND TRANSFER AGENT
The Property Trustee is acting as the registrar and transfer agent for the
Capital Securities.
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Registration of transfers of the Capital Securities will be effected
without charge by or on behalf of the Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Trust will not be required to register or cause to be
registered the transfer or exchange of the Capital Securities after they 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 the Declaration and, during the existence of an 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 Declaration at the request of any holder of Trust
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
Declaration or is unsure of the application of any provision of the Declaration,
and the matter is not one on which holders of the Capital Securities or the
Common Securities are entitled under the Declaration 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 Trust in such a way that the Trust will not 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 (or in a way that would
substantially increase the risk that the Trust would be classified as other than
a grantor trust for United States federal income tax purposes), and so that the
Junior Subordinated Debt Securities will be treated as indebtedness of the
Corporation for United States federal income tax purposes. In this connection,
the Corporation and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of the
Trust or the Declaration, 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 Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF EXCHANGE JUNIOR SUBORDINATED DEBT SECURITIES
The Old Junior Subordinated Debt Securities were issued, and the Exchange
Junior Subordinated Debt Securities will be issued, as a separate series under
the Indenture. The Indenture has been qualified under the Trust Indenture Act.
This summary of certain terms and provisions of the Junior Subordinated Debt
Securities and the Indenture does not purport to be complete, and where
reference is made to particular provisions of the Indenture, such provisions,
including the definitions of certain terms, some of which are not otherwise
defined herein, are qualified in their entirety by reference to all of the
provisions of the Indenture and those terms made a part of the Indenture by the
Trust Indenture Act. The Indenture is attached as an exhibit to the Registration
Statement.
GENERAL
Concurrently with the issuance of the Old Capital Securities and the Common
Securities, the Trust invested the proceeds thereof in Old Junior Subordinated
Debt Securities issued by the Corporation. The Junior Subordinated Debt
Securities bear interest at the Applicable Rate payable semi-annually in arrears
on
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the 1st day of June and December of each year (each, an "Interest Payment
Date"), commencing December 1, 1997, to the person in whose name each Junior
Subordinated Debt Security 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 of the Trust, each Junior
Subordinated Debt Security will be registered in the name of the Trust and held
by the Property Trustee for the benefit of the holders of the Trust Securities.
The amount of interest payable for any period will be computed on the basis of
the actual number of days elapsed in a year of twelve 30-day months. In the
event that any date on which interest is payable on the Junior Subordinated Debt
Securities 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), 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 Applicable Rate, compounded semi-annually from the relevant Interest Payment
Date. The term "interest" as used herein shall include semi-annual payments,
interest on semi-annual interest payments not paid on the applicable Interest
Payment Date and Additional Sums, as applicable. Unless previously redeemed or
repurchased, the Junior Subordinated Debt Securities will mature on June 1,
2029. See " -- Mandatory Redemption", " -- Optional Redemption" and " -- Tax
Event, '40 Act Event and Capital Treatment Event Redemption."
Prior to the Rate Reset Date, the Applicable Rate on the Junior
Subordinated Debt Securities will be 6.75% per annum. On and after the Rate
Reset Date, the Applicable Rate on the Junior Subordinated Debt Securities will
be determined on the basis of Orders placed prior to the Submission Deadline in
a Rate Reset Auction to be held on the Rate Reset Pricing Date. Pursuant to the
Auction Procedures, each Existing Holder will indicate its desire to (i)
continue to hold Capital Securities without regard to the Applicable Rate that
results from the Rate Reset Auction, (ii) continue to hold Capital Securities if
the Applicable Rate that results from the Rate Reset Auction is equal to or
greater than the rate bid by such Existing Holder, and/or (iii) sell Capital
Securities without regard to the Applicable Rate that results from such Rate
Reset Auction. A Bid by a Potential Holder over the Maximum Applicable Rate will
not be considered, and a Bid by an Existing Holder over the Maximum Applicable
Rate will be deemed to be a Sell Order. The Applicable Rate on the Junior
Subordinated Debt Securities on and after the Rate Reset Date will be equal to
(i) the Winning Bid Rate if Sufficient Clearing Bids have been made; or (ii) if
all outstanding Capital Securities are subject to Hold Orders, to the Full
Participation Rate. See "Description of the Rate Reset Auction."
In connection with the Exchange Offer, the Corporation will exchange the
Old Junior Subordinated Debt Securities for the Exchange Junior Subordinated
Debt Securities as soon as practicable after the date hereof. No Old Junior
Subordinated Debt Securities will remain outstanding after such exchange. The
Junior Subordinated Debt Securities are unsecured and rank junior and
subordinate in right of payment to all Senior Debt. Because the Corporation is a
bank 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 (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of such subsidiary, except to the extent that the
Corporation may itself be recognized as a creditor of such subsidiary.
Accordingly, the Junior Subordinated Debt Securities will be subordinated to all
Senior Debt and effectively subordinated to all existing and future liabilities
of the Corporation's subsidiaries, and holders of Junior Subordinated Debt
Securities should look only to the assets of the Corporation for payments on the
Junior Subordinated Debt Securities. 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
" -- Subordination."
The Junior Subordinated Debt Securities rank pari passu with all Other
Debentures issued under the Indenture and are 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 is a legal entity separate
and distinct from its present and
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future banking and non-banking affiliates. See "Risk Factors -- Ranking of
Obligations Under the Guarantee and the Junior Subordinated Debt Securities" and
" -- Status of the Corporation as a Bank Holding Company." The Corporation's
bank subsidiaries are subject to certain restrictions imposed by federal law on
any extensions of credit to, and certain other transactions with, the
Corporation and certain other affiliates, and on investments in stock or other
securities thereof. Such restrictions prevent the Corporation and such other
affiliates from borrowing from such banks unless the loans are secured by
various types of collateral. In addition, payment of dividends to the
Corporation by a bank subsidiary is subject to ongoing review by banking
regulators and is subject to various statutory limitations and in certain
circumstances requires approval by banking regulatory authorities. The Other
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.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Junior Subordinated Debt Securities will be represented by one or more
global certificates registered in the name of Cede & Co. as the nominee of DTC
if, and only if, distributed to the holders of the Trust Securities. Until such
time, the Junior Subordinated Debt Securities will be registered in the name of
the Trust and held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. Should the Junior Subordinated Debt Securities
be distributed to holders of the Trust Securities, beneficial interests in the
Junior Subordinated Debt Securities will be shown on, and transfers thereof will
be effected only through, records maintained by Participants in DTC. Except as
described below, Junior Subordinated Debt Securities in certificated form will
not be issued in exchange for the global certificates.
A global security shall be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than Cede & Co. only if (i)
DTC notifies the Corporation that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have been
appointed, or if at any time DTC ceases to be a "clearing agency" registered
under the Exchange Act, at a time when DTC is required to be so registered to
act as such depositary, (ii) the Corporation in its sole discretion determines
that such global security shall be so exchangeable, or (iii) there shall have
occurred and be continuing a Debenture Event of Default. Any global security
that is exchangeable pursuant to the preceding sentence shall be exchangeable
for 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 with respect to ownership of beneficial interests in such global
security. In the event that Junior Subordinated Debt Securities are issued in
certificated form, such Junior Subordinated Debt Securities will be in minimum
blocks of $100,000 and integral multiples of $100,000 in excess thereof and may
be transferred or exchanged only in such minimum denominations and in the manner
and at the offices described below.
Payments on Junior Subordinated Debt Securities represented by a global
security will be made to DTC, as the depositary for the Junior Subordinated Debt
Securities. In the event Junior Subordinated Debt Securities are issued in
certificated form, principal and interest will be payable, the transfer of the
Junior Subordinated Debt Securities will be registrable, and Junior Subordinated
Debt Securities will be exchangeable for Junior Subordinated Debt Securities 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.
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 "Description of Capital Securities -- Form, Denomination,
Book-Entry Procedures and Transfer." If the Junior Subordinated Debt Securities
are distributed to the holders of the Trust Securities upon the termination of
the Trust, the form, denomination, book-entry and transfer procedures with
respect to the Capital Securities as described under "Description of Exchange
Capital Securities -- Form, Denomination, Book-Entry Procedures and Transfer,"
shall apply to the Junior Subordinated Debt Securities mutatis mutandis.
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PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on Junior Subordinated Debt
Securities will be made at the office of the Debenture Trustee in the City of
New York or at the office of such Paying Agent or Paying Agents as the
Corporation may designate from time to time, except that at the option of the
Corporation payment of any interest may be made (except in the case of Junior
Subordinated Debt Securities in global form), (i) by check mailed to the address
of the person entitled thereto as such address shall appear in the register for
Junior Subordinated Debt Securities or (ii) by transfer to an account maintained
by the person entitled thereto as specified in such register, provided that
proper transfer instructions have been received by the relevant record date.
Payment of any interest on any Junior Subordinated Debt Security will be made to
the person in whose name such Junior Subordinated Debt Security is registered at
the close of business on the 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 the Junior Subordinated Debt Securities.
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 or
interest on any Junior Subordinated Debt Security and remaining unclaimed for
two years after such principal 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 Debt Security shall thereafter look, as a general
unsecured creditor, only to the Corporation for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
After the Rate Reset Date and so long as no Debenture Event of Default has
occurred and is continuing, the Corporation has the right under the Indenture to
defer the payment of interest on the Junior Subordinated Debt Securities at any
time or from time to time for a period not exceeding ten consecutive semi-annual
periods with respect to each Extension Period, provided, that no Extension
Period may extend beyond the Stated Maturity of the Junior Subordinated Debt
Securities. At the end of an Extension Period, the Corporation must pay all
interest then accrued and unpaid on the Junior Subordinated Debt Securities
(together with interest thereon accrued at a variable annual rate equal the
Applicable Rate compounded semi-annually from the relevant Interest Payment
Date, to the extent permitted by applicable law). During an Extension Period and
for so long as the Junior Subordinated Debt Securities remain outstanding,
interest will continue to accrue and holders of Junior Subordinated Debt
Securities (and holders of the Capital Securities while Capital Securities are
outstanding) will be required to accrue interest income (in the form of OID) for
United States federal income tax purposes. See "Certain United States Federal
Income Tax Consequences -- Interest and Original Issue Discount."
During any Extension Period, the Corporation may not (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
(which includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including any Other Debentures) that rank pari
passu with or junior in interest to the Junior Subordinated Debt Securities or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation
(including any Other Guarantees) if such guarantee ranks pari passu with or
junior in interest to the Junior Subordinated Debt Securities (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 capital stock under any such plan
in the future, or the redemption or repurchase of any such rights pursuant
thereto, (c) payments under the Guarantee, (d) purchases or acquisitions of
shares of the Corporation's common stock in connection with the satisfaction by
the Corporation of its obligations under any employee benefit plan or any other
contractual obligation of the Corporation (other than a contractual obligation
ranking pari passu with or junior to the Junior Subordinated Debt Securities),
(e) as a result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
for another class or series of the Corporation's capital stock or (f) the
purchase of fractional interests in shares of the Corporation's capital
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stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged). Prior to the termination of any
Extension Period the Corporation may further extend such Extension Period;
provided, however, that such extension does not cause such Extension Period to
exceed ten consecutive semi-annual periods or to extend beyond the Stated
Maturity of the Junior Subordinated Debt Securities. Upon the termination of any
Extension Period and the payment of all interest then accrued and unpaid on the
Junior Subordinated Debt Securities (together with interest thereon accrued at
the Applicable Rate, compounded semi-annually, to the extent permitted by
applicable law), and subject to the foregoing limitations, the Corporation may
elect to begin a new Extension Period. 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 any Extension Period (or an extension thereof) at
least three Business Days prior to the earlier of (i) the date the Distributions
on the Capital Securities would have been payable except for the election to
begin or extend such Extension Period or (ii) the date the Administrative
Trustees are required to give notice to any automated quotation system or to
holders of Capital Securities of the record date or the date such Distributions
are payable, but in any event not less than three Business Days prior to such
record date. The Debenture Trustee shall give notice of the Corporation's
election to begin or extend a new Extension Period to the holders of the Capital
Securities. There is no limitation on the number of times that the Corporation
may elect to begin an Extension Period.
REDEMPTION
The Junior Subordinated Debt Securities will mature on June 1, 2029 (the
"Stated Maturity") unless earlier redeemed. Prior to the Rate Reset Date, the
Corporation may not redeem the Junior Subordinated Debt Securities for any
reason. The circumstances in which the Corporation may, or is required to,
redeem the Junior Subordinated Debt Securities are described below. Upon the
repayment in full at maturity or redemption, in whole or in part, of the Junior
Subordinated Debt Securities (other than following the distribution of the
Junior Subordinated Debt Securities to the holders of the Trust Securities), the
proceeds from such repayment or redemption shall concurrently be applied to
redeem, at the applicable Redemption Price, Trust Securities having an aggregate
Liquidation Amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed, upon the terms and conditions
described herein. See "Description of Exchange Capital Securities -- Mandatory
Redemption."
Notice of any Early Optional Redemption (except in the limited
circumstances described in the following sentence), Optional Redemption or a
Special Event Redemption will be mailed to each holder of Trust Securities at
its registered address at least 30 but not more than 60 days before the
Redemption Date. Notice of an Early Optional Redemption may also be given at
least five days before the Redemption Date when a Tax Event, '40 Act Event or
Capital Treatment Event has occurred not more than 30 days prior to the
Submission Deadline. A Mandatory Redemption or repayment at Stated Maturity will
occur, if at all, in the circumstances set forth in this Prospectus, and,
accordingly, notice of any such redemption or repayment is given hereby and will
not be mailed to the holders of Trust Securities.
Mandatory Redemption
In the event of a Failed Auction, the Corporation must redeem the Junior
Subordinated Debt Securities on the Rate Reset Date (an "Early Mandatory
Redemption"), in whole but not in part, at par plus accrued and unpaid interest
thereon to the date of redemption.
Optional Redemption
The Corporation may redeem the Junior Subordinated Debt Securities in
whole, but not in part, on the Rate Reset Date (an "Early Optional Redemption"),
at par plus accrued and unpaid interest thereon to the date of redemption. In
addition the Corporation may redeem the Junior Subordinated Debt Securities in
whole or in part at any time on or after June 1, 2009 (an "Optional
Redemption"), at the Optional Redemption Price subject to the Corporation having
received prior approval from the Federal Reserve, if then required under
applicable capital guidelines or policies of the Federal Reserve.
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"Optional Redemption Price" is equal to the sum of the aggregate principal
amount of Junior Subordinated Debt Securities being redeemed, any accrued and
unpaid interest on the Junior Subordinated Debt Securities to the date of
redemption and the Optional Redemption Premium.
"Optional Redemption Premium" is equal to 50% of the Stated Coupon (as
defined below) on June 1, 2009, declining ratably on each June 1 thereafter to
zero on or after June 1, 2019.
"Stated Coupon" is the product of the aggregate principal amount of Junior
Subordinated Debt Securities being redeemed and the Applicable Rate.
Tax Event, '40 Act Event or Capital Event Redemption
After the Rate Reset Date and upon the occurrence of an Tax Event, '40 Act
Event or Capital Treatment Event (each a "Special Event"), the Corporation may
within 90 days following the occurrence of such Special Event redeem the Junior
Subordinated Debt Securities in whole, but not in part, for cash, at (i) the
Make-Whole Amount, in the case of a redemption upon the occurrence of a Special
Event prior to June 1, 2009, or (ii) the Optional Redemption Price, in the case
of a redemption upon the occurrence of a Special Event on or after June 1, 2009.
Upon the redemption of the Junior Subordinated Debt Securities, the proceeds of
such redemption shall concurrently be applied to redeem, at the applicable
Redemption Price, the Trust Securities upon the terms and conditions described
herein. See "Description of Exchange Capital Securities -- Mandatory
Redemption."
"Tax Event" means the receipt by the Property Trustee of an opinion of
nationally recognized independent tax counsel experienced in such matters to the
effect that, as a result of (a) any amendment to, or change (including any
announced proposed change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein (b) any judicial decision or official administrative pronouncement,
ruling, regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations (an
"Administrative Action") or (c) any amendment to or change in the administrative
position or interpretation of any Administrative Action or judicial decision
that differs from the theretofore generally accepted position, in each case, by
any legislative body, court, governmental agency or regulatory body,
irrespective of the manner in which such amendment or change is made known,
which amendment or change is effective or such Administrative Action or decision
is announced, in each case, on or after the thirtieth day prior to the
Submission Deadline, there is more than an insubstantial risk that (x) if the
Junior Subordinated Debt Securities are held by or on behalf of the Trust, (i)
the Trust is, or will be within 90 days of the date of such opinion, subject to
the United States federal income tax with respect to interest accrued or
received on the Junior Subordinated Debt Securities or subject to more than a de
minimis amount of other taxes, duties or other governmental charges as
determined by such counsel, or (ii) any portion of interest payable by the
Corporation to the Trust on the Junior Subordinated Debt Securities is not, or
within 90 days of the date of such opinion will not be, deductible by the
Corporation in whole or in part for United States federal income tax purposes or
(y) with respect to Junior Subordinated Debt Securities which are no longer held
by or on behalf of the Trust, any portion of interest payable by the Corporation
on the Junior Subordinated Debt Securities 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.
" '40 Act Event" means the receipt by the Property Trustee of an opinion of
independent counsel rendered by a law firm having a recognized national
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority ("Change in Investment Company Law"), there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act,
which Change in Investment Company Law becomes effective or is announced,
enacted or promulgated on or after the thirtieth day prior to the Submission
Deadline.
"Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or
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as a result of any official or administrative pronouncement or action, or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement, action or decision is
announced on or after the thirtieth day prior to the Submission Deadline Date,
there is more than an insubstantial risk that the Corporation will not be
entitled to treat an amount equal to Liquidation Amount of the Capital
Securities as "Tier 1 Capital" (or the then equivalent thereof) after the Rate
Reset Date for purposes of the capital adequacy guidelines of the Federal
Reserve, as then in effect and applicable to the Corporation.
"Make-Whole Amount" will be equal to the greater of (i) 100% of the
principal amount of such Junior Subordinated Debt Securities or (ii) as
determined by the Quotation Agent (as defined herein), (a) the sum of the
present values of the principal amount and premium, if any, payable as part of
the Optional Redemption Price on such Junior Subordinated Debt Securities on
June 1, 2009, together with the present values of scheduled payments of interest
on such Junior Subordinated Debt Securities from the redemption date to June 1,
2009, in each case discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate plus 100 basis points less (b) accrued and unpaid interest on such Junior
Subordinated Debt Securities to the date of redemption.
"Remaining Life" means (i) for purposes of determining the Maximum
Applicable Rate and the Full Participation Rate, the period beginning on the
Rate Reset Date and ending on the Stated Maturity date, and (ii) with respect to
an Optional Redemption or Special Event Redemption, the period beginning on the
applicable Redemption Date and ending on June 1, 2009.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the calculation date, appearing in the
most recently published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue
(as defined below), calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price (as defined below) for such redemption date, the Rate Reset
Pricing Date or the Rate Reset Date. The Treasury Rate shall be calculated on
the third Business Day preceding the redemption date, the Rate Reset Pricing
Date or the Rate Reset Date, as the case may be.
"Comparable Treasury Issue" means, with respect to any redemption date, the
Rate Reset Pricing Date, or the Rate Reset Date, as the case may be, the United
States Treasury security selected by the Quotation Agent as having a maturity
comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after June 1, 2009 or the Stated
Maturity, as the case may be, the two most closely corresponding United States
Treasury securities shall be used as the Comparable Treasury Issue, and the
Treasury Rate shall be interpolated or extrapolated on a straight-line basis,
rounding to the nearest month using such securities.
"Quotation Agent" means Initial Purchaser and its successors; provided,
however, that if the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), the
Corporation shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Corporation.
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"Comparable Treasury Price" means (A) the average of five Reference
Treasury Dealer Quotations (as defined below) for such Redemption Date, the Rate
Reset Pricing Date or the Rate Reset Date, as the case may be, after excluding
the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Debenture Trustee obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the Rate Reset Pricing Date
or the Rate Reset Date, as the case may be, the average, as determined by the
Debenture Trustee, of the bid and ask prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such redemption date,
the Rate Reset Pricing Date or the Rate Reset Date, as the case may be.
ADDITIONAL SUMS
If the Trust is required to pay any additional taxes, duties or other
governmental charges (other than United States withholding taxes) as a result of
a Tax Event, the Corporation will pay as additional amounts on the Junior
Subordinated Debt Securities such amounts as shall be required so that the
Distributions payable by the Trust shall not be reduced as a result of any such
additional taxes, duties or other governmental charges. The Corporation has
covenanted in the Indenture that, if and so long as (i) the Trust is the holder
of all Junior Subordinated Debt Securities and (ii) a Tax Event in respect of
the Trust has occurred and is continuing, it will pay Additional Sums (as
defined under "Description of Exchange Capital Securities -- Mandatory
Redemption") in respect of such Trust Securities to the Trust.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation has also covenanted that it will not (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
(which includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Corporation (including Other Debentures) that rank pari passu
with or junior in interest to the Junior Subordinated Debt Securities or (iii)
make any guarantee payments with respect to any guarantee by the Corporation of
the debt securities of any subsidiary of the Corporation (including under Other
Guarantees) if such guarantee ranks pari passu with or junior in interest to the
Junior Subordinated Debt Securities (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 capital stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) purchases or acquisitions of shares of the Corporation's common
stock in connection with the satisfaction by the Corporation of its obligations
under any employee benefit plan or any other contractual obligation of the
Corporation (other than a contractual obligation ranking pari passu with or
junior in interest to the Junior Subordinated Debt Securities), (e) as a result
of a reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock or (f) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged), if at such time (i) there shall have occurred a
Debenture Event of Default, (ii) the Corporation shall be in default with
respect to its payment of any obligations under the Guarantee or (iii) the
Corporation shall have given notice of its election of an Extension Period as
provided in the Indenture 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 Junior Subordinated Debt Securities, 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
Junior Subordinated Debt Securities or the
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holders of the Capital 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 Junior Subordinated Debt Securities, to modify
the Indenture in a manner affecting the rights of the holders of Junior
Subordinated Debt Securities; provided, however, that no such modification may,
without the consent of the holder of each outstanding Junior Subordinated Debt
Security so affected, change the Stated Maturity, or reduce the principal amount
of the Junior Subordinated Debt Securities, or reduce the rate or extend the
time of payment of interest thereon or reduce the percentage of principal amount
of Junior Subordinated Debt Securities, or have certain other effects as set
forth in the Indenture.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debt Securities, any
supplemental Indenture for the purpose of creating any Other Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debt Securities that has occurred
and is continuing constitutes a "Debenture Event of Default":
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debt Securities 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 the Junior
Subordinated Debt Securities when due, whether at maturity, upon
redemption, by declaration of acceleration 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 the Junior Subordinated
Debt Securities; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation; or
(v) the voluntary or involuntary dissolution, winding-up or
termination of the Trust, except in connection with the distribution of the
Junior Subordinated Debt Securities to the holders of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities of
the Trust, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities 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 the Junior Subordinated Debt Securities may
declare the principal due and payable immediately upon a Debenture Event of
Default and, should the Debenture Trustee or such holders of Junior Subordinated
Debt Securities fail to make such declaration, the holders of at least 25% in
aggregate Liquidation Amount of the Capital Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities may annul such declaration and waive the
default if the default (other than the non-payment of the principal of the
Junior Subordinated Debt Securities 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. Should the holders of Junior
Subordinated Debt Securities fail to annul such declaration and waive such
default, the holders of a majority in aggregate Liquidation Amount of the
Capital Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities affected thereby may, on behalf of the
holders of all the Junior Subordinated Debt Securities, waive any past default,
except a default in the payment of principal of (or premium, if any) 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
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holder of each outstanding Junior Subordinated Debt Security. Should the holders
of such Junior Subordinated Debt Securities fail to annul such declaration and
waive such default, the holders of a majority in aggregate Liquidation Amount of
the Capital 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, the
Property Trustee will have the right to declare the principal of and the
interest on the Junior Subordinated Debt Securities, and any other amounts
payable under the Indenture, to be forthwith due and payable and to enforce its
other rights as a creditor with respect to the Junior Subordinated Debt
Securities.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL 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 Junior Subordinated Debt Securities on the date such interest
or principal is otherwise payable, a holder of Capital Securities may institute
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 Capital Securities. If the right to bring a Direct
Action is removed following the Exchange Offer, the Trust may become subject to
the reporting obligations under the Exchange Act. Notwithstanding any payments
made to a holder of Capital Securities by the Corporation in connection with a
Direct Action, the Corporation shall remain obligated to pay the principal of
and interest on the Junior Subordinated Debt Securities, and the Corporation
shall be subrogated to the rights of the holder of such Capital Securities with
respect to payments on the Capital Securities to the extent of any payments made
by the Corporation to such holder in any Direct Action.
The holders of the Capital Securities will not be able to exercise directly
any remedies, other than those set forth in the preceding paragraph, available
to the holders of the Junior Subordinated Debt Securities unless there shall
have been an Event of Default under the Declaration. See "Description of
Exchange Capital 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 with or 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 with or 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 with or 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 Debt Securities issued under the Indenture; (ii) immediately after
giving effect thereto, no Debenture Event of Default, and no event which, after
notice or lapse of time or both, would become a Debenture Event of Default,
shall have occurred and be continuing; (iii) if at the time any Capital
Securities are outstanding, such transaction is permitted under the Declaration
and the Guarantee and does not give rise to any breach or violation of the
Declaration or the 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 Debt Securities protection in the event of a highly leveraged or
other transaction involving the Corporation that may adversely affect holders of
the Junior Subordinated Debt Securities.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debt Securities issued thereunder shall 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
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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 Debt Securities, or the Property Trustee on
behalf of the holders, will be entitled to receive or retain any payment or
distribution in respect thereof.
In the event of the acceleration of the maturity of the Junior Subordinated
Debt Securities, 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
the Junior Subordinated Debt Securities will be entitled to receive or retain
any payment in respect of the principal of or interest, if any, on the Junior
Subordinated Debt Securities.
In the event that the Corporation shall default in the payment of any
principal of (or premium, if any), or interest, if any, on any Senior Debt when
the same becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration of acceleration or otherwise, then, unless and
until such default shall have been cured or waived or shall have ceased to exist
or all Senior Debt shall have been paid, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made for principal or interest, if any, on the Junior Subordinated Debt
Securities, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the Junior Subordinated Debt Securities.
"Senior Debt" means (a) the principal of, and premium, if any, and interest
on all indebtedness of the Corporation for money borrowed, whether outstanding
on the date of execution of the Indenture or thereafter created, assumed or
incurred, (b) all obligations to make payment pursuant to the terms of financial
instruments, such as (i) securities contracts and foreign currency exchange
contracts, (ii) derivative instruments, such as swap agreements (including
interest rate and foreign exchange rate swap agreements), cap agreements, floor
agreements, collar agreements, interest rate agreements, foreign exchange
agreements, options, commodity futures contracts and commodity options
contracts, and (iii) similar financial instruments; except, in the case of both
(a) and (b) above, such indebtedness and obligations that are expressly stated
to rank junior in right of payment to, or pari passu in right of payment with,
the Junior Subordinated Debt Securities, (c) and indebtedness or obligations of
others of the kind described in both (a) and (b) above for the payment of which
the Corporation is responsible or liable as guarantor or otherwise, and (d) any
deferrals, renewals or extensions of any such Senior Debt; 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, was without recourse to the
Corporation, (ii) any Debt of the Corporation to any of its subsidiaries, (iii)
Debt to any employee of the Corporation, (iv) Debt which by its terms is
subordinated to trade accounts payable or accrued liabilities arising in the
ordinary course of business to the extent that payments made to the holders of
such debt by the holders of the Junior Subordinated Debt Securities as a result
of the subordination provisions of the Indenture would be greater than such
payments otherwise would have been as a result of any obligation of such holders
of such debt to pay amounts over to the obligees on such trade accounts payable
or accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject and (v) any other debt
securities issued pursuant to the Indenture.
"Debt" means (i) the principal of and premium, if any, and unpaid interest
on indebtedness for money borrowed, (ii) purchase money and similar obligations,
(iii) obligations under capital leases, (iv) guarantees, assumptions or purchase
commitments relating to, or other transactions as a result of which the
Corporation is responsible for the payment of such indebtedness of others, (v)
renewals, extensions and refunding of any such indebtedness, (vi) interest or
obligations in respect of any such indebtedness accruing after the commencement
of any insolvency or bankruptcy proceedings and (vii) obligations associated
with derivative products such as interest rate and currency exchange contracts,
foreign exchange contracts, commodity contracts and similar arrangements.
The Indenture places no limitation on the amount of Senior Debt that may be
incurred by the Corporation. The Corporation expects from time to time to incur
additional indebtedness constituting Senior Debt. At June 30, 1997, the
aggregate outstanding Senior Debt of the Corporation was approximately
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$833 million on an unconsolidated basis. The Indenture also places no limitation
on the indebtedness of the Corporation's subsidiaries, which rank senior in
right of payment to the Junior Subordinated Debt Securities. As of June 30,
1997, the Corporation's subsidiaries had indebtedness and other liabilities of
approximately $46.1 billion.
RESTRICTIONS ON TRANSFER
The Junior Subordinated Debt Securities will be issued, and may be
transferred only, in blocks having aggregate principal amounts of $100,000 and
multiples of $100,000 in excess thereof. Any transfer, sale or other disposition
of Junior Subordinated Debt Securities in a block having a principal amount of
other than an integral multiple of $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Junior Subordinated Debt Securities for any purpose, including
but not limited to the receipt of payments on such Junior Subordinated Debt
Securities, and such transferee shall be deemed to have no interest whatsoever
in such Junior Subordinated Debt Securities.
GOVERNING LAW
The Indenture and the Junior Subordinated Debt Securities are governed by
and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee has been and is subject to all of 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 Debt Securities, 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.
DESCRIPTION OF EXCHANGE GUARANTEE
The Old Guarantee was entered into by the Corporation concurrently with the
issuance by the Trust of the Capital Securities for the benefit of the holders
from time to time of such Capital Securities. As soon as practicable after the
date hereof, the Old Guarantee will be exchanged by the Corporation for the
Exchange Guarantee. The Exchange Guarantee has been qualified under the Trust
Indenture Act. This summary of certain provisions of the Guarantee does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guarantee, including the definitions
therein of certain terms, and the Trust Indenture Act. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Capital
Securities. The Exchange Guarantee is attached as an exhibit to the Registration
Statement.
GENERAL
The Corporation has agreed (and under the Exchange Guarantee will agree) to
pay in full on a subordinated basis, to the extent set forth herein, the
Guarantee Payments (as defined herein) to the holders of the Capital Securities,
as and when due, regardless of any defense, right of set-off or counterclaim
that the Trust may have or assert other than the defense of payment. The
following payments with respect to the Capital Securities, to the extent not
paid by or on behalf of the Trust (the "Guarantee Payments"), will be subject to
the Guarantee: (i) any accrued and unpaid Distributions required to be paid on
the Capital Securities, to the extent that the Trust has funds on hand available
therefor at such time, (ii) the applicable Redemption Price with respect to
Capital Securities called for redemption, to the extent that the Trust has funds
on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of the Capital Securities or the redemption of all of the Capital
Securities) the lesser
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of (a) the Liquidation Distribution, to the extent the Trust has funds available
therefor and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Capital Securities upon liquidation of the Trust
after satisfaction of liabilities to creditors of the Trust as required by
applicable law. The Corporation's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Corporation to the
holders of the Capital Securities or by causing the Trust to pay such amounts to
such holders.
The Guarantee is an irrevocable guarantee on a subordinated basis of the
Trust's obligations under the Capital Securities, although it will apply only to
the extent that the Trust has funds sufficient to make such payments, and is not
a guarantee of collection. If the Corporation does not make interest payments on
the Junior Subordinated Debt Securities held by the Trust, the Trust will not be
able to pay Distributions on the Capital Securities and will not have funds
legally available therefor.
The Guarantee ranks subordinate and junior in right of payment to all
Senior Debt. See "-- Status of the Guarantee." 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 (and thus the ability of the holders of Capital
Securities to benefit indirectly from any such distribution), is subject to the
prior claims of creditors of such subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary. The
Corporation is also subject to restrictions under federal law which limit the
transfer of funds to the Corporation and its nonbanking subsidiaries, whether in
the form of loans, extensions of credit, investments, asset purchases or
otherwise. Such transfers by the Corporation's subsidiaries to the Corporation
or any of the Corporation's nonbanking subsidiaries are limited in amount and
furthermore, such loans and extensions of credit are required to be secured in
specified amounts. Accordingly, the Corporation's obligations under the
Guarantee will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, including deposits, and claimants
should look only to the assets of the Corporation for payments thereunder. See
"National City." The Guarantee does not limit the incurrence or issuance of
other secured or unsecured debt of the Corporation, including Senior Debt,
whether under the Indenture, any other indenture that the Corporation may enter
into in the future or otherwise.
Payment of dividends by the Corporation's bank subsidiaries is restricted
by various legal and regulatory limitations. At June 30, 1997, approximately
$664 million was available for payment of dividends to the Corporation from the
Corporation's bank subsidiaries without prior regulatory approval.
Taken together, the Corporation's obligations under the Guarantee, the
Declaration, the Junior Subordinated Debt Securities and the Indenture,
including the Corporation's obligation to pay the costs, expenses and other
liabilities of the Trust (other than the Trust's obligations to the holders of
the Trust Securities under the Trust Securities), provide, in the aggregate, a
full and unconditional guarantee, to the extent described herein, of all of the
Trust's obligations under the Capital 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 and unconditional guarantee, to the
extent described herein, of the Trust's obligations under the Capital
Securities. See "Relationship Among the Capital Securities, the Junior
Subordinated Debt Securities and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee constitutes an unsecured obligation of the Corporation and
ranks subordinate and junior in right of payment to all Senior Debt in the same
manner as Junior Subordinated Debt Securities.
The Guarantee ranks pari passu with all Other Guarantees issued by the
Corporation. The Guarantee constitutes a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee is held for the benefit of the holders of the Capital Securities. The
Guarantee will not be discharged except by payment of the Guarantee Payments in
full to the extent not paid by the Trust or upon distribution to the holders of
the Capital Securities of the Junior Subordinated Debt Securities. The Guarantee
does not place a limitation on the amount of additional
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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 that do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of such
outstanding Capital Securities. The manner of obtaining any such approval will
be as set forth under "Description of Exchange Capital Securities -- Voting
Rights; Amendment of the Declaration." All guarantees and agreements contained
in the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the Capital Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder;
provided, however, that except with respect to a default in payment of any
Guarantee Payment, the Corporation shall have received notice of default and
shall not have cured such default within 60 days after receipt of such notice.
The holders of not less than a majority in aggregate Liquidation Amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the 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 the Guarantee at the
request of any holder of the Capital Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Capital Securities, upon full
payment of the amounts payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debt Securities to the holders of the
Capital Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Capital
Securities must restore payment of any sums paid under the Capital Securities or
the Guarantee.
GOVERNING LAW
The Old Guarantee is and the Exchange Guarantee will be governed by and
construed in accordance with the laws of the State of New York.
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DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the Exchange Securities, except that (i) the Old Securities have not been
registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the Registration Agreement
(which rights will terminate upon consummation of the Exchange Offer, except
under limited circumstances); and (ii) the Exchange Capital Securities will not
provide for any increase in the Distribution rate thereon. The Old Securities
provided that, in the event that the Exchange Offer is not consummated on or
prior to December 3, 1997, or in certain limited circumstances, in the event a
shelf registration statement (the "Shelf Registration Statement") with respect
to the resale of the Old Capital Securities is not declared effective on or
prior to December 3, 1997, the interest rate borne by the Old Junior
Subordinated Debt Securities would increase by 0.25% per annum, and the
Distribution rate borne by the Old Capital Securities would increase by 0.25%
per annum, each commencing on December 4, 1997 until the time the Exchange Offer
is consummated or any required Shelf Registration Statement is declared
effective, as the case may be. The aggregate amount of such additional interest
and Distributions payable pursuant to the foregoing provisions will in no event
exceed 0.50% per annum. The holders of Exchange Securities are not, and upon
consummation of the Exchange Offer the holders of Old Securities will not be,
entitled to any such additional interest or Distributions. Accordingly, holders
of the Old Capital Securities should review the information set forth under
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities"
and "Description of Exchange Capital Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Trust 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 Exchange Guarantee." Taken together, the
Corporation's obligations under the Junior Subordinated Debt Securities, the
Indenture, the Declaration and the Guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee, to the extent described herein, of
payments of Distributions and other amounts due on the Capital 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, to the extent described herein, of the
Trust's obligations under the Trust Securities. If and to the extent that the
Corporation does not make payments on the Junior Subordinated Debt Securities,
the Trust will not pay Distributions or other amounts due on the Capital
Securities. The Guarantee does not cover payment of Distributions when the Trust
does not have sufficient funds to pay such Distributions. In such event, the
remedy of a holder of Capital Securities is to institute a Direct Action. The
obligations of the Corporation under the 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 the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount or applicable Redemption Price of the
Junior Subordinated Debt Securities will be equal to the sum of the aggregate
Liquidation Amount or applicable Redemption Price, as applicable, of the Trust
Securities; (ii) the Applicable Rate and interest and other payment dates on the
Junior Subordinated Debt Securities will match the Distribution Date and other
payment dates for the Capital Securities; (iii) the Corporation shall pay for
all costs, expenses and liabilities of the Trust except the Trust's obligations
to holders of Trust Securities under such Trust Securities; and (iv) the
Declaration further provides that the Trust will not engage in any activity that
is not consistent with the limited purposes thereof.
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Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set off any payment it is otherwise required to make thereunder
with and to the extent the Corporation has theretofore made, or is concurrently
on the date of such payment making any payment under Guarantee used to satisfy
the related payment of indebtedness under the Indenture.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Senior Debt would not constitute a
default or Event of Default under the Declaration. However, in the event of
payment defaults under, or acceleration of, Senior Debt, the subordination
provisions of the Indenture provide that no payments may be made in respect of
the Junior Subordinated Debt Securities 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 Junior Subordinated Debt Securities would constitute an
Event of Default under the Declaration.
LIMITED PURPOSE OF THE TRUST
The Capital Securities evidence a beneficial interest in the Trust, and the
Trust exists for the sole purpose of issuing the Capital Securities and the
Common Securities investing the proceeds of the Trust Securities in Junior
Subordinated Debt Securities, exchanging the Junior Subordinated Debt Securities
and Capital Securities in the Exchange Offer pursuant to the Indenture and
engaging in other activities necessary or incidental thereto.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the Junior Subordinated Debt Securities,
after satisfaction of the liabilities of creditors of the Trust as required by
applicable law, the holders of the Trust Securities will be entitled to receive,
out of assets held by the Trust, the Liquidation Distribution in cash. See
"Description of Exchange Capital Securities -- Liquidation of the Trust and
Distribution of Junior Subordinated Debt Securities." Upon any voluntary or
involuntary liquidation or bankruptcy of the Corporation, the Property Trustee,
as holder of the Junior Subordinated Debt Securities, 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 the
Guarantee and has agreed to pay for all costs, expenses and liabilities of the
Trust (other than the Trust's obligations to the holders of its Trust
Securities), the positions of a holder of Capital Securities and a holder of
Junior Subordinated Debt Securities 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.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Cravath, Swaine & Moore, special counsel to the Company
and the Trust ("Tax Counsel"), the following are the material United States
federal income tax consequences of the ownership and disposition of Capital
Securities. This summary only addresses the tax consequences to a person that
acquires Capital Securities on their original issuance from the Initial
Purchaser at their original offering price and that is (i) an individual citizen
or resident of the United States, (ii) a corporation or other entity taxable as
a corporation 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 its source
(an "Initial Holder"). This summary does not address all tax consequences that
may be applicable to an Initial Holder that is a beneficial owner of Capital
Securities, nor does it address the tax consequences to (i) persons that may be
subject to special treatment under United States federal income tax law (such as
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banks, insurance companies, thrift institutions, regulated investment companies,
real estate investment trusts, tax-exempt organizations and dealers in
securities or currencies), (ii) persons that will hold Capital Securities as
part of a straddle or as part of a hedging or conversion transaction or other
integrated investment transaction for federal income tax purposes, (iii) persons
whose functional currency is not the United States dollar or (iv) persons that
do not hold Capital Securities as capital assets.
This summary is based on 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 (possibly on a retroactive basis), or different interpretation. In
particular, legislation has been proposed that could adversely affect the
Corporation's ability to deduct interest on Junior Subordinated Debt Securities,
which may in turn permit the Corporation to cause a redemption of the Capital
Securities but only after the Rate Reset Date.
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF CAPITAL
SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF
ANY STATE, LOCAL OR OTHER TAX LAWS.
CLASSIFICATION OF THE TRUST
In the opinion of Tax Counsel, under current law and assuming full
compliance with the terms of the Declaration, the Trust will be classified for
United States federal income tax purposes as a grantor trust and not as a
partnership or an association taxable as a corporation. Accordingly, each holder
of Capital Securities (a "Securityholder") will be considered the owner of a pro
rata portion of the Junior Subordinated Debt Securities held by the Trust and
will be required to include in gross income the pro rata share of income accrued
on the Junior Subordinated Debt Securities.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
In the opinion of Tax Counsel, under current law and assuming full
compliance with the Indenture, the Junior Subordinated Debt Securities will be
classified for United States federal income tax purposes as indebtedness of the
Corporation.
EXCHANGE OFFER
The exchange of the Old Capital Securities for Exchange Capital Securities
should not be treated as a taxable exchange for United States federal income tax
purposes. As a result, Securityholders should not recognize any taxable gain or
loss or any interest income as a result of exchanging their Old Capital
Securities. Furthermore, a Securityholder's adjusted tax basis and holding
period in the Exchange Capital Securities should generally equal the
Securityholder's adjusted tax basis and holding period, respectively, in the Old
Capital Securities.
INTEREST AND ORIGINAL ISSUE DISCOUNT
The Corporation believes, and will take the position, that the Junior
Subordinated Debt Securities will be considered to be issued without "original
issue discount" ("OID") for United States federal income tax purposes based on
applicable Treasury Regulations. Tax Counsel believes that this position is
correct although there is no authority directly on point and the Treasury
Regulations are not completely clear. As a result, the Internal Revenue Service
might take a contrary position and the Junior Subordinated Debt Securities could
be deemed to be issued initially with OID. Moreover, if an Extension Period
occurs, the Junior Subordinated Debt Securities would, in any event, be
considered to have OID at all times after the beginning of the first Extension
Period, including after the termination of the Extension Period. If the OID
rules do not apply, stated interest will be includable in an Initial Holder's
gross income as ordinary interest income in accordance with such Initial
Holder's regular method of tax accounting.
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If the OID rules apply to the Junior Subordinated Debt Securities (either
following the occurrence of an Extension Period or initially), each
Securityholder, whether on the cash or accrual method of accounting, will be
required to accrue its pro rata share of OID into income in accordance with a
constant yield method based on the compounding of interest. As a result, income
will be required to be reported by Securityholders before the receipt of cash
attributable to such income, and, in particular, income will be reported during
an Extension Period even though no cash distributions are being made. If the OID
rules apply for a period during which cash distributions are currently being
made, either before or after the Rate Reset Date, the sum of the daily accruals
of income for a semi-annual period for a Securityholder that purchased the
Capital Securities for their liquidation value will equal the cash distribution
received by the Securityholder for such semi-annual period, assuming no
disposition prior to the record date for such distribution.
If the OID rules apply, actual distributions of stated interest will not be
separately reported as income. A Securityholder's tax basis for the Junior
Subordinated Debt Securities will be increased by OID accrued into income, and
decreased by cash distributions of interest.
Whether or not the OID rules apply, no portion of the amounts received on
the Capital Securities will be eligible for the corporate dividends received
deduction.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF
THE TRUST
Under current law, a distribution by the Trust of the Junior Subordinated
Debt Securities as described under the caption "Description of Exchange Capital
Securities -- Liquidation of the Trust and Distribution of Junior Subordinated
Debt Securities" will be non-taxable and will result in the Securityholder
receiving directly such Securityholder's pro rata share of the Junior
Subordinated Debt Securities previously held indirectly through the Trust, with
a holding period and tax basis equal to the holding period and adjusted tax
basis such Securityholder was considered to have had in such Securityholder's
pro rata share of the underlying Junior Subordinated Debt Securities immediately
prior to such distribution. If, however, the special event giving rise to the
distribution is a Tax Event which results in the Trust being treated as an
association taxable as a corporation, the distribution would constitute a
taxable event to holders of the Capital Securities.
DISPOSITION OF THE CAPITAL SECURITIES
Upon a sale, exchange or other disposition of the Capital Securities
(including a distribution of cash in redemption of a Securityholder's Capital
Securities upon redemption or repayment of the underlying Junior Subordinated
Debt Securities, but excluding the distribution of Junior Subordinated Debt
Securities), a Securityholder will be considered to have disposed of all or part
of such Securityholder's pro rata share of the Junior Subordinated Debt
Securities, and will recognize gain or loss equal to the difference between the
amount realized (other than amounts attributable to accrued but unpaid stated
interest that is not treated as OID) and the Securityholder's adjusted tax basis
in such Securityholder's pro rata share of the underlying Junior Subordinated
Debt Securities deemed disposed of. A holder's adjusted tax basis in the Capital
Securities generally will be its initial purchase price increased by OID
previously includable in such holder's gross income to the date of disposition
and decreased by payments (other than payments of stated interest that are not
treated as OID) received on the Capital Securities. Gain or loss will be capital
gain or loss (except to the extent of any accrued interest or market discount
not previously included in income). Such gain or loss will be long-term capital
gain or loss if the Capital Securities have been held for more than one year.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments made on, and proceeds from sale of, Capital Securities may be
subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's federal income tax, provided the
required information is timely filed with the Internal Revenue Service. Payment
of the proceeds from the disposition of Capital Securities to or through a
United States office or broker is subject to information reporting and backup
withholding unless the security holder establishes an exemption from information
reporting and backup withholding. The Trust will report the interest paid or any
OID that accrued during the year with respect to the Junior Subordinated Debt
Securities, and any gross proceeds received by the Trust from the retirement or
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redemption of the Junior Subordinated Debt Securities, annually to the holders
of record of the Capital Securities and the Internal Revenue Service. The Trust
currently intends to deliver such reports to holders of record prior to January
31 following each calendar year.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the revenue portion of President Clinton's fiscal year
1998 budget proposal (the "Budget Proposal") was released. If enacted, the
Budget Proposal would generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 15 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 Corporation's consolidated
balance sheet. The above described provision of the Budget Proposal is proposed
to be effective generally for instruments issued on or after the date of first
Congressional committee action. No such action has yet occurred and neither the
House of Representatives nor the Senate has included the above described
provision of the Budget Proposal in the revenue provisions of H.R. 2014 (as
approved by the House of Representatives on June 26, 1997 and by the Senate on
June 27, 1997). If the above described provision were to apply to the Junior
Subordinated Debt Securities, the Corporation would be unable to deduct interest
on the Junior Subordinated Debt Securities. Under current law, the Corporation
will be able to deduct interest on the Junior Subordinated Debt Securities.
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 Junior Subordinated Debt Securities. Such a change could give
rise to a Tax Event, which, after the Rate Reset Date, may permit the
Corporation to cause a redemption of the Capital Securities, as described more
fully under "Description of the Exchange Capital Securities -- Mandatory
Redemption" and "Description of Exchange Junior Subordinated Debt Securities --
Redemption -- Tax Event, '40 Act Event and Capital Treatment Event Redemption."
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of an employee benefit or other plan (a "Plan") subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), should consider the fiduciary standards of ERISA in the context of
the Plan's particular circumstances before authorizing an investment in the
Capital Securities. Accordingly, among other factors, the fiduciary should
consider whether the investment would satisfy the prudence and diversification
requirements of ERISA and would be consistent with the documents and instruments
governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(5) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Trust would be deemed to be
"plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if
"plan assets" of the Plan were used to acquire an equity interest in the Trust
and no exception were applicable under the Plan Assets Regulation. An "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Trust would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity
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interest in the Trust, less than 25% of the value of each class of equity
interest in the Trust were held by Plans, other employee benefit plans not
subject to ERISA or Section 4975 of the Code (such as governmental, church and
foreign plans) and entities holding assets deemed to be "plan assets" of any
Plan (collectively, "Benefit Plan Investors"). No assurance can be given by the
Initial Purchaser that the value of the Capital Securities held by Benefit Plan
Investors will be less than 25% of the total value of such Capital Securities at
the completion of the Offering or thereafter, and no monitoring or other
measures will be taken with respect to the satisfaction of the conditions to
this exception. All of the Common Securities will be purchased and held directly
or indirectly by the Corporation.
Certain transactions involving the Trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities were acquired with "plan
assets" of such Plan and assets of the Trust were deemed to be "plan assets" of
Plans investing in the Trust. For example, if the Corporation is a Party in
Interest with respect to an investing Plan (either directly or by reason of its
ownership of the Trust or of any of the Corporation's other subsidiaries),
extensions of credit between the Corporation and the Trust (as represented by
the Junior Subordinated Debt Securities and the Guarantee) would likely be
prohibited by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the
Code, unless exemptive relief were available under an applicable administrative
exemption (see below).
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the Capital Securities, assuming that
assets of the Trust were deemed to be "plan assets" of Plans investing in the
Trust (see above). Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company pooled separate accounts) and
PTCE 84-14 (for certain transactions determined by independent qualified
professional asset managers).
Because the Capital Securities may be deemed to be equity interests in the
Trust for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose underlying
assets include "plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity") or any person investing "plan assets" of any Plan, unless
such purchaser or holder is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. Any purchaser or holder of the Capital
Securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that it either (a) is not a Plan or a Plan Asset
Entity and is not purchasing such securities on behalf of or with "plan assets"
of any Plan or (b) is eligible for the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 with respect to such purchase or holding.
Furthermore, to avoid certain prohibited transactions under ERISA and the Code
that could result under certain circumstances if the Capital Securities are
deemed to be such equity interests, each investing Plan, by purchasing the
Capital Securities, will be deemed to have directed the Trust to invest in the
Junior Subordinated Debentures and to have appointed the Property Trustee.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Capital
Securities on behalf of or with "plan assets" of any Plan consult with their
counsel regarding the potential consequences if the assets of the Trust were
deemed to be "plan assets" and the availability of exemptive relief under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14.
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PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Capital Securities
for its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Capital
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in certain interpretive letters, the Corporation and the Trust
believe that Participating Broker-Dealers, may fulfill their prospectus delivery
requirements with respect to the Exchange Capital Securities received upon
exchange of such Old Capital Securities with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such Exchange Capital Securities. Accordingly,
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer during the period referenced below in
connection with resales of Exchange Capital Securities received in exchange for
Old Capital Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities subject to certain provisions set forth in the Registration
Agreement. The Corporation and the Trust have agreed that, starting on the
Expiration Date and ending on the close of business on the first anniversary
following the Expiration Date, or, if earlier, when all such Exchange Capital
Securities have been disposed of by such Participating Broker-Dealer, this
Prospectus, as amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resale of such Exchange Capital
Securities. Any person, including any Participating Broker-Dealer, who is an
Affiliate may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. In addition, until December 31, 1997,
all dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.
The Corporation and the Trust will not receive any proceeds from any sale
of Exchange Capital Securities by Participating Broker-Dealers. Exchange Capital
Securities received by Participating Broker-Dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Capital Securities or a combination of
such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such Exchange Capital
Securities. Any broker-dealer that resells Exchange Capital Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Capital
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit of any such resale of Exchange Capital Securities
and any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Trust and the
Corporation will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any Participating Broker-Dealer
that requests such documents in the Letter of Transmittal. The Corporation and
the Trust have agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the holders of the Old Capital
Securities) other than commissions or concessions of any brokers or dealers and
will indemnify the holders of the Old Capital Securities (including any
Participating Broker-Dealers) against certain liabilities, including liabilities
under the Securities Act.
72
<PAGE> 82
VALIDITY OF EXCHANGE SECURITIES
Certain matters of Delaware law relating to the validity of the Exchange
Capital Securities will be passed upon by Potter Anderson & Corroon, special
Delaware counsel to the Corporation and the Trust. The validity of the Exchange
Guarantee and the Exchange Junior Subordinated Debt Securities will be passed
upon for the Corporation by Jones, Day, Reavis & Pogue.
INDEPENDENT AUDITORS
The consolidated financial statements of National City Corporation at
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996 incorporated by reference in this Prospectus have been audited
by Ernst & Young LLP, independent auditors, as set forth in their reports
incorporated by reference elsewhere herein which, as to the years 1995 and 1994,
are based in part on the reports of Coopers & Lybrand LLP, independent auditors.
The financial statements referred to above are included in reliance upon such
reports given upon the authority of such firms as experts in accounting and
auditing.
73
<PAGE> 83
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") empowers a Delaware corporation to indemnify any person who was or is,
or is threatened to be made, a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation, by
reason of the fact that such person is or was a director, officer, employee or
agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise). The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided that such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, such person had no reasonable cause to believe his conduct was
unlawful. A Delaware corporation may indemnify such persons in actions brought
by or in the right of the corporation to procure a judgment in its favor under
the same conditions, except that no indemnification is permitted in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and to the extent the Court of Chancery of
the State of Delaware or the court in which such action or suit was brought
shall determine upon application that, in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses as the Court of Chancery or other such court shall deem proper. To the
extent such person has been successful on the merits or otherwise in defense of
any action referred to above, or in defense of any claim, issue or matter
therein, the corporation must indemnify him against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. The indemnification and advancement of expenses provided for, or
granted pursuant to, Section 145 are not exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise. Section 145 also provides that a corporation may maintain insurance
against liabilities for which indemnification is not expressly provided by the
statute.
Article VI of National City's First Restatement of By-Laws provides for the
mandatory indemnification of directors, officers or employees of National City
or any of its subsidiaries and of those persons serving at the request of
National City as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise in accordance with and to
the full extent permitted by the DGCL. National City has purchased liability
insurance covering certain liabilities which may be incurred by the directors,
officers, employees and agents of National City and its subsidiaries in
connection with the performance of their duties.
In addition, National City's Restated Certificate of Incorporation (the
"Certificate"), as permitted by Section 102(d) of the DGCL, limits directors'
liability to National City and its stockholders by eliminating liability in
damages for breach of fiduciary duty of care. Article Seventh of the Certificate
provides that neither National City nor its stockholders may recover damages
from National City's directors or former directors for breach of their duty of
care in the performance of their duties as directors of National City. As
limited by Section 102(b) of the DGCL, this provision cannot, however, have the
effect of indemnifying any director or former director of National City in the
case of liability (a) for a breach of the director's duty of loyalty, (b) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the DGCL or (d)
for any transactions for which the director derived an improper personal
benefit.
Under the Amended and Restated Declaration of Trust, National City, as
depositor of the Trust, has agreed (i) to indemnify and hold harmless each
Issuer Trustee and any employee or agent of the Trust or its Affiliates from and
against any loss, damage, liability, tax, penalty, expense or claim of any kind
or nature
II-1
<PAGE> 84
whatsoever incurred by such person by reason of the creation, operation or
termination of the Trust or any act or omission performed or omitted by such
person in good faith on behalf of the Trust and in a manner such person
reasonably believes to be within the scope of authority conferred on such person
by the Declaration, except that no person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such person by reason of
negligence or willful misconduct with respect to such acts or omissions, and
(ii) to advance expenses (including legal fees) incurred by such person in
defending any claim, demand, action, suit or proceeding, from time to time,
prior to the final disposition of such claim, demand, action, suit or
proceeding.
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------------------------------------------------------------------
<S> <C>
*4.1 Junior Subordinated Debt Securities Indenture, dated as of June 6, 1997, between
National City Corporation and The Bank of New York, as Debenture Trustee
*4.2 Certificate of Trust, dated May 29, 1997, of National City Capital Trust I
*4.3 Trust Agreement, dated May 29, 1997, of National City Capital Trust I
*4.4 Amended and Restated Declaration of Trust, dated as of June 6, 1997, of National
City Capital Trust I
*4.5 Auction Agency Agreement, dated as of June 6, 1997, between National City
Corporation and The Bank at New York
*4.6 Remarketing Agreement, dated as of June 6, 1997, between National City Corporation
and UBS Securities LLC
*4.7 Form of Capital Security Certificate for National City Capital Trust I (included in
Exhibit 4.4)
*4.8 Form of Exchange Guarantee Agreement for the benefit of the holders of the Trust
Securities
*4.9 Form of Junior Subordinated Debt Security (included in Exhibit 4.1)
*4.10 Registration Agreement, dated as of June 6, 1997, among National City Corporation,
National City Capital Trust I and UBS Securities LLC
*5.1 Opinion of Jones, Day, Reavis & Pogue as to validity of the Exchange Junior
Subordinated Debt Securities and the Exchange Guarantee to be issued by National
City Corporation
*5.2 Opinion of Potter Anderson & Corroon, special Delaware counsel, as to validity of
the Exchange Capital Securities to be issued by National City Capital Trust I
*8 Opinion of Cravath, Swaine & Moore as to certain federal income tax matters
12 Statement re: Computation of Consolidated Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Coopers & Lybrand LLP
*23.3 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
*23.4 Consent of Potter Anderson & Corroon (included in Exhibit 5.2)
*23.5 Consent of Cravath, Swaine & Moore (included in Exhibit 8)
*24 Powers of Attorney
*25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under
the Junior Subordinated Debt Securities Indenture
*25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under
the Amended and Restated Declaration of Trust
*25.3 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under
the Exchange Guarantee Agreement
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* Previously filed.
II-2
<PAGE> 85
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of a
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) which 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of a Registrant
pursuant to the foregoing provisions, or otherwise, each of the Registrants has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a Registrant of expenses incurred or paid
by a director, officer or controlling person of a Registrant 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, such
Registrant 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 Securities Act and will be governed by the final adjudication
of such issue.
Each of the undersigned Registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one Business Day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
Each of the undersigned Registrants hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE> 86
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 NATIONAL CITY
CORPORATION HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF CLEVELAND, OHIO ON OCTOBER 1, 1997.
NATIONAL CITY CORPORATION
By: /s/ DAVID L. ZOELLER
------------------------------------
David L. Zoeller
Senior Vice President,
General Counsel and Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------- ---------------------
<S> <C> <C>
/s/ DAVID A. DABERKO Chairman of the Board October 1, 1997
- ---------------------------------------- and Chief Executive
DAVID A. DABERKO Officer
/s/ ROBERT G. SIEFERS Executive Vice President, October 1, 1997
- ---------------------------------------- Chief Financial Officer
ROBERT G. SIEFERS (Principal Financial
Officer)
/s/ THOMAS A. RICHLOVSKY Senior Vice President and October 1, 1997
- ---------------------------------------- Treasurer
THOMAS A. RICHLOVSKY (Principal Accounting
Officer)
* October 1, 1997
- ----------------------------------------
SANDRA H. AUSTIN Director
* Director October 1, 1997
- ----------------------------------------
CHARLES H. BOWMAN
* Director October 1, 1997
- ----------------------------------------
EDWARD B. BRANDON
* Director October 1, 1997
- ----------------------------------------
JOHN G. BREEN
* Director October 1, 1997
- ----------------------------------------
JAMES S. BROADHURST
* Director October 1, 1997
- ----------------------------------------
DUANE E. COLLINS
* Director October 1, 1997
- ----------------------------------------
DAVID A. DABERKO
* Director October 1, 1997
- ----------------------------------------
DANIEL E. EVANS
</TABLE>
II-4
<PAGE> 87
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------- ---------------------
<S> <C> <C>
* Director October 1, 1997
- ----------------------------------------
OTTO N. FRENZEL III
Director
- ----------------------------------------
BERNADINE P. HEALY, M.D.
* Director October 1, 1997
- ----------------------------------------
JOSEPH H. LEMIEUX
* Director October 1, 1997
- ----------------------------------------
W. BRUCE LUNSFORD
Director
- ----------------------------------------
A. STEVEN MILES
* Director October 1, 1997
- ----------------------------------------
ROBERT A. PAUL
* Director October 1, 1997
- ----------------------------------------
WILLIAM R. ROBERTSON
* Director October 1, 1997
- ----------------------------------------
WILLIAM F. ROEMER
* Director October 1, 1997
- ----------------------------------------
MICHAEL A. SCHULER
* Director October 1, 1997
- ----------------------------------------
STEPHEN A. STITLE
* Director October 1, 1997
- ----------------------------------------
MORRY WEISS
</TABLE>
* David L. Zoeller, by signing his name hereto, signs this document on behalf of
each of the persons indicated by an asterisk above pursuant to powers of
attorney duly executed by such persons and filed herewith with the Securities
and Exchange Commission.
October 1, 1997 By: /s/ DAVID L. ZOELLER
------------------------------------
David L. Zoeller, Attorney-in-fact
II-5
<PAGE> 88
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 NATIONAL CITY
CAPITAL TRUST I, HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CLEVELAND, OHIO ON OCTOBER 1, 1997.
National City Capital Trust I
By: /s/ DAVID J. LUCIDO
------------------------------------
David J. Lucido
Administrative Trustee
By: /s/ NIKOLITSA HARTOFILLIS
------------------------------------
Nikolitsa Hartofillis
Administrative Trustee
II-6
<PAGE> 89
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- -------- -----------------------------------------------------------------------------------
<S> <C>
*4.1 Junior Subordinated Debt Securities Indenture, dated as of June 6, 1997, between
National City Corporation and The Bank of New York, as Debenture Trustee
*4.2 Certificate of Trust, dated May 29, 1997, of National City Capital Trust I
*4.3 Agreement of Trust, dated May 29, 1997, of National City Capital Trust I
*4.4 Amended and Restated Declaration of Trust, dated as of June 6, 1997, of National
City Capital Trust I
*4.5 Auction Agency Agreement, dated as of June 6, 1997, between National City
Corporation and The Bank at New York
*4.6 Remarketing Agreement, dated as of June 6, 1997, between National City Corporation
and UBS Securities LLC
*4.7 Form of Capital Security Certificate for National City Capital Trust I (included in
Exhibit 4.4)
*4.8 Form of Exchange Guarantee Agreement for the benefit of the holders of the Trust
Securities
*4.9 Form of Junior Subordinated Debt Security (included in Exhibit 4.1)
*4.10 Registration Agreement, dated as of June 6, 1997, among National City Corporation,
National City Capital Trust I and UBS Securities LLC
*5.1 Opinion of Jones, Day, Reavis & Pogue as to validity of the Exchange Junior
Subordinated Debt Securities and the Exchange Guarantee to be issued by National
City Corporation
*5.2 Opinion of Potter Anderson & Corroon, special Delaware counsel, as to validity of
the Exchange Capital Securities to be issued by National City Capital Trust I
*8 Opinion of Cravath, Swaine & Moore as to certain federal income tax matters
12 Statement re: Computation of Consolidated Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Coopers & Lybrand LLP
*23.3 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
*23.4 Consent of Potter Anderson & Corroon (included in Exhibit 5.2)
*23.5 Consent of Cravath, Swaine & Moore (included in Exhibit 8)
*24 Powers of Attorney
*25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under
the Junior Subordinated Debt Securities Indenture
*25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under
the Amended and Restated Declaration of Trust
*25.3 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under
the Exchange Guarantee Agreement
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 12
NATIONAL CITY CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE PERIODS INDICATED
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30, ----------------------------------------------------------
1997 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income 394,418 736,630 591,460 598,467 616,817 407,426
Income tax expense 184,321 321,814 253,685 260,855 234,636 165,139
Cumulative effect of
accounting changes, net -- -- -- -- (60,000) --
------- --------- --------- --------- --------- ---------
Pre-tax income 578,739 1,058,444 845,145 859,322 791,453 572,565
======= ========= ========= ========= ========= =========
Fixed charges:
Interest on indebtedness (a) 269,748 496,670 525,988 326,277 238,171 227,807
Interest portion of rental expense 10,700 19,705 18,595 17,207 18,417 25,557
------- --------- --------- --------- --------- ---------
Fixed charges excluding interest on deposits 280,448 516,375 544,583 343,484 256,588 253,364
Interest on deposits 610,475 1,216,089 1,249,698 910,737 887,426 1,153,053
------- --------- --------- --------- --------- ---------
Fixed charges including interest on deposits 890,923 1,732,464 1,794,281 1,254,221 1,144,014 1,406,417
Ratio of earnings to fixed charges:
Excluding interest on deposits 3.06 3.05 2.55 3.50 4.08 3.26
Including interest on deposits 1.65 1.61 1.47 1.69 1.69 1.41
</TABLE>
(a) Interest expense includes amortization of debt expense and discount or
premium relating to any indebtedness.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent
Auditors" in the Registration Statement (Amendment No. 2 to Form S-4,
Registration Numbers 333-31827 and 333-31827-01) and related Prospectus of
National City Corporation and National City Capital Trust I for the offer to
exchange $500,000,000 of its Reset Asset Capital Securities for any and all of
the outstanding Reset Asset Capital Securities of National City Capital Trust I
fully and unconditionally guaranteed, as described in Amendment No. 2 to Form
S-4, by National City Corporation, and to the incorporation by reference
therein of our report dated January 22, 1997 with respect to the consolidated
financial statements of National City Corporation included in the Annual Report
on Form 10-K for the year ended December 31, 1996, filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
Cleveland, Ohio
September 29, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
on Amendment No. 2 to Form S-4 (File Numbers 333-31827 and 333-31827-01)
related to the Prospectus of National City Corporation and National City
Capital Trust I for the offer to exchange $500,000,000 of its Reset Asset
Capital Securities for any and all of the outstanding Reset Asset Capital
Securities of National City Capital Trust I, of our report dated January 17,
1996, on our audits of the consolidated financial statements and financial
statement schedules of Integra Financial Corporation and subsidiaries as of
December 31, 1995 and for the years ended December 31, 1995 and 1994. We also
consent to the reference to our firm as "Experts."
Pittsburgh, Pennsylvania
September 29, 1997
COOPERS & LYBRAND LLP
