<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1996
REGISTRATION NO. 333-15721, 333-15721-01, 333-15721-02, 333-15721-03,
333-15721-04, 333-15721-05
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
<TABLE>
<S> <C>
MBNA CAPITAL I
MBNA CAPITAL II
MBNA CAPITAL III
MBNA CAPITAL IV
MBNA CORPORATION MBNA CAPITAL V
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS (EXACT NAME OF EACH REGISTRANT AS SPECIFIED
CHARTER) IN ITS TRUST AGREEMENT)
DELAWARE
MARYLAND (STATE OR OTHER JURISDICTION OF INCORPORATION
(STATE OR OTHER JURISDICTION OF INCORPORATION OR
OR ORGANIZATION) ORGANIZATION OF EACH REGISTRANT)
52-1713008
(I.R.S. EMPLOYER EACH TO BE APPLIED FOR
IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
C/O MBNA CORPORATION
WILMINGTON, DELAWARE 19884 WILMINGTON, DELAWARE 19884
(800) 362-6255 (800) 362-6255
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S INCLUDING AREA CODE, OF EACH REGISTRANT'S
PRINCIPAL PRINCIPAL
EXECUTIVE OFFICES) EXECUTIVE OFFICES)
</TABLE>
------------------
M. SCOT KAUFMAN
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER
MBNA CORPORATION
WILMINGTON, DELAWARE 19884-0864
(800) 362-6255
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
With copies to:
<TABLE>
<S> <C>
JOHN W. SCHEFLEN JOHN TEHAN
EXECUTIVE VICE PRESIDENT, SIMPSON THACHER & BARTLETT
GENERAL COUNSEL & SECRETARY 425 LEXINGTON AVENUE
MBNA CORPORATION NEW YORK, NEW YORK 10017
WILMINGTON, DELAWARE 19884-0616
</TABLE>
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the Registration Statement becomes effective.
------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------
THE REGISTRANTS HEREBY AMEND 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER , 1996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER , 1996
$250,000,000
MBNA CAPITAL I
% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
MBNA CORPORATION
------------------------
The % Capital Securities, Series A (the "Series A Capital Securities"),
offered hereby represent beneficial ownership interests in MBNA Capital I, a
statutory business trust created under the laws of the State of Delaware (the
"Series A Issuer"). MBNA Corporation, a Maryland corporation (the
"Corporation"), will be the owner of all the beneficial ownership interests
represented by common securities of the Series A Issuer ("Series A Common
Securities" and, collectively with the Series A Capital Securities, the "Series
A Securities"). The Bank of New York is the Property Trustee of the Series A
Issuer. The Series A Issuer exists for the sole purpose of issuing the Series A
Capital Securities and the Series A Common Securities and investing the proceeds
thereof in $ aggregate principal amount of % Junior Subordinated
Deferrable Interest Debentures, Series A (the "Series A Subordinated
Debentures"), to be issued by the Corporation. The Series A Subordinated
Debentures will mature on December 1, 2026 (the "Stated Maturity"). The Series A
Capital Securities will have a preference under certain circumstances with
respect to cash distributions and amounts payable on liquidation or redemption
over the Series A Common Securities. See "Description of Preferred
Securities -- Subordination of Common Securities" in the accompanying
Prospectus. (Continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-4 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES A 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 SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC PROCEEDS TO
OFFERING UNDERWRITING THE SERIES A
PRICE(1) COMMISSION(2) ISSUER(1)(3)(4)
-------------- ------------- --------------
<S> <C> <C> <C>
Per Series A Capital Security................. $1,000 (3) $1,000
Total......................................... $ (3) $
</TABLE>
- ---------------
(1) Plus accrued distributions, if any, from the date of original issuance.
(2) The Series A Issuer and the Corporation have each agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Series A Capital
Securities will be invested in the Series A Subordinated Debentures, the
Corporation has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment therein of
such proceeds $ 0. per Series A Capital Security (or $ in the
aggregate). See "Underwriting."
(4) Expenses of the offering which are payable by the Corporation are estimated
to be $ .
------------------------
The Series A Capital Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that the Series A Capital Securities will be ready for delivery in book-entry
form only through the facilities of The Depository Trust Company in New York,
New York, on or about December , 1996, against payment therefor in immediately
available funds.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
------------------------
The date of this Prospectus Supplement is December , 1996.
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
CAPITAL SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
(cover page continued)
Holders of the Series A Capital Securities will be entitled to receive
cumulative cash distributions accruing from the date of original issuance and
payable semi-annually in arrears on the first day of June and December of each
year, commencing June 1, 1997, at the annual rate of % of the Liquidation
Amount (as defined in the accompanying Prospectus) of $1,000 per Series A
Capital Security ("Distributions"). Subject to certain exceptions, as described
herein, the Corporation has the right to defer payment of interest on the Series
A Subordinated Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period may
extend beyond the Stated Maturity of the Series A Subordinated Debentures. Upon
the termination of any such Extension Period and the payment of all interest
then accrued and unpaid (together with interest thereon at the rate of %,
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 Series A Subordinated
Debentures are so deferred, Distributions on the Series A Capital Securities
will also be deferred and the Corporation will not be permitted, subject to
certain exceptions described herein, to declare or pay any cash distributions
with respect to the Corporation's capital stock or debt securities that rank
pari passu with or junior to the Series A Subordinated Debentures. During an
Extension Period, interest on the Series A Subordinated Debentures will continue
to accrue (and the amount of Distributions to which holders of the Series A
Capital Securities are entitled will accumulate) at the rate of % per
annum, compounded semi-annually, to the extent permitted by applicable law, from
the relevant payment date for such interest, and holders of Series A Capital
Securities will be required to accrue interest income for United States federal
income tax purposes. See "Certain Terms of Series A Subordinated
Debentures -- Option to Defer Interest Payments" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The Series A Subordinated Debentures are unsecured and subordinated to all
Senior Debt (as defined in the accompanying Prospectus). Substantially all of
the Corporation's existing indebtedness constitutes Senior Debt. Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of assets of any subsidiary, including MBNA America Bank,
National Association, upon such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent that the Corporation may itself be recognized as a creditor
of that subsidiary. Accordingly, the Series A Subordinated Debentures (and
therefore the Series A Capital Securities) will be effectively subordinated to
all existing and future liabilities of the Corporation's subsidiaries, and
holders thereof should only look to the assets of the Corporation for payments
on the Series A Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Subordination" in the accompanying Prospectus.
The Corporation has, through the Series A Guarantee, the Trust Agreement,
the Series A Subordinated Debentures and the Indenture (each as defined herein),
taken together, fully, irrevocably and unconditionally guaranteed all of the
Series A Issuer's obligations under the Series A Capital Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees -- Full and Unconditional Guarantee"
in the accompanying Prospectus. The Series A Guarantee of the Corporation
guarantees the payment of Distributions and payments on liquidation of the
Series A Issuer or redemption of the Series A
S-2
<PAGE> 4
(cover page continued)
Securities, but only in each case to the extent of funds held by the Series A
Issuer, as described herein (the "Series A Guarantee"). See "Description of
Guarantees" in the accompanying Prospectus. If the Corporation does not make
interest payments on the Series A Subordinated Debentures held by the Series A
Issuer, the Series A Issuer will have insufficient funds to pay Distributions on
the Series A Capital Securities. The Series A Guarantee does not cover payment
of Distributions when the Series A Issuer has insufficient funds to pay such
Distributions. In such event, a holder of Series A Capital Securities may
institute a legal proceeding directly against the Corporation pursuant to the
terms of the Indenture to enforce payment of amounts equal to such Distributions
to such holder. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights By Holders of Preferred Securities"
in the accompanying Prospectus. The obligations of the Corporation under the
Series A Guarantee and the Indenture are subordinate and junior in right of
payment to all Senior Debt of the Corporation.
The Series A Capital Securities are subject to mandatory redemption, in
whole or in part, upon repayment of Series A Subordinated Debentures at their
Stated Maturity or their earlier redemption. 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, the Series A Subordinated Debentures are redeemable
prior to their Stated Maturity at the option of the Corporation (i) on or after
December 1, 2006, in whole at any time or in part from time to time, or (ii)
prior to December 1, 2006, in whole (but not in part), within 90 days following
the occurrence of a Tax Event or a Capital Treatment Event (each as defined
herein). For a description of the redemption prices for the Series A Capital
Securities pursuant to clause (i) or (ii) above, see "Certain Terms of Series A
Capital Securities -- Redemption" and "Certain Terms of Series A Subordinated
Debentures -- Redemption."
The Corporation will have the right at any time to terminate the Series A
Issuer, subject to the Corporation having received prior approval of the Federal
Reserve to do so if then required under applicable capital guidelines or
policies. See "Certain Terms of Series A Capital Securities -- Liquidation of
Series A Issuer and Distribution of Series A Subordinated Debentures to
Holders." In the event of the termination of the Series A Issuer, after
satisfaction of liabilities to creditors of the Series A Issuer as required by
applicable law, the holders of the Series A Capital Securities will be entitled
to receive a Liquidation Amount of $1,000 per Series A Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of such amount in Series A Subordinated
Debentures in exchange therefor, subject to certain exceptions. See "Description
of Preferred Securities -- Liquidation Distribution Upon Termination" in the
accompanying Prospectus.
Application has been made to list the Series A Capital Securities on the
New York Stock Exchange under the symbol "KRBCS." If Series A Subordinated
Debentures are distributed to the holders of Series A Capital Securities in
exchange therefor upon the liquidation of the Series A Issuer, the Corporation
will use its best efforts to list the Series A Subordinated Debentures on the
New York Stock Exchange or such other stock exchanges or automated quotation
systems, if any, on which the Series A Capital Securities are then listed or
traded.
The Series A Capital Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Series A Capital Securities will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described below and in the accompanying
Prospectus, Series A Capital Securities in certificated form will not be issued
in exchange for the global certificates. See "Certain Terms of Series A Capital
Securities -- Registration of Series A Capital Securities."
S-3
<PAGE> 5
The information in this Prospectus Supplement supplements, and should be
read in conjunction with, the information contained in the accompanying
Prospectus. As used herein, (i) the "Indenture" means the Junior Subordinated
Indenture, as amended and supplemented from time to time, between the
Corporation and The Bank of New York, as trustee (the "Debenture Trustee"), and
(ii) the "Trust Agreement" means the Amended and Restated Trust Agreement
relating to the Series A Issuer among the Corporation, as Depositor, The Bank of
New York, as Property Trustee (the "Property Trustee"), The Bank of New York
(Delaware), as Delaware Trustee (the "Delaware Trustee"), and the Administrative
Trustees named therein (collectively, with the Property Trustee and Delaware
Trustee, the "Issuer Trustees"). Each of the other capitalized terms used in
this Prospectus Supplement and not otherwise defined in this Prospectus
Supplement has the meaning set forth in the accompanying Prospectus.
RISK FACTORS
Prospective purchasers of the Series A Capital Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and in
the accompanying Prospectus and should particularly consider the following
matters. In addition, because holders of Series A Capital Securities may receive
Series A Subordinated Debentures in exchange therefor upon liquidation of the
Series A Issuer, prospective purchasers of Series A Capital Securities are also
making an investment decision with regard to the Series A Subordinated
Debentures and should carefully review all the information regarding the Series
A Subordinated Debentures contained herein and in the accompanying Prospectus.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE SERIES
A SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series A Guarantee issued by
the Corporation for the benefit of the holders of Series A Securities and under
the Series A Subordinated Debentures are unsecured and rank subordinate and
junior in right of payment to all Senior Debt of the Corporation. Substantially
all of the Corporation's indebtedness constitutes Senior Debt. Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of the assets of any subsidiary, including MBNA America Bank,
National Association, upon such subsidiary's liquidation or reorganization or
otherwise is subject to the prior claims of creditors of that subsidiary, except
to the extent that the Corporation may itself be recognized as a creditor of
that subsidiary. There are various legal limitations on the extent to which
certain of the Corporation's subsidiaries may extend credit, pay dividends or
otherwise supply funds to, or engage in transactions with, the Corporation or
certain of its other subsidiaries. Accordingly, the Series A Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Series A
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Series A Subordinated Debentures. See "MBNA Corporation." None
of the Indenture, the Series A Guarantee or the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior Debt,
that may be incurred by the Corporation. See "Description of
Guarantees -- Status of the Guarantees" and "Description of Junior Subordinated
Debentures -- Subordination" in the accompanying Prospectus.
The ability of the Series A Issuer to pay amounts due on the Series A
Capital Securities is solely dependent upon the Corporation making payments on
the Series A Subordinated Debentures as and when required.
OPTION TO DEFER INTEREST PAYMENT; TAX CONSEQUENCES; MARKET PRICE CONSEQUENCES
So long as no event of default under the Indenture has occurred or is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series A Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive
S-4
<PAGE> 6
semi-annual periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the Series A
Subordinated Debentures. As a consequence of any such deferral, semi-annual
Distributions on the Series A Capital Securities by the Series A Issuer will
also be deferred (and the amount of Distributions to which holders of the Series
A Capital Securities are entitled will accumulate additional Distributions
thereon at the rate of % per annum, compounded semi-annually from the
relevant payment date for such Distributions) during any such Extension Period.
During any such Extension Period, the Corporation may not, and may not permit
any subsidiary of the Corporation to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including other series of Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Series A Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation if such guarantee ranks pari passu with or junior
in interest to the Series A Subordinated Debentures (other than (a) dividends or
distributions in capital stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan or
the redemption or repurchase of any such rights pursuant thereto, (c) payments
under the Series A Guarantee and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees, related to the issuance of common
stock or rights under a dividend reinvestment and stock purchase plan, or
related to the issuance of common stock (or securities convertible into or
exchangeable for common stock) as consideration in an acquisition transaction
that was entered into prior to the commencement of such Extension Period). Prior
to the termination of any such Extension Period, the Corporation may further
defer the payment of interest, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Series A Subordinated Debentures. Upon the termination of any Extension Period
and the payment of all interest then accrued and unpaid (together with interest
thereon at the annual rate of %, compounded semi-annually from the
interest payment date for such interest, to the extent permitted by applicable
law), the Corporation may elect to begin a new Extension Period subject to the
above requirements. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period. See "Certain Terms of Series
A Capital Securities -- Distributions" and "Certain Terms of Series A
Subordinated Debentures -- Option to Defer Interest Payments."
Should an Extension Period occur, a holder of Series A Capital Securities
will be required to accrue income (in the form of original issue discount) in
respect of its pro rata share of the Series A Subordinated Debentures held by
the Series A Issuer for United States federal income tax purposes. As a result,
a holder of Series A Capital Securities will be required to include such
interest income in gross income for United States federal income tax purposes in
advance of the receipt of cash attributable to such income, and will not receive
the cash related to such income from the Series A Issuer if the holder disposes
of the Series A Capital Securities prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount" and "--Sales or Redemption of Series A Capital
Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Series A Subordinated Debentures. However, should
the Corporation elect to exercise such right in the future, the market price of
the Series A Capital Securities is likely to be affected. A holder that disposes
of its Series A Capital Securities during an Extension Period, therefore, might
not receive the same return on its investment as a holder that continues to hold
its Series A Capital Securities.
S-5
<PAGE> 7
TAX EVENT OR CAPITAL TREATMENT EVENT -- REDEMPTION
Upon the occurrence and continuation of a Tax Event or Capital Treatment
Event prior to December 1, 2006, the Corporation has the right to redeem the
Series A Subordinated Debentures in whole (but not in part) within 90 days
following the occurrence of such Tax Event or Capital Treatment Event and
thereby cause a mandatory redemption of the Series A Capital Securities. Any
such redemption shall be at a price equal to the Make-Whole Amount (as defined
in "Certain Terms of Series A Capital Securities -- Redemption") together with
accrued interest to but excluding the date fixed for redemption. The exercise of
such right is subject to the Corporation having received prior approval of the
Federal Reserve to do so if then required under applicable capital guidelines or
policies.
A "Tax Event" means the receipt by the Series A Issuer or the Corporation
of an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced proposed change)
in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective, or
which proposed change, pronouncement or decision is announced, on or after the
date of issuance of the Series A Capital Securities under the Trust Agreement,
there is more than an insubstantial risk that (i) the Series A Issuer is, or
will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the Series A
Subordinated Debentures, (ii) interest payable by the Corporation on the Series
A Subordinated Debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by the Corporation, in whole or in part, for United
States federal income tax purposes or (iii) the Series A Issuer is, or will be
within 90 days of the date of the opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective, or which proposed change, pronouncement, action or decision is
announced, on or after the date of issuance of the Series A Capital Securities
under the Trust Agreement, there is more than an insubstantial risk that the
Corporation will not be entitled to treat an amount equal to the Liquidation
Amount of the Series A Capital Securities as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Corporation.
See "Risk Factors -- Possible Tax Law Changes" for a discussion of certain
legislative proposals that, if adopted, could give rise to a Tax Event, that may
permit the Corporation to cause a redemption of the Series A Capital Securities
prior to December 1, 2006.
EXCHANGE OF SERIES A CAPITAL SECURITIES FOR SERIES A SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series A
Issuer and, after satisfaction of liabilities to creditors of the Series A
Issuer as required by applicable law, cause the Series A Subordinated Debentures
to be distributed to the holders of the Series A Capital Securities in exchange
therefor upon liquidation of the Series A Issuer. The exercise of such right is
subject to the Corporation having received prior approval of the Federal Reserve
if then required under applicable capital guidelines or policies. See "Certain
Terms of Series A Capital Securities -- Liquidation of Series A Issuer and
Distribution of Series A Subordinated Debentures to Holders."
Under current United States federal income tax law and interpretations and
assuming, as expected, the Series A Issuer is classified as a grantor trust for
such purposes, a distribution of the
S-6
<PAGE> 8
Series A Subordinated Debentures upon a liquidation of the Series A Issuer would
not be a taxable event to holders of the Series A Capital Securities. However,
if a Tax Event were to occur which would cause the Series A Issuer to be subject
to United States federal income tax with respect to income received or accrued
on the Series A Subordinated Debentures, a distribution of the Series A
Subordinated Debentures by the Series A Issuer could be a taxable event to the
Series A Issuer and the holders of the Series A Capital Securities. See "Certain
Federal Income Tax Consequences -- Distribution of the Series A Subordinated
Debentures to Holders of Series A Capital Securities."
MARKET PRICES
There can be no assurance as to the market prices for Series A Capital
Securities or Series A Subordinated Debentures that may be distributed in
exchange for Series A Capital Securities upon liquidation of the Series A
Issuer. Accordingly, the Series A Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Series A Subordinated Debentures that a holder of Series A Capital
Securities may receive on liquidation of the Series A Issuer, may trade at a
discount to the price that the investor paid to purchase the Series A Capital
Securities offered hereby. As a result of the existence of the Corporation's
right to defer interest payments, the market price of the Series A Capital
Securities (which represent beneficial ownership interests in the Series A
Issuer) may be more volatile than the market prices of other securities that are
not subject to such optional deferrals. See "Certain Terms of Series A
Subordinated Debentures" and "Description of Junior Subordinated
Debentures -- Corresponding Junior Subordinated Debentures" in the accompanying
Prospectus.
RIGHTS UNDER THE SERIES A GUARANTEE
The Series A Guarantee guarantees to the holders of the Series A Securities
the following payments, to the extent not paid by the Series A Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series A
Securities, to the extent that the Series A Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Series A
Securities called for redemption, to the extent that the Series A Issuer has
funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Series A Issuer
(unless the Series A Subordinated Debentures are distributed to holders of the
Series A Securities), the lesser of (a) the aggregate of the Liquidation Amount
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Series A Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series A Issuer remaining available
for distribution to holders of the Series A Securities after satisfaction of the
liabilities to creditors of the Series A Issuer as required by applicable law.
The Series A Guarantee will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Bank of New
York will act as the indenture trustee under the Series A Guarantee (the
"Guarantee Trustee") for the purpose of compliance with the Trust Indenture Act
and will hold the Series A Guarantee for the benefit of the holders of the
Series A Securities. The Bank of New York will also act as Debenture Trustee for
the Series A Subordinated Debentures and as Property Trustee under the Trust
Agreement and The Bank of New York (Delaware) will act as Delaware Trustee under
the Trust Agreement.
The Series A Guarantee is subordinate as described under "--Ranking of
Subordinated Obligations Under the Series A Guarantee and the Series A
Subordinated Debentures."
The holders of not less than a majority in aggregate Liquidation Amount of
the Series A Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Series A Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series A Guarantee. Any holder of
the Series A Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Series A Guarantee without first
instituting a legal proceeding against the Series A Issuer, the Guarantee
Trustee or any other person or entity. If the
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Corporation were to default on its obligation to pay amounts payable under the
Series A Subordinated Debentures, the Series A Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Series A
Securities or otherwise, and, in such event, holders of the Series A Securities
would not be able to rely upon the Series A Guarantee for payment of such
amounts. Instead, if an event of default under the Indenture shall have occurred
and be continuing and such event is attributable to the failure of the
Corporation to pay interest or premium, if any, on or principal of the Series A
Subordinated Debentures on the applicable payment date, then a holder of Series
A Capital Securities may institute a legal proceeding directly against the
Corporation pursuant to the terms of the Indenture for enforcement of payment to
such holder of the principal of or interest or premium, if any, on such Series A
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Series A Securities of such holder (a "Direct
Action"). In connection with such Direct Action, the Corporation will have a
right of set-off under the Indenture to the extent of any payment made by the
Corporation to such holder of Series A Capital Securities in the Direct Action.
Except as described herein, holders of Series A Capital Securities will not be
able to exercise directly any other remedy available to the holders of the
Series A Subordinated Debentures or assert directly any other rights in respect
of the Series A Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities,"
"--Debenture Events of Default" and "Description of Guarantees" in the
accompanying Prospectus. The Trust Agreement provides that each holder of Series
A Securities by acceptance thereof agrees to the provisions of the Series A
Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series A Capital Securities generally will have limited voting
rights relating only to the modification of the Series A Capital Securities and
the Series A Guarantee and the exercise of the Series A Issuer's rights as
holder of Series A Subordinated Debentures and the Series A Guarantee. Holders
of Series A Capital Securities will not be entitled to vote to appoint, remove
or replace the Property Trustee, the Delaware Trustee or any Administrative
Trustee, and such voting rights are vested exclusively in the holder of the
Series A Common Securities except, with respect to the Property Trustee and the
Delaware Trustee, upon the occurrence of certain events described in the
accompanying Prospectus. The Property Trustee, the Delaware Trustee, the
Administrative Trustees and the Corporation may amend the Trust Agreement
without the consent of holders of Series A Capital Securities to ensure that the
Series A Issuer will be classified for United States federal income tax purposes
as a grantor trust unless such action materially and adversely affects the
interests of such holders. See "Description of Preferred Securities -- Voting
Rights; Amendment of Each Trust Agreement" and "-- Removal of Issuer Trustees"
in the accompanying Prospectus.
TRADING CHARACTERISTICS OF SERIES A PREFERRED SECURITIES
Application has been made to list the Series A Capital Securities on the
New York Stock Exchange. The Series A Capital Securities may trade at prices
that do not fully reflect the value of accrued and unpaid interest with respect
to the underlying Series A Subordinated Debentures. See "Certain Federal Income
Tax Consequences -- Interest Income and Original Issue Discount" and "-- Sales
or Redemption of Series A Capital Securities" for a discussion of the United
States federal income tax consequences that may result from a taxable
disposition of the Series A Capital Securities.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
introduced in the 104th Congress which would have, among other things, generally
denied interest deductions for interest on an instrument issued by a corporation
that has a maximum term of more than 20 years and that is not shown as
indebtedness on the separate balance sheet of the issuer or, where the
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<PAGE> 10
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. The above-described
provision was proposed to be effective generally for instruments issued on or
after December 7, 1995. If this provision were to apply to the Series A
Subordinated Debentures, the Corporation would not be able to deduct interest on
the Series A Subordinated Debentures. However, on March 29, 1996, the Chairmen
of the Senate Finance and House Ways and Means Committees issued a joint
statement (the "Joint Statement") to the effect that it was their intention that
the effective date of the Bill, if enacted, would be no earlier than the date of
appropriate Congressional action. In addition, subsequent to the publication of
the Joint Statement, Senator Daniel Patrick Moynihan and Representatives Sam M.
Gibbons and Charles B. Rangel wrote letters to Treasury Department officials
concurring with the view expressed in the Joint Statement (the "Democrat
Letters"). The 104th Congress adjourned without enacting the Bill. Moreover, if
the principles contained in the Joint Statement and the Democrat Letters were
followed any similar legislation in this area that is subsequently proposed
would not apply to the Series A Subordinated Debentures. Although the 104th
Congress adjourned without enacting the Bill, there can be no assurance that
current or future legislative proposals or final legislation will not adversely
affect the ability of the Corporation to deduct interest on the Series A
Subordinated Debentures or otherwise affect the tax treatment of the transaction
described herein. If enacted such a change could give rise to a Tax Event, which
would permit the Corporation, upon approval of the Federal Reserve if then
required under applicable capital guidelines or policies, to cause a redemption
of the Series A Capital Securities, as described more fully in the accompanying
Prospectus under "Description of Preferred Securities -- Redemption or
Exchange."
MBNA CAPITAL I
MBNA Capital I (the "Series A Issuer") is a statutory business trust
created under Delaware law pursuant to the filing of a certificate of trust with
the Delaware Secretary of State on November 6, 1996 and will be governed by the
Trust Agreement executed by the Corporation, as Depositor, The Bank of New York,
as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, and
the Administrative Trustees named therein. The Series A Issuer's business and
affairs are conducted by the Issuer Trustees: The Bank of New York, as Property
Trustee, and The Bank of New York (Delaware), as Delaware Trustee, and two
individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Series A Issuer exists for the exclusive
purposes of (i) issuing and selling the Series A Capital Securities and Series A
Common Securities, (ii) using the proceeds from the sale of Series A Capital
Securities and Series A Common Securities to acquire Series A Subordinated
Debentures issued by the Corporation and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer of
the Series A Securities). Accordingly, the Series A Subordinated Debentures will
be the sole assets of the Series A Issuer, and payments under the Series A
Subordinated Debentures will be the sole revenue of the Series A Issuer. All of
the Series A Common Securities will be owned by the Corporation. The Series A
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Series A Capital Securities, except that upon the occurrence and
continuance of an event of default under the Trust Agreement resulting from an
event of default under the Indenture, the rights of the Corporation as holder of
the Series A Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption or otherwise will be subordinated to the
rights of the holders of the Series A Capital Securities. See "Description of
Preferred Securities -- Subordination of Common Securities" in the accompanying
Prospectus. The Corporation will acquire Series A Common Securities in an
aggregate Liquidation Amount equal to 3% of the total capital of the Series A
Issuer. The Series A Issuer has a term of 55 years, but may terminate earlier as
provided in the Trust Agreement. The principal executive office of the Series A
Issuer is Wilmington, Delaware 19884, and its telephone number is (800)
362-6255. See "The Issuers" in the accompanying Prospectus.
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It is anticipated that the Series A Issuer will not be subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
MBNA CORPORATION
The Corporation is a registered bank holding company incorporated under the
laws of Maryland in 1990. It is the parent corporation of MBNA America Bank,
National Association (the "Bank"), a national bank organized in January 1991, as
the successor to a national bank organized in 1982.
As of September 30, 1996, the Corporation had consolidated assets of $15.6
billion, consolidated deposits of $9.6 billion and stockholders' equity of $1.6
billion. The principal asset of the Corporation is its equity interest in the
Bank. As of September 30, 1996, the Bank and its subsidiaries constituted
approximately 92.5% of the consolidated assets of the Corporation.
Through the Bank, the Corporation is the country's second largest lender
through bank credit cards and is the leading issuer of affinity credit cards
marketed primarily to members of associations and financial institutions. In
addition to its credit card lending, the Corporation also makes individual loans
and offers various deposit products.
The Corporation generates interest and other income through finance charges
assessed on outstanding loan balances, loan servicing fees, interchange income,
credit card fees, merchant discount fees, processing fees, and interest on
investments. The Corporation's primary costs are the costs of funding its loan
receivables and investments, which include interest paid on deposits, short-term
borrowings, and long-term debt and bank notes; credit losses; royalties paid to
affinity groups and financial institutions; business development and operating
expenses; and income taxes.
The Corporation's principal executive offices are located in Wilmington,
Delaware 19884, and its telephone number is (800) 362-6255.
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RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS
The following are the consolidated ratio of earnings to fixed charges and
ratio of earnings to combined fixed charges and preferred stock dividend
requirements for the Corporation for each of the years in the five-year period
ended December 31, 1995 and the nine-month period ended September 30, 1996:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- --------------------------------------
1996* 1995 1994 1993** 1992 1991
------------- ---- ---- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Including Interest on Deposits.................. 1.9 2.0 2.4 2.0 2.1 1.6
Excluding Interest on Deposits.................. 4.0 4.4 5.7 6.0 15.7 12.9
Earnings to Combined Fixed Charges and Preferred
Stock Dividends:
Including Interest on Deposits.................. 1.8 2.0 2.4 2.0 2.1 1.6
Excluding Interest on Deposits.................. 3.6 4.3 5.7 6.0 15.7 12.9
</TABLE>
- ---------------
* Income before income taxes for the nine months ended September 30, 1996,
includes a charges of $54.3 million related to the launch of the MBNA
Platinum Plus Visa and MasterCard program. Without the charge, the ratio of
earnings to fixed charges, including and excluding interest on deposits,
would have been 2.0 and 4.3, respectively and the ratio of earnings to
combined fixed charges and preferred stock dividend requirements, including
and excluding interest on deposits, would have been 1.9 and 3.9,
respectively.
** Income before income taxes for 1993 includes a charge of $150.0 million for
the termination of a marketing agreement with an independent third-party
marketing organization. Without the charge, the ratio of earnings to fixed
charges and the ratio of earnings to combined fixed charges and preferred
stock dividend requirements, including and excluding interest on deposits,
would have each been 2.9 and 9.9, respectively.
The ratio of earnings to fixed charges is computed by dividing (i) income
before income taxes and fixed charges less interest capitalized during such
period, net of amortization of previously capitalized interest, by (ii) fixed
charges. The ratio of earnings to combined fixed charges and preferred stock
dividend requirements is computed by dividing (i) income before income taxes and
fixed charges less interest capitalized during such period, net of amortization
of previously capitalized interest, by (ii) fixed charges and preferred stock
dividend requirements. Fixed charges consist of interest expense on borrowings,
including capitalized interest (including or excluding deposits, as the case may
be), and the portion of rental expense which is deemed representative of
interest. The preferred stock dividend requirements represent the pre-tax
earnings which would be required to cover such dividend requirements on the
Corporation's preferred stock outstanding. The Corporation did not have any
preferred stock outstanding during the periods prior to 1995 presented above and
accordingly there were no preferred stock dividend requirements during such
periods.
USE OF PROCEEDS
All of the proceeds from the sale of the Series A Capital Securities will
be invested by the Series A Issuer in Series A Subordinated Debentures. The
Corporation intends that the proceeds from the sale of the Series A Subordinated
Debentures will be added to its general corporate funds and will be used for
general corporate purposes.
The Corporation is required by the Federal Reserve to maintain certain
levels of capital for bank regulatory purposes. On October 21, 1996, the Federal
Reserve announced that cumulative
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preferred securities having the characteristics of the Series A Capital
Securities could be included as Tier 1 capital for bank holding companies. Such
Tier 1 capital treatment, together with the Corporation's ability to deduct, for
income tax purposes, interest payable on the Series A Subordinated Debentures,
will provide the Corporation with greater financial flexibility and more cost-
effective regulatory capital.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of September 30, 1996 and as adjusted to
give effect to the consummation of the offering of the Series A Capital
Securities. The following data should be read in conjunction with the
consolidated financial statements and notes thereto of the Corporation and its
subsidiaries incorporated herein by reference.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN MILLIONS)
<S> <C> <C>
Total long-term debt and bank notes................................ $3,382,469 $ 3,382,469
Guaranteed Preferred Beneficial Interest in Corporation's Junior
Subordinated Deferrable Interest Debentures(a)................... -- 250,000
Stockholders' Equity
Preferred Stock............................................... 120 120
Common Stock.................................................. 2,228 2,228
Additional Paid In Capital.................................... 621,839 621,839
Retained Earnings............................................. 980,185 980,185
Net Unrealized Gains on Investment Securities, Available for
Sale, Net of Taxes........................................... 691 691
Treasury Stock, At Cost............................................
------ ------
Total Stockholders' Equity............................... $1,605,063 $ 1,605,063
------ ------
Total Capitalization.......................................... $4,987,532 $ 5,237,532
====== ======
</TABLE>
- ---------------
(a) As described herein, the sole assets of the Series A Issuer will be
approximately $ principal amount of Series A Subordinated Debentures
issued by the Corporation to the Series A Issuer. The Series A Subordinated
Debentures will bear interest at the rate of % per annum and will
mature on December 1, 2026. The Corporation will own all of the Series A
Common Securities of the Series A Issuer.
It is anticipated that the Series A Issuer will not be subject to the
reporting requirements under the Exchange Act.
ACCOUNTING TREATMENT
For financial reporting purposes, the Series A Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Series A
Issuer will be included in the consolidated financial statements of the
Corporation. The Series A Capital Securities will be presented as a separate
line item in the consolidated balance sheets of the Corporation under the
caption "Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures" and appropriate disclosures about
the Series A Capital Securities, the Series A Guarantee and the Series A
Subordinated Debentures will be included in the notes to the consolidated
financial statements. For financial reporting purposes, the Corporation will
record Distributions payable on the Series A Capital Securities as an expense in
the consolidated statements of income.
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The Corporation has agreed that future financial reports of the Corporation
will: (i) present the Preferred Securities issued by other trusts created by the
Corporation on the Corporation's balance sheet as a separate line term entitled
"Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated
Deferrable Interest Debentures"; (ii) include in a footnote to the consolidated
financial statements disclosure that the sole assets of the trusts are the
Junior Subordinated Debentures (specifying as to each trust the principal
amount, interest rate and maturity date of Junior Subordinated Debentures held);
and (iii) disclose, in a footnote to the consolidated financial statements, that
(a) the trusts are wholly owned, (b) the sole assets of the trusts are the
Junior Subordinated Debentures (specifying as to each trust the principal
amount, interest rate and maturity date of the Junior Subordinated Debentures
held), and (c) the obligations of the Corporation under the relevant Junior
Subordinated Debentures, indenture, trust agreement and guarantee, in the
aggregate, constitute a full and unconditional guarantee by the Corporation of
such trusts' obligations under the Preferred Securities issued by such trust.
CERTAIN TERMS OF SERIES A CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series A
Capital Securities supplements the description of the terms and provisions of
the Capital Securities set forth in the accompanying Prospectus under the
heading "Description of Preferred Securities," to which description reference is
hereby made. This summary of certain terms and provisions of the Series A
Capital Securities, which describes the material provisions thereof, does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Agreement, to which reference is hereby made. The form
of the Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and accompanying Prospectus form a
part.
DISTRIBUTIONS
The Series A Capital Securities represent beneficial ownership interests in
the assets of the Series A Issuer, and Distributions on each Series A Capital
Security will be payable at the annual rate of % of the stated
Liquidation Amount of $1,000 payable semi-annually in arrears on June 1 and
December 1 of each year, to the holders of the Series A Capital Securities on
the relevant record dates. The record dates for the Series A Capital Securities
will be, for so long as the Series A Capital Securities remain in book-entry
form, one Business Day (as defined in the accompanying Prospectus) prior to the
relevant Distribution payment date and, in the event the Series A Capital
Securities are not in book-entry form, the 15th day of the month preceding the
month in which the relevant Distribution payment date occurs. Distributions will
accumulate from the date of original issuance. The first Distribution payment
date for the Series A Capital Securities will be June 1, 1997. The amount of
Distributions payable for any period less than a full distribution period will
be computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which Distributions are payable on the Series A Capital
Securities is not a Business Day, then payment of the Distributions payable on
such date will be made on the next succeeding day that is a Business Day (and
without any additional Distributions or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable. See "Description of Preferred Securities -- Distributions"
in the accompanying Prospectus.
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series A Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods with respect
to each Extension Period, provided that no Extension Period may
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extend beyond the Stated Maturity of the Series A Subordinated Debentures. As a
consequence of any such deferral of interest payments by the Corporation,
semi-annual Distributions on the Series A Capital Securities by the Series A
Issuer will also be deferred during any such Extension Period. Distributions to
which holders of the Series A Capital Securities are entitled will accumulate
additional Distributions thereon at the rate per annum of % thereof,
compounded semi-annually from the relevant payment date for such Distributions.
The term "Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Corporation may not, and
may not permit any subsidiary of the Corporation to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including other
series of Junior Subordinated Debentures) that rank pari passu with or junior in
interest to the Series A Subordinated Debentures or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt securities
of any subsidiary of the Corporation if such guarantee ranks pari passu with or
junior in interest to the Series A Subordinated Debentures (other than (a)
dividends or distributions in capital stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Series A Guarantee and (d) purchases of
common stock related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees, related to
the issuance of common stock or rights under a dividend reinvestment and stock
purchase plan, or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest on the Series A
Subordinated Debentures, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Series A Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at the rate of %, compounded semi-annually, to the
extent permitted by applicable law), the Corporation may elect to begin a new
Extension Period. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period. See "Certain Terms of Series
A Subordinated Debentures -- Option to Defer Interest Payments" and "Certain
Federal Income Tax Consequences -- Interest Income and Original Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Subordinated Debentures.
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series A
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined in
the accompanying Prospectus) of the Series A Securities, upon not less than 30
nor more than 60 days notice prior to the date fixed for redemption, at a
redemption price, with respect to the Series A Capital Securities (the
"Redemption Price"), equal to the aggregate Liquidation Amount of such Series A
Capital Securities plus accumulated and unpaid Distributions thereon to the date
of redemption (the "Redemption Date") and the related amount of the premium, if
any, paid by the Corporation upon the concurrent redemption of such Series A
Subordinated Debentures. See "Description of Series A Subordinated
Debentures -- Redemption". If less than all of the Series A Subordinated
Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds
from such repayment or redemption shall be allocated to the redemption pro rata
of the Series A Capital Securities and the Series A Common Securities. The
amount of premium if any, paid by the Corporation upon the redemption of all or
any part of Series A Subordinated Debentures
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<PAGE> 16
to be repaid or redeemed on a Redemption Date shall be allocated to the
redemption pro rata of the Series A Capital Securities and the Series A Common
Securities.
The Corporation has the right to redeem the Series A Subordinated
Debentures (i) on or after December 1, 2006, in whole at any time or in part
from time to time, or (ii) prior to December 1, 2006, in whole (but not in part)
within 90 days following the occurrence of a Tax Event or Capital Treatment
Event. A redemption of the Series A Subordinated Debentures would cause a
mandatory redemption of Series A Capital Securities and Series A Common
Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices expressed in percentages of the Liquidation Amount
together with accrued Distributions to but excluding the Redemption Date. If
redeemed during the 12-month period beginning December 1:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
-------------------------------------------------------- ----------
<S> <C>
2006.................................................... %
2007....................................................
2008....................................................
2009....................................................
2010....................................................
2011....................................................
2012....................................................
2013....................................................
2014....................................................
2015....................................................
and at 100% on or after December 1, 2016................
</TABLE>
The Redemption Price, in the case of a redemption following a Tax Event or
Capital Treatment Event as described under (ii) above, shall equal for each
Series A Capital Security the Make-Whole Amount for a corresponding $1,000
principal amount of Series A Subordinated Debentures together with accrued
Distributions to but excluding the Redemption Date. The "Make-Whole Amount"
shall be equal to the greater of (i) 100% of the principal amount of such Series
A Subordinated Debentures or (ii) as determined by a Quotation Agent (as defined
below), the sum of the present values of the principal amount and premium
payable as part of the Redemption Price with respect to an optional redemption
of such Series A Subordinated Debentures on December 1, 2006, together with
scheduled payments of interest from the Redemption Date to December 1, 2006 (the
"Remaining Life"), in each case discounted to the Redemption Date on a
semi-annual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate (as defined below).
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate (as defined below) plus (i) % if such Redemption Date occurs on
or before December 1, 1997 or (ii) 0.50% if such Redemption Date occurs after
December 1, 1997.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the immediately prior week, 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
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<PAGE> 17
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 Treasury Rate shall be calculated
on the third Business Day preceding the Redemption Date.
"Comparable Treasury Issue" means, with respect to any Redemption Date, 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 December 1, 2006, 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 Goldman, Sachs & Co. and their 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.
"Comparable Treasury Price" means (A) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Debenture Trustee, of the bid and asked 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.
LIQUIDATION OF SERIES A ISSUER AND DISTRIBUTION OF SERIES A SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to terminate the Series A
Issuer and, after satisfaction of the liabilities to creditors of the Series A
Issuer as required by applicable law, cause the Series A Subordinated Debentures
to be distributed to the holders of the Series A Capital Securities in exchange
therefor upon liquidation of the Series A Issuer. Such right is subject to the
Corporation having received prior approval of the Federal Reserve if then
required under applicable capital guidelines or policies.
Under current United States federal income tax law and interpretations and
assuming, as expected, the Series A Issuer is treated as a grantor trust, a
distribution of Series A Subordinated Debentures in exchange for the Series A
Capital Securities would not be a taxable event to holders of the Series A
Capital Securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or other circumstances, however, the distribution
could be a taxable event to holders of the Series A Capital Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Series A
Subordinated Debentures to Holders of Series A Capital Securities." If the
Corporation elects neither to redeem the Series A Subordinated Debentures prior
to maturity nor to liquidate the Series A Issuer and distribute the Series A
Subordinated Debentures to holders of the Series A Capital Securities in
exchange therefor the Series A Capital Securities will remain outstanding until
the Stated Maturity of the Series A Subordinated Debentures.
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<PAGE> 18
LIQUIDATION VALUE
The amount payable on the Series A Capital Securities in the event of any
liquidation of the Series A Issuer is $1,000 per Series A Capital Securities
plus accumulated and unpaid Distributions, which amount may be paid in the form
of a distribution of a Like Amount in Series A Subordinated Debentures, subject
to certain exceptions. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
REGISTRATION OF SERIES A CAPITAL SECURITIES
The Series A Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the Series
A Capital Securities will be shown on, and transfers thereof will be effected
only through, records maintained by participants in DTC. Except as described
below and in the accompanying Prospectus, Series A Capital Securities in
certificated form will not be issued in exchange for the global certificates.
See "Book-Entry Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Series A Capital Securities
registered in the names of persons other than DTC or its nominee only if (i) the
Corporation or DTC notifies the Series A Issuer that DTC 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 Series A Issuer in its sole
discretion determines that such global security shall be so exchangeable or
(iii) there shall have occurred and be continuing an event of default under the
Indenture with respect to the Series A Subordinated Debentures. Any global
security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its Participants (as defined in the accompanying
Prospectus) with respect to ownership of beneficial interests in such global
security. In the event that Series A Capital Securities are issued in definitive
form, such Series A Capital Securities will be in denominations of $1,000 and
integral multiples thereof and may be transferred or exchanged at the offices
described below.
Payments on Series A Capital Securities represented by a global security
will be made to DTC, as the depositary for the Series A Capital Securities. In
the event Series A Capital Securities are issued in certificated form, the
Liquidation Amount and Distributions will be payable, the transfer of the Series
A Capital Securities will be registrable, and Series A Capital Securities will
be exchangeable for Series A Capital Securities of other denominations of a like
aggregate Liquidation Amount, at the corporate office of the Property Trustee in
New York, New York, or at the offices of any paying agent or transfer agent
appointed by the Administrative Trustees, provided that payment of any
Distribution may be made at the option of the Administrative Trustees by check
mailed to the address of the persons entitled thereto or by wire transfer. In
addition, if the Series A Capital Securities are issued in certificated form,
the record dates for payment of Distributions will be the 15th day of the month
preceding the month in which the relevant Distribution payment is scheduled to
be paid. For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Book-Entry Issuance" in the accompanying Prospectus.
CERTAIN TERMS OF SERIES A SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series A
Subordinated Debentures supplements the description of the terms and provisions
of the Corresponding Junior Subordinated Debentures (as defined in the
Prospectus) set forth in the accompanying Prospectus
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<PAGE> 19
under the heading "Description of Junior Subordinated Debentures," to which
description reference is hereby made. The summary of certain terms and
provisions of the Series A Subordinated Debentures set forth below, which
describes the material provisions thereof, does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the Indenture,
to which reference is hereby made. The form of Indenture has been filed as an
exhibit to the Registration Statement of which this Prospectus Supplement and
accompanying Prospectus form a part.
Concurrently with the issuance of the Series A Capital Securities, the
Series A Issuer will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series A Common Securities, in the
Series A Subordinated Debentures issued by the Corporation. The Series A
Subordinated Debentures will bear interest at the annual rate of % of the
principal amount thereof, payable semi-annually in arrears on June 1 and
December 1 of each year (each, an "Interest Payment Date"), commencing June 1,
1997, to the person in whose name each Series A Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. It is anticipated that,
until the liquidation, if any, of the Series A Issuer, each Series A
Subordinated Debenture will be held by the Property Trustee in trust for the
benefit of the holders of the Series A Securities. The amount of interest
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months. In the event that any date on which interest is payable on the
Series A Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of % thereof, compounded semi-
annually from the relevant Interest Payment Date. The term "interest" as used
herein shall include semi-annual interest payments and interest on semi-annual
interest payments not paid on the applicable Interest Payment Date, as
applicable.
The Series A Subordinated Debentures will be issued as a series of junior
subordinated deferrable interest debentures under the Indenture.
The Series A Subordinated Debentures will mature on December 1, 2026.
The Series A Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt of the Corporation.
See "Description of Junior Subordinated Debentures -- Subordination" in the
accompanying Prospectus. Substantially all of the Corporation's existing
indebtedness constitutes Senior Debt. Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary, including the Bank, upon such subsidiary's liquidation
or reorganization or otherwise is subject to the prior claims of creditors of
that subsidiary, except to the extent that the Corporation may itself be
recognized as a creditor of that subsidiary. There are various legal limitations
on the extent to which certain of the Corporation's subsidiaries may extend
credit, pay dividends or otherwise supply funds to, or engage in transactions
with, the Corporation or certain of its other subsidiaries. Accordingly, the
Series A Subordinated Debentures will be effectively subordinated to all
existing and future liabilities of the Corporation's subsidiaries, and holders
of Series A Subordinated Debentures should look only to the assets of the
Corporation for payments on the Series A Subordinated Debentures. The Indenture
does not limit the incurrence or issuance of other secured or unsecured debt of
the Corporation, including Senior Debt, whether under the Indenture, any
existing indenture or any other indenture that the Corporation may enter into in
the future or otherwise. See "Description of Junior Subordinated
Debentures -- Subordination" in the accompanying Prospectus.
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<PAGE> 20
OPTION TO DEFER INTEREST PAYMENTS
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture at any time or
from time to time during the term of the Series A Subordinated Debentures to
defer payment of interest on the Series A Subordinated Debentures for a period
not exceeding 10 consecutive semi-annual periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Series A Subordinated Debentures. At the end of such Extension Period,
the Corporation must pay all interest then accrued and unpaid on the Series A
Subordinated Debentures (together with interest on such unpaid interest at the
annual rate of %, compounded semi-annually from the relevant Interest
Payment Date, to the extent permitted by applicable law). During an Extension
Period, interest will accrue and holders of Series A Subordinated Debentures (or
holders of Series A Capital Securities while such series is outstanding) will be
required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
During any such Extension Period, the Corporation may not, and may not
permit any subsidiary of the Corporation to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including other series of Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Series A Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation if such guarantee ranks pari passu with or junior
in interest to the Series A Subordinated Debentures (other than (a) dividends or
distributions in capital stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Series A Guarantee, and (d) purchases of common stock related
to the issuance of common stock or rights under any of the Corporation's benefit
plans for its directors, officers or employees, related to the issuance of
common stock or rights under a dividend reinvestment and stock purchase plan, or
related to the issuance of common stock (or securities convertible into or
exchangeable for common stock) as consideration in an acquisition transaction
that was entered into prior to the commencement of such Extension Period). Prior
to the termination of any such Extension Period, the Corporation may further
defer the payment of interest on the Series A Subordinated Debentures, provided
that no Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Series A Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at the rate of %,
compounded semi-annually, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election to
begin such Extension Period at least one Business Day prior to the earlier of
(i) the date Distributions on the Series A Securities would have been payable
except for the election to begin such Extension Period, (ii) the date the
Administrative Trustees are required to give notice to the New York Stock
Exchange, the NASDAQ National Market or other applicable stock exchange or
automated quotation system on which the Series A Capital Securities are then
listed or quoted or to holders of Series A Subordinated Debentures of the record
date for such Distributions or (iii) the date such Distributions are payable,
but in any event not less than one Business Day prior to such record date. The
Debenture Trustee shall give notice of the Corporation's election to begin a new
Extension Period to the holders of the Series A Subordinated Debentures. There
is no limitation on the number of times that the Corporation may elect to begin
an Extension Period. See "Description of Junior Subordinated
Debentures -- Option to Defer Interest Payments" in the accompanying Prospectus.
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<PAGE> 21
TRUST EXPENSES AND TAXES
In the Indenture, the Corporation, as borrower, has agreed to pay to the
Series A Issuer all debts and other obligations (other than with respect to the
Series A Securities) and all costs and expenses of the Series A Issuer
(including costs and expenses relating to the organization of the Series A
Issuer, the fees and expenses of the relevant Issuer Trustees and the costs and
expenses relating to the operation of the Series A Issuer) and to pay any and
all taxes and all costs and expenses with respect thereto (other than United
States withholding taxes) to which the Series A Issuer might become subject. See
"Description of the Junior Subordinated Debentures -- Trust Expenses and Taxes"
in the accompanying Prospectus.
REDEMPTION
Subject to the Corporation having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies, the
Series A Subordinated Debentures are redeemable prior to maturity at the option
of the Corporation (i) on or after December 1, 2006, in whole at any time or in
part from time to time or (ii) prior to December 1, 2006, in whole (but not in
part) within 90 days following the occurrence of a Tax Event or Capital
Treatment Event (each as defined under "Risk Factors -- Tax Event or Capital
Treatment Event -- Redemption"), in each case at the Redemption Price described
below. The proceeds of any such redemption will be used by the Series A Issuer
to redeem the Series A Securities.
The Redemption Price in the case of a redemption under (i) above shall
equal the following prices, expressed in percentages of the principal amount,
together with accrued interest to but excluding the Redemption Date. If redeemed
during the 12-month period beginning December 1:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
-------------------------------------------------------- ----------
<S> <C>
2006.................................................... %
2007....................................................
2008....................................................
2009....................................................
2010....................................................
2011....................................................
2012....................................................
2013....................................................
2014....................................................
2015....................................................
and at 100% on or after December 1, 2016................
</TABLE>
The Redemption Price, in the case of a redemption following a Tax Event or
Capital Treatment Event as described under (ii) above, shall equal the
Make-Whole Amount (as defined under "Certain Terms of Series A Capital
Securities -- Redemption"), together with accrued interest to but excluding the
Redemption Date.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES
As described under "Certain Terms of Series A Capital
Securities -- Liquidation of Series A Issuer and Distribution of Series A
Subordinated Debentures to Holders," under certain circumstances involving the
termination of the Series A Issuer, Series A Subordinated Debentures may be
distributed to the holders of the Series A Capital Securities in exchange
therefor upon liquidation of the Series A Issuer after satisfaction of
liabilities to creditors of the Series A Issuer as provided by applicable law.
If distributed to holders of Series A Capital Securities, the Series A
Subordinated Debentures will initially be issued in the form of one or more
global securities and DTC, or any successor depositary for the Series A Capital
Securities, will act as depositary for the Series A
S-20
<PAGE> 22
Subordinated Debentures. It is anticipated that the depositary arrangements for
the Series A Subordinated Debentures would be substantially identical to those
in effect for the Series A Capital Securities. If Series A Subordinated
Debentures are distributed to the holders of Series A Capital Securities in
exchange therefor upon the liquidation of the Series A Issuer, the Corporation
will use its best efforts to list the Series A Subordinated Debentures on the
New York Stock Exchange or such other stock exchanges or automated quotation
system, if any, on which the Series A Capital Securities are then listed or
quoted. There can be no assurance as to the market price of any Series A
Subordinated Debentures that may be distributed to the holders of Series A
Capital Securities.
REGISTRATION OF SERIES A SUBORDINATED DEBENTURES
The Series A Subordinated Debentures will be registered in the name of the
Series A Issuer. In the event that the Series A Subordinated Debentures are
distributed to holders of Series A Capital Securities, it is anticipated that
the depositary and other arrangements for the Series A Subordinated Debentures
will be substantially identical to those in effect for the Series A Capital
Securities as applicable. See "Certain Terms of Series A Capital
Securities -- Registration of Series A Capital Securities."
CERTAIN TERMS OF SERIES A GUARANTEE
The Series A Guarantee guarantees to the holders of the Series A Securities
the following payments, to the extent not paid by the Series A Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series A
Securities, to the extent that the Series A Issuer has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Series A
Securities called for redemption, to the extent that the Series A Issuer has
funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding-up or liquidation of the Series A Issuer
(unless the Series A Subordinated Debentures are distributed to holders of the
Series A Securities), the lesser of (a) the aggregate of the Liquidation Amount
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Series A Issuer has funds on hand available therefor at such
time, and (b) the amount of assets of the Series A Issuer remaining available
for distribution to holders of the Series A Securities after satisfaction of the
liabilities to creditors of the Series A Issuer as required by applicable law.
The Series A Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Bank of New York will act as the Guarantee Trustee for the
purposes of compliance with the Trust Indenture Act and will hold the Series A
Guarantee for the benefit of the holders of the Series A Securities. The Bank of
New York will also act as Debenture Trustee for the Series A Subordinated
Debentures and as Property Trustee.
The holders of not less than a majority in aggregate Liquidation Amount of
the Series A Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Series A Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series A Guarantee. Any holder of
the Series A Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Series A Guarantee without first
instituting a legal proceeding against the Series A Issuer, the Guarantee
Trustee or any other person or entity. If the Corporation were to default on its
obligation to pay amounts payable under the Series A Subordinated Debentures,
the Series A Issuer would lack funds for the payment of Distributions or amounts
payable on redemption of the Series A Securities or otherwise, and, in such
event, holders of the Series A Securities would not be able to rely upon the
Series A Guarantee for payment of such amounts. Instead, if an event of default
under the Indenture shall have occurred and be continuing and such event is
attributable to the failure of the Corporation to pay interest or premium, if
any, on or principal of the Series A Subordinated Debentures on the applicable
payment date, then a holder of Series A Capital Securities may institute a
Direct Action against the Corporation pursuant to the
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<PAGE> 23
terms of the Indenture for enforcement of payment to such holder of the
principal of or interest or premium, if any, on such Series A Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Series A Securities of such holder. In connection with such Direct
Action, the Corporation will have a right of set-off under the Indenture to the
extent of any payment made by the Corporation to such holder of Series A
Securities in the Direct Action. Except as described herein, holders of Series A
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Series A Subordinated Debentures or assert
directly any other rights in respect of the Series A Subordinated Debentures.
See "Description of Guarantees" in the accompanying Prospectus. The Trust
Agreement provides that each holder of Series A Securities by acceptance thereof
agrees to the provisions of the Series A Guarantee and the Indenture.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Simpson Thacher & Bartlett, special counsel to the
Corporation and the Series A Issuer ("Tax Counsel"), the following summary
accurately describes the material United States federal income tax consequences
that may be relevant to the purchase, ownership and disposition of Series A
Capital Securities. Unless otherwise stated, this summary deals only with Series
A Capital Securities held as capital assets by United States Persons (defined
below) who purchase the Series A Capital Securities upon original issuance at
their original issue price. As used herein, a "United States Person" means a
person that is (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, (iii) an estate
the income of which is subject to United States federal income taxation
regardless of its source, or (iv) a trust the income of which is subject to
United States federal income taxation regardless of its source; provided,
however, that for taxable years beginning after December 31, 1996 (or, if a
trustee so elects, for taxable years ending after August 20, 1996), a "United
States Person" shall include any trust if a court is able to exercise primary
supervision over the administration of such trust and one or more United States
fiduciaries have the authority to control all substantial decisions of such
trust. The tax treatment of a holder may vary depending on his, her or its
particular situation. This summary does not address all the tax consequences
that may be relevant to a particular holder or to holders who may be subject to
special tax treatment, such as banks, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, or foreign investors. In addition, this summary does not
include any description of the alternative minimum tax consequences or the tax
laws of any state, local or foreign government that may be applicable to a
holder of Series A Capital Securities. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change, possibly on a
retroactive basis.
The authorities on which this summary is based are subject to various
interpretations and the opinions of Tax Counsel are not binding on the Internal
Revenue Service ("IRS") or the courts, either of which could take a contrary
position. Moreover, no rulings have been or will be sought from the IRS with
respect to the transactions described herein. Accordingly, there can be no
assurance that the IRS will not challenge the opinions expressed herein or that
a court would not sustain such a challenge. Nevertheless, Tax Counsel has
advised that it is of the view that, if challenged, the opinions expressed
herein would be sustained by a court with jurisdiction in a properly presented
case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES A
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE,
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<PAGE> 24
LOCAL, FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF
THE SERIES A CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE
"CERTAIN TERMS OF SERIES A CAPITAL SECURITIES -- REDEMPTION."
CLASSIFICATION OF THE SERIES A ISSUER
In connection with the issuance of the Series A Capital Securities, Tax
Counsel is of the opinion that, under current law and assuming compliance with
the terms of the Trust Agreement, and based on certain facts and assumptions
contained in such opinion, the Series A Issuer will be classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes. As a result, each beneficial owner of Series A
Capital Securities (a "Securityholder") will be treated as owning an undivided
beneficial interest in the Series A Subordinated Debentures. Accordingly, each
Securityholder will be required to include in its gross income its pro rata
share of the interest income or original issue discount accrued on the Series A
Subordinated Debentures. See "-- Interest Income and Original Issue Discount."
CLASSIFICATION OF THE SERIES A SUBORDINATED DEBENTURES
The Corporation, the Series A Issuer and the holders of the Series A
Securities (by acceptance of a beneficial interest in a Series A Security) will
agree to treat the Series A Subordinated Debentures as indebtedness for all
United States tax purposes. In connection with the issuance of the Series A
Subordinated Debentures, Tax Counsel is of the opinion that, under current law,
and based on certain representations, facts and assumptions set forth in such
opinion, the Series A Subordinated Debentures will be classified as indebtedness
for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as set forth below, stated interest on the Series A Subordinated
Debentures generally will be included in income by a Securityholder at the time
such interest income is paid or accrued in accordance with such Securityholder's
regular method of tax accounting.
The Corporation believes that, under the applicable Treasury regulations,
the Series A Subordinated Debentures will not be considered to have been issued
with "original issue discount" ("OID") within the meaning of Section 1273(a) of
the Code. If, however, the Corporation exercises its right to defer payments of
interest on the Series A Subordinated Debentures, the Series A Subordinated
Debentures will become OID instruments at such time and all Securityholders will
be required to accrue the stated interest on the Series A Subordinated
Debentures on a daily basis during the Extension Period, even though the
Corporation will not pay such interest until the end of the Extension Period,
and even though some Securityholders may use the cash method of tax accounting.
Moreover, thereafter the Series A Subordinated Debentures will be taxed as OID
instruments for as long as they remain outstanding. Thus, even after the end of
the Extension Period, all Securityholders would be required to continue to
include the stated interest on the Series A Subordinated Debentures in income on
a daily economic accrual basis, regardless of their method of tax accounting and
in advance of receipt of the cash attributable to such interest income. Under
the OID economic accrual rules, a Securityholder would accrue an amount of
interest income each year that approximates the stated interest payments called
for under the terms of the Series A Subordinated Debentures, and actual cash
payments of interest on the Series A Subordinated Debentures would not be
reported separately as taxable income. Any amount of OID included in a
Securityholder's gross income (whether or not during an Extension Period) will
increase such Securityholder's tax basis in its Series A Capital Securities, and
the amount of Distributions received by a Securityholder with respect to such
Series A Capital Securities will reduce the tax basis of such Series A Capital
Securities.
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<PAGE> 25
The Treasury regulations described above have not been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully that the
stated interest on the Series A Subordinated Debentures was OID regardless of
whether the Corporation exercises its right to defer payments of interest on
such debentures, all Securityholders would be required to include such stated
interest in income on a daily economic accrual basis as described above.
Corporate Securityholders will not be entitled to dividends-received
deductions with respect to any income recognized with respect to the Series A
Capital Securities.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES TO HOLDERS OF SERIES A CAPITAL
SECURITIES
Under current law, a distribution by the Series A Issuer of the Series A
Subordinated Debentures as described under the caption "Certain Terms of Series
A Capital Securities -- Liquidation of Series A Issuer and Distribution of
Series A Subordinated Debentures to Holders" will be non-taxable and will result
in the Securityholder receiving directly its pro rata share of the Series A
Subordinated Debentures previously held indirectly through the Series A Issuer,
with a holding period and aggregate tax basis equal to the holding period and
aggregate tax basis such Securityholder had in its Series A Capital Securities
before such distribution. If, however, the liquidation of the Series A Issuer
were to occur because the Series A Issuer is subject to United States federal
income tax with respect to income accrued or received on the Series A
Subordinated Debentures, the distribution of Series A Subordinated Debentures to
Securityholders by the Series A Issuer would be a taxable event to the Series A
Issuer and each Securityholder, and a Securityholder would recognize gain or
loss as if the Securityholder had exchanged its Series A Capital Securities for
the Series A Subordinated Debentures it received upon the liquidation of the
Series A Issuer. A Securityholder will accrue interest in respect of Series A
Subordinated Debentures received from the Series A Issuer in the manner
described above under "-- Interest Income and Original Issue Discount."
SALES OR REDEMPTION OF SERIES A CAPITAL SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Series A
Capital Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized by the Securityholder on the sale or
redemption of the Series A Capital Securities (except to the extent that such
amount realized is characterized as a payment in respect of accrued but unpaid
interest on such Securityholder's allocable share of the Series A Subordinated
Debentures that such Securityholder has not included in gross income previously)
and the Securityholder's adjusted tax basis in the Series A Capital Securities
sold or redeemed. Such gain or loss generally will be taxable as long-term
capital gain or loss if the Securityholder held the Series A Capital Securities
that it sold or redeemed for more than one year. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any person that
is not a United States Holder. As discussed above, the Series A Capital
Securities will be treated as evidence of an undivided beneficial ownership
interest in the Series A Subordinated Debentures. See "-- Classification of the
Series A Issuer." Thus under present United States federal income tax law, and
subject to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Corporation or any paying agent
of principal or interest (which for purposes of this discussion includes
any OID) on the Series A Subordinated Debentures to a Non-United States
Holder, provided (i) that the beneficial owner of the Series A Capital
Securities ("Beneficial Owner") does not actually or constructively own 10%
or more of the total
S-24
<PAGE> 26
combined voting power of all classes of stock of the Corporation entitled
to vote within the meaning of section 871(h)(3) of the Code and the
regulations thereunder, (ii) the Beneficial Owner is not a controlled
foreign corporation that is related to the Corporation through stock
ownership, (iii) the Beneficial Owner is not a bank whose receipt of
interest on the Series A Subordinated Debentures is described in section
881(c)(3)(A) of the Code and (iv) the Beneficial Owner satisfies the
statement requirement (described generally below) set forth in section
871(h) and section 881(c) of the Code and the regulations thereunder; and
(b) no withholding of United States federal income tax will be
required with respect to any gain realized by a Non-United States Holder
upon the sale or other disposition of the Series A Capital Securities.
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Series A Capital Securities on
behalf of such owner, must provide, in accordance with specified procedures, to
the Series A Issuer or its paying agent, a statement to the effect that the
Beneficial Owner is not a United States Holder. Pursuant to current temporary
Treasury regulations, these requirements will be met if (1) the Beneficial Owner
provides his name and address, and certifies, under penalties of perjury, that
it is not a United States person (which certification may be made on an IRS Form
W-8 (or successor form)) or (2) a financial institution holding the Series A
Capital Securities on behalf of the Beneficial Owner certifies, under penalties
of perjury, that such statement has been received by it and furnishes a paying
agent with a copy thereof.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of interest made
to such Non-United States Holder will be subject to a 30% withholding tax unless
the Beneficial Owner provides the Series A Issuer or its paying agent, as the
case may be, with a properly executed (1) IRS Form 1001 (or successor form)
claiming an exemption from, or a reduction of, such withholding tax under the
benefit of a tax treaty or (2) IRS Form 4224 (or successor form) stating that
interest paid on the Series A Subordinated Debentures is not subject to
withholding tax because it is effectively connected with the Beneficial Owner's
conduct of a trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest on the Series A Subordinated Debentures is
effectively connected with the conduct of such trade or business, the Non-United
States Holder, although exempt from the withholding tax discussed above, will be
subject to United States federal income tax on such interest on a net income
basis in the same manner as if it were a United States Holder. In addition, if
such Non-United States Holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments. For this purpose, such
interest income would be included in such foreign corporation's earnings and
profits.
Any gain realized upon the sale or other disposition of the Series A
Capital Securities generally will not be subject to United States federal income
tax unless (i) such gain is effectively connected with a trade or business
carried on in the United States by the Non-United States Holder, (ii) in the
case of a Non-United States Holder who is an individual, such individual is
present in the United States for 183 days or more in the taxable year of such
sale, exchange or retirement, and certain other conditions are met, and (iii) in
the case of any gain representing accrued interest on the Series A Subordinated
Debentures, the requirements described above are not satisfied.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest (or OID, if any) accrued on the Series A Capital
Securities held of record by United States Persons (other than corporations and
other exempt Securityholders) will be reported to the Internal Revenue Service.
"Backup" withholding at a rate of 31% will apply to payments of interest (or
OID, if any) to nonexempt United States Persons unless the Securityholder
furnishes its taxpayer identification number in the manner prescribed in
applicable Treasury
S-25
<PAGE> 27
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Series A Capital Securities
to or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the Internal Revenue Service.
It is anticipated that income on the Series A Capital Securities will be
reported to holders on Form 1099 and mailed to holders of the Series A Capital
Securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
introduced in the 104th Congress which would have, among other things, generally
denied interest deductions for interest on an instrument issued by a corporation
that has a maximum term of more than 20 years and that is not shown as
indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. The above-described
provision was proposed to be effective generally for instruments issued on or
after December 7, 1995. If this provision were to apply to the Series A
Subordinated Debentures, the Corporation would not be able to deduct interest on
the Series A Subordinated Debentures. However, on March 29, 1996, the Chairmen
of the Senate Finance and House Ways and Means Committees issued the Joint
Statement to the effect that it was their intention that the effective date of
the Bill, if enacted, would be no earlier than the date of appropriate
Congressional action. In addition, subsequent to the publication of the Joint
Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons
and Charles B. Rangel wrote the Democrat Letters to Treasury Department
officials concurring with the view expressed in the Joint Statement. The 104th
Congress adjourned without enacting the Bill. Moreover, if the principles
contained in the Joint Statement and the Democrat Letters were followed any
similar legislation in this area that is subsequently proposed would not apply
to the Series A Subordinated Debentures. Although the 104th Congress adjourned
without enacting the Bill, there can be no assurance that current or future
legislative proposals or final legislation will not adversely affect the ability
of the Corporation to deduct interest on the Series A Subordinated Debentures or
otherwise affect the tax treatment of the transaction described herein.
Moreover, such a change could give rise to a Tax Event, which would permit the
Corporation, upon approval of the Federal Reserve if then required under
applicable capital guidelines or policies, to cause a redemption of the Series A
Capital Securities, as described more fully in the accompanying Prospectus under
"Description of Preferred Securities -- Redemption or Exchange -- Tax Event or
Capital Event Redemption."
ERISA CONSIDERATIONS
[TO COME]
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Corporation and the Series A Issuer have agreed that the Series A
Issuer will sell to each of the Underwriters
S-26
<PAGE> 28
named below, and each of such Underwriters has severally agreed to purchase from
the Series A Issuer, the respective number of Series A Capital Securities set
forth opposite their names below.
<TABLE>
<CAPTION>
NUMBER OF
SERIES A
CAPITAL
UNDERWRITER SECURITIES
----------------------------------------------------------------------- ----------
<S> <C>
Goldman, Sachs & Co. ..................................................
Bear, Stearns & Co. Inc. ..............................................
Lehman Brothers, Inc. .................................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..............................................
Salomon Brothers Inc...................................................
----------
Total.............................................................
==========
</TABLE>
Under the terms of the Underwriting Agreement, the Underwriters are
committed to take and pay for all of the Series A Capital Securities, if any are
taken.
The Underwriters propose to offer the Series A Capital Securities to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession not
in excess of $. per Series A Capital Security. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $. per
Series A Capital Security to certain brokers and dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
In view of the fact that the proceeds from the sale of the Series A Capital
Securities will be used to purchase the Series A Subordinated Debentures issued
by the Corporation, the Underwriting Agreement provides that the Corporation
will pay as Underwriters' compensation for the Underwriters' arranging the
investment therein of such proceeds an amount of $ per Series A Capital
Securities for the accounts of the several Underwriters.
The Corporation and the Series A Issuer have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing to and
including the closing date, they will not offer, sell, contract to sell or
otherwise dispose of any Series A Capital Securities, any other beneficial
interests in the assets of the Series A Issuer, or any preferred securities or
any other securities of the Series A Issuer or the Corporation which are
substantially similar to the Series A Capital Securities, including any
guarantee of such securities, or any securities convertible into or exchangeable
for or representing the right to receive preferred securities or any such
substantially similar securities of either the Series A Issuer or the
Corporation, without the prior written consent of the Underwriters, except for
the Series A Capital Securities offered in connection with this offering.
Prior to this offering, there has been no public market for the Series A
Capital Securities. Application has been made to list the Series A Capital
Securities on the New York Stock Exchange. Trading of the Series A Capital
Securities on the New York Stock Exchange is expected to commence within a
30-day period after the initial delivery of the Series A Capital Securities. The
Underwriters have advised the Corporation that they intend to make a market in
the Series A Capital Securities prior to commencement of trading on the New York
Stock Exchange, but are not obligated to do so and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity of the
trading market for the Series A Capital Securities.
The Corporation and the Series A Issuer have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
Goldman, Sachs & Co. will serve as Quotation Agent with respect to the
Series A Capital Securities and in certain instances will calculate the
Redemption Price thereof.
S-27
<PAGE> 29
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series A
Capital Securities, the enforceability of the Trust Agreement and the formation
of the Series A Issuer will be passed upon by Richards, Layton & Finger, special
Delaware counsel to the Corporation and the Series A Issuer. The validity of the
Series A Guarantee and the Series A Subordinated Debentures will be passed upon
for the Corporation by Simpson Thacher & Bartlett (a partnership which includes
professional corporations) and for the Underwriters by Sullivan & Cromwell.
Simpson Thacher & Bartlett and Sullivan & Cromwell will rely on the opinion of
John W. Scheflen, Executive Vice President, General Counsel and Secretary of the
Corporation as to matters of Maryland law and the opinion of Richards, Layton &
Finger as to matters of Delaware law. Certain matters relating to United States
federal income tax considerations described in this Prospectus Supplement will
be passed upon for the Corporation by Simpson Thacher & Bartlett. Mr. Scheflen
owns beneficially 225,624 shares of common stock of the Corporation, including
options exercisable within sixty days under the Corporation's 1991 Long Term
Incentive Plan. Sullivan & Cromwell and Richards, Layton & Finger regularly
perform legal services for the Corporation and its subsidiaries.
S-28
<PAGE> 30
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER , 1996
$750,000,000
MBNA CORPORATION
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES
MBNA CAPITAL I
MBNA CAPITAL II
MBNA CAPITAL III
MBNA CAPITAL IV
MBNA CAPITAL V
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
MBNA CORPORATION
MBNA Corporation, a Maryland corporation (the "Corporation"), may from time
to time offer in one or more series or issuances its junior subordinated
deferrable interest debentures (the "Junior Subordinated Debentures"). The
Junior Subordinated Debentures will be unsecured and subordinate and junior in
right of payment to Senior Debt (as defined in "Description of Junior
Subordinated Debentures -- Subordination") of the Corporation. If provided in an
accompanying Prospectus Supplement, the Corporation will have the right to defer
payments of interest on any series of Junior Subordinated Debentures by
extending the interest payment period thereon at any time or from time to time
for up to such number of consecutive interest payment periods (which shall not
extend beyond the Stated Maturity (as defined herein) of the Junior Subordinated
Debentures) with respect to each deferral period as may be specified in such
Prospectus Supplement (each, an "Extension Period"). In such circumstance,
however, the Corporation would not be permitted, subject to certain exceptions
set forth herein, to declare or pay any dividends, distributions or other
payments with respect to, or repay, repurchase, redeem or otherwise acquire, the
Corporation's capital stock or debt securities that rank pari passu with or
junior to such series of Junior Subordinated Debentures. See "Description of
Junior Subordinated Debentures -- Option to Defer Interest Payment Date" and
"-- Restrictions on Certain Payments."
MBNA Capital I, MBNA Capital II, MBNA Capital III, MBNA Capital IV and MBNA
Capital V, each a trust created under the laws of the State of Delaware (each,
an "Issuer," and collectively, the "Issuers"), may severally offer, from time to
time, preferred securities (the "Preferred Securities") representing beneficial
ownership interests in such Issuer. The Corporation will be the owner of the
common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing beneficial ownership interests
in such Issuer. Holders of the Preferred Securities will be entitled to receive
cumulative cash distributions ("Distributions") accumulating from the date of
original issuance and payable periodically as specified in an accompanying
Prospectus Supplement.
Concurrently with the issuance by an Issuer of its Preferred Securities,
such Issuer will invest the proceeds thereof and of contributions received in
respect of the Common Securities in a corresponding series of the Corporation's
Junior Subordinated Debentures (the "Corresponding Junior Subordinated
Debentures") with terms corresponding to the terms of that Issuer's Preferred
Securities (the "Related Preferred Securities"). Accordingly, if, as provided in
an accompanying Prospectus Supplement, the Corporation has the right to defer
payment of interest on a series of Corresponding Junior Subordinated Debentures,
then, if interest payments are so deferred, Distributions on the Related
Preferred Securities would also be deferred, but would continue to accumulate at
the rate per annum set forth in the related Prospectus Supplement. See
"Description of Preferred Securities -- Distributions."
---------------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is , 1996.
<PAGE> 31
Taken together, the Corporation's obligations under each series of
Corresponding Junior Subordinated Debentures, the Indenture and the related
Trust Agreement and the related Guarantee (each, as defined herein), in the
aggregate, provide a full, irrevocable and unconditional guarantee of payments
of Distributions and other amounts due on the Related Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees -- Full and Unconditional Guarantee."
The payment of Distributions with respect to the Preferred Securities of each
Issuer and payments on liquidation of such Issuer or redemption of such
Preferred Securities, in each case out of funds held by such Issuer, are each
irrevocably guaranteed by the Corporation to the extent described herein (each a
"Guarantee"). See "Description of Guarantees." The obligations of the
Corporation under each Guarantee will be unsecured and subordinate and junior in
right of payment to all Senior Debt of the Corporation.
The Corresponding Junior Subordinated Debentures will be the sole assets of
each Issuer and payments under the Corresponding Junior Subordinated Debentures
will be the only revenue of each Issuer. If so provided in an accompanying
Prospectus Supplement, the Corporation may, upon receipt of approval of the
Federal Reserve (if such approval is then required under the applicable capital
guidelines or policies), redeem the Corresponding Junior Subordinated Debentures
(and thereby cause the redemption of the Trust Securities) or may terminate each
Issuer and, after satisfaction of liabilities to the creditors of such Issuer as
required by applicable law, cause the Corresponding Junior Subordinated
Debentures to be distributed to the holders of Preferred Securities in exchange
therefor upon liquidation of their interests in such Issuer. See "Description of
Preferred Securities -- Liquidation Distribution Upon Termination."
The Junior Subordinated Debentures and Preferred Securities may be offered
in amounts, at prices and on terms to be determined at the time of offering;
provided, however, the aggregate initial public offering price of all Junior
Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of which
this Prospectus forms a part shall not exceed $750,000,000. Certain specific
terms of the Junior Subordinated Debentures or Preferred Securities in respect
of which this Prospectus is being delivered will be described in an accompanying
Prospectus Supplement, including without limitation and where applicable and to
the extent not set forth herein, (a) in the case of Junior Subordinated
Debentures, the specific designation, aggregate principal amount, denominations,
Stated Maturity (including any provisions for the shortening or extension
thereof), interest payment dates, interest rate (which may be fixed or variable)
or method of calculating interest, if any, applicable Extension Period or
interest deferral terms, if any, place or places where principal, premium, if
any, and interest, if any, will be payable, any terms of redemption, any sinking
fund provisions, terms for any conversion or exchange into other securities,
initial offering or purchase price, methods of distribution and any other
special terms, and (b) in the case of Preferred Securities, the identity of the
Issuer, specific title, aggregate stated liquidation amount, number of
securities, Distribution rate or method of calculating such rate, Distribution
payment dates, applicable Distribution deferral terms, if any, place or places
where Distributions will be payable, any terms of redemption, exchange, initial
offering or purchase price, methods of distribution and any other special terms.
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax consequences relating to the
Junior Subordinated Debentures and Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, dealers or agents or directly to purchasers. See "Plan
of Distribution." The names of any underwriters, dealers or agents involved in
the sale of Junior Subordinated Debentures or Preferred Securities in respect of
which this Prospectus is being delivered and any applicable fee, commission or
discount arrangements with them will be set forth in a Prospectus Supplement.
The Prospectus Supplement will state whether the Junior Subordinated Debentures
or Preferred Securities will be listed on any national securities exchange or
automated quotation system. If the Junior Subordinated Debentures or Preferred
Securities are not listed on any national securities exchange or automated
quotation system, there can be no assurance that there will be a secondary
market for the Junior Subordinated Debentures or Preferred Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
------------------------
2
<PAGE> 32
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
and information statements and other information, including the documents
incorporated by reference herein, can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at 75 Park
Place, New York, New York 10007 and Suite 1400, Northwestern Atrium Center, 500
West Madison Street, Chicago, Illinois 60661, or obtained through the
Commission's Internet address at http://www.sec.gov. Copies of such material can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such material can also
be inspected and copied at the office of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The Corporation and the Issuers have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Corporation and the securities offered hereby, reference is made
to the Registration Statement and the exhibits and the financial statements,
notes and schedules filed as a part thereof or incorporated by reference
therein, which may be inspected at the public reference facilities of the
Commission at the addresses set forth above or through the Commission's homepage
on the Internet. Statements made in this Prospectus concerning the contents of
any documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such document
filed as an exhibit to the Registration Statement.
No separate financial statements of any Issuer have been included herein.
The Corporation and the Issuers do not consider that such financial statements
would be material to holders of the Preferred Securities because each Issuer is
a newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Corresponding Junior Subordinated
Debentures of the Corporation and issuing the Trust Securities. Furthermore,
taken together, the Corporation's obligations under each series of Corresponding
Junior Subordinated Debentures, the Indenture, the related Trust Agreement (as
defined herein) and the related Guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of Distributions and other
amounts due on the Related Preferred Securities of an Issuer. See "The Issuers,"
"Description of Preferred Securities," "Description of Junior Subordinated
Debentures -- Corresponding Junior Subordinated Debentures" and "Description of
Guarantees." In addition, the Corporation does not expect that any of the
Issuers will be filing reports under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995 as amended by Form 10-K/A-1 provided, however, that the
information referred to in Item 402(a)(8) of Regulation S-K promulgated by
the Commission shall not be deemed to be specifically incorporated by
reference herein.
2. The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996.
3. The Corporation's Current Reports on Form 8-K dated November 26,
1996, December 3, 1996 and December 5, 1996.
3
<PAGE> 33
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: MBNA Corporation,
Wilmington, Delaware 19884, Attention: Investor Relations, (800) 362-6255.
MBNA CORPORATION
MBNA Corporation is a registered bank holding company incorporated under
the laws of Maryland in 1990. It is the parent corporation of MBNA America Bank,
National Association, a national bank organized in January 1991, as the
successor to a national bank organized in 1982.
The Corporation's principal executive offices are located in Wilmington,
Delaware 19884, and its telephone number is (800) 362-6255.
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The following are the consolidated ratio of earnings to fixed charges and
ratio of earnings to combined fixed charges and preferred stock dividend
requirements for the Corporation for each of the years in the five-year period
ended December 31, 1995 and the nine-month period ended September 30, 1996:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER YEARS ENDED DECEMBER 31,
30, --------------------------------------
1996* 1995 1994 1993** 1992 1991
------------ ---- ---- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Including Interest on Deposits............... 1.9 2.0 2.4 2.0 2.1 1.6
Excluding Interest on Deposits............... 4.0 4.4 5.7 6.0 15.7 12.9
Earnings to Combined Fixed Charges and Preferred
Stock Dividends:
Including Interest on Deposits............... 1.8 2.0 2.4 2.0 2.1 1.6
Excluding Interest on Deposits............... 3.6 4.3 5.7 6.0 15.7 12.9
</TABLE>
- ---------------
* Income before income taxes for the nine months ended September 30, 1996,
includes a charge of $54.3 million related to the launch of the MBNA Platinum
Plus Visa and MasterCard program. Without the charge, the ratio of earnings
to fixed charges, including and excluding interest on deposits, would have
been 2.0 and 4.3, respectively and the ratio of earnings to combined fixed
charges and preferred stock dividend requirements, including and excluding
interest on deposits, would have been 1.9 and 3.9, respectively.
** Income before income taxes for 1993 includes a charge of $150.0 million for
the termination of a marketing agreement with an independent third-party
marketing organization. Without the charge, the ratio of earnings to fixed
charges and the ratio of earnings to combined fixed charges and preferred
stock dividend requirements, including and excluding interest on deposits,
would have each been 2.9 and 9.9, respectively.
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The ratio of earnings to fixed charges is computed by dividing (i) income
before income taxes and fixed charges less interest capitalized during such
period, net of amortization of previously capitalized interest, by (ii) fixed
charges. The ratio of earnings to combined fixed charges and preferred stock
dividend requirements is computed by dividing (i) income before income taxes and
fixed charges less interest capitalized during such period, net of amortization
of previously capitalized interest, by (ii) fixed charges and preferred stock
dividend requirements. Fixed charges consist of interest expense on borrowings,
including capitalized interest (including or excluding deposits, as the case may
be), and the portion of rental expense which is deemed representative of
interest. The preferred stock dividend requirements represent the pre-tax
earnings which would be required to cover such dividend requirements on the
Corporation's preferred stock outstanding. The Corporation did not have any
preferred stock outstanding during the periods prior to 1995 presented above and
accordingly there were no preferred stock dividend requirements during such
periods.
THE ISSUERS
Each Issuer is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement executed by the Corporation, as Depositor of
the Issuer, and an Administrative Trustee (as defined herein) of such Issuer and
(ii) the filing of a certificate of trust with the Delaware Secretary of State.
Each trust agreement will be amended and restated in its entirety (each, as so
amended and restated, a "Trust Agreement") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each Trust Agreement will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). Each Issuer exists for the
exclusive purposes of (i) issuing and selling its Trust Securities, (ii) using
the proceeds from the sale of such Trust Securities to acquire a series of
Corresponding Junior Subordinated Debentures issued by the Corporation, and
(iii) engaging in only those other activities necessary or incidental thereto
(such as registering the transfer of Trust Securities). Accordingly, the
Corresponding Junior Subordinated Debentures will be the sole assets of each
Issuer, and payments under the Corresponding Junior Subordinated Debentures will
be the sole revenue of each Issuer.
All of the Common Securities of each Issuer will be owned by the
Corporation. The Common Securities of an Issuer will rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities of such
Issuer, except that upon the occurrence and continuance of an event of default
under a Trust Agreement resulting from an event of default under the Indenture,
the rights of the Corporation as holder of the Common Securities to payment in
respect of Distributions and payments upon liquidation or redemption will be
subordinated to the rights of the holders of the Preferred Securities of such
Issuer. See "Description of Preferred Securities -- Subordination of Common
Securities." The Corporation will acquire Common Securities in an aggregate
Liquidation Amount (as defined herein) equal to not less than 3% of the total
capital of each Issuer.
Unless otherwise specified in the applicable Prospectus Supplement, each
Issuer has a term of approximately 55 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer's business and affairs
are conducted by its trustees, each appointed by the Corporation as holder of
the Common Securities. The trustees for each Issuer will be The Bank of New
York, as the Property Trustee (the "Property Trustee"), The Bank of New York
(Delaware), as the Delaware Trustee (the "Delaware Trustee"), and two individual
trustees (the "Administrative Trustees") who are employees or officers of or
affiliated with the Corporation (collectively, the "Issuer Trustees"). The Bank
of New York, as Property Trustee, will act as sole trustee under each Trust
Agreement for purposes of compliance with the Trust Indenture Act. The Bank of
New York will also act as trustee under the Guarantees and the Indenture. See
"Description of Guarantees" and "Description of Junior Subordinated Debentures."
The holder of the Common Securities of an Issuer, or the holders of a majority
in Liquidation Amount of the Related Preferred Securities if an event of default
under the Trust Agreement for such Issuer has occurred and is continuing, will
be entitled to appoint, remove or replace the Property Trustee and/or the
Delaware Trustee for such Issuer. In no event will the holders of the Preferred
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees; such voting rights are vested exclusively in the holder
of the Common Securities. The duties and obligations of each Issuer Trustee are
governed by the applicable Trust Agreement. The
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Corporation will pay all fees and expenses related to each Issuer and the
offering of the Preferred Securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of each Issuer.
The principal executive office of each Issuer is Wilmington, Delaware 19884
and its telephone number is (800) 362-6255.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
Corporation intends to use the proceeds from the sale of its Junior Subordinated
Debentures (including Corresponding Junior Subordinated Debentures issued to the
Issuers in connection with the investment by the Issuers of all of the proceeds
from the sale of Trust Securities) for general corporate purposes, including
working capital, capital expenditures, investments in or loans to subsidiaries,
refinancing of debt, redemption or repurchase of shares of its outstanding
common and preferred stock, the satisfaction of other obligations or for such
other purposes as may be specified in the applicable Prospectus Supplement.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under a Junior Subordinated Indenture, as supplemented from time to time (as so
supplemented, the "Indenture"), between the Corporation and The Bank of New York
as trustee (the "Debenture Trustee"). This summary of certain terms and
provisions of the Junior Subordinated Debentures, Corresponding Junior
Subordinated Debentures and the Indenture, which summarizes the material
provisions thereof, does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, the form of which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part, and to the Trust Indenture Act, to each of which reference is hereby
made. The Indenture is qualified under the Trust Indenture Act. Whenever
particular defined terms of the Indenture (as supplemented or amended from time
to time) are referred to herein or in a Prospectus Supplement, such defined
terms are incorporated herein or therein by reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu with all
other series of Junior Subordinated Debentures and will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth in the Indenture to all Senior Debt as defined below) of the Corporation.
See "-- Subordination." Because the Corporation is a holding company, the right
of the Corporation to participate in any distribution of assets of any
subsidiary, including the Bank, upon such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of the
subsidiary, except to the extent the Corporation may itself be recognized as a
creditor of that subsidiary. Accordingly, the Junior Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Junior Subordinated Debentures should
look only to the assets of the Corporation for payments on the Junior
Subordinated Debentures. Except as otherwise provided in the applicable
Prospectus Supplement, the Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of the Corporation, including Senior Debt,
whether under the Indenture, any other existing indenture or any other indenture
that the Corporation may enter into in the future or otherwise. See
"-- Subordination" and the applicable Prospectus Supplement relating to any
offering of Preferred Securities or Junior Subordinated Debentures.
The Junior Subordinated Debentures will be issuable in one or more series
pursuant to an indenture supplement to the Indenture or a resolution of the
Corporation's Board of Directors or a committee thereof.
The applicable Prospectus Supplement will describe the following terms of
the Junior Subordinated Debentures: (1) the title of the Junior Subordinated
Debentures; (2) any limit upon the aggregate principal amount of the Junior
Subordinated Debentures; (3) the date or dates on which the principal of the
Junior Subordinated Debentures is payable (the "Stated Maturity") or the method
of determination thereof; (4) the rate or rates, if any, at which the Junior
Subordinated Debentures shall bear interest, the dates on which any
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such interest shall be payable (the "Interest Payment Dates"), the right, if
any, of the Corporation to defer or extend an Interest Payment Date, and the
record date for any interest payable on any Interest Payment Date (the "Regular
Record Dates") or the method by which any of the foregoing shall be determined;
(5) the place or places where, subject to the terms of the Indenture as
described below under "-- Payment and Paying Agents," the principal of and
premium, if any, and interest on the Junior Subordinated Debentures will be
payable and where, subject to the terms of the Indenture as described below
under "-- Denominations, Registration and Transfer," the Junior Subordinated
Debentures may be presented for registration of transfer or exchange and the
place or places where notices and demands to or upon the Corporation in respect
of the Junior Subordinated Debentures and the Indentures may be made ("Place of
Payment"); (6) any period or periods within which, or date or dates on which,
the price or prices at which and the terms and conditions upon which Junior
Subordinated Debentures may be redeemed, in whole or in part, at the option of
the Corporation or a holder thereof; (7) the obligation or the right, if any, of
the Corporation or a holder thereof to redeem, purchase or repay the Junior
Subordinated Debentures and the period or periods within which, the price or
prices at which, the currency or currencies (including currency unit or units)
in which and the other terms and conditions upon which the Junior Subordinated
Debentures shall be redeemed, repaid or purchased, in whole or in part, pursuant
to such obligation; (8) the denominations in which any Junior Subordinated
Debentures shall be issuable if other than denominations of $25 and any integral
multiple thereof; (9) if other than in U.S. Dollars, the currency or currencies
(including currency unit or units) in which the principal of and premium, if
any, and interest on the Junior Subordinated Debentures shall be payable, or in
which the Junior Subordinated Debentures shall be denominated; (10) any
additions, modifications or deletions in the events of default under the
Indenture or covenants of the Corporation specified in the Indenture with
respect to the Junior Subordinated Debentures; (11) if other than the principal
amount thereof, the portion of the principal amount of Junior Subordinated
Debentures that shall be payable upon declaration of acceleration of the
maturity thereof; (12) any additions or changes to the Indenture with respect to
a series of Junior Subordinated Debentures as shall be necessary to permit or
facilitate the issuance of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (13) any
index or indices used to determine the amount of payments of principal of and
premium, if any, on the Junior Subordinated Debentures and the manner in which
such amounts will be determined; (14) the terms and conditions relating to the
issuance of a temporary Global Security representing all of the Junior
Subordinated Debentures of such series and the exchange of such temporary Global
Security for definitive Junior Subordinated Debentures of such series; (15)
subject to the terms described herein under "-- Global Junior Subordinated
Debentures," whether the Junior Subordinated Debentures of the series shall be
issued in whole or in part in the form of one or more Global Securities and, in
such case, the depositary for such Global Securities, which depositary shall be
a clearing agency registered under the Exchange Act; (16) the appointment of any
paying agent or agents; (17) the terms and conditions of any obligation or right
of the Corporation or a holder to convert or exchange the Junior Subordinated
Debentures into Preferred Securities; (18) the form of Trust Agreement and
Guarantee Agreement, if applicable; (19) the relative degree, if any, to which
such Junior Subordinated Debentures of the series shall be senior to or be
subordinated to other series of such Junior Subordinated Debentures or other
indebtedness of the Corporation in right of payment, whether such other series
of Junior Subordinated Debentures or other indebtedness are outstanding or not;
and (20) any other terms of the Junior Subordinated Debentures not inconsistent
with the provisions of the Indenture.
Junior Subordinated Debentures may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain United States federal
income tax consequences and special considerations applicable to any such Junior
Subordinated Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, premium, if any, or interest, on any
Junior Subordinated Debentures is payable in one or more foreign currencies or
currency units, the restrictions, elections, certain United States federal
income tax consequences, specific terms and other information with respect to
such
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series of Junior Subordinated Debentures and such foreign currency or currency
units will be set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debentures,
special United States federal income tax, accounting and other considerations
applicable thereto will be described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. Junior
Subordinated Debentures of any series will be exchangeable for other Junior
Subordinated Debentures of the same issue and series, of any authorized
denominations, of a like aggregate principal amount, of the same original issue
date and stated maturity and bearing the same interest rate.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the appropriate securities registrar or at the
office of any transfer agent designated by the Corporation for such purpose with
respect to any series of Junior Subordinated Debentures and referred to in the
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. The
Corporation will appoint the Debenture Trustee as securities registrar under the
Indenture. If the applicable Prospectus Supplement refers to any transfer agents
(in addition to the securities registrar) initially designated by the
Corporation with respect to any series of Junior Subordinated Debentures, the
Corporation may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent acts,
provided that the Corporation maintains a transfer agent in each place of
payment for such series. The Corporation may at any time designate additional
transfer agents with respect to any series of Junior Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of any series during a period beginning at the
opening of business 15 days before the day of selection for redemption of Junior
Subordinated Debentures of that series and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Junior Subordinated Debentures that will
be deposited with, or on behalf of, a depositary (the "Depositary") identified
in the Prospectus Supplement relating to such series. Global Junior Subordinated
Debentures may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual Junior Subordinated Debentures represented thereby, a Global Junior
Subordinated Debenture may not be transferred except as a whole by the
Depositary for such Global Junior Subordinated Debenture to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Junior Subordinated Debentures will be described in the Prospectus Supplement
relating to such series. The Corporation anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, and the
deposit of such Global Junior Subordinated Debenture with or on behalf of the
Depositary, the Depositary for such Global Junior Subordinated Debenture or its
nominee will credit, on its book-entry registration and transfer system, the
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respective principal amounts of the individual Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture to the accounts of
persons that have accounts with such Depositary ("Participants"). Such accounts
shall be designated by the dealers, underwriters or agents with respect to such
Junior Subordinated Debentures or by the Corporation if such Junior Subordinated
Debentures are offered and sold directly by the Corporation. Ownership of
beneficial interests in a Global Junior Subordinated Debenture will be limited
to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Junior Subordinated Debenture
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the applicable Depositary or its nominee (with
respect to interests of Participants) and the records of Participants (with
respect to interests of persons who hold through Participants). The laws of some
states require that certain purchasers of securities take physical delivery of
such securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Junior Subordinated
Debenture.
So long as the Depositary for a Global Junior Subordinated Debenture, or
its nominee, is the registered owner of such Global Junior Subordinated
Debenture, such Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture for all purposes under
the Indenture governing such Junior Subordinated Debentures. Except as provided
below, owners of beneficial interests in a Global Junior Subordinated Debenture
will not be entitled to have any of the individual Junior Subordinated
Debentures of the series represented by such Global Junior Subordinated
Debenture registered in their names, will not receive or be entitled to receive
physical delivery of any such Junior Subordinated Debentures of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of and premium, if any, and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner of
the Global Junior Subordinated Debenture representing such Junior Subordinated
Debentures. None of the Corporation, the Debenture Trustee, any Paying Agent, or
the Securities Registrar for such Junior Subordinated Debentures will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Junior
Subordinated Debenture representing such Junior Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Corporation expects that the Depositary for a series of Junior
Subordinated Debentures or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of a permanent Global Junior
Subordinated Debenture representing any of such Junior Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
such Global Junior Subordinated Debenture for such Junior Subordinated
Debentures as shown on the records of such Depositary or its nominee. The
Corporation also expects that payments by Participants to owners of beneficial
interests in such Global Junior Subordinated Debenture held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Corporation within 90 days, the Corporation
will issue individual Junior Subordinated Debentures of such series in exchange
for the Global Junior Subordinated Debenture representing such series of Junior
Subordinated Debentures. In addition, the Corporation may at any time and in its
sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Junior Subordinated Debentures, determine not to
have any Junior Subordinated Debentures of such series represented by one or
more Global Junior Subordinated Debentures and, in such event, will issue
certificated Junior Subordinated Debentures of such series in exchange for the
Global Junior Subordinated Debenture or Securities. Further, if the Corporation
so specifies with respect to the Junior Subordinated Debentures of a series, an
owner of a beneficial interest in a Global Junior Subordinated Debenture
representing Junior
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Subordinated Debentures of such series may, on terms acceptable to the
Corporation, the Debenture Trustee and the Depositary for such Global Junior
Subordinated Debenture, receive certificated Junior Subordinated Debentures of
such series in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such Junior
Subordinated Debentures. In any such instance, an owner of a beneficial interest
in a Global Junior Subordinated Debenture will be entitled to physical delivery
of certificated Junior Subordinated Debentures of the series represented by such
Global Junior Subordinated Debenture equal in principal amount to such
beneficial interest and to have such Junior Subordinated Debentures registered
in its name. Individual Junior Subordinated Debentures of such series so issued
will be issued in denominations, unless otherwise specified by the Corporation,
of $25 and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of and premium, if any, and any interest on Junior Subordinated
Debentures will be made at the office of the Debenture Trustee in the City of
New York or at the office of such paying agent or paying agents as the
Corporation may designate from time to time in the applicable Prospectus
Supplement, except that at the option of the Corporation payment of any interest
may be made (i) except in the case of Global Junior Subordinated Debentures, by
check mailed to the address of the person entitled thereto as such address shall
appear in the securities register or (ii) by transfer to an account maintained
by the person entitled thereto as specified in the securities register, provided
that proper transfer instructions have been received by the Regular Record Date.
Unless otherwise indicated in the applicable Prospectus Supplement, payment of
any interest on Junior Subordinated Debentures will be made to the person in
whose name such Junior Subordinated Debenture is registered at the close of
business on the Regular Record Date for such interest, except in the case of
defaulted interest. The Corporation may at any time designate additional paying
agents or rescind the designation of any paying agent; however the Corporation
will at all times be required to maintain a paying agent in each place of
payment for each series of Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Corporation in trust, for the payment of the principal of and
premium, if any, or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Corporation will
have the right at any time and from time to time during the term of any series
of Junior Subordinated Debentures to defer payment of interest for up to such
number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided that such Extension Period may not extend beyond the Stated
Maturity of such series of Junior Subordinated Debentures. Certain United States
federal income tax consequences and special considerations applicable to any
such Junior Subordinated Debentures will be described in the applicable
Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, Junior
Subordinated Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation may, at its option and subject to receipt of prior approval by the
Board of Governors of the Federal Reserve System (the "Federal Reserve") if then
required under applicable capital guidelines or policies, redeem the Junior
Subordinated Debentures of any series in whole at any time or in part from time
to time. If the Junior Subordinated Debentures of any series are so redeemable
only on or after a specified date or upon the
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satisfaction of additional conditions, the applicable Prospectus Supplement will
specify such date or describe such conditions. Junior Subordinated Debentures in
denominations larger than $25 may be redeemed in part but only in integral
multiples of $25. Except as otherwise specified in the applicable Prospectus
Supplement, the redemption price for any Junior Subordinated Debenture so
redeemed shall equal any accrued and unpaid interest thereon to the redemption
date, plus 100% of the principal amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Debenture Tax Event (as defined below) in respect of a series of Junior
Subordinated Debentures or a Capital Treatment Event (as defined below) shall
occur and be continuing, the Corporation may, at its option and subject to
receipt of prior approval by the Federal Reserve if then required under
applicable capital guidelines or policies, redeem such series of Junior
Subordinated Debentures in whole (but not in part) at any time within 90 days
following the occurrence of such Debenture Tax Event or Capital Treatment Event,
at a redemption price equal to 100% of the principal amount of such Junior
Subordinated Debentures then outstanding plus accrued and unpaid interest to the
date fixed for redemption.
"Debenture Tax Event" means the receipt by the Corporation of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the applicable series of Junior Subordinated Debentures
under the Indenture, there is more than an insubstantial risk that interest
payable by the Corporation on such series of Junior Subordinated Debentures is
not, or within 90 days of the date of such opinion will not be, deductible by
the Corporation, in whole or in part, for United States federal income tax
purposes.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such proposed change, pronouncement, action or decision is
announced on or after the date of issuance of the applicable Preferred
Securities under the applicable Trust Agreement, there is more than an
insubstantial risk that the Corporation will not be entitled to treat an amount
equal to the Liquidation Amount of the applicable Preferred Securities as "Tier
1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Corporation
defaults in payment of the redemption price, on and after the redemption date
interest ceases to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation will covenant, as to each series of Junior Subordinated
Debentures, that it will not, and will not permit any subsidiary of the
Corporation to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Corporation's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Corporation (including other series of Junior Subordinated Debentures) that rank
pari passu with or junior in interest to the Junior Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation if such
guarantee ranks pari passu with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in capital stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the redemption or repurchase
of any such rights pursuant thereto, (c) payments under any Guarantee with
respect to the series
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of related Preferred Securities and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees, related to the issuance of common
stock or rights under a dividend reinvestment and stock purchase plan, or
related to the issuance of common stock (or securities convertible into or
exchangeable for common stock) as consideration in an acquisition transaction
that was entered into prior to the commencement of such Extension Period) if at
such time (i) there shall have occurred any event of which the Corporation has
actual knowledge (a) that with the giving of notice or the lapse of time, or
both, would constitute an "Event of Default" under the Indenture with respect to
the Junior Subordinated Debentures of such series and (b) in respect of which
the Corporation shall not have taken reasonable steps to cure, (ii) if such
Junior Subordinated Debentures are held by an Issuer of a series of Related
Preferred Securities, the Corporation shall be in default with respect to its
payment of any obligations under the Guarantee relating to such Related
Preferred Securities or (iii) the Corporation shall have given notice of its
selection of an Extension Period as provided in the Indenture with respect to
the Junior Subordinated Debentures of such series and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing.
MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of any series of Junior Subordinated Debentures,
amend, waive or supplement the Indenture for specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies (provided
that any such action does not materially adversely affect the interest of the
holders of any series of Junior Subordinated Debentures or, in the case of
Corresponding Junior Subordinated Debentures, the holders of the Related
Preferred Securities so long as they remain outstanding) and qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act.
The Indenture contains provisions permitting the Corporation and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of each outstanding series of Junior Subordinated Debentures
affected, to modify the Indenture in a manner adversely affecting the rights of
the holders of such series of the Junior Subordinated Debentures in any material
respect; provided, that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Debenture so affected, (i) change
the Stated Maturity of any series of Junior Subordinated Debentures (except as
otherwise specified in the applicable Prospectus Supplement), or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures of any series, the holders of which are required to
consent to any such modification of the Indenture, provided further that, in the
case of Corresponding Junior Subordinated Debentures, so long as any Related
Preferred Securities remain outstanding, (a) no such modification may be made
that adversely affects the holders of such Preferred Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
event of default or compliance with any covenant under the Indenture may be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount of all Related Preferred Securities affected
unless and until the principal of the Corresponding Junior Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions have been satisfied, and (b) where a consent under
the Indenture would require the consent of each holder of Corresponding Junior
Subordinated Debentures, no such consent shall be given by the Property Trustee
without the prior consent of each holder of Related Preferred Securities.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debentures, any supplemental
Indenture for the purpose of creating any new series of Junior Subordinated
Debentures.
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DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on such series of Junior
Subordinated Debentures when due (subject to the deferral of any interest
payment in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series
of Junior Subordinated Debentures when due, whether at maturity or upon
redemption; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Corporation from the Debenture Trustee or the holders of at least
25% in aggregate outstanding principal amount of such affected series of
outstanding Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures of each series affected have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Debenture Trustee. The Debenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of Junior Subordinated Debentures
of each series affected may declare the principal due and payable immediately
upon a Debenture Event of Default with respect to such series, and, in the case
of Corresponding Junior Subordinated Debentures, should the Debenture Trustee or
such holders of such Corresponding Junior Subordinated Debentures fail to make
such declaration, the holders of at least 25% in aggregate Liquidation Amount of
the Related Preferred Securities shall have such right. The holders of a
majority in aggregate outstanding principal amount of Junior Subordinated
Debentures of each series affected may annul such declaration with respect to
such series. In the case of Corresponding Junior Subordinated Debentures of any
series, should the holders of such Corresponding Junior Subordinated Debentures
fail to annul such declaration, the holders of a majority in aggregate
Liquidation Amount of the series of Related Preferred Securities affected shall
have such right.
The holders of a majority in aggregate outstanding principal amount of each
series of the Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures of such series, waive any
default, except a default in the payment of principal or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest, premium (if any) and principal due with respect to such series
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture of such series. In the case of Corresponding
Junior Subordinated Debentures of a series, should the holders of such
Corresponding Junior Subordinated Debentures fail to annul such declaration and
waive such default, the holders of a majority in aggregate Liquidation Amount of
the series of Related Preferred Securities affected shall have such right. The
Corporation is required to file annually with the Debenture Trustee a
certificate as to whether or not the Corporation is in compliance with all the
conditions and covenants applicable to it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing as to a
series of Corresponding Junior Subordinated Debentures, the Property Trustee
will have the right to declare the principal of and the interest on such
Corresponding Junior Subordinated Debentures, and any other amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Corresponding Junior Subordinated
Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debentures has occurred and is continuing and such event is
attributable to the failure of the Corporation to
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pay interest, premium (if any) or principal on such Corresponding Junior
Subordinated Debentures on the date such interest, premium (if any) or principal
is due and payable, a holder of Preferred Securities may institute a legal
proceeding directly against the Corporation for enforcement of payment to such
holder of the principal of or interest or premium (if any) on such Corresponding
Junior Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Related Preferred Securities of such holder (a "Direct
Action"). The Corporation may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Preferred Securities outstanding. If the right to bring a Direct
Action is removed, the applicable Issuer may become subject to the reporting
obligations under the Exchange Act. The Corporation shall have the right under
the Indenture to set-off any payment made to such holder of Preferred Securities
by the Corporation in connection with a Direct Action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an event of default under the Trust Agreement. See "Description
of Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation may consolidate with or merge
into any other person or convey, transfer or lease its properties and assets
substantially as an entirety to any person, provided that (i) in case the
Corporation consolidates with or merges into another person or conveys or
transfers its properties and assets substantially as an entirety to any person,
the successor person is organized under the laws of the United States or any
state or the District of Columbia, and such successor person expressly assumes
the Corporation's obligations on the Junior Subordinated Debentures issued under
the Indenture; (ii) immediately after giving effect thereto, no Debenture Event
of Default, and no event which, after notice or lapse of time or both, would
become a Debenture Event of Default, shall have occurred and be continuing;
(iii) in the case of Corresponding Junior Subordinated Debentures, such
transaction is permitted under the related Trust Agreement and Guarantee and
does not give rise to any breach or violation of the related Trust Agreement or
Guarantee, and (iv) certain other conditions as prescribed by the Indenture are
met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and the Corporation deposits or causes
to be deposited with the Debenture Trustee funds, in trust, for the purpose and
in an amount in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal (and premium, if any) and interest
to the date of the deposit or to the Stated Maturity, as the case may be, then
the Indenture will cease to be of further effect (except as to the Corporation's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Corporation will be deemed to have satisfied and discharged the Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or exchangeable
into Junior Subordinated Debentures of another series or into Preferred
Securities of another series. The specific terms on which Junior Subordinated
Debentures of any series may be so converted or exchanged will be set forth in
the applicable Prospectus
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Supplement. Such terms may include provisions for conversion or exchange, either
mandatory, at the option of the holder, or at the option of the Corporation, in
which case the number of shares of Preferred Securities or other securities to
be received by the holders of Junior Subordinated Debentures being converted or
exchanged would be calculated as of a time and in the manner stated in the
applicable Prospectus Supplement.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets of the Corporation upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Debt will first
be entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of Junior Subordinated
Debentures or, in the case of Corresponding Junior Subordinated Debentures, the
Property Trustee on behalf of the holders of Trust Securities, will be entitled
to receive or retain any payment in respect of the principal of (and premium, if
any) or interest, if any, on the Junior Subordinated Debentures; provided,
however, that holders of Senior Debt shall not be entitled to receive payment of
any such amounts to the extent that such holders would be required by the
subordination provisions of such Senior Debt to pay such amounts over to the
obligees on trade accounts payable or other liabilities arising in the ordinary
course of the Corporation's business.
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon (including any amounts due upon acceleration) before the holders of
Junior Subordinated Debentures will be entitled to receive or retain any payment
in respect of the principal of or premium, if any, or interest, if any, on the
Junior Subordinated Debentures; provided, however, that holders of Senior Debt
shall not be entitled to receive payment of any such amounts to the extent that
such holders would be required by the subordination provisions of such Senior
Debt to pay such amounts over to the obligees on trade accounts payable or other
liabilities arising in the ordinary course of the Corporation's business.
No payments on account of principal or premium, if any, or interest in
respect of the Junior Subordinated Debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior Debt
or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent, (i) every
obligation of such person for money borrowed; (ii) every obligation of such
person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; (vi) every
obligation of such person for claims in respect of derivative products such as
interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; and (vii) and every obligation of the type referred to in clauses
(i) through (vi) of another person and all dividends of another person the
payment of which, in either case, such person has guaranteed or is responsible
or liable, directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of and premium, if any, and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Corporation whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in
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right of payment to the Junior Subordinated Debentures or to other Debt which is
pari passu with, or subordinated to, the Junior Subordinated Debentures;
provided, however, that Senior Debt shall not be deemed to include (i) any Debt
of the Corporation which when incurred and without respect to any election under
Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was
without recourse to the Corporation, (ii) any Debt of the Corporation to any of
its subsidiaries, (iii) Debt to any employee of the Corporation, (iv) Debt which
by its terms is subordinated to trade accounts payable or accrued liabilities
arising in the ordinary course of business to the extent that payments made to
the holders of such Debt by the holders of the Junior Subordinated Debentures as
a result of the subordination provisions of the Indenture would be greater than
such payments otherwise would have been as a result of any obligation of such
holders of such Debt to pay amounts over to the obligees on such trade accounts
payable or accrued liabilities arising in the ordinary course of business as a
result of subordination provisions to which such Debt is subject, and (v) any
other debt securities issued pursuant to the Indenture.
The Indenture places no limitation on the amount of Senior Debt that may be
incurred by the Corporation. The Corporation expects from time to time to incur
additional indebtedness and other obligations constituting Senior Debt.
The Indenture provides that the foregoing subordination provisions, insofar
as they relate to any particular issue of Junior Subordinated Debentures, may be
changed prior to such issuance. Any such change would be described in the
applicable Prospectus Supplement.
TRUST EXPENSES AND TAXES
In the Indenture, the Corporation, as borrower, has agreed to pay to each
Issuer all debts and other obligations (other than with respect to the Trust
Securities) and all costs and expenses of such Issuer (including costs and
expenses relating to the organization of such Issuer, the fees and expenses of
the related Issuer Trustees and the costs and expenses relating to the operation
of such Issuer) and the offering of the Preferred Securities, and to pay any and
all taxes, duties, assessments or other similar governmental charges (other than
United States withholding taxes), and all costs and expenses with respect to the
foregoing, to which such Issuer might become subject (any such payment of taxes,
duties, assessments or other governmental charges being referred to as
"Additional Sums").
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In that
event, concurrently with the issuance of each Issuer's Preferred Securities,
such Issuer will invest the proceeds thereof and the consideration paid by the
Corporation for the Common Securities of such Issuer in such series of
Corresponding Junior Subordinated Debentures issued by the Corporation to such
Issuer. Each series of Corresponding Junior Subordinated Debentures will be in
the principal amount equal to the aggregate stated Liquidation Amount of the
Related Preferred Securities and
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the Common Securities of such Issuer and will rank pari passu with all other
series of Junior Subordinated Debentures. Holders of the Related Preferred
Securities for a series of Corresponding Junior Subordinated Debentures will
have the rights, in connection with modifications to the Indenture or upon
occurrence of Debenture Events of Default, as described under "-- Modification
of Indenture" and "-- Debenture Events of Default," unless provided otherwise in
the Prospectus Supplement for such Related Preferred Securities.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Tax Event (as defined herein) in respect of an Issuer of Related Preferred
Securities shall occur and be continuing, the Corporation may, at its option and
subject to prior approval of the Federal Reserve if then so required under
applicable capital guidelines or policies, redeem the Corresponding Junior
Subordinated Debentures at any time within 90 days of the occurrence of such Tax
Event, in whole but not in part, subject to the provisions of the Indenture, and
whether or not such Corresponding Junior Subordinated Debentures are then
otherwise redeemable at the option of the Corporation. The redemption price for
any Corresponding Junior Subordinated Debentures shall be equal to 100% of the
principal amount of such Corresponding Junior Subordinated Debentures then
outstanding plus accrued and unpaid interest to the date fixed for redemption.
For so long as the applicable Issuer is the holder of all the outstanding
Corresponding Junior Subordinated Debentures of such series, the proceeds of any
such redemption will be used by the Issuer to redeem the corresponding Trust
Securities in accordance with their terms. The Corporation may not redeem a
series of Corresponding Junior Subordinated Debentures in part unless all
accrued and unpaid interest has been paid in full on all outstanding
Corresponding Junior Subordinated Debentures of such series for all interest
periods terminating on or prior to the Redemption Date.
The Corporation will covenant, as to each series of Corresponding Junior
Subordinated Debentures, (i) to maintain directly or indirectly 100% ownership
of the Common Securities of the Issuer to which such Corresponding Junior
Subordinated Debentures have been issued, provided that certain successors which
are permitted pursuant to the Indenture may succeed to the Corporation's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind up
or liquidate any Issuer, except (a) in connection with a distribution of
Corresponding Junior Subordinated Debentures to the holders of the Preferred
Securities in exchange therefor upon liquidation of such Issuer, or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the related Trust Agreement, in either such case, if so specified in the
applicable Prospectus Supplement upon prior approval of the Federal Reserve if
then so required under applicable capital guidelines on policies, and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
related Trust Agreement, to cause such Issuer to remain classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Issuer, the Issuer
Trustees on behalf of such Issuer will issue the Preferred Securities and the
Common Securities. The Preferred Securities of a particular issue will represent
beneficial ownership interests in the Issuer and the holders thereof will be
entitled to a preference in certain circumstances with respect to Distributions
and amounts payable on redemption or liquidation over the Common Securities of
such Issuer, as well as other benefits as described in the corresponding Trust
Agreement. This summary of certain provisions of the Preferred Securities and
each Trust Agreement, which summarizes the material terms thereof, does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of each Trust Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act, to each of
which reference is hereby made. Wherever particular defined terms of a Trust
Agreement (as amended or supplemented from time to time) are referred to herein
or in a Prospectus Supplement, such defined terms are incorporated herein or
therein by reference. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each of the Issuers is a legally separate entity and the assets of one are not
available to satisfy the obligations of any of the others.
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GENERAL
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer except
as described under "-- Subordination of Common Securities." Legal title to the
Corresponding Junior Subordinated Debentures will be held by the Property
Trustee in trust for the benefit of the holders of the related Preferred
Securities and Common Securities. Each guarantee agreement executed by the
Corporation for the benefit of the holders of an Issuer's Trust Securities (the
"Guarantee") will be a guarantee on a subordinated basis with respect to the
related Trust Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of such Trust Securities when the
related Issuer does not have funds on hand available to make such payments. See
"Description of Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. In the event that any date
on which Distributions are payable on the Preferred Securities is not a Business
Day (as defined below), payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect to any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in either case with the same
force and effect as if made on such date (each date on which Distributions are
payable in accordance with the foregoing, a "Distribution Date"). A "Business
Day" shall mean any day other than a Saturday or a Sunday, or a day on which
banking institutions in the City of New York are authorized or required by law
or executive order to remain closed or a day on which the corporate trust office
of the Property Trustee or the Debenture Trustee is closed for business.
Each Issuer's Preferred Securities represent beneficial ownership interests
in the applicable Issuer, and the Distributions on each Preferred Security will
be payable at a rate specified in the applicable Prospectus Supplement for such
Preferred Securities. The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months unless otherwise
specified in the applicable Prospectus Supplement. Distributions to which
holders of Preferred Securities are entitled will accumulate additional
Distributions at the rate per annum if and as specified in the applicable
Prospectus Supplement. The term "Distributions" as used herein includes any such
additional Distributions unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Corporation has
the right under the Indenture to defer the payment of interest at any time or
from time to time on any series of the Corresponding Junior Subordinated
Debentures for up to such number of consecutive interest payment periods, which
will be specified in such Prospectus Supplement relating to such series (each,
an "Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Corresponding Junior Subordinated Debentures. As a
consequence of any such deferral, Distributions on the Related Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the Issuer of such Preferred
Securities during any such Extension Period. During such Extension Period, the
Corporation may not, and may not permit any subsidiary of the Corporation to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Corporation's
capital stock, (ii) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Corporation that
rank pari passu with or junior in interest to the Corresponding Junior
Subordinated Debentures or (iii) make any guarantee payments with respect to any
guarantee by the Corporation of debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in interest to the
Corresponding Junior Subordinated Debentures (other than (a) dividends or
distributions in capital stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the 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
with respect to such Preferred Securities and (d) purchases of common stock
related to the issuance of common stock or rights under any of the Corporation's
benefit plans for its directors, officers or employees related to the
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issuance of common stock or rights under a dividend reinvestment and stock
purchase plan, or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period).
The revenue of each Issuer available for distribution to holders of its
Preferred Securities will be limited to payments under the Corresponding Junior
Subordinated Debentures in which the Issuer will invest the proceeds from the
issuance and sale of its Trust Securities. See "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures." If the
Corporation does not make interest payments on such Corresponding Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Related Preferred Securities. The payment of
Distributions (if and to the extent the Issuer has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by the Corporation on the basis set forth herein under "Description
of Guarantees."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day prior to the relevant Distribution Date. Subject to any
applicable laws and regulations and the provisions of the applicable Trust
Agreement, each such payment will be made as described under "Book -- Entry
Issuance." In the event any Preferred Securities are not in book-entry form, the
relevant record date for such Preferred Securities shall be the date at least 15
days prior to the relevant Distribution Date, as specified in the applicable
Prospectus Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Corresponding Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days notice, at a redemption price (the "Redemption Price")
equal to the aggregate Liquidation Amount of such Trust Securities plus
accumulated but unpaid Distributions thereon to the date of redemption (the
"Redemption Date") and the related amount of the premium, if any, paid by the
Corporation upon the concurrent redemption of such Corresponding Junior
Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Redemption." If less than all of any series of Corresponding
Junior Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the Related Preferred Securities and the Common
Securities. The amount of premium, if any, paid by the Corporation upon the
redemption of all or any part of any series of any Corresponding Junior
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall be
allocated to the redemption pro rata of the Related Preferred Securities and the
Common Securities.
The Corporation will have the right to redeem any series of Corresponding
Junior Subordinated Debentures (i) on or after such date as may be specified in
the applicable Prospectus Supplement, in whole at any time or in part from time
to time or (ii) at any time, in whole (but not in part), upon the occurrence of
a Tax Event or Capital Treatment Event, in either case subject to receipt of
prior approval by the Federal Reserve if then required under applicable capital
guidelines or policies.
Distribution of Corresponding Junior Subordinated Debentures. Subject to
the Corporation having received prior approval of the Federal Reserve to do so
if then required under applicable capital guidelines or policies of the Federal
Reserve, the Corporation has the right at any time to liquidate the related
Issuer and, after satisfaction of the liabilities of creditors of such Issuer as
provided by applicable law, cause such Corresponding Junior Subordinated
Debentures in respect of the Preferred Securities and Common Securities issued
by such Issuer to be distributed to the holders of such Preferred Securities and
Common Securities in exchange therefor upon liquidation of the Issuer.
Tax Event or Capital Treatment Event Redemption. If a Tax Event or Capital
Treatment Event in respect of a series of Preferred Securities and Common
Securities shall occur and be continuing, the Corporation has the right to
redeem the Corresponding Junior Subordinated Debentures in whole (but not in
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part) and thereby cause a mandatory redemption of such Preferred Securities and
Common Securities in whole (but not in part) at the Redemption Price within 90
days following the occurrence of such Tax Event or Capital Treatment Event. In
the event a Tax Event or Capital Treatment Event in respect of a series of
Preferred Securities and Common Securities has occurred and is continuing and
the Corporation does not elect to redeem the Corresponding Junior Subordinated
Debentures and thereby cause a mandatory redemption of such Preferred Securities
and Common Securities or to liquidate the related Issuer and cause the
Corresponding Junior Subordinated Debentures to be distributed to holders of
such Preferred Securities and Common Securities in exchange therefor upon
liquidation of the Issuer as described above, such Preferred Securities will
remain outstanding.
Possible Tax Law Changes. On March 19, 1996, the Revenue Reconciliation
Bill of 1996 (the "Bill"), was introduced in the 104th Congress which would
have, among other things, generally denied interest deductions for interest on
an instrument issued by a corporation that has a maximum weighted average
maturity of more than 40 years. The Bill also would have generally denied
interest deductions for interest on an instrument issued by a corporation that
has a maximum term of more than 20 years and that is not shown as indebtedness
on the separate balance sheet of the issuer or, where the instrument is issued
to a related party (other than a corporation), where the holder or some other
related party issues a related instrument that is not shown as indebtedness on
the issuer's consolidated balance sheet. For purposes of determining the
weighted average maturity or the term of an instrument, any right to extend
would be treated as exercised. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If either provision were to apply to the Corresponding Junior
Subordinated Debentures, the Corporation would not be able to deduct interest on
the Corresponding Junior Subordinated Debentures. However, on March 29, 1996,
the Chairmen of the Senate Finance and House Ways and Means Committees issued a
joint statement (the "Joint Statement") to the effect that it was their
intention that the effective date of the Bill, if enacted, would be no earlier
than the date of appropriate Congressional action. In addition, subsequent to
the publication of the Joint Statement, Senator Daniel Patrick Moynihan and
Representatives Sam M. Gibbons and Charles B. Rangel wrote letters to Treasury
Department officials concurring with the view expressed in the Joint Statement
(the "Democrat Letters"). The 104th Congress adjourned without enacting the
Bill. Moreover, if the principles contained in the Joint Statement and the
Democrat Letters were followed, any similar legislation in this area that is
subsequently proposed would not apply to any Corresponding Junior Subordinated
Debentures issued prior to the effective date of such legislation. Although the
104th Congress adjourned without enacting the Bill, there can be no assurance
that current or future legislative proposals or final legislation will not
adversely affect the ability of the Corporation to deduct interest on the
Corresponding Junior Subordinated Debentures or otherwise affect the tax
treatment of the transaction described herein. If enacted, such a change could
give rise to a Tax Event, which may permit the Corporation to cause a redemption
of the Related Preferred Securities.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to that portion of the principal amount of Corresponding
Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Indenture, allocated to the Common Securities and to the Preferred
Securities pro rata based upon the relative Liquidation Amounts of such classes
and the proceeds of which will be used to pay the Redemption Price of such Trust
Securities, and (ii) with respect to a distribution of Corresponding Junior
Subordinated Debentures to holders of any series of Trust Securities in exchange
therefor in connection with a dissolution or liquidation of the related Issuer,
Corresponding Junior Subordinated Debentures having a principal amount equal to
the Liquidation Amount of the Trust Securities of the holder to whom such
Corresponding Junior Subordinated Debentures would be distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Tax Event" with respect to an Issuer means the receipt by the Issuer of a
series of Preferred Securities or the Corporation of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or
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regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of issuance of such
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) such Issuer is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the corresponding series of Corresponding
Junior Subordinated Debentures, (ii) interest payable by the Corporation on such
series of Corresponding Junior Subordinated Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Corporation, in
whole or in part, for United States federal income tax purposes, or (iii) such
Issuer is, or will be within 90 days of the date of such opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Preferred Securities (i) such
series of Preferred Securities will no longer be deemed to be outstanding, (ii)
the depositary or its nominee, as the record holder of such series of Preferred
Securities, will receive a registered global certificate or certificates
representing the Corresponding Junior Subordinated Debentures to be delivered
upon such distribution and (iii) any certificates representing such series of
Preferred Securities not held by the Depositary or its nominee will be deemed to
represent the Corresponding Junior Subordinated Debentures having a principal
amount equal to the stated Liquidation Amount of such series of Preferred
Securities, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on such series of Preferred Securities until
such certificates are presented to the Administrative Trustees or their agent
for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of an Issuer were to occur. Accordingly, the Preferred Securities
that an investor may purchase, or the Corresponding Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of an
Issuer, may trade at a discount to the price that the investor paid to purchase
the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Corresponding Junior Subordinated Debentures. Redemptions of
the Preferred Securities shall be made and the Redemption Price shall be payable
on each Redemption Date only to the extent that the related Issuer has funds on
hand available for the payment of such Redemption Price. See also
"-- Subordination of Common Securities."
If an Issuer gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, the Property Trustee will deposit irrevocably
with the depositary funds sufficient to pay the applicable Redemption Price and
will give the Depositary irrevocable instructions and authority to pay the
Redemption Price to the holders of such Preferred Securities. See "-- Book-Entry
Issuance." If such Preferred Securities are no longer in book-entry form, the
Property Trustee, to the extent funds are available, will irrevocably deposit
with the paying agent for such Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption shall be
payable to the holders of such Preferred Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of the holders of such Preferred Securities so called for redemption will
cease, except the right of the holders of such Preferred Securities to receive
the Redemption Price, but without interest on such Redemption Price, and such
Preferred Securities will cease to be outstanding. In the event that any date
fixed for redemption of Preferred Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the
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Redemption Price in respect of Preferred Securities called for redemption is
improperly withheld or refused and not paid either by the Issuer or by the
Corporation pursuant to the Guarantee as described under "Description of
Guarantees," Distributions on such Preferred Securities will continue to accrue
at the then applicable rate, from the Redemption Date originally established by
the Issuer for such Preferred Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debentures to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the relevant record
date, which shall be one Business Day prior to the relevant Redemption Date or
liquidation date, as applicable; provided, however, that in the event that any
Preferred Securities are not in book-entry form, the relevant record date for
such Preferred Securities shall be a date at least 15 days prior to the
Redemption Date or liquidation date, as applicable, as specified in the
applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities issued
by an Issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property Trustee
from the outstanding Preferred Securities not previously called for redemption,
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or an
integral multiple of $25 in excess thereof) of the Liquidation Amount of
Preferred Securities of a denomination larger than $25. The Property Trustee
shall promptly notify the trust registrar in writing of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities selected
for partial redemption, the Liquidation Amount thereof to be redeemed. For all
purposes of each Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Securities redeemed or to be redeemed only in part, to
the portion of the aggregate Liquidation Amount of Preferred Securities which
has been or is to be redeemed. Unless the Issuer defaults in payment of the
Redemption Price, on and after the Redemption Date additional Distributions will
cease to accumulate on such Preferred Securities or portions thereof called for
redemption.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Issuer's
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the Issuer's outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the Issuer's
outstanding Preferred Securities then called for redemption shall have been made
or provided for, and all funds available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions on, or Redemption
Price of, the Issuer's Preferred Securities then due and payable.
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In the case of any event of default under the applicable Trust Agreement
resulting from a Debenture Event of Default, the Corporation as holder of such
Issuer's Common Securities will be deemed to have waived any right to act with
respect to any such event of default under the applicable Trust Agreement until
the effect of all such events of default with respect to such Preferred
Securities have been cured, waived or otherwise eliminated. Until all such
events of default under the applicable Trust Agreement with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of such Preferred
Securities and not on behalf of the Corporation as holder of the Issuer's Common
Securities, and only the holders of such Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each Issuer shall automatically terminate
upon expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Corresponding Junior Subordinated
Debentures to the holders of its Trust Securities, if the Corporation, as
Depositor, has given written direction to the Property Trustee to terminate such
Issuer (subject to the Corporation having received prior approval of the Federal
Reserve if so required under applicable capital guidelines or policies); (iii)
redemption of all of the Issuer's Preferred Securities as described under
"-- Redemption or Exchange -- Mandatory Redemption"; and (iv) the entry of an
order for the dissolution of the Issuer by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of such Issuer as provided by applicable law, to the
holders of such Trust Securities in exchange therefor a Like Amount of the
Corresponding Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Issuer available
for distribution to holders, after satisfaction of liabilities to creditors of
such Issuer as provided by applicable law, an amount equal to, in the case of
holders of Preferred Securities, the aggregate of the Liquidation Amount plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Distribution can be
paid only in part because such Issuer has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by such Issuer on its Preferred Securities shall be paid on a pro rata
basis. The holder(s) of such Issuer's Common Securities will be entitled to
receive distributions upon any such liquidation pro rata with the holders of its
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over the
Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
each Trust Agreement with respect to the Preferred Securities issued thereunder
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation
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of such default or breach for a period of 90 days after there has been
given, by registered or certified mail, to the defaulting Issuer Trustee or
Trustees by the holders of at least 25% in aggregate Liquidation Amount of
the outstanding Preferred Securities of the applicable Issuer, a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" under such Trust
Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Corporation to
appoint a successor Property Trustee within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's Preferred
Securities, the Administrative Trustees and the Corporation, as Depositor,
unless such Event of Default shall have been cured or waived. The Corporation,
as Depositor, and the Administrative Trustees are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under each Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities as
described above. See "-- Subordination of Common Securities" and "-- Liquidation
Distribution Upon Termination." The existence of an Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the trust
property may at the time be located, the Corporation, as the holder of the
Common Securities, and the Administrative Trustees shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of such trust property, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case a Debenture
Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
person succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under each Trust Agreement,
provided such person shall be otherwise qualified and eligible.
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MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUERS
An Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. An Issuer may, at the request of the Corporation, with the
consent of the Administrative Trustees and without the consent of the holders of
the Preferred Securities, merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (a) expressly assumes all
of the obligations of such Issuer with respect to the Preferred Securities or
(b) substitutes for the Preferred Securities other securities having
substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Preferred
Securities in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Corporation expressly appoints a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Corresponding Junior Subordinated
Debentures, (iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities are
then listed, if any, (iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Preferred Securities to be
downgraded by any nationally recognized statistical rating organization which
gives ratings on the Preferred Securities, (v) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, (vi)
such successor entity has a purpose identical to that of the Issuer, (vii) prior
to such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease, the Corporation has received an opinion from independent counsel to
the Issuer experienced in such matters to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Issuer nor such
successor entity will be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
(viii) the Corporation or any permitted successor or assignee owns all of the
Common Securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, an Issuer shall not,
except with the consent of holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Issuer or the successor entity to be classified as other than a grantor trust
for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of Guarantees -- Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
Each Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee, the Delaware Trustee and the Administrative Trustees,
without the consent of the holders of the Preferred Securities (i) to cure any
ambiguity, correct or supplement any provisions in such Trust Agreement that may
be inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under such Trust Agreement, which shall
not be inconsistent with the other provisions of such Trust Agreement, or (ii)
to modify, eliminate or add to any provisions of such Trust Agreement to such
extent as shall be necessary to ensure that the Issuer will be classified for
United States federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that the Issuer will not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that
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in the case of either clause (i) or clause (ii), such action shall not adversely
affect in any material respect the interests of any holder of Preferred
Securities, and any amendments of such Trust Agreement shall become effective
when notice thereof is given to the holders of Trust Securities. Each Trust
Agreement may be amended by the Issuer Trustees and the Corporation with (i) the
consent of holders representing not less than a majority (based upon Liquidation
Amounts) of the outstanding Trust Securities, and (ii) receipt by the Issuer
Trustees of an opinion of counsel to the effect that such amendment or the
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not affect the Issuer's status as a grantor trust for United
States federal income tax purposes or the Issuer's exemption from status as an
"investment company" under the Investment Company Act, provided that without the
consent of each holder of Trust Securities, such Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as any Corresponding Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on the Property Trustee with
respect to such Corresponding Junior Subordinated Debentures, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or such Corresponding Junior
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Corresponding Junior Subordinated Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior consent of each
holder of the corresponding Preferred Securities. The Issuer Trustees shall not
revoke any action previously authorized or approved by a vote of the holders of
the Preferred Securities except by subsequent vote of the holders of the
Preferred Securities. The Property Trustee shall notify each holder of Preferred
Securities of any notice of default with respect to the Corresponding Junior
Subordinated Debentures. In addition to obtaining the foregoing approvals of the
holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Issuer Trustees shall obtain an opinion of counsel experienced in
such matters to the effect that such action would not cause the Issuer to be
classified as other than a grantor trust for United States federal income tax
purposes.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each holder of record of Preferred Securities in the manner set forth in each
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for an Issuer to redeem and cancel its Preferred Securities in accordance with
the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited with,
or on behalf of, the Depositary identified in the Prospectus Supplement relating
to such series. Unless otherwise indicated in the applicable Prospectus
Supplement for such series, the Depositary will be The Depository Trust Company
("DTC"). Global Preferred Securities may be issued only in fully registered form
and in either temporary or permanent form. Unless and until it is
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exchanged in whole or in part for the individual Preferred Securities
represented thereby, a Global Preferred Security may not be transferred except
as a whole by the Depositary for such Global Preferred Security to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Preferred Securities will be described in the Prospectus Supplement relating
to such series. The Corporation anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-entry
registration and transfer system, the respective aggregate Liquidation Amounts
of the individual Preferred Securities represented by such Global Preferred
Securities to the accounts of Participants. Such accounts shall be designated by
the dealers, underwriters or agents with respect to such Preferred Securities or
by the Corporation if such Preferred Securities are offered and sold directly by
the Corporation. Ownership of beneficial interests in a Global Preferred
Security will be limited to Participants or persons that may hold interests
through Participants. Ownership of beneficial interests in such Global Preferred
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Preferred
Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Preferred Securities represented by such Global Preferred Security for all
purposes under the applicable Trust Agreement governing such Preferred
Securities. Except as provided below, owners of beneficial interests in a Global
Preferred Security will not be entitled to have any of the individual Preferred
Securities of the series represented by such Global Preferred Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Preferred Securities of such series in definitive form and
will not be considered the owners or holders thereof under the applicable Trust
Agreement.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Corporation, the
Issuer Trustees, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
Redemption Price, premium or Distributions in respect of a permanent Global
Preferred Security representing any of such Preferred Securities, immediately
will credit Participants' accounts with payments in amounts proportionate to
their respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security for such Preferred Securities as shown on the records
of such Depositary or its nominee. The Corporation also expects that payments by
Participants to owners of beneficial interests in such Global Preferred Security
held through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling, unable
or ineligible to continue as depositary and a successor depositary cannot be
appointed by the Issuer, the Issuer will issue individual Preferred Securities
of such
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series in exchange for the Global Preferred Security representing such series of
Preferred Securities. In addition, the Issuer may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Preferred Securities, determine not to have any Preferred
Securities of such series represented by one or more Global Preferred Securities
and, in such event, will issue individual Preferred Securities of such series in
exchange for the Global Preferred Security or Securities representing such
series of Preferred Securities. Further, if the Issuer so specifies with respect
to the Preferred Securities of a series, an owner of a beneficial interest in a
Global Preferred Security representing Preferred Securities of such series may,
on terms acceptable to the Issuer, the Property Trustee and the Depositary for
such Global Preferred Security, receive individual Preferred Securities of such
series in exchange for such beneficial interests, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities. In
any such instance, an owner of a beneficial interest in a Global Preferred
Security will be entitled to physical delivery of individual Preferred
Securities of the series represented by such Global Preferred Security equal in
principal amount to such beneficial interest and to have such Preferred
Securities registered in its name. Individual Preferred Securities of such
series so issued will be issued in denominations, unless otherwise specified by
the Issuer, of $25 and integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Issuer's Preferred Securities are not
held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Corporation. In the event that the Property Trustee shall no longer be
the Paying Agent, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the Administrative Trustees and
the Corporation) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuers will not be required to register or cause to be registered
the transfer of their Preferred Securities after such Preferred Securities have
been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the powers vested in
it by the applicable Trust Agreement at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
applicable Trust Agreement or is unsure of the application of any provision of
the applicable Trust Agreement, and the matter is not one on which holders of
Preferred Securities are entitled under such Trust Agreement to vote, then the
Property Trustee shall take such action as is directed by the Corporation and if
not so directed, shall take such action as it deems advisable and in the best
interests of the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
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MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuers in such a way that no Issuer will be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as other than a grantor trust for United
States federal income tax purposes and so that the Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the Corporation for
United States federal income tax purposes. In this connection, the Corporation
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of each Issuer or
each Trust Agreement, that the Corporation and the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer may borrow money or issue debt or mortgage or pledge any of its
assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred Securities
and the Junior Subordinated Debentures, unless otherwise referred to in the
Prospectus Supplement relating to an offering of Preferred Securities or Junior
Subordinated Debentures. The Preferred Securities and the Junior Subordinated
Debentures will be issued only as fully-registered securities registered in the
name of Cede & Co. (DTC's nominee). One or more fully-registered global
certificates will be issued for the Preferred Securities of each Issuer and the
Junior Subordinated Debentures, representing in the aggregate the total number
of such Issuer's Preferred Securities or aggregate principal balance of Junior
Subordinated Debentures, respectively, and will be deposited with DTC or held by
the Property Trustee or Debenture Trustee, respectively, as custodian for DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated Debentures
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security and each Junior Subordinated Debenture ("Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the Beneficial
Owners purchased Preferred Securities or Junior Subordinated Debentures.
Transfers of ownership interests in the Preferred Securities or Junior
Subordinated Debentures are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Preferred
Securities or Junior
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Subordinated Debentures, except in the event that use of the book-entry system
for the Preferred Securities of such issuer or Junior Subordinated Debentures is
discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
or Junior Subordinated Debentures are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all of
an Issuer's Preferred Securities or the Junior Subordinated Debentures are being
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Preferred Securities or Junior Subordinated Debentures. Under its usual
procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts such Preferred Securities or Junior Subordinated Debentures are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, the relevant Trustee, the issuer thereof or the
Corporation, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of Distributions to DTC is the responsibility
of the relevant Trustee, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursements of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities or the Junior Subordinated Debentures
at any time by giving reasonable notice to the relevant Trustee and the
Corporation. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Corporation, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through DTC. In any such event,
definitive certificates for such Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and the Corporation believe to
be accurate, but the Issuers and the Corporation assume no responsibility for
the accuracy thereof. Neither the Issuers nor the Corporation has any
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
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DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Corporation concurrently
with the issuance by each Issuer of its Trust Securities for the benefit of the
holders from time to time of such Trust Securities. The Bank of New York will
act as trustee ("Guarantee Trustee") under each Guarantee for the purposes of
compliance with the Trust Indenture Act and each Guarantee will be qualified as
an indenture under the Trust Indenture Act. This summary of certain provisions
of the Guarantees which summarizes the material terms thereof does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of each Guarantee, including the definitions therein of
certain terms, and the Trust Indenture Act, to each of which reference is hereby
made. The form of the Guarantee has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Reference in this summary to
Trust Securities means that Issuer's Trust Securities to which a Guarantee
relates. The Guarantee Trustee will hold each Guarantee for the benefit of the
holders of the related Issuer's Trust Securities.
GENERAL
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of an Issuer's Trust Securities, as and when due, regardless of
any defense, right of set-off or counterclaim that such Issuer may have or
assert other than the defense of payment. The following payments with respect to
the Trust Securities, to the extent not paid by or on behalf of the related
Issuer (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on Trust Securities, to
the extent that such Issuer has funds on hand available therefor at such time,
(ii) the Redemption Price with respect to any Trust Securities called for
redemption to the extent that such Issuer has funds on hand available therefor
at such time, or (iii) upon a voluntary or involuntary dissolution, winding up
or liquidation of such Issuer (unless the Corresponding Junior Subordinated
Debentures are distributed to holders of such Trust Securities in exchange
therefor), the lesser of (a) the Liquidation Distribution and (b) the amount of
assets of such Issuer remaining available for distribution to holders of Trust
Securities after satisfaction of liabilities to creditors of such Issuer as
required by applicable law. The Corporation's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Corporation to the holders of the applicable Trust Securities or by causing the
Issuer to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Issuer's obligations under the Trust Securities, but will apply only
to the extent that such related Issuer has funds sufficient to make such
payments, and is not a guarantee of collection.
If the Corporation does not make interest payments on the Corresponding
Junior Subordinated Debentures held by the Issuer, the Issuer will not be able
to pay Distributions on the Trust Securities and will not have funds legally
available therefor. Each Guarantee will rank subordinate and junior in right of
payment to all Senior Debt of the Corporation. See "-- Status of the
Guarantees." Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the Guarantees will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and claimants should look only to the assets of the
Corporation for payments thereunder. Except as otherwise provided in the
applicable Prospectus Supplement, the Guarantees do not limit the incurrence or
issuance of other secured or unsecured debt of the Corporation, including Senior
Debt, whether under the Indenture, any other existing indenture or any other
indenture that the Corporation may enter into in the future or otherwise.
The Corporation has, through the applicable Guarantee, the applicable Trust
Agreement, the applicable series of Corresponding Junior Subordinated Debentures
and the Indenture taken together, fully, irrevocably and unconditionally
guaranteed all of the Issuer's obligations under the Preferred Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
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irrevocable and unconditional guarantee of the Issuer's obligations under the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures and the Guarantees."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior Debt of
the Corporation in the same manner as the Junior Subordinated Debentures.
Each Guarantee will rank pari passu with all other Guarantees issued by the
Corporation. Each Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the related Preferred
Securities. Each Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer or upon
distribution to the holders of the Preferred Securities of the Corresponding
Junior Subordinated Debentures. None of the Guarantees places a limitation on
the amount of additional Senior Debt that may be incurred by the Corporation.
The Corporation expects from time to time to incur additional indebtedness
constituting Senior Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Preferred Securities (in which case no vote
will be required), no Guarantee may be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of such
outstanding related Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of Preferred
Securities -- Voting Rights; Amendment of Each Trust Agreement." All guarantees
and agreements contained in each Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Corporation and shall inure to
the benefit of the holders of the related Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
related Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the related Preferred Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under such
Guarantee without first instituting a legal proceeding against the Issuer, the
Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of any Guarantee, undertakes to
perform only such duties as are specifically set forth in each Guarantee and,
after default with respect to any Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any
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Guarantee at the request of any holder of any Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the amounts payable upon liquidation of the related Issuer or
upon distribution of Corresponding Junior Subordinated Debentures to the holders
of the related Preferred Securities in exchange therefor. Each Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the related Preferred Securities must restore payment of any
sums paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of Guarantees." Taken together, the
Corporation's obligations under each series of Corresponding Junior Subordinated
Debentures, the Indenture, the related Trust Agreement, and the related
Guarantee provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of distributions and other amounts due on the Related
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the Related Preferred Securities. If and to the
extent that the Corporation does not make payments on any series of
Corresponding Junior Subordinated Debentures, such Issuer will not pay
Distributions or other amounts due on the Related Preferred Securities. The
Guarantees do not cover payment of Distributions when the related Issuer does
not have sufficient funds to pay such Distributions. In such event, the remedy
of a holder of a series of Preferred Securities is to institute a legal
proceeding directly against the Corporation pursuant to the terms of the
Indenture for enforcement of payment of amounts equal to such Distributions to
such holder. The obligations of the Corporation under each Guarantee are
subordinate and junior in right of payment to all Senior Debt of the
Corporation.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Subordinated Debentures, such payments will
be sufficient to cover Distributions and other payments due on the Related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debentures will be equal to the
sum of the aggregate stated Liquidation Amount of the Related Preferred
Securities and related Common Securities; (ii) the interest rate and interest
and other payment dates on each series of Corresponding Junior Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the Related Preferred Securities; (iii) the Corporation shall pay for
all and any costs, expenses and liabilities of such Issuer except the Issuer's
obligations to holders of its Preferred Securities or other similar interests on
the Issuer under such Preferred Securities or such other similar interests, as
the case may be; and (iv) each Trust Agreement further provides that the Issuer
will not engage in any activity that is not consistent with the limited purposes
of such Issuer.
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Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to setoff any payment it is otherwise required to make thereunder
with and to the extent the Corporation has theretofore made, or is concurrently
on the date of such payment making, a payment under the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Related Preferred Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the related
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related Issuer or any other person or entity.
A default or event of default under any Senior Debt of the Corporation
would not constitute a default or Event of Default under the Indenture. However,
in the event of payment defaults under, or acceleration of, Senior Debt of the
Corporation, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Corresponding Junior Subordinated
Debentures until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on any
series of Corresponding Junior Subordinated Debentures would constitute an Event
of Default under the Indenture.
LIMITED PURPOSE OF ISSUERS
Each Issuer's Preferred Securities evidence a beneficial ownership interest
in such Issuer, and each Issuer exists for the sole purpose of issuing its
Preferred Securities and Common Securities and investing the proceeds thereof in
Corresponding Junior Subordinated Debentures. Taken together, the Corporation's
obligations under each series of Corresponding Junior Subordinated Debentures,
the Indenture, the related Trust Agreement and the related Guarantee provide, in
the aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Related Preferred Securities. See
"-- Full and Unconditional Guarantee." A principal difference between the rights
of a holder of a Preferred Security and a holder of a Corresponding Junior
Subordinated Debenture is that a holder of a Corresponding Junior Subordinated
Debenture is entitled to receive from the Corporation the principal amount of
and interest accrued on Corresponding Junior Subordinated Debentures held, while
a holder of Preferred Securities is entitled to receive Distributions from such
Issuer (or from the Corporation under the applicable Guarantee) if and to the
extent such Issuer has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
any Issuer involving the liquidation of the Corresponding Junior Subordinated
Debentures, the holders of the related Preferred Securities will be entitled to
receive, out of the assets held by such Issuer, the Liquidation Distribution in
cash. See "Description of Preferred Securities -- Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or bankruptcy of the
Corporation, the Property Trustee, as holder of the Corresponding Junior
Subordinated Debentures, would be a subordinated creditor of the Corporation,
subordinated in right of payment to all Senior Debt as set forth in the
Indenture, but entitled to receive payment in full of principal and interest,
before any stockholders of the Corporation receive payments or distributions.
Since the Corporation is the guarantor under each Guarantee and has agreed to
pay for all costs, expenses and liabilities of each Issuer (other than the
Issuer's obligations to the holders of its Preferred Securities), the positions
of a holder of such Preferred Securities and a holder of such Corresponding
Junior Subordinated Debentures relative to other creditors and to stockholders
of the Corporation in the event of liquidation or bankruptcy of the Corporation
are expected to be substantially the same.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures or the Preferred Securities may be sold
in a public offering to or through underwriters or dealers designated from time
to time or directly to purchasers. The Corporation and each Issuer may sell its
Junior Subordinated Debentures or Preferred Securities as soon as practicable
after the effectiveness of the Registration Statement of which this Prospectus
forms a part. The names of any
34
<PAGE> 64
underwriters or dealers involved in the sale of the Junior Subordinated
Debentures or Preferred Securities in respect of which this Prospectus is
delivered, the amount or number of Junior Subordinated Debentures and Preferred
Securities to be purchased by any such underwriters and any applicable
commissions or discounts will be set forth in the applicable Prospectus
Supplement.
Underwriters may offer and sell Junior Subordinated Debentures or Preferred
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In connection with the sale of
Preferred Securities, underwriters may be deemed to have received compensation
from the Corporation and/or the applicable Issuer in the form of underwriting
discounts or commissions. Underwriters may sell Junior Subordinated Debentures
or Preferred Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters.
Any underwriting compensation paid by the Corporation and/or the applicable
Issuer to underwriters in connection with the offering of Junior Subordinated
Debentures or Preferred Securities, and any discounts, concessions or
commissions allowed by such underwriters to participating dealers, will be
described in an accompanying Prospectus Supplement. Underwriters and dealers
participating in the distribution of Junior Subordinated Debentures or Preferred
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of such Junior
Subordinated Debentures or Preferred Securities may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters and dealers
may be entitled, under agreement with the Corporation and the applicable Issuer,
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by the
Corporation for certain expenses.
In connection with the offering of the Preferred Securities of any Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set forth
in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set forth
in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, the Corporation and/ or the applicable Issuer and/or any of their
affiliates in the ordinary course of business.
The Junior Subordinated Debentures and the Preferred Securities will be new
issues of securities and will have no established trading market. Any
underwriters to whom Junior Subordinated Debentures or Preferred Securities are
sold for public offering and sale may make a market in such Junior Subordinated
Debentures and Preferred Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. Such
Junior Subordinated Debentures or Preferred Securities may or may not be listed
on a national securities exchange or the Nasdaq National Market. No assurance
can be given as to the liquidity of or the existence of trading markets for any
Junior Subordinated Debentures or Preferred Securities.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed upon for the Corporation and the Issuers by John W.
Scheflen, Executive Vice President, General Counsel and Secretary of the
Corporation and for the Issuers by Richards, Layton & Finger, special Delaware
counsel to the Issuers and the Corporation. The validity of the Guarantees and
the Junior Subordinated Debentures will be passed upon for the Underwriters by
Simpson Thacher & Bartlett (a partnership which includes professional
corporations). Simpson Thacher & Bartlett will rely on the opinion of Mr.
Scheflen as to matters of Maryland law and the opinion of Richards, Layton &
Finger as to matters of Delaware law. Mr. Scheflen will rely on the opinion of
Simpson Thacher & Bartlett as to matters of New York law. Mr. Scheflen owns
beneficially 225,624 shares of common stock of the Corporation, including
options exercisable within sixty days under the Corporation's 1991 Long Term
Incentive Plan. Simpson Thacher & Bartlett and Richards, Layton & Finger
regularly perform legal services for the Corporation and its subsidiaries.
35
<PAGE> 65
EXPERTS
The consolidated financial statements of MBNA Corporation incorporated by
reference in MBNA Corporation's Annual Report (Form 10-K) for the year ended
December 31, 1995, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon incorporated by reference therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
36
<PAGE> 66
- ---------------------------------------------------------
---------------------------------------------------------
- ---------------------------------------------------------
---------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR
THE SERIES A ISSUER SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors................................. S- 4
MBNA Capital I............................... S- 9
MBNA Corporation............................. S-10
Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements...... S-11
Use of Proceeds.............................. S-11
Capitalization............................... S-12
Accounting Treatment......................... S-12
Certain Terms of Series A Capital
Securities................................. S-13
Certain Terms of Series A Subordinated
Debentures................................. S-17
Certain Terms of Series A Guarantee.......... S-21
Certain Federal Income Tax Consequences...... S-22
Erisa Considerations......................... S-26
Underwriting................................. S-26
Validity of Securities....................... S-28
PROSPECTUS
Available Information........................ 3
Incorporation of Certain Documents by
Reference.................................. 3
MBNA Corporation............................. 4
Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements...... 4
The Issuers.................................. 5
Use of Proceeds.............................. 6
Description of Junior Subordinated
Debentures................................. 6
Description of Preferred Securities.......... 17
Book-Entry Issuance.......................... 29
Description of Guarantees.................... 31
Relationship Among the Preferred Securities,
the Corresponding Junior Subordinated
Debentures and the Guarantees.............. 33
Plan of Distribution......................... 34
Validity of Securities....................... 35
Experts...................................... 37
</TABLE>
$250,000,000
MBNA CAPITAL I
% CAPITAL SECURITIES, SERIES A
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
MBNA CORPORATION
------------------------
PROSPECTUS SUPPLEMENT
------------------------
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
- ---------------------------------------------------------
---------------------------------------------------------
- ---------------------------------------------------------
---------------------------------------------------------
<PAGE> 67
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee under the Securities Act of 1933, as amended... $ 227,273
Blue Sky fees and expenses (including counsel fees)............. 40,000
Fees of rating agencies......................................... 435,000
Trustees' fee and expenses...................................... 47,000
Printing and engraving.......................................... 200,000
Accounting services............................................. 110,000
Legal fees of Registrant's counsel.............................. 100,000
Miscellaneous................................................... 150,000
----------
Total...................................................... $1,309,273
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation and By-Laws provide that the
Registrant shall indemnify and advance expenses to its currently acting and its
former directors to the maximum extent permitted by the Maryland General
Corporation Law, and that the Registrant shall indemnify and advance expenses to
its officers to the same extent as its directors and to such further extent as
is consistent with law. The Maryland General Corporation Law provides that a
corporation may indemnify any director made a party to a proceeding by reason of
service in that capacity unless it is established that: (1) the act or omission
of the director was material to the matter giving rise to the proceeding and (a)
was committed in bad faith or (b) was the result of active and deliberate
dishonesty, or (2) the director actually received an improper personal benefit
in money, property or services, or (3) in the case of any criminal proceeding,
the director had reasonable cause to believe that the act or omission was
unlawful. To the extent that a director has been successful in defense of any
proceeding, the Maryland General Corporation Law provides that he shall be
indemnified against reasonable expenses incurred in connection therewith. A
Maryland corporation may indemnify its officers to the same extent as its
directors and to such further extent as is consistent with law.
Reference is made to the Underwriting Agreement the form of which is filed
as Exhibit 1 to this Registration Statement which provides for indemnification
of directors and officers of the Corporation by the underwriters against certain
liabilities under the Securities Act of 1933, as amended, in certain instances.
Under the Trust Agreement, MBNA will agree to indemnify each of the
Trustees of the Issuer or any predecessor Trustee for the Issuer, and to hold
the Trustee harmless against, any loss, damage, claims, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the Trust Agreements,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties under the Trust Agreements.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
- -----
<C> <C> <S>
1 -- Form of Underwriting Agreement
4(a) -- Certificate of Incorporation of the Corporation, as amended
4(b) -- By-laws of the Corporation, as amended
4(c) -- Form of Junior Subordinated Indenture between MBNA Corporation and The Bank of
New York, as Debenture Trustee*
4(d)(1) -- Certificate of Trust of MBNA Capital I*
4(d)(2) -- Certificate of Trust of MBNA Capital II*
</TABLE>
II-1
<PAGE> 68
<TABLE>
<CAPTION>
EXHIBIT
- -----
<C> <C> <S>
4(d)(3) -- Certificate of Trust of MBNA Capital III*
4(d)(4) -- Certificate of Trust of MBNA Capital IV*
4(d)(5) -- Certificate of Trust of MBNA Capital V*
4(e)(1) -- Trust Agreement of MBNA Capital I*
4(e)(2) -- Trust Agreement of MBNA Capital II*
4(e)(3) -- Trust Agreement of MBNA Capital III*
4(e)(4) -- Trust Agreement of MBNA Capital IV*
4(e)(5) -- Trust Agreement of MBNA Capital V*
4(f)(1) -- Form of Amended and Restated Trust Agreement of MBNA Capital I*
4(f)(2) -- Form of Amended and Restated Trust Agreement of MBNA Capital II*
4(f)(3) -- Form of Amended and Restated Trust Agreement of MBNA Capital III*
4(f)(4) -- Form of Amended and Restated Trust Agreement of MBNA Capital IV*
4(f)(5) -- Form of Amended and Restated Trust Agreement of MBNA Capital V*
4(g)(1) -- Form of Preferred Security Certificate for MBNA Capital I (included in Exhibit
4(e)(1)*
4(g)(2) -- Form of Preferred Security Certificate for MBNA Capital II (included in Exhibit
4(e)(2)*
4(g)(3) -- Form of Preferred Security Certificate for MBNA Capital III (included in
Exhibit 4(e)(3)*
4(g)(4) -- Form of Preferred Security Certificate for MBNA Capital IV (included in Exhibit
4(e)(4)*
4(g)(5) -- Form of Preferred Security Certificate for MBNA Capital V (included in Exhibit
4(e)(5)*
4(h)(1) -- Form of Guarantee Agreement for MBNA Capital I*
4(h)(2) -- Form of Guarantee Agreement for MBNA Capital II*
4(h)(3) -- Form of Guarantee Agreement for MBNA Capital III*
4(h)(4) -- Form of Guarantee Agreement for MBNA Capital IV*
4(h)(5) -- Form of Guarantee Agreement for MBNA Capital V*
4(i) -- Form of Junior Subordinated Debt Security (included in Exhibit 4(c))*
5(a) -- Opinion of John W. Scheflen, Executive Vice President, General Counsel and
Secretary of the Corporation, as to legality of the Junior Subordinated
Debentures and the Guarantees to be issued by MBNA
5(b) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to legality
of the Preferred Securities to be issued by MBNA Capital I*
5(c) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to legality
of the Preferred Securities to be issued by MBNA Capital II*
5(d) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to legality
of the Preferred Securities to be issued by MBNA Capital III*
5(e) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to legality
of the Preferred Securities to be issued by MBNA Capital IV*
5(f) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to legality
of the Preferred Securities to be issued by MBNA Capital V*
8 -- Opinion of Simpson Thacher & Bartlett as to certain federal income tax matters
12 -- Statement re: Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Fixed Charges and Preferred Stock Dividends*
23(a) -- Consent of Ernst & Young L.L.P.
23(b) -- Consent of John W. Scheflen (included in Exhibit 5(a))
23(c) -- Consents of Richards, Layton & Finger (included in Exhibits 5(b), (c), (d), (e)
and (f))*
23(d) -- Consent of Simpson Thacher & Bartlett (included in Exhibit 8)
24 -- Powers of Attorney (included in signature page)*
25(a) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Junior Subordinated Indenture*
25(b) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Amended and Restated Trust Agreement of MBNA Capital I*
25(c) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Amended and Restated Trust Agreement of MBNA Capital II*
25(d) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Amended and Restated Trust Agreement of MBNA Capital III*
25(e) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Amended and Restated Trust Agreement of MBNA Capital IV*
</TABLE>
II-2
<PAGE> 69
<TABLE>
<CAPTION>
EXHIBIT
- -----
<C> <C> <S>
25(f) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Amended and Restated Trust Agreement of MBNA Capital V*
25(g) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Guarantee for the benefit of the holders of Preferred Securities of
MBNA Capital I*
25(h) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Guarantee for the benefit of the holders of Preferred Securities of
MBNA Capital II*
25(i) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Guarantee for the benefit of the holders of Preferred Securities of
MBNA Capital III*
25(j) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Guarantee for the benefit of the holders of Preferred Securities of
MBNA Capital IV*
25(k) -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee
under the Guarantee for the benefit of the holders of Preferred Securities of
MBNA Capital V*
</TABLE>
- ---------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing a Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, 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
of 1933 may be permitted to directors, officers and controlling persons of each
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, each Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
each Registrant of expenses incurred or paid by a director, officer or
controlling person of each 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, each Registrant will, unless
in the opinion of its counsel the matter has been settled by the controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue. Each of the
undersigned Registrants hereby also undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424 (b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
II-3
<PAGE> 70
provided, however, that paragraphs (1) (i) and (1) (ii) do not apply if the
information required to be included in post-effective amendment by those
paragraphs is contained in periodic reports filed by a Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) to provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the underwriter to permit prompt delivery to each
purchaser.
(5) That, for the purposes of determining any liability under the
Securities Act of 1933:
(i) The information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrants
pursuant to Rule 424 (b) (1) or (4) or 487 (h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(ii) Each post-effective amendment that contains a form of prospectus
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.
II-4
<PAGE> 71
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wilmington, State of Delaware, on
December 10, 1996.
MBNA CORPORATION
By: /s/ VERNON H.C. WRIGHT
--------------------------------------
NAME: VERNON H.C. WRIGHT
TITLE: EXECUTIVE VICE PRESIDENT AND
CHIEF CORPORATE FINANCE
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed on December 10, 1996 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<S> <C>
* Chairman and Chief Executive Officer
- --------------------------------------------- (principal executive officer) and Director
ALFRED LERNER
* President and Director
- ---------------------------------------------
CHARLES M. CAWLEY
* Executive Vice President, Chief Financial
- --------------------------------------------- Officer and Chief Accounting Officer and
M. SCOT KAUFMAN Treasurer (principal financial and accounting
officer)
* Director
- ---------------------------------------------
JAMES H. BERICK, ESQ.
* Director
- ---------------------------------------------
BENJAMIN R. CIVILETTI, ESQ.
* Director
- ---------------------------------------------
RANDOLPH D. LERNER, ESQ.
* Director
- ---------------------------------------------
STUART L. MARKOWITZ, M.D.
* Director
- ---------------------------------------------
MICHAEL ROSENTHAL, PH.D.
</TABLE>
* Vernon H.C. Wright hereby signs this Amendment to the Registration Statement
on Form S-3 on December 10, 1996 on behalf of each of the indicated persons
for whom he is attorney-in-fact pursuant to a power of attorney filed herein.
By: /s/ VERNON H.C. WRIGHT
--------------------------------------
NAME: VERNON H.C. WRIGHT
TITLE: EXECUTIVE VICE PRESIDENT AND
CHIEF CORPORATE FINANCE
OFFICER
II-5
<PAGE> 72
Pursuant to the requirements of the Securities Act of 1933, MBNA Capital I
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wilmington, and State of Delaware on December
10, 1996.
MBNA CAPITAL I
By: MBNA Corporation, as
Depositor
By: /s/ M. SCOT KAUFMAN
--------------------------------------
M. SCOT KAUFMAN
Pursuant to the requirements of the Securities Act of 1933, MBNA Capital II
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wilmington, and State of Delaware on December
10, 1996.
MBNA CAPITAL II
By: MBNA Corporation, as
Depositor
By: /s/ M. SCOT KAUFMAN
--------------------------------------
M. SCOT KAUFMAN
II-6
<PAGE> 73
Pursuant to the requirements of the Securities Act of 1933, MBNA Capital
III certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wilmington, and State of Delaware on December
10, 1996.
MBNA CAPITAL III
By: MBNA Corporation, as
Depositor
By: /s/ M. SCOT KAUFMAN
--------------------------------------
M. SCOT KAUFMAN
Pursuant to the requirements of the Securities Act of 1933, MBNA Capital IV
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wilmington, and State of Delaware on December
10, 1996.
MBNA CAPITAL IV
By: MBNA Corporation, as
Depositor
By: /s/ M. SCOT KAUFMAN
--------------------------------------
M. SCOT KAUFMAN
Pursuant to the requirements of the Securities Act of 1933, MBNA Capital V
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wilmington, and State of Delaware on December
10, 1996.
MBNA CAPITAL V
By: MBNA Corporation, as Depositor
By: /s/ M. SCOT KAUFMAN
--------------------------------------
M. SCOT KAUFMAN
II-7
<PAGE> 74
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------------- -----
<C> <C> <S> <C>
1 -- Form of Underwriting Agreement...........................................
4(a) -- Certificate of Incorporation of the Corporation, as amended..............
4(b) -- By-laws of the Corporation, as amended...................................
4(c) -- Form of Junior Subordinated Indenture between MBNA Corporation and The
Bank of New York, as Debenture Trustee*..................................
4(d)(1) -- Certificate of Trust of MBNA Capital I*..................................
4(d)(2) -- Certificate of Trust of MBNA Capital II*.................................
4(d)(3) -- Certificate of Trust of MBNA Capital III*................................
4(d)(4) -- Certificate of Trust of MBNA Capital IV*.................................
4(d)(5) -- Certificate of Trust of MBNA Capital V*..................................
4(e)(1) -- Trust Agreement of MBNA Capital I*.......................................
4(e)(2) -- Trust Agreement of MBNA Capital II*......................................
4(e)(3) -- Trust Agreement of MBNA Capital III*.....................................
4(e)(4) -- Trust Agreement of MBNA Capital IV*......................................
4(e)(5) -- Trust Agreement of MBNA Capital V*.......................................
4(f)(1) -- Form of Amended and Restated Trust Agreement of MBNA Capital I*..........
4(f)(2) -- Form of Amended and Restated Trust Agreement of MBNA Capital II*.........
4(f)(3) -- Form of Amended and Restated Trust Agreement of MBNA Capital III*........
4(f)(4) -- Form of Amended and Restated Trust Agreement of MBNA Capital IV*.........
4(f)(5) -- Form of Amended and Restated Trust Agreement of MBNA Capital V*..........
4(g)(1) -- Form of Preferred Security Certificate for MBNA Capital I (included in
Exhibit 4(e)(1)*.........................................................
4(g)(2) -- Form of Preferred Security Certificate for MBNA Capital II
(included in Exhibit 4(e)(2)*............................................
4(g)(3) -- Form of Preferred Security Certificate for MBNA Capital III
(included in Exhibit 4(e)(3)*............................................
4(g)(4) -- Form of Preferred Security Certificate for MBNA Capital IV
(included in Exhibit 4(e)(4)*............................................
4(g)(5) -- Form of Preferred Security Certificate for MBNA Capital V (included in
Exhibit 4(e)(5)*.........................................................
4(h)(1) -- Form of Guarantee Agreement for MBNA Capital I*..........................
4(h)(2) -- Form of Guarantee Agreement for MBNA Capital II*.........................
4(h)(3) -- Form of Guarantee Agreement for MBNA Capital III*........................
4(h)(4) -- Form of Guarantee Agreement for MBNA Capital IV*.........................
4(h)(5) -- Form of Guarantee Agreement for MBNA Capital V*..........................
4(i) -- Form of Junior Subordinated Debt Security (included in Exhibit 4(c))*....
5(a) -- Opinion of John W. Scheflen, Executive Vice President, General Counsel
and Secretary of the Corporation, as to legality of the Junior
Subordinated Debentures and the Guarantees to be issued by MBNA..........
5(b) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to
legality of the Preferred Securities to be issued by MBNA Capital I*.....
5(c) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to
legality of the Preferred Securities to be issued by MBNA Capital II*....
5(d) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to
legality of the Preferred Securities to be issued by MBNA Capital III*...
5(e) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to
legality of the Preferred Securities to be issued by MBNA Capital IV*....
5(f) -- Opinion of Richards, Layton & Finger, special Delaware counsel as to
legality of the Preferred Securities to be issued by MBNA Capital V*.....
8 -- Opinion of Simpson Thacher & Bartlett as to certain federal income tax
matters..................................................................
12 -- Statement re: Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Fixed Charges and Preferred Stock Dividends*..............
23(a) -- Consent of Ernst & Young L.L.P. .........................................
23(b) -- Consent of John W. Scheflen (included in Exhibit 5(a))*..................
23(c) -- Consents of Richards, Layton & Finger (included in Exhibits 5(b), (c),
(d),
(e) and (f))*............................................................
23(d) -- Consent of Simpson Thacher & Bartlett (included in Exhibit 8)............
24 -- Powers of Attorney (included in signature page)*.........................
25(a) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Junior Subordinated Indenture*.........................
</TABLE>
<PAGE> 75
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------------- -----
<C> <C> <S> <C>
25(b) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Trust Agreement of MBNA Capital
I*.......................................................................
25(c) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Trust Agreement of MBNA Capital
II*......................................................................
25(d) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Trust Agreement of MBNA Capital
III*.....................................................................
25(e) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Trust Agreement of MBNA Capital
IV*......................................................................
25(f) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Amended and Restated Trust Agreement of MBNA Capital
V*.......................................................................
25(g) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Guarantee for the benefit of the holders of Preferred
Securities of MBNA Capital I*............................................
25(h) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Guarantee for the benefit of the holders of Preferred
Securities of MBNA Capital II*...........................................
25(i) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Guarantee for the benefit of the holders of Preferred
Securities of MBNA Capital III*..........................................
25(j) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Guarantee for the benefit of the holders of Preferred
Securities of MBNA Capital IV*...........................................
25(k) -- Form T-1 Statement of Eligibility of The Bank of New York to act as
trustee under the Guarantee for the benefit of the holders of Preferred
Securities of MBNA Capital V*............................................
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 1
Draft of December 5, 1996
MBNA CAPITAL I
MBNA CAPITAL II
MBNA CAPITAL III
MBNA CAPITAL IV
MBNA CAPITAL V
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH IN THE GUARANTEES BY
MBNA CORPORATION
-------------------------------------
Underwriting Agreement
December ___, 1996
To the Representatives of the several
Underwriters named in the respective
Pricing Agreements hereinafter described.
Dear Sirs:
From time to time MBNA Capital I, MBNA Capital II, MBNA Capital III, MBNA
Capital IV or MBNA Capital V, each a statutory business trust formed under the
laws of the State of Delaware (each a "Trust" and collectively, the "Trusts"),
and MBNA Corporation, a Maryland corporation (the "Company"), as depositor of
each trust and as guarantor, propose to enter into one or more Pricing
Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with
such additions and deletions as the parties thereto may determine, and, subject
to the terms and conditions stated herein and therein, that the Trust
identified in the applicable Pricing Agreement (such Trust being the
"Designated Trust" with respect to such Pricing Agreement) issue and sell to
the firms named in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain of its preferred securities (the
"Securities") representing undivided beneficial interests in the assets of the
Designated Trust. The Securities specified in Schedule II to such Pricing
Agreement are referred to as the "Firm Designated Securities" with respect to
such Pricing Agreement. If specified in such Pricing Agreement, the Designated
Trust may grant to the Underwriters the right to purchase at their election an
additional number of Securities, specified in such Pricing Agreement as
provided in Section 3 hereof (the "Optional Designated Securities"). The Firm
Designated Securities and any Optional Designated Securities are collectively
called the "Designated Securities." The proceeds of the sale of the Designated
Securities to the public and of common securities of the Designated Trust (the
"Common Securities") to the Company concurrently with the sale of the
Designated Securities are to be invested in junior subordinated deferrable
interest debentures of the Company
<PAGE> 2
(the "Subordinated Debentures") identified in the Pricing Agreement with
respect to such Designated Securities (with respect to such Pricing Agreement,
the "Designated Subordinated Debentures"), to be issued pursuant to a junior
subordinated indenture to be dated as of December [__], 1996 (the "Indenture")
between the Company and The Bank of New York, as trustee. The Designated
Securities may be exchangeable into Designated Subordinated Debentures, as
specified in Schedule II to such Pricing Agreement. The Designated Securities
will be guaranteed by the Company to the extent set forth in the Pricing
Agreement with respect to such Designated Securities (the "Designated
Guarantee") (all such Designated Guarantees together, the "Guarantees").
The terms and rights of any particular issuance of Designated Securities
shall be as specified in the Pricing Agreement relating thereto and in or
pursuant to the amended and restated trust agreement identified in such Pricing
Agreement (with respect to such Pricing Agreement, the "Trust Agreement").
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Designated Securities, for whom the firms
designated as representatives of the Underwriters of such Designated Securities
in the Pricing Agreement relating thereto will act as representatives (the
"Representatives"). The term "Representatives" also refers to a single firm
acting as sole representative of the Underwriters and to Underwriters who act
without any firm being designated as their representative. This Underwriting
Agreement shall not be construed as an obligation of any Trust to sell any of
the Securities or as an obligation of any of the Underwriters to purchase any
of the Securities. The obligation of any Trust to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate number of the Firm Designated Securities, the maximum number of
Optional Designated Securities, if any, the initial public offering price of
such Firm and Optional Designated Securities or the manner of determining such
price, the terms of the Designated Securities, including the terms on which and
terms of the securities into which the Designated Securities will be
exchangeable, the purchase price to the Underwriters of such Designated
Securities, the names of the Underwriters of such Designated Securities, the
names of the Representatives of such Underwriters, the number of such
Designated Securities to be purchased by each Underwriter and the commission,
if any, payable to the Underwriters with respect thereto and shall set forth
the date, time and manner of delivery of such Firm and Optional Designated
Securities, if any, and payment therefor. The Pricing Agreement shall also
specify (to the extent not set forth in the registration statement and
prospectus with respect thereto) the terms of such Designated Securities. A
Pricing Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic
communications or any other rapid transmission device designed to produce a
written record of communications transmitted. The obligations of the
Underwriters under this Agreement and each Pricing Agreement shall be several
and not joint.
2
<PAGE> 3
2. The Designated Trust and the Company, jointly and severally, each
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333- ) (the
"Initial Registration Statement") in respect of the Securities, the
Subordinated Debentures and the Guarantees (including the Designated
Securities, the Designated Subordinated Debentures and the Designated
Guarantees) has been filed with the Securities and Exchange Commission
(the "Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered or
to be delivered to the Representatives and, excluding exhibits to such
registration statement, but including all documents incorporated by
reference in the prospectus included therein, to the Representatives for
each of the other Underwriters has been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing, no other
document with respect to the Initial Registration Statement or document
incorporated by reference therein has heretofore been filed, or
transmitted for filing, with the Commission (other than prospectuses filed
pursuant to Rule 424(b) of the rules and regulations of the Commission
under the Act, each in the form heretofore delivered to the
Representatives); and no stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment thereto or
the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) under the Act is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement and the rule 462(b)
Registration Statement, if any, including (i) the information contained in
the form of final prospectus filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the Initial Registration
Statement at the time it was declared effective or such part of the Rule
462(b) Registration Statement, if any, became or hereafter becomes
effective, (ii) all exhibits thereto and (iii) the documents incorporated
by reference in the prospectus contained in the registration statement at
the time such part of the registration statement became effective but
excluding Forms T-1, each as amended at the time such part of the
registration statement became effective, being hereinafter collectively
called the "Registration Statement"; the prospectus relating to the
Securities, the Subordinated Debentures and the Guarantees, in the form in
which it has most recently been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, being hereinafter
called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the applicable
form under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment or
supplement to any Preliminary Prospectus or Prospectus shall be deemed to
refer to and include any documents filed after the date of such
Preliminary Prospectus or Prospectus, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of any
Trust, and the Company filed pursuant to Section 13(a) or 15(d) of the
Exchange Act after the effective date of the Registration Statement that
is
3
<PAGE> 4
incorporated by reference in the Registration Statement; and any reference
to the Prospectus as amended or supplemented shall be deemed to refer to
the Prospectus as amended or supplemented in relation to the applicable
Designated Securities in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof, including any documents incorporated by reference therein as of
the date of such filings;
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Designated
Trust or the Company by an Underwriter of Designated Securities through
the Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as
to the Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Designated Trust or the Company by an Underwriter of
Designated Securities through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Securities;
(d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Designated Trust, or of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
the Designated Trust, or by the Company or any of the Company's
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Designated Trust, or to the Company and
its subsidiaries considered as one enterprise, (C) except for regular
dividends, there has been no dividend or
4
<PAGE> 5
distribution of any kind declared, paid or made by the Company on any
class of its capital stock and (D) there has been no material increase in
the long-term debt of the Company, except such increases as are set forth
in the Prospectus;
(e) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus;
(f) Each subsidiary of the Company which is a significant
subsidiary, as defined in Rule 405 of Regulation C of the regulations
promulgated under the 1933 Act (each, a "Significant Subsidiary") has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation except for
MBNA America Bank, National Association (the "Bank") and any other
national bank subsidiary, each of which has been duly organized and is
validly existing as a national bank under the laws of the United States,
with power and authority (corporate and other) to own its properties and
to conduct its business as described in the Prospectus;
(g) The Company and each Significant Subsidiary has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require
qualification;
(h) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable;
(i) The Designated Trust has been duly created and is validly
existing as a business trust in good standing under the laws of the State
of Delaware, with power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus; all
the outstanding beneficial interests in the Designated Trust have been
duly and validly authorized and issued, are fully paid and non-assessable
and conform to the descriptions thereof contained in the Prospectus;
(j) The Designated Securities have been duly and validly authorized,
and, when the Firm Designated Securities are issued and delivered pursuant
to this Agreement and the Pricing Agreement with respect to such
Designated Securities and, in the case of any Optional Designated
Securities, pursuant to Over-allotment Options (as defined in Section 3
hereof) with respect to such Securities, such Designated Securities will
be duly and validly issued and fully paid and non-assessable beneficial
interests in the Designated Trust entitled to the benefits provided by the
applicable Trust Agreement, which will be substantially in the form filed
as an exhibit to the Registration Statement; the Designated Securities
conform to the description thereof contained in the Registration Statement
and the Designated Securities will conform to the description thereof
contained in the Prospectus as amended or supplemented with respect to
such Designated Securities;
5
<PAGE> 6
(k) The holders of the Designated Securities (the "Securityholders")
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware;
(l) The Common Securities of the Designated Trust have been duly
authorized on behalf of the Designated Trust by the Company, as depositor
of the Designated Trust, and upon delivery by the Designated Trust to the
Company against payment therefor as set forth in the Trust Agreement, will
be duly and validly issued and non-assessable beneficial interests in the
Designated Trust and will conform to the description thereof contained in
the Prospectus; the issuance of the Common Securities of the Designated
Trust is not subject to preemptive or other similar rights; and at each
Time of Delivery, all of the issued and outstanding Common Securities of
the Designated Trust will be directly owned by the Company free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity;
(m) The Designated Guarantee, the Trust Agreement for the Designated
Trust, the Designated Subordinated Debentures and the Indenture (the
Designated Guarantee, such Trust Agreement, the Designated Subordinated
Debentures and the Indenture being collectively referred to as the
"Company Agreements") have each been duly authorized and when validly
executed and delivered by the Company and, in the case of the Guarantee,
by the Guarantee Trustee (as defined in the Guarantee), in the case of the
Trust Agreement, by the Trustees (as defined in the Trust Agreement) and,
in the case of the Indenture, by the Trustee named therein (the
"Debenture"), and, in the case of the Designated Subordinated Debentures,
when validly issued by the Company and duly authenticated and delivered by
the Debenture Trustee, will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; the Trust
Agreement, the Indenture and the Designated Guarantee have each been duly
qualified under the Trust Indenture Act; the Designated Subordinated
Debentures are entitled to the benefits of the Indenture; and the Company
Agreements, which will be in substantially the form filed as an exhibit to
the Registration Statement, will conform to the descriptions thereof in
the Prospectus as amended or supplemented with respect to the Designated
Securities to which they relate;
(n) The issuance by the Company of the Guarantees and the
Subordinated Debentures, the compliance by the Company with all of the
provisions of this Agreement, any Pricing Agreement and each
Over-allotment Option, if any, the Guarantees, the Subordinated
Debentures, the Trust Agreements and the Indenture, the execution,
delivery and performance by the Company of the Company Agreements, and the
consummation of the transactions contemplated herein and therein will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company is a party or by which the Company is bound or to which any of
the material property or assets of the Company is subject, nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any order, rule
or regulation of any court or governmental agency or body (including,
without limitation, the Board of Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation) having jurisdiction over the Company or any of its
6
<PAGE> 7
properties; and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or body
is required for the issue of the Guarantees or the Subordinated Debentures
or the consummation by the Company of the other transactions contemplated
by this Agreement, any Pricing Agreement or the Company Agreements, except
such as have been or will have been, prior to each Time of Delivery,
obtained under the Act or the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
issuance by the Company of the Guarantees and the Subordinated Debentures;
(o) The issue and sale of the Designated Securities by the
Designated Trust, the compliance by the Designated Trust with all of the
provisions of this Agreement, any Pricing Agreement and each
Over-allotment Option, if any, the Designated Securities and the Trust
Agreement, the purchase of the Designated Subordinated Debentures by the
Designated Trust, the execution, delivery and performance by the
Designated Trust of the Trust Agreement and the consummation of the
transactions contemplated herein and therein will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Trust is a party
or by which such Trust is bound or to which any of the material property
or assets of such Trust is subject, nor will such action result in any
violation of the provisions of the Trust Agreement or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Trust or any of its properties; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Designated Securities and the Common Securities by
such Trust, the purchase of the Subordinated Debentures by the such Trust
or the consummation by such Trust of the transactions contemplated by this
Agreement, the Pricing Agreement or any Over-allotment Option or the Trust
Agreement, except such as have been, or will have been, prior to each Time
of Delivery (as defined in Section 4 hereof), obtained under the Act and
the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Designated Securities by the Underwriters;
(p) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Designated Trust, the
Company or any of its subsidiaries is a party or of which any property of
the Company or any of its subsidiaries is the subject, which, if
determined adversely to the Designated Trust, the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial position,
stockholders' equity (or net assets, as the case may be) or results of
operations of the Designated Trust, or the Company and its subsidiaries;
and, to the best of the Designated Trust's and the Company's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(q) The Designated Trust is not in violation of the Trust Agreement
for the Designated Trust or the Certificate of Trust for the Designated
Trust, or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its properties
may be bound;
7
<PAGE> 8
(r) Each of the Company, the Bank, and the Designated Trust is in
substantial compliance with, and conducts its business in substantial
conformity with, all applicable laws and governmental regulations;
(s) The statements set forth in (i) the Prospectus under the
captions "Description of Junior Subordinated Debentures", "Description of
Preferred Securities", "Description of Guarantees" and "Relationship Among
the Preferred Securities, the Corresponding Junior Subordinated
Debentures", and (ii) in the Prospectus as amended or supplemented under
the captions "Certain Terms of Series __ QUIPS" and "Certain Terms of
Series __ Subordinated Debentures", insofar as they constitute a summary
of the terms of the Securities, Subordinated Debentures, the Guarantees
and the Company Agreements (including the Designated Securities, the
Designated Subordinated Debentures and the Designated Guarantees); and
(t) Neither the Designated Trust nor the Company is or, after giving
effect to the offering and sale of the Securities, will be, an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release
of the Firm Designated Securities, the several Underwriters propose to offer
the Firm Designated Securities for sale upon the terms and conditions set forth
in the Prospectus as amended or supplemented.
The Designated Trust may specify in the Pricing Agreement applicable to
any Designated Securities that the Designated Trust thereby grants to the
Underwriters the right (an "Over-allotment Option") to purchase at their
election up to the number of Optional Designated Securities set forth in such
Pricing Agreement, on the terms set forth in the paragraph above, for the sole
purpose of covering over-allotments in the sale of the Firm Designated
Securities. Any such election to purchase Optional Designated Securities may
be exercised only by written notice from the Representatives to the Designated
Trust and the Company, given within a period specified in the Pricing
Agreement, setting forth the aggregate number of Optional Designated Securities
to be purchased and the date on which such Optional Designated Securities are
to be delivered, as determined by the Representatives but in no event earlier
than the First Time of Delivery (as defined in Section 4 hereof) or, unless the
Representatives, the Designated Trust and the Company otherwise agree in
writing, earlier than or later than the respective number of business days
after the date of such notice set forth in such Pricing Agreement.
The number of Optional Designated Securities to be added to the number of
Firm Designated Securities to be purchased by each Underwriter as set forth in
Schedule I to the Pricing Agreement applicable to such Designated Securities
shall be, in each case, the number of Optional Designated Securities which the
Designated Trust and the Company have been advised by the Representatives have
been attributed to such Underwriter; provided that, if the Designated Trust and
the Company have not been so advised, the number of Optional Designated
Securities to be so added shall be, in each case, that proportion of Optional
Designated Securities which the number of Firm Designated Securities to be
purchased by such Underwriter under such Pricing Agreement bears to the
aggregate number of Firm Designated Securities (rounded as the Representatives
may determine to the nearest 100 securities). The total number of Designated
Securities to be purchased by all
8
<PAGE> 9
the Underwriters pursuant to such Pricing Agreement shall be the aggregate
number of Firm Designated Securities set forth in Schedule I to such Pricing
Agreement plus the aggregate number of Optional Designated Securities which the
Underwriters elect to purchase.
As compensation to the Underwriters of the Designated Securities for their
commitments hereunder and under the Pricing Agreement, and in view of the fact
that the proceeds of the sale of the Designated Securities will be used by the
Designated Trust to purchase the Designated Subordinated Debentures of the
Company, the Company agrees to pay at each Time of Delivery to Goldman, Sachs &
Co., for the accounts of the several Underwriters, the amount set forth in the
Pricing Agreement per preferred security for the Designated Securities to be
delivered at such Time of Delivery.
4. Certificates for the Firm Designated Securities and the Optional
Designated Securities to be purchased by each Underwriter pursuant to the
Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice
to the Designated Trust and the Company, shall be delivered by or on behalf of
the Designated Trust to the Representatives for the account of such
Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by wire transfer of Federal (same day) Funds to an
account designated by the Designated Trust, (i) with respect to the Firm
Designated Securities, all in the manner and at the place and time and date
specified in such Pricing Agreement or at such other place and time and date as
the Representatives, the Designated Trust and the Company may agree upon in
writing, such time and date being herein called the "First Time of Delivery"
and (ii) with respect to the Optional Designated Securities, if any, in the
manner and at the time and date specified by the Representatives in the written
notice given by the Representatives of the Underwriters' election to purchase
such Optional Designated Securities, or at such other time and date as the
Representatives, the Designated Trust and the Company may agree upon in
writing, such time and date, if not the First Time of Delivery, herein called
the "Second Time of Delivery". Each such time and date for delivery is herein
called a "Time of Delivery".
5. The Designated Trust and the Company, jointly and severally, each
agrees with each of the Underwriters of any Designated Securities:
(a) To prepare the Prospectus as amended and supplemented in
relation to the Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement relating
to such Securities and prior to any Time of Delivery for such Securities
which shall be disapproved by the Representatives for such Securities
promptly after reasonable notice thereof; to advise the Representatives
promptly of any such amendment or supplement after any Time of Delivery
for the Designated Securities and furnish the Representatives with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Designated Trust or the
Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act for so long as the delivery of a prospectus is
required in
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<PAGE> 10
connection with the offering or sale of the Designated Securities, and
during such same period to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed with
the Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating to
the Securities, of the suspension of the qualification of the Designated
Securities, the Designated Guarantees or the Designated Subordinated
Debentures for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information with respect to the
registration or sale of the Securities; and, in the event of the issuance
of any such stop order or of any such order preventing or suspending the
use of any prospectus relating to the Securities or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Designated
Securities, the Designated Guarantees or the Designated Subordinated
Debentures for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of such Designated Securities, provided that in connection therewith
neither the Designated Trust nor the Company shall be required to qualify
as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus as
amended or supplemented in such quantities as the Representatives may from
time to time reasonably request, and, if the delivery of a prospectus is
required at any time in connection with the offering or sale of the
Designated Securities, the Designated Guarantees or the Designated
Subordinated Debentures and if at such time any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Act, the Exchange Act or the
Trust Indenture Act, to notify the Representatives and upon their request
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance;
(d) In the case of the Company, to make generally available to its
security holders as soon as practicable, but in any event not later than
eighteen months after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Act), an earnings statement of the
Company and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations of the Commission
thereunder (including at the option of the Company Rule 158);
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<PAGE> 11
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Securities and continuing to and including
the [earlier] of (i) the termination of trading restrictions for such
Designated Securities, as notified to the Designated Trust and the Company
by the Representatives and (ii) the last Time of Delivery for such
Designated Securities, not to offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder, any Securities, any other
beneficial interests in the assets of any Trust, or any preferred
securities or any other securities of any Trust or the Company, as the
case may be, which are substantially similar to such Designated Securities
(including any guarantee of such securities) or any securities that are
convertible into or exchangeable for, or that represent the right to
receive securities, preferred securities or any such substantially similar
securities of either any Trust or the Company without the prior written
consent of the Representatives;
(f) In the case of the Company, to issue the Guarantee and the
Subordinated Debentures concurrently with the issue and sale of the
Securities as contemplated herein or in the Pricing Agreement;
(g) To use its best efforts to list, subject to notice of issuance,
the Designated Securities on the New York Stock Exchange and, if the
Company elects to terminate the Designated Trust and to distribute the
Designated Subordinated Debentures to the holders of the Designated
Securities in liquidation of the Designated Trust, to use its best efforts
to list the Designated Subordinated Debentures, subject to notice of
issuance, on the New York Stock Exchange prior to such distribution; and
(h) If the Trust and the Company elect to rely upon Rule 462(b), the
Trust and the Company shall file a Rule 462(b) Registration Statement with
the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Trust and the Company
shall at the time of filing either pay to the Commission the filing fee
for the rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the
Act.
6. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities, the Guarantees and the
Subordinated Debentures under the Act and all other expenses in connection with
the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the Underwriters
and dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, any Pricing Agreement, any Company Agreement, any
Blue Sky and Legal Investment Memoranda, and any other documents in connection
with the offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities, the Guarantees
and the Subordinated Debentures for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements
of counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky and legal investment survey(s); (iv) any fees
charged by securities rating services for rating the Securities and the
Subordinated Debentures; (v) any filing fees incident to any required reviews
by the National Association of Securities Dealers, Inc. of the terms of the
sale of the Securities and the issuance of the Guarantees and the Subordinated
Debentures; (vi) the cost of preparing
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<PAGE> 12
certificates for the Securities and the Subordinated Debentures; (vii) the cost
and charges of any transfer agent or registrar or dividend disbursing agent;
(viii) the fees and expenses of any Trustee, Debenture Trustee and Guarantee
Trustee, and any agent of any trustee and the fees and disbursements of counsel
for any trustee in connection with any Trust Agreement, Indenture, Guarantee
and the Securities; (ix) the cost of qualifying the Securities with The
Depository Trust Company; (x) any fees and expenses in connection with listing
the Securities and the Subordinated Debentures and the cost of registering the
Securities under Section 12 of the Exchange Act; and (xi) all other costs and
expenses incident to the performance of its obligations hereunder and under any
Over-allotment Options which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section, and Section 8 and Section 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, transfer
taxes on resale of any of the Securities by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Designated Trust and
the Company in or incorporated by reference in the Pricing Agreement relating
to such Designated Securities are, at and as of each Time of Delivery for such
Designated Securities, true and correct, the condition that the Designated
Trust and the Company shall have performed all of their respective obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to such
Designated Securities shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; if the Trust and the Company have elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have become
effective by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the Commission;
and all requests for additional information on the part of the Commission
shall have been complied with to the Representatives' reasonable
satisfaction;
(b) Sullivan & Cromwell, or other counsel for the Underwriters,
shall have furnished to the Representatives such opinion or opinions,
dated each Time of Delivery for such Designated Securities, with respect
to the incorporation of the Company and the formation of the Designated
Trust, the validity of the Designated Securities, the Designated
Subordinated Debentures, the Designated Guarantee, the Registration
Statement, the Prospectus as amended or supplemented, as well as such
other related matters as the Representatives may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) John W. Scheflen, Executive Vice President and General Counsel
of the Company [and counsel the Designated Trust], or other counsel for
the Designated Trust and the Company satisfactory to the Representatives
shall have furnished to the Representatives their written
12
<PAGE> 13
opinions, dated each Time of Delivery for such Designated Securities,
respectively, in form and substance satisfactory to the Representatives,
to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business
as described in the Prospectus as amended or supplemented;
(ii) Each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, except for the Bank and
any other national bank subsidiary, which has been duly organized and
is validly existing under the laws of the United States, with power
and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries, provided
that such counsel shall state that he believes that both you and he
are justified in relying upon such opinions and certificates);
(iii) The Company and each subsidiary has been duly qualified
as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require
qualification, or is subject to no material liability or disability
by reason of failure to be so qualified in any such jurisdiction
(such counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in respect of matters
of fact upon certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such
opinions and certificates);
(iv) The Company has an authorized capitalization as set forth
in the Prospectus as amended or supplemented, and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; the
Designated Securities have been duly authorized by the Company as
depositor on behalf of the Designated Trust, are duly and validly
issued and non-assessable beneficial interests in the Designated
Trust and are entitled to the benefits provided by the Trust
Agreement; and the Designated Securities conform to the description
of the Securities contained in the Prospectus as amended or
supplemented;
(v) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries; to the best of such counsel's
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<PAGE> 14
knowledge, there are no legal or governmental proceedings pending to
which the Designated Trust is a party or of which any property of the
Designated Trust is the subject; and to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vi) This Agreement and the Pricing Agreement with respect to
the Designated Securities have been duly authorized, executed and
delivered by the Designated Trust and the Company;
(vii) The issuance by the Company of the Designated Guarantee and
the Designated Subordinated Debentures, the compliance by the Company
with all of the provisions of this Agreement and the Pricing
Agreement with respect to the Designated Securities and the Company
Agreements, the execution, delivery and performance by the Company of
the Company Agreements and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject; nor
will such actions result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any statute
or any order, rule or regulation known to such counsel of any court
or governmental agency or body (including, without limitation, the
Board of Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency and the Federal Deposit Insurance
Corporation) having jurisdiction over the Designated Trust, the
Company or any of their properties;
(viii) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Designated Securities
being delivered at such Time of Delivery or the issuance of the
Designated Guarantee and the Designated Subordinated Debentures or
the consummation by the Designated Trust or the Company of the
transactions contemplated by this Agreement or such Pricing Agreement
and the Company Agreements, except such as have been obtained under
the Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Designated Securities by the
Underwriters or the issuance of the Designated Guarantee and
Designated Subordinated Debentures by the Company;
(ix) The Designated Trust is not in violation of its Trust
Agreement or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it
or any of its properties may be bound;
(x) The statements set forth (i) in the Prospectus under the
captions "Description of Junior Subordinated Debentures",
"Description of Preferred Securities", "Description of Guarantees"
and "Relationship Among the Preferred Securities, the Corresponding
Junior Subordinated Debentures", and (ii) in the Prospectus as
amended or supplemented under the captions "Certain Terms of Series
__ QUIPS" and "Certain Terms of Series __ Subordinated Debentures",
insofar as they constitute a summary of the terms of the
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<PAGE> 15
Securities, Subordinated Debentures, the Guarantees and the Company
Agreements (including the Designated Securities, the Designated
Subordinated Debentures and the Designated Guarantees);
(xi) The Designated Subordinated Debentures are in the
form prescribed in or pursuant to the Indenture, have been duly and
validly authorized by the Company by all necessary corporate action
and, when completed, executed and authenticated as specified in or
pursuant to the Indenture and issued and delivered, will be valid and
binding obligations of the Company, enforceable in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to
affecting creditors' rights and to general equity principles; and the
Designated Subordinated Debentures conform to the descriptions
thereof in the Prospectus as amended or supplemented;
(xii) The Company Agreements have each been duly authorized,
executed and delivered by the parties thereto and constitute valid
and legally binding instruments, enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; the Company Agreements conform to the descriptions
thereof in the Prospectus as amended or supplemented; and the
Indenture, the Designated Guarantee and the Designated Trust
Agreement have been duly qualified under the Trust Indenture Act;
(xiii) The Designated Trust is not an "investment company" or
an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act;
(xiv) The documents incorporated by reference in the
Prospectus as amended or supplemented (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder; and he has no reason to believe that any of such
documents, when they became effective or were so filed, as the case
may be, contained, in the case of a registration statement which
became effective under the Act, an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
or, in the case of other documents which were filed under the Act or
the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed, not
misleading; and
(xv) The Registration Statement and the Prospectus as amended or
supplemented and any further amendments and supplements thereto made
by the Designated Trust or the Company prior to such Time of Delivery
(other than the financial statements and related schedules therein,
as to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Act and the
rules and regulations thereunder; he has no reason to believe that,
as of its effective date, the Registration
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<PAGE> 16
Statement or any further amendment thereto made by the Designated
Trust or the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus as amended or
supplemented or any further amendment or supplement thereto made by
the Designated Trust or the Company prior to such Time of Delivery
(other than the financial statements and related schedules therein,
as to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading or that, as of
such Time of Delivery, either the Registration Statement or the
Prospectus as amended or supplemented or any further amendment or
supplement thereto made by the Designated Trust or the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;
and he does not know of any amendment to the Registration Statement
required to be filed or any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be incorporated by reference into the
Prospectus as amended or supplemented or required to be described in
the Registration Statement or the Prospectus as amended or
supplemented which are not filed or incorporated by reference or
described as required;
(d) Simpson Thacher & Bartlett, counsel for the Designated Trust and
the Company, shall have furnished to the Representatives their written
opinions, dated each Time of Delivery for such Designated Securities,
respectively, in form and substance satisfactory to the Representatives,
to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Maryland;
(ii) The Pricing Agreement with respect to the Designated
Securities has been duly authorized, executed and delivered by the
Company;
(iii) The statements set forth (i) in the Prospectus under the
captions "Description of Junior Subordinated Debentures",
"Description of Preferred Securities", "Description of Guarantees"
and "Relationship Among the Preferred Securities, the Corresponding
Junior Subordinated Debentures and the Guarantees", and (ii) in the
Prospectus as amended or supplemented under the captions "Certain
Terms of Series __ Capital Securities", "Certain Terms of Series __
Subordinated Debentures" and "Certain Terms of Series __ Guarantee",
insofar as they purport to constitute summaries of certain terms of
the Designated Securities and the Company Agreements, in each case
constitute accurate summaries of the Company Agreements and of the
terms of such securities, as set forth in the Company Agreements, in
all material respects;
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<PAGE> 17
(iv) The Designated Subordinated Debentures are in the form
prescribed in or pursuant to the Indenture, have been duly and
validly authorized by the Company by all necessary corporate action
and, when completed, executed and authenticated as specified in or
pursuant to the Indenture and issued and delivered against payment
therefore as specified in the Company Agreements, will be valid and
binding obligations of the Company, enforceable in accordance with
their terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, to general
equitable principles (whether considered in a proceeding in equity or
at law) and by an implied covenant of good faith and fair dealing;
(v) The Indenture, the Designated Guarantee and the Trust
Agreement for the Designated Trust have each been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Debenture Trustee (in
the case of the Indenture), by the Guarantee Trustee (in the case of
the Guarantee) and by the Trustees (in the case of the Trust
Agreement) constitute valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, to general equitable
principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing; and the
Indenture, the Designated Guarantee and the Designated Trust
Agreement have been duly qualified under the Trust Indenture Act;
(vi) The Designated Trust is not an "investment company" or an
entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended;
(vii) The Registration Statement and the Prospectus as amended or
supplemented, and any further amendments and supplements thereto made
by the Designated Trust or the Company prior to such Time of Delivery
(other than the financial statements and related schedules and other
financial and statistical data therein and the Form T-1 Statements of
Eligibility and Qualification of the Trustees, as to which such
counsel need express no opinion), comply as to form in all material
respects with requirements of the Act and the Trust Indenture Act and
the rules and regulations thereunder; although they have not
independently verified and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred
to in the opinion in subsection (iii) of this Section 7(c), they have
no reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Designated
Trust or the Company prior to such Time of Delivery (other than the
financial statements and related schedules and other financial and
statistical data therein and the Form T-1 Statements of Eligibility
and Qualification of the Trustees, as to
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<PAGE> 18
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus as
amended or supplemented or any further amendment or supplement
thereto made by the Designated Trust or the Company prior to such
Time of Delivery (other than the financial statements and related
schedules and other financial and statistical data therein and the
Form T-1 Statements of Eligibility and Qualification of the Trustees,
as to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as
of such Time of Delivery, either the Registration Statement or the
Prospectus as amended or supplemented or any further amendment or
supplement thereto made by the Designated Trust or the Company prior
to such Time of Delivery (other than the financial statements and
related schedules and other financial and statistical data therein
and the Form T-1 Statements of Eligibility and Qualification of the
Trustees, as to which such counsel need express no opinion) contains
an untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and they do
not know of any contracts or other documents of a character required
to be filed as an exhibit to the Registration Statement or required
to be incorporated by reference into the Prospectus as amended or
supplemented or required to be the described in the Registration
Statement or the Prospectus as amended or supplemented which are not
filed or incorporated by reference or described as required;
(e) Special Delaware Counsel to the Designated Trust and the Company
satisfactory to the Representatives, shall have furnished to you, the
Company and the Designated Trust their written opinion, dated the
respective Time of Delivery, in form and substance satisfactory to you, to
the effect that
(i) The Designated Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware
Business Trust Act, and all filings required under the laws of the
State of Delaware with respect to the creation and valid existence of
the Designated Trust as a business trust have been made;
(ii) Under the Delaware Business Trust Act and the Trust
Agreement, the Designated Trust has the power and authority to own
property and conduct its business, all as described in the
Prospectus;
(iii) The Trust Agreement constitutes a valid and legally binding
obligation of the Company and the Trustees, enforceable against the
Company and the Trustees in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(iv) Under the Delaware Business Trust Act and the Trust
Agreement, the Designated Trust has the power and authority to (a)
execute and deliver, and to perform its obligations under, this
Agreement and the Pricing Agreement and (b) issue and perform its
obligations under the Designated Securities and the Common Securities
of the Designated Trust;
(v) Under the Delaware Business Trust Act and the Trust
Agreement, the execution and delivery by the Designated Trust of this
Agreement and the Pricing Agreement, and the performance by the
Designated Trust of its obligations thereunder and thereunder, have
been duly authorized by all necessary action on the part of the
Designated Trust;
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<PAGE> 19
(vi) The Designated Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and non-assessable
beneficial interests in the Designated Trust and are entitled to the
benefits provided by the Trust Agreement; the Securityholders, as
beneficial owners of the Designated Trust, will be entitled to the
same limitation of personal liability extended to stockholders of
private corporations for profit organized under the General
Corporation Law of the State of Delaware; provided that such counsel
may note that the Securityholders may be obligated, pursuant to the
Trust Agreement, to (a) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from
transfers or exchanges of Securities certificates and the issuance of
replacement Securities certificates and (b) provide security and
indemnity in connection with requests of or directions to the
Property Trustee (as defined in the Trust Agreement) to exercise its
rights and remedies under the Trust Agreement;
(vii) The Common Securities of the Designated Trust have been
duly authorized by the Trust Agreement and are validly issued and
represent beneficial interests in the Designated Trust;
(viii) Under the Delaware Business Trust Act and the Trust
Agreement, the issuance of the Designated Securities and the Common
Securities of the Designated Trust is not subject to preemptive
rights;
(ix) The issuance and sale by the Designated Trust of Designated
Securities and the Common Securities of the Designated Trust, the
execution, delivery and performance by the Designated Trust of this
Agreement and the Pricing Agreement, the consummation by the
Designated Trust of the transactions contemplated thereby and
compliance by the Designated Trust with its obligations thereunder
will not violate (a) any of the provisions of the Certificate of
Trust of the Designated Trust or the Trust Agreement, or (b) any
applicable Delaware law or administrative regulation;
(x) Assuming that the Designated Trust derives no income from
or connected with services provided within the State of Delaware and
has no assets, activities (other than maintaining the Delaware
Trustee and the filing of documents with the Secretary of State of
the State of Delaware) or employees in the State of Delaware, no
authorization, approval, consent or order of any Delaware court or
governmental authority or agency is required to be obtained by the
Designated Trust solely in connection with the issuance and sale of
the Designated Securities and the Common Securities of the Designated
Trust. (In rendering the opinion expressed in this paragraph (x),
such counsel need express no opinion concerning the securities laws
of the State of Delaware.); and
(xi) Assuming that the Designated Trust derives no income from
or connected with services provided within the State of Delaware and
has no assets, activities (other than maintaining the Delaware
Trustee and the filing of documents with the Secretary of State of
the State of Delaware) or employees in the State of Delaware, the
Securityholders (other than those holders of the Securities who
reside or are domiciled in the State of Delaware) will have no
liability for income taxes imposed by the State of Delaware solely as
a result
19
<PAGE> 20
of their participation in the Designated Trust, and the Designated
Trust will not be liable for any income tax imposed by the State of
Delaware.
(f) Tax counsel for the Designated Trust and the Company
satisfactory to the Representatives shall have furnished to you their
written opinion, dated the respective Time of Delivery, in form and
substance satisfactory to you, to the effect that such firm confirms its
opinion set forth in the Prospectus under the caption "Certain Federal
Income Tax Consequences";
(g) On the date of the Pricing Agreement for such Designated
Securities and at each Time of Delivery for such Designated Securities,
the independent accountants of the Company who have audited the
consolidated financial statements of the Company and its subsidiaries
included or incorporated by reference in the Registration Statement shall
have furnished to the Representatives a letter, dated the effective date
of the Registration Statement or the date of the most recent report filed
with the Commission containing consolidated financial statements and
incorporated by reference in the Registration Statement, if the date of
such report is later than such effective date, and a letter dated such
Time of Delivery, respectively, to the effect set forth in Annex II
hereto, and with respect to such letter dated such Time of Delivery, as to
such other matters as the Representatives may reasonably request and in
form and substance satisfactory to the Representatives;
(h) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there shall have been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Designated Trust or the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, (B) there shall have been no transactions
entered into by the Designated Trust or the Company or any of the
Company's subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Designated Trust or the
Company and its subsidiaries considered as one enterprise, (C) except for
regular dividends, there shall have been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock and (D) there shall have been no material increase in the long-term
debt of the Company, except such increases as are listed in the Pricing
Agreement relating to such Securities, the effect of which, in any such
case described in Clause (A), (B), (C), or (D), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Underwriters' Securities on the terms and in the manner contemplated in
the Prospectus;
(i) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g) under the Act and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities or preferred stock;
20
<PAGE> 21
(j) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange; (ii) a general moratorium on commercial
banking activities in New York declared by either Federal or New York
State authorities; or (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in
this Clause (iii) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Firm Designated Securities or Optional Designated
Securities or both on the terms and in the manner contemplated in the
Prospectus as amended or supplemented;
(k) The Designated Securities at each Time of Delivery shall have
been duly listed subject to notice of issuance on the New York Stock
Exchange;
(l) No order shall have been issued by any Federal or state bank or
securities regulatory authority in respect of the offering of the
Designated Securities which would interfere with the offering of the
Designated Securities and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company, shall be contemplated by
any such authority; and
(m) The Designated Trust and the Company shall have furnished or
caused to be furnished to the Representatives at each Time of Delivery for
the Designated Securities certificates of officers of the Designated Trust
and the Company satisfactory to the Representatives as to the accuracy of
the representations and warranties of the Designated Trust and the Company
herein at and as of such Time of Delivery, as to the performance by the
Designated Trust and the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to matters set forth in
subsections (a), (c), (d) and (l) of this Section and as to such other
matters as the Representatives may reasonably request.
8. (a) The Designated Trust and the Company, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Designated Securities, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any reasonable legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that neither
the Designated Trust nor the Company shall be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Designated Trust and the Company by any
21
<PAGE> 22
Underwriter of Designated Securities through the Representatives expressly for
use in the Prospectus as amended or supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Designated
Trust and the Company against any losses, claims, damages or liabilities to
which the Designated Trust may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus
as amended or supplemented and any other prospectus relating to the Designated
Securities, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Securities, or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Designated Trust and the Company by such Underwriter through
the Representatives expressly for use therein; and will reimburse the
Designated Trust and the Company for any legal or other expenses reasonably
incurred by the Designated Trust in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify such
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Designated Trust and the Company on the one hand and the
Underwriters of the Designated Securities on the other from the offering of the
Designated Securities to which such loss, claim, damage or liability (or action
in respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by
22
<PAGE> 23
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Designated Trust and the Company on the one hand and the
Underwriters of the Designated Securities on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Designated
Trust and the Company on the one hand and such Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from such
offering (before deducting expenses) received by the Designated Trust and the
Company bear to the total underwriting discounts and commissions received by
such Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Designated Trust and the Company on the
one hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Designated Trust, the Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the applicable Designated Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the
Underwriters of Designated Securities in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations with respect
to such Securities and not joint.
(e) The obligations of the Designated Trust and the Company under this
Section 8 shall be in addition to any liability which the Designated Trust and
the Company may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of any Underwriter and to each person,
if any, who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Designated Trust and the Company and to each person, if any, who controls the
Designated Trust and the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Firm Designated Securities or Optional Designated Securities which it has
agreed to purchase under the Pricing Agreement relating to such Securities, the
Representatives may in their discretion arrange for themselves or another party
or other parties to purchase such Securities on the terms contained
23
<PAGE> 24
herein. If within thirty-six hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Firm Designated
Securities or Optional Designated Securities, as the case may be, then the
Designated Trust shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to the
Representatives to purchase such Securities on such terms. In the event that,
within the respective prescribed period, the Representatives notify the
Designated Trust that they have so arranged for the purchase of such
Securities, or the Designated Trust notifies the Representatives that it has so
arranged for the purchase of such Securities, the Representatives or the
Designated Trust shall have the right to postpone a Time of Delivery for such
Securities for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus as amended or supplemented, or in any other documents or
arrangements, and the Designated Trust agrees to file promptly any amendments
or supplements to the Registration Statement or the Prospectus which in the
opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to the Pricing Agreement with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Firm Designated Securities or Optional Designated Securities, as the case may
be, of a defaulting Underwriter or Underwriters by the Representatives and the
Designated Trust as provided in subsection (a) above, the aggregate number of
such Securities which remains unpurchased does not exceed one-eleventh of the
aggregate number of the Firm Designated Securities or Optional Designated
Securities, as the case may be, to be purchased at the respective Time of
Delivery, then the Designated Trust shall have the right to require each
non-defaulting Underwriter to purchase the number of Firm Designated Securities
or Optional Designated Securities, as the case may be, which such Underwriter
agreed to purchase under the Pricing Agreement relating to such Designated
Securities and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Firm Designated Securities
or Optional Designated Securities, as the case may be, which such Underwriter
agreed to purchase under such Pricing Agreement) of the Firm Designated
Securities or Optional Designated Securities, as the case may be, of such
defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Firm Designated Securities or Optional Designated Securities, as the case may
be, of a defaulting Underwriter or Underwriters by the Representatives and the
Designated Trust as provided in subsection (a) above, the aggregate number of
Firm Designated Securities or Optional Designated Securities, as the case may
be, which remains unpurchased exceeds one-eleventh of the aggregate number of
the Firm Designated Securities or Optional Designated Securities, as the case
may be, to be purchased at the respective Time of Delivery, as referred to in
subsection (b) above, or if the Designated Trust shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Firm Designated Securities or Optional Designated Securities, as the
case may be, of a defaulting Underwriter or Underwriters, then the Pricing
Agreement relating to such Firm Designated Securities or the Over-allotment
Option relating to such Optional Designated Securities, as the case may be,
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Designated Trust or the Company, except for the expenses to
be borne by the Designated Trust and the Company and the Underwriters as
provided in Section 6 hereof and the
24
<PAGE> 25
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Designated Trust or the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Designated Trust or the Company, or any officer or
director or controlling person of the Designated Trust or the Company, and
shall survive delivery of and payment for the Securities.
11. If any Pricing Agreement or Over-allotment Option shall be terminated
pursuant to Section 9 hereof, neither the Designated Trust nor the Company
shall then be under any liability to any Underwriter with respect to the Firm
Designated Securities or Optional Designated Securities with respect to which
such Pricing Agreement shall have been terminated except as provided in Section
6 and Section 8 hereof; but, if for any other reason, Designated Securities are
not delivered by or on behalf of the Designated Trust or the Company as
provided herein, the Company will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but the Designated Trust or the Company
shall then be under no further liability to any Underwriter with respect to
such Designated Securities except as provided in Section 6 and Section 8
hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Representatives as set forth in
the Pricing Agreement; and if to the Designated Trust or the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of
the Designated Trust or the Company, respectively, set forth in the
Registration Statement, Attention: Chief Financial Officer; provided, however,
that any notice to an Underwriter pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the
Designated Trust and the Company by the Representatives upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, each Designated Trust, the
Company and, to the extent provided in Section 8 and Section 10 hereof, the
officers and directors of each Designated Trust, the Company and each person
who controls any Designated Trust or the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall
25
<PAGE> 26
acquire or have any right under or by virtue of this Agreement or any such
Pricing Agreement. No purchaser of any of the Securities from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, the term "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each
of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
26
<PAGE> 27
If the foregoing is in accordance with your understanding, please sign and
return to us [six] counterparts hereof.
Very truly yours,
MBNA Corporation MBNA Capital III
By: MBNA Corporation
as Depositor
By: By:
------------------------- ------------------------
Name: Name:
Title: Title:
MBNA Capital I MBNA Capital IV
By: MBNA Corporation By: MBNA Corporation
as Depositor as Depositor
By: By:
------------------------- ------------------------
Name: Name:
Title: Title:
MBNA Capital II MBNA Capital V
By: MBNA Corporation BY: MBNA Corporation
as Depositor as Depositor
By: By:
------------------------- ------------------------
Name: Name:
Title: Title:
Accepted on behalf of ourselves and the other Underwriters listed in
Schedule I to the Pricing Agreement:
Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
By:
-------------------------
(Goldman, Sachs & Co.)
27
<PAGE> 28
ANNEX I
PRICING AGREEMENT
Goldman, Sachs & Co.,
[Name(s) of Co-Representative(s),]
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Date: ___________
Ladies and Gentlemen:
MBNA Capital I, a statutory business trust formed under the laws of the
State of Delaware (the "Designated Trust") and MBNA Corporation, a Maryland
corporation (the "Company"), propose, subject to the terms and conditions
stated herein and in the Underwriting Agreement, dated December ___, 1996 (the
"Underwriting Agreement"), between the Designated Trust, MBNA Capital II, MBNA
Capital III, MBNA Capital IV, MBNA Capital V and the Company on the one hand
and Goldman, Sachs & Co., [name(s) of Co-Representative(s)], on the other hand,
to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the "Designated
Securities" consisting of Firm Designated Securities and any Optional
Designated Securities the Underwriters may elect to purchase). The principal
asset of the Trust consists of debt securities of the Company (the
"Subordinated Debentures"), as specified in Schedule II to this Agreement. The
Designated Securities will be guaranteed by the Company to the extent set forth
in this Agreement with respect to such Designated Securities (the "Guarantee").
Each of the provisions of the Underwriting Agreement is incorporated herein by
reference in its entirety, and shall be deemed to be a part of this Agreement
to the same extent as if such provisions had been set forth in full herein; and
each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Pricing Agreement, except that
each representation and warranty which refers to the Prospectus in Section 2 of
the Underwriting Agreement shall be deemed to be a representation or warranty
as of the date of the Underwriting Agreement in relation to the Prospectus (as
therein defined), and also a representation and warranty as of the date of this
Pricing Agreement in relation to the Prospectus as amended or supplemented
relating to the Designated Securities which are the subject of this Pricing
Agreement. Each reference to the Representatives herein and in the provisions
of the Underwriting Agreement so incorporated by reference shall be deemed to
refer to you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined. The Representatives
designated to act on behalf of the Representatives and on behalf of each of the
Underwriters of the Designated Securities pursuant to Section 12 of the
Underwriting Agreement and the address of the Representatives referred to in
such Section 12 are set forth in Schedule II hereto.
An amendment to the Initial Registration Statement or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
<PAGE> 29
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, (a) the Designated
Trust agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Designated
Trust, at the time and place and at the purchase price to the Underwriters set
forth in Schedule II hereto, the number of Firm Designated Securities set forth
opposite the name of such Underwriter in Schedule I hereto and, (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Designated Securities, as provided below, the Designated
Trust agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Designated
Trust at the purchase price to the Underwriters set forth in Schedule II hereto
that portion of the number of Optional Designated Securities as to which such
election shall have been exercised.
The Designated Trust hereby grants to each of the Underwriters the right
to purchase at their election up to the number of Optional Designated
Securities set forth opposite the name of such Underwriter in Schedule I hereto
on the terms referred to in the paragraph above for the sole purpose of
covering over-allotments in the sale of the Firm Designated Securities. Any
such election to purchase Optional Designated Securities may be exercised by
written notice from the Representatives to the Designated Trust and the Company
given within a period of 30 calendar days after the date of this Pricing
Agreement, setting forth the aggregate number of Optional Designated Securities
to be purchased and the date on which such Optional Designated Securities are
to be delivered, as determined by the Representatives, but in no event earlier
than the First Time of Delivery or, unless the Representatives and the
Designated Trust otherwise agree in writing, no earlier than two or later than
ten business days after the date of such notice.
2
<PAGE> 30
If the foregoing is in accordance with your understanding, please sign and
return to us [ ] counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Designated Trust and the Company. It is understood that
your acceptance of this letter on behalf of each of the Underwriters is or will
be pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Designated Trust and
the Company for examination, upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours,
MBNA Corporation
By:
---------------------------
Name:
Title:
MBNA CAPITAL __
By: MBNA Corporation,
as Depositor
By:
---------------------------
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
As Representatives of the Underwriters
Named in Schedule I hereto
By:
---------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
3
<PAGE> 31
<TABLE>
<CAPTION>
SCHEDULE I
MAXIMUM NUMBER
NUMBER OF OF OPTIONAL DESIGNATED
FIRM DESIGNATED SECURITIES WHICH
SECURITIES MAY BE
UNDERWRITER TO BE PURCHASED PURCHASED
----------- --------------- ---------
<S> <C> <C>
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . .
[Name(s) of Co-Representative(s)] . . . . . . . . . . . . . . .
[Names of other Underwriters] . . . . . . . . . . . . . . . . .
Total
</TABLE>
1
<PAGE> 32
SCHEDULE II
DESIGNATED TRUST:
MBNA Capital __
TITLE OF DESIGNATED SECURITIES:
____% Cumulative Quarterly Income Preferred Securities, Series __
("QUIPS")
AGGREGATE PRINCIPAL AMOUNT:
Aggregate principal amount of Designated
Securities to be sold: $_____________
PRICE TO PUBLIC:
100% of the principal amount of the Designated Securities
PURCHASE PRICE BY UNDERWRITERS:
_______% of the principal amount of the Designated Securities
UNDERWRITERS' COMPENSATION:
As compensation to the Underwriters for their commitments hereunder,
and in view of the fact that the proceeds of the sale of the
Designated Securities will be used by the Designated Trust to purchase
the Subordinated Debentures of the Company, the Company hereby agrees
to pay at each Time of Delivery to Goldman, Sachs & Co., for the
accounts of the several Underwriters, an amount equal to $__________
per preferred security for the Designated Securities to be delivered
at each Time of Delivery.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Federal (same day) Funds
ACCOUNTANTS' LETTER TO BE DELIVERED ON DATE OF PRICING AGREEMENT:
Yes.
TRUST AGREEMENT:
Amended and Restated Trust Agreement dated as of ________ __, ____,
between the Company and the Trustees named therein
2
<PAGE> 33
INDENTURE:
Indenture dated as of ________ __, 199_, between the Company and
[Debenture Trustee], as Debenture Trustee and Supplemental Indenture
No. __ dated as of ________ __, ____, between the Company and the
Debenture Trustee (collectively the "Indenture")
GUARANTEE:
Guarantee Agreement dated as of ________ __, ____, between Company and
[Guarantee Trustee], as Guarantee Trustee
MATURITY:
________ __, ____
INTEREST RATE:
____%
INTEREST PAYMENT DATES:
March 31, June 30, September 30 and December 31
EXTENSION PERIOD:
[20 quarters]
REDEMPTION PROVISIONS:
[The redemption provisions set forth in Section 402 of the Trust
Agreement shall apply to the Designated Securities.]
SINKING FUND PROVISIONS:
[No sinking fund provisions.]
TIME OF DELIVERY:
10:00 a.m., New York City time
________ __, ____
CLOSING LOCATION:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
3
<PAGE> 34
NAMES AND ADDRESSES OF REPRESENTATIVES:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
4
<PAGE> 35
ANNEX II
Pursuant to Section 7(f) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Designated Trust and the Company and its subsidiaries
within the meaning of the Act and the applicable published rules and
regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined
by them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been separately furnished to the representatives of the Underwriters
(the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
reports on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which have been
separately furnished to the Representatives; and on the basis of
specified procedures including inquiries of officials of the Company
who have responsibility for financial and accounting matters regarding
whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related published rules and regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years included
in the Prospectus and included or incorporated by reference in Item 6
of the Company's Annual Report on Form 10-K for the most recent fiscal
year agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures
<PAGE> 36
specified in such letter nothing came to their attention as a result
of the foregoing procedures that caused them to believe that this
information does not conform in all material respects with the
disclosure requirements of items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting
an examination in accordance with generally accepted auditing
standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading of the
latest available interim financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act and the related published rules and regulations, or (ii)
any material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus or
included in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
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<PAGE> 37
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
stockholders' equity or other items specified by the Representatives,
or any increases in any items specified by the Representatives, in
each case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except in
each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and
other procedures referred to in paragraphs (iii) and (vi) above, they
have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the Representatives which are derived from the general
accounting records of the Company and its subsidiaries, which appear
in the Prospectus (excluding documents incorporated by reference), or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives or in documents
incorporated by reference in the Prospectus specified by the
Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of
the Company and its subsidiaries and have found them to be in
agreement.
All references in this Annex II to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) in relation to the applicable Designated
Securities for purposes of the letter delivered at the Time of Delivery for
such Designated Securities.
3
<PAGE> 1
EXHIBIT 4(a)
MBNA CORPORATION
COMPOSITE ARTICLES OF INCORPORATION
ARTICLE I - NAME
The name of the corporation (hereinafter called the "Corporation") is
MBNA Corporation. (As amended 1/10/91)
ARTICLE II - PURPOSE
The Corporation is formed to engage in the business of banking and
finance, directly and through subsidiaries. It may engage in any other business
permitted by law.
ARTICLE III - PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. The resident agent of the Corporation in the State of Maryland
is The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202. The resident agent is a Maryland corporation.
ARTICLE IV - CAPITAL STOCK
(a) The total number of shares of stock of all classes which the
Corporation has authority to issue is 720,000,000 shares, of which 700,000,000
shares are classified as Common Stock, par value $.01 per share, and 20,000,000
shares are classified as Preferred Stock, par value $.01 per share. The
aggregate par value of all shares of all classes which the Corporation is
authorized to issue is $7,200,000. (As amended by the Company's Stockholders on
4/22/96)
(b) The Preferred Stock may be issued in series. Prior to issuance,
the Board of Directors shall set the terms of the Preferred Stock, including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption.
(c) The Board of Directors shall have the power to classify or
reclassify any unissued stock, whether now or hereafter authorized, by setting
or changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such stock.
(d) Unless otherwise provided by the Board of Directors, no holder of
stock of any class shall be entitled to preemptive rights to subscribe for or
purchase or receive any stock of any class or securities convertible into stock
of any class of the Corporation.
<PAGE> 2
ARTICLE V - BOARD OF DIRECTORS
(a) The Corporation shall initially have four directors. The initial
directors, who shall act as such until the first annual meeting or until their
successors are duly elected and qualify shall be Charles M. Cawley, John R.
Cochran, Bruce L. Hammonds and M. Scot Kaufman. The number of directors may be
increased or decreased as provided in the By-Laws of the Corporation.
(b) The Board of Directors may authorize the issuance from time to
time of stock of the Corporation of any class, now or hereafter authorized, and
securities convertible into stock of the Corporation of any class, now or
hereafter authorized, for such consideration and on such other terms as the
Board of Directors may deem advisable, without stockholder approval.
ARTICLE VI - VOTING
Notwithstanding any provision of law requiring any action to be taken
or authorized by the affirmative vote of the holders of a greater proportion of
the votes of all classes or of any class of stock of the Corporation, such
action shall be effective and valid if taken or authorized by the affirmative
vote of a majority of the total number of votes entitled to be cast thereon,
except as otherwise provided in the charter.
ARTICLE VII - LIABILITY AND INDEMNIFICATION
(a) To the fullest extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation Law,
no director or officer of the Association shall have any liability to the
Corporation or its stockholders for damages. This limitation on liability
applies to events occurring at the time a person serves as director or officer
of the Corporation whether or not such person is a director or officer at the
time of any proceeding in which liability is asserted.
(b) To the fullest extent permitted by the Maryland General
Corporation Law, the Corporation shall indemnify and advance expenses to its
currently acting and its former directors. The Corporation shall indemnify and
advance expenses to its officers to the same extent as its directors, and may
do so to such further extent as is consistent with law. The Board of Directors
may by bylaw, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents to the fullest
extent permitted by the Maryland General Corporation Law.
(c) References to the Maryland General Corporation Law in this Article
are to that law as from time to time amended. No amendment to the charter of
the Corporation shall affect any right of any person under this Article based
on any event, omission or proceeding prior to the amendment.
ARTICLE VIII - CONTROL SHARE ACQUISITION STATUTE EXEMPTIONS
2
<PAGE> 3
(As amended by adding this new Article VIII and renumbering existing
Article VIII as Article IX 1/21/91)
Any acquisition of shares of the Corporation on or after January 21,
1991 by Alfred Lerner (or his successor in interest) ("Lerner") or by The
Progressive Corporation (or its successors in interest) ("Progressive"), or by
any present or future affiliate or associate thereof so long as such affiliate
or associate is at the time in question such an affiliate or associate (or any
person acting in concert or in a group with any of the foregoing) is, pursuant
to Section 3-702(b) of the Maryland General Corporation Law (the "MGCL") (or
any successor or replacement provision or statute), hereby approved for
purposes of and exempted from the provisions of, Subtitle 7 of Title 3 of the
MGCL (or any successor or replacement provision or statute), with the result
that any shares acquired by any such person shall have all voting rights
otherwise appurtenant thereto, notwithstanding Subtitle 7 of Title 3 of the
MGCL (or any successor or replacement provision or statute).
Notwithstanding anything in the Charter or bylaws of the Corporation
(as each may be amended from time to time) to the contrary, this ARTICLE may
not be amended, altered or repealed except with the unanimous approval of all
of the members of the Board of Directors and the written consent of all
persons or entities then in existence and specified above that may be adversely
affected, or that may lose any privilege or right, as a result of such
amendment, alteration or repeal. (As amended by deleting the second paragraph
of Article VIII and inserting in lieu thereof the foregoing second paragraph
1/28/91)
ARTICLE IX - AMENDMENTS
Except as set forth in this Article, The Corporation reserves the
right to make, from time to time, any amendments of its charter which may now
or hereafter be authorized by law, including any amendments which alter the
contract rights of any class of outstanding stock as expressly set forth in the
charter.
Filed: 12/6/90
Adopted: 12/6/90
Board Approval: 1/10/91
1/21/91
1/28/91
4/21/92
4/22/96
3
<PAGE> 4
MBNA CORPORATION
ARTICLES SUPPLEMENTARY - SERIES A
(Filed November 9, 1995)
FIRST: 10,000,000 shares of authorized but unissued common
stock, par value $.01 per share, of the Corporation, have been
reclassified as additional shares of Preferred Stock, par value $.01
per share, and 6,000,000 shares of authorized but unissued Preferred
Stock of the Corporation have been classified as 7-1/2% Cumulative
Preferred Stock, Series A, $.01 par value, of the Corporation (the
"Series") with the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption, as follows:
1. Dividends. (a) Dividends shall be payable on the
shares of this Series: (i) for the period (the "Initial Dividend
Period") from the date of original issue of shares of this Series to
and including January 14, 1996 and (ii) for each quarterly dividend
period thereafter (the Initial Dividend Period and each quarterly
dividend period thereafter being hereinafter individually referred to
as a "Dividend Period" and collectively referred to as "Dividend
Periods"), which quarterly Dividend Periods shall commence on January
15, April 15, July 15 and October 15 in each year, commencing January
15, 1996, and shall end on and include the day next preceding the
first day of the next Dividend Period, in an amount equal to $.46875
per share per quarterly Dividend Period. Dividends shall be
cumulative from such date of original issue and shall be payable,
when, as and if declared by the Board of Directors, on April 15, July
15, October 15 and January 15 of each year (each, a "Dividend Payment
Date"), commencing on January 15, 1996. Each dividend on the shares
of this Series will be payable to the holders of record of the shares
of this Series as they appear on the stock books of the Corporation on
such record date as may be fixed by the Board of Directors of the
Corporation, which record date will not be more than sixty (60) days
prior to the applicable Dividend Payment Date.
(b) Dividends payable on this Series for any period
greater or less than a full Dividend Period, including the Initial
Dividend Period, shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and the actual number of days
included in the Dividend Period.
(c) Holders of shares of this Series shall not be
entitled to any dividend, whether payable in cash, property or stock,
in excess of full cumulative dividends, as herein provided, on this
Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series
which may be in arrears.
4
<PAGE> 5
(d) No full dividends shall be declared or paid or set
apart for payment on any series stock ranking, as to dividends, on a
parity with this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for
such payment on this Series for all Dividend Periods terminating on or
prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of this
Series and any other stock ranking on a parity as to dividends with
this Series, all dividends declared upon shares of this Series and any
other series of stock ranking on a parity as to dividends with this
Series shall be declared pro rata so that the amount of dividends
declared per share on this Series and such other stock shall in all
cases bear to each other the same ratio that accrued and unpaid
dividends per share on the shares of this Series and such other stock
bear to each other.
(e) So long as any shares of this Series are outstanding,
no dividend (other than a dividend payable in common stock or in any
other stock ranking junior to this Series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment or
other distribution declared or made upon the common stock or upon any
other stock ranking junior to this Series as to dividends or upon
liquidation, nor shall any common stock or any other stock of the
Corporation ranking junior to this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by
the Corporation (except by conversion into or exchange for stock of
the Corporation ranking junior to this Series as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on
all outstanding shares of this Series shall have been paid or declared
and set aside for payment for all past Dividend Periods.
2. Redemption. (a) The holders of the shares of this
Series may not require the Corporation to redeem any shares of this
Series. The Corporation, at its option, may redeem shares of this
Series, as a whole or in part, at any time on or after January 15,
2001, at a redemption price of $25 per share, plus accrued and unpaid
dividends thereon to the date fixed for redemption.
(b) In the event that fewer than all the outstanding
shares of this Series are to be redeemed, the number of shares to be
redeemed shall be determined by lot or pro rata as may be determined
by the Corporation or by any other method as may be determined by the
Board of Directors of the Corporation in its sole discretion to be
equitable, provided that such method satisfies any applicable
requirements of any securities exchange on which this Series is
listed.
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<PAGE> 6
(c) In the event the Corporation shall redeem shares of
this Series, notice of such redemption shall be given by first class
mail, postage prepaid, mailed not less than 30 or more than 60 days
prior to the redemption date, to each holder of record of the shares
to be redeemed, at such holder's address as the same appears on the
stock register of the Corporation. Each such notice shall state: (i)
the redemption date; (ii) the number of shares of this Series to be
redeemed and, if fewer than all the shares held by such holder are to
be redeemed, the number of such shares to be redeemed from such
holder; (iii) the redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed
cease to accrue on the redemption date.
(d) Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the
Corporation in providing money for the payment of the redemption
price) dividends on the shares of this Series so called for redemption
shall cease to accrue, and said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of
the Corporation (except the right to receive from the Corporation the
redemption price) shall cease. Upon surrender in accordance with said
notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so require
and the notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(e) Any shares of this Series which shall at any time
have been redeemed shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without designation
as to series.
(f) Notwithstanding the foregoing provisions of this
Section 2, if any dividends on this Series or any other series of
cumulative Preferred Stock ranking on a parity with this Series are in
arrears, no shares of this Series or any such parity series shall be
redeemed unless all outstanding shares of this Series or any such
parity series are simultaneously redeemed, and the Corporation shall
not purchase or otherwise acquire any shares of this Series or any
such parity series; provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of this Series or any
such parity series pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding shares of this Series.
3. Conversion. The holders of shares of this
Series shall not have any rights to convert such shares into shares of
any other class or series of capital stock of the Corporation.
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<PAGE> 7
4. Liquidation Rights. (a) Upon the voluntary
or involuntary dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be
entitled to receive and to be paid out of the assets of the
Corporation available for distribution to its stockholders, before any
payment or distribution shall be made on the common stock or on any
other class of stock ranking junior to this Series upon liquidation,
the amount of $25 per share, plus accrued and unpaid dividends
thereon.
(b) After the payment to the holders of the shares of
this Series of the full preferential amounts provided for in this
Section 4, the holders of this Series as such shall have no right or
claim to any of the remaining assets of the Corporation.
(c) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the amounts payable
with respect to the shares of this Series and any other shares of
stock of the Corporation ranking as to any such distribution on a
parity with the shares of this Series are not paid in full, the
holders of the shares of this Series and of such other shares will
share ratably in any such distribution of assets of the Corporation in
proportion to the full preferential amounts to which they are
entitled.
(d) Neither the sale of all or substantially all of the
assets of the Corporation, nor the merger or consolidation or share
exchange of the Corporation into or with any other corporation or the
merger or consolidation or share exchange of any other corporation
into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes
of this Section 4.
(e) Upon the dissolution, liquidation or winding up of
the Corporation, the holders of shares of this Series then outstanding
shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders all amounts to which
such holders are entitled pursuant to paragraph (a) of this Section 4
before any payment shall be made to the holder of any class of capital
stock of the Corporation ranking junior to this Series upon
liquidation.
5. Ranking. Any stock of any class or classes of the
Corporation shall be deemed to rank:
(a) prior to the shares of this Series, either as to
dividends or upon liquidation, if the holders of such class or classes
shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the
holders of shares of this Series;
7
<PAGE> 8
(b) on a parity with shares of this Series, either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share
or sinking fund provisions, if any, be different from those of this
Series, if the holders of such stock shall be entitled to the receipt
of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, without
preference or priority, one over the other, as between the holders of
such stock and the holders of shares of this Series; and
(c) junior to shares of this Series, either as to
dividends or upon liquidation, if such class shall be common stock or
if the holders of shares of this Series shall be entitled to receipt
of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes.
6. Voting Rights. (a) Except as indicated
below, the shares of this Series shall not be entitled to vote on any
matter including, but not limited to:
(i) Any merger, consolidation, share exchange or
sale of all or substantially all of the assets of the
Corporation except to the extent such action changes or alters
the preferences, conversion and other rights, voting powers,
restrictions, limitation as to dividends, qualifications and
terms and conditions of redemption of this Series as expressly
set forth herein in a manner adverse to the holders of this
Series, or,
(ii) An increase in the authorized amount of this
Series or the creation, authorization or issuance of an
additional series ranking on a parity with the shares of this
Series as to dividends or upon liquidation, or to reclassify
any authorized stock of the Corporation into any such shares
ranking on a parity with, or to authorize or issue any
obligation or security convertible into or evidencing the
right to purchase any such pari passu shares.
(b) Notwithstanding the foregoing:
(i) The affirmative vote of at least two-thirds
of the votes entitled to be cast by holders of shares of this
Series, shall be necessary for any amendment, alteration or
repeal, whether by merger, consolidation, share exchange or
otherwise, of the Charter of the Corporation, any articles
supplementary thereto or of the resolutions contained in the
articles supplementary thereto, which changes or alters the
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of this Series as expressly
set forth herein in a manner adverse to the holders of this
Series;
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<PAGE> 9
(ii) The affirmative vote of at least two-thirds
of the votes entitled to be cast by the holders of the shares
of this Series and all other series of Preferred Stock ranking
on a parity with shares of this Series as to dividends or upon
liquidation upon which like voting rights have been conferred
and are exercisable, voting together as a single class without
regard to series, shall be necessary to authorize or issue any
shares of any class of stock of the Corporation ranking prior
to the shares of this Series as to dividends or upon
liquidation, or to reclassify any authorized stock of the
Corporation into any such prior shares, or authorize or issue
any obligation or security convertible into or evidencing the
right to purchase any such prior shares; and
(iii) If at the time of any annual meeting of the
Corporation's stockholders for the election of directors there
is a default in preference dividends (as hereinafter defined)
on this Series, the number of directors constituting the Board
of Directors of the Corporation shall be increased by two, and
the holders of the shares of this Series (together with the
holders of the Preferred Stock of all other series upon which
like voting rights have been conferred and are exercisable),
shall have the right at such meeting, voting together as a
single class without regard to series, to the exclusion of the
holders of common stock, to elect two directors of the
Corporation (each a "Preferred Director") to fill such newly
created directorships. Each holder of shares of this Series
will have one vote for each share of stock held and each
holder of each other series of Preferred Stock with like
voting rights will have such number of rights, if any, for
each share of stock held as may be granted to such holder.
Such right shall continue until there are no dividends in
arrears upon this Series, subject to re-vesting in the event
of each and every subsequent default in preference dividends
on this Series. Any Preferred Director may be removed with or
without cause by the vote of the holders of record of the
outstanding shares of Preferred Stock entitled to elect such
Preferred Director, voting together as a single class without
regard to series, at a meeting of the Corporation's
stockholders, or of the holders of such shares of Preferred
Stock, called for the purpose. Any Preferred Director may be
removed for cause by the vote of the holders of outstanding
shares of stock of the Corporation entitled to vote for the
election of directors. So long as a default in any preference
dividends on this Series shall exist, (a) any vacancy in the
office of a Preferred Director may be filled (except as
provided in the following clause (b)) by an instrument in
writing signed by the remaining Preferred Director and filed
with the Corporation and (b) in the case of the removal of any
Preferred Director, the vacancy may be filled by the vote of
the holders of the outstanding shares of Preferred Stock,
voting together as a single class without regard to series, at
the same meeting at which such removal shall be voted. Each
director
9
<PAGE> 10
appointed as aforesaid by the remaining Preferred Director
shall be deemed, for all purposes hereof, to be a Preferred
Director. Whenever a default in preference dividends shall no
longer exist, subject to the rights of the holders of any
other series of Preferred Stock, the number of directors
constituting the Board of Directors of the Corporation shall
be reduced by two. For the purposes hereof, a "default in
preference dividends" on this Series shall be deemed to have
occurred whenever the amount of accrued dividends upon this
Series shall be equivalent to six full quarterly dividends or
more (whether or not consecutive), and, having so occurred,
such default shall be deemed to exist thereafter until, but
only until, all accrued dividends on all shares of this Series
shall have been paid to the end of the last preceding dividend
period.
SECOND: The shares of Common Stock have been reclassified as
Preferred Stock and the shares of this Series have been reclassified
by the Board of Directors of the Corporation under the authority
contained in the Charter of the Corporation. The terms of this
Series have been fixed by a committee of the Board of Directors
pursuant to a general formula adopted by the Board of Directors.
10
<PAGE> 11
MBNA CORPORATION
ARTICLES SUPPLEMENTARY - SERIES B
MBNA CORPORATION, a Maryland corporation having its principal
office in Baltimore City, Maryland (the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: 6,000,000 shares of authorized but unissued Preferred
Stock of the Corporation have been classified as Adjustable Rate
Cumulative Preferred Stock, Series B, $.01 par value, of the
Corporation (the "Series") with the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption, as follows:
1. Dividends. (a) Dividends shall be payable on the
shares of the Series for the period from September 23, 1996 to October
15, 1996 (the "Initial Dividend Period") at the rate of 7.0% per annum
($.1069 per share). For each quarterly dividend period after the
Initial Dividend Period (the Initial Dividend Period and each
quarterly dividend period thereafter being hereinafter individually
referred to as a "Dividend Period" and collectively referred to as
"Dividend Periods"), which Dividend Periods shall commence on January
15, April 15, July 15 and October 15 of each year, commencing October
15, 1996, and shall end on and include the day next preceding the
first day of the next Dividend Period, dividends payable on the shares
of the Series shall be payable at a rate per annum of the stated value
thereof equal to the Applicable Rate (as defined in Section 2) in
respect of such Dividend Period, expressed as a percentage to the
nearest ten thousandth of a percentage point. The amount of dividends
per share for each Dividend Period shall be computed by dividing the
Applicable Rate for such quarterly Dividend Period by four and
applying the resulting rate to the stated value per share of the
Series. Dividends shall be fully cumulative from September 23, 1996
and shall be payable, as, if and when declared by the Board of
Directors, on January 15, April 15, July 15 and October 15 of each
year (each, a "Dividend Payment Date"), commencing on October 15,
1996. If a Dividend Payment Date is not a business day, dividends (if
declared) on the shares of the Series will be paid on the immediately
succeeding business day, without interest. Each dividend will be
payable to holders of record as they appear on the stock books of the
Corporation on such record dates as shall be fixed by the Board of
Directors of the Corporation and shall be not more than 60 days
preceding the payment date of such dividend. The right of the holders
of the shares of the Series to receive dividends is fully cumulative
and, accordingly, all dividends not paid, whether or not declared,
will accumulate without interest until declared
<PAGE> 12
2
and paid, which declaration and payment may be for all or part of the
then accumulated dividends. The Corporation's ability to pay
dividends on its Preferred Stock, including the Series, is subject to
policies established by the Federal Reserve Board.
(b) Dividends payable on the Series for any period
greater or less than a full Dividend Period, including the Initial
Dividend Period, shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and the actual number of days
elapsed in any period less than one month.
(c) Holders of shares of the Series shall not be entitled
to any dividend, whether payable in cash, property or stock, in excess
of full cumulative dividends, as herein provided, on the Series. No
interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series which may be
in arrears.
(d) No full dividends shall be declared or paid or set
apart for payment on any stock ranking, as to dividends, on a parity
with the Series for any period unless full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the
Series for all Dividend Periods terminating on or prior to the date of
payment of such full cumulative dividends. When dividends are not
paid in full, as aforesaid, upon the shares of the Series and any
other stock ranking on a parity as to dividends with the Series, all
dividends declared upon shares of the Series and any other series of
stock ranking on a parity as to dividends with the Series shall be
declared pro rata so that the amount of dividends declared per share
on the Series and such other stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on
the shares of the Series and such other stock bear to each other.
(e) So long as any shares of the Series are outstanding,
no dividend (other than a dividend payable in common stock or in any
other stock ranking junior to the Series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment or
other distribution declared or made upon the common stock or upon any
other stock ranking junior to the Series as to dividends or upon
liquidation, nor shall any common stock or any other stock of the
Corporation ranking junior to the Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by
the Corporation (except by conversion into or exchange for stock
<PAGE> 13
3
of the Corporation ranking junior to the Series as to dividends and
upon liquidation) unless, in each case, the full cumulative dividends
on all outstanding shares of the Series shall have been paid or
declared and set aside for payment for all past Dividend Periods.
2. Definition of Applicable Rate, etc. (a) Except as
provided below in this paragraph, the "Applicable Rate" for any
Dividend Period (other than the Initial Dividend Period) will be equal
to 99.0% of the Effective Rate (as defined below), but not less than
5.5% per annum or more than 11.5% per annum. The "Effective Rate" for
any Dividend Period will be equal to the highest of the Treasury Bill
Rate, the Ten Year Constant Maturity Rate and the Thirty Year Constant
Maturity Rate (each as defined below) for such Dividend Period. In
the event that the Corporation determines in good faith that for any
reason:
(i) any one of the Treasury Bill Rate,
the Ten Year Constant Maturity Rate or the Thirty Year
Constant Maturity Rate cannot be determined for any Dividend
Period, the Effective Rate for such Dividend Period will be
equal to the higher of whichever two of such rates can be so
determined;
(ii) only one of the Treasury Bill Rate,
the Ten Year Constant Maturity Rate or the Thirty Year
Constant Maturity Rate can be determined for any Dividend
Period, the Effective Rate for such Dividend Period will be
equal to whichever such rate can be so determined; or
(iii) none of the Treasury Bill Rate, the
Ten Year Constant Maturity Rate or the Thirty Year Constant
Maturity Rate can be determined for any Dividend Period, the
Effective Rate for the preceding dividend period will be
continued for such Dividend Period.
(b) Except as described below in this paragraph, the
"Treasury Bill Rate" for each Dividend Period will be the arithmetic
average of the two most recent weekly per annum market discount rates
(or the one weekly per annum market discount rate, if only one such
rate is published during the relevant Calendar Period (as defined
below)) for three-month U.S. Treasury bills, as published weekly by
the Federal Reserve Board (as defined below) during the Calendar
Period immediately preceding the last ten calendar days preceding the
Dividend Period for which the dividend rate on the Series is being
determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum market discount rate during any such
Calendar Period, the Treasury Bill Rate for such Dividend Period will
be the arithmetic average of the two most recent weekly per annum
market discount rates (or the one weekly per annum market
<PAGE> 14
4
discount rate, if only one such rate is published during the relevant
Calendar Period) for three-month U.S. Treasury bills, as published
weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation.
In the event that a per annum market discount rate for three-month
U.S. Treasury bills is not published by the Federal Reserve Board or
by any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, the Treasury Bill Rate for such
Dividend Period will be the arithmetic average of the two most recent
weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate is published during the
relevant Calendar Period) for all of the U.S. Treasury bills then
having remaining maturities of not less than 80 nor more than 100
days, as published during such Calendar Period by the Federal Reserve
Board or, if the Federal Reserve Board does not publish such rates, by
any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason no such U.S. Treasury
bill rates are published as provided above during such Calendar
Period, the Treasury Bill Rate for such Dividend Period will be the
arithmetic average of the per annum market discount rates based upon
the closing bids during such Calendar Period for each of the issues of
marketable non-interest-bearing U.S. Treasury securities with a
remaining maturity of not less than 80 nor more than 100 days from the
date of each such quotation, as chosen and quoted daily for each
business day in New York City (or less frequently if daily quotations
are not generally available) to the Corporation by at least three
recognized dealers in U.S. Government securities selected by the
Corporation. In the event that the Corporation determines in good
faith that for any reason the Corporation cannot determine the
Treasury Bill Rate for any Dividend Period as provided above in this
paragraph, the Treasury Bill Rate for such Dividend Period will be the
arithmetic average of the per annum market discount rates based upon
the closing bids during such Calendar Period for each of the issues of
marketable interest-bearing U.S. Treasury securities with a remaining
maturity of not less than 80 nor more than 100 days from the date of
each such quotation, as chosen and quoted daily for each business day
in New York City (or less frequently if daily quotations are not
generally available) to the Corporation by at least three recognized
dealers in U.S. Government securities selected by the Corporation.
(c) Except as described below in this paragraph, the "Ten
Year Constant Maturity Rate" for each Dividend Period will be the
arithmetic average of the two most recent weekly per annum Ten Year
Average Yields (as defined below) (or the one weekly per annum Ten
Year Average Yield, if only one such yield is published during the
relevant Calendar
<PAGE> 15
5
Period), as published weekly by the Federal Reserve Board during the
Calendar Period immediately preceding the last ten calendar days
preceding the Dividend Period for which the dividend rate on the
Series is being determined. In the event that the Federal Reserve
Board does not publish such a weekly per annum Ten Year Average Yield
during any such Calendar Period, the Ten Year Constant Maturity Rate
for such Dividend Period will be the arithmetic average of the two
most recent weekly per annum Ten Year Average Yields (or the one
weekly per annum Ten Year Average Yield, if only one such yield is
published during the relevant Calendar Period), as published weekly
during such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In the
event that a per annum Ten Year Average Yield is not published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period, the Ten
Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum average
yields to maturity (or the one weekly per annum average yield to
maturity, if only one such yield is published during the relevant
Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities
(as defined below)) then having remaining maturities of not less than
eight nor more than twelve years, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board
does not publish such yields, by any Federal Reserve Bank or by any
U.S. Government department or agency selected by the Corporation. In
the event that the Corporation determines in good faith that for any
reason the Corporation cannot determine the Ten Year Constant Maturity
Rate for any Dividend Period as provided above in this paragraph, then
the Ten Year Constant Maturity Rate for such Dividend Period will be
the arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each of
the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final maturity
date not less than eight nor more than twelve years from the date of
each such quotation, as chosen and quoted daily for each business day
in New York City (or less frequently if daily quotations are not
generally available) to the Corporation by at least three recognized
dealers in U.S. Government securities selected by the Corporation.
(d) Except as described below in this paragraph, the
"Thirty Year Constant Maturity Rate" for each Dividend Period will be
the arithmetic average of the two most recent weekly per annum Thirty
Year Average Yields (as defined below) (or the one weekly per annum
Thirty Year Average yield, if only one such yield is published during
the relevant Calendar Period), as published weekly by the
<PAGE> 16
6
Federal Reserve Board during the Calendar Period immediately preceding
the last ten calendar days preceding the Dividend Period for which the
dividend rate on the Series is being determined. In the event that
the Federal Reserve Board does not publish such a weekly per annum
Thirty Year Average Yield during any such Calendar Period, the Thirty
Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum Thirty Year
Average Yields (or the one weekly per annum Thirty Year Average Yield,
if only one such yield is published during the relevant Calendar
Period), as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that a per annum Thirty
Year Average Yield is not published by the Federal Reserve Board or by
any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, the Thirty Year Constant Maturity
Rate for such Dividend Period will be the arithmetic average of the
two most recent weekly per annum average yields to maturity (or the
one weekly per annum average yield to maturity, if only one such yield
is published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) then having remaining
maturities of not less than 28 nor more than 30 years, as published
during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board does not publish such yields, by any Federal
Reserve Bank or by any U.S. Government department or agency selected
by the Corporation. In the event that the Corporation determines in
good faith that for any reason the Corporation cannot determine the
Thirty Year Constant Maturity Rate for any Dividend Period as provided
above in this paragraph, then the Thirty Year Constant Maturity Rate
for such Dividend Period will be the arithmetic average of the per
annum average yields to maturity based upon the closing bids during
such Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than 28 nor
more than 30 years from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
(e) The Treasury Bill Rate, the Ten Year Constant
Maturity Rate and the Thirty Year Constant Maturity Rate shall each be
rounded to the nearest five hundredths of a percent.
(f) The Applicable Rate with respect to each Dividend
Period (other than the Initial Dividend Period) will be calculated as
promptly as practicable by the Corporation
<PAGE> 17
7
according to the appropriate method described above. The Corporation
will cause each Applicable Rate to be published in a newspaper of
general circulation in New York City before the commencement of the
Dividend Period to which it applies and will cause notice of such
Applicable Rate to be enclosed with the dividend payment checks next
mailed to the holders of the shares of the Series.
(g) For purposes of this Section,
(i) "Calendar Period" means a period of
fourteen calendar days;
(ii) "Federal Reserve Board" means the
Board of Governors of the Federal Reserve System;
(iii) "Special Securities" means
securities which can, at the option of the holder, be
surrendered at face value in payment of any Federal estate tax
or which provide tax benefits to the holder and are priced to
reflect such tax benefits or which were originally issued at a
deep or substantial discount;
(iv) "Ten Year Average Yield" means the
average yield to maturity for actively traded marketable U.S.
Treasury fixed interest rate securities (adjusted to constant
maturities of ten years); and
(v) "Thirty Year Average Yield" means
the average yield to maturity for actively traded marketable
U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of thirty years).
3. Changes in the Dividends-Received Percentage. (a)
If one or more amendments to the Internal Revenue Code of 1986, as
amended (the "Code") are enacted that reduce the percentage of the
dividends-received deduction (currently 70%) as specified in Section
243(a)(1) of the Code or any successor provision (the
"Dividends-Received Percentage"), certain adjustments may be made in
respect of the dividends payable by the Corporation and Post
Declaration Date Dividends (as defined below) may become payable, as
described below.
(b) The amount of each dividend payable (if declared) per
share of the Series for dividend payments made on or after the
effective date of enactment of such change in the Code will be
adjusted by multiplying the amount of the dividend payable determined
as described in Section 1 above (before adjustment) by a factor which
shall be the number determined in accordance with the following
formula (the "DRD Formula"), and rounding the result to the nearest
cent (with one-half cent rounded up):
<PAGE> 18
8
1-.35(1-.70)
--------------
1-.35(1-DRP)
(c) For the purposes of the DRD Formula, "DRP" means the
Dividends-Received Percentage (expressed as a decimal) applicable to
the dividend in question. No amendment to the Code, other than a
change in the percentage of the dividends-received deduction set forth
in Section 243(a)(1) of the Code or any successor provision thereto,
will give rise to an adjustment. Notwithstanding the foregoing
provisions, if, with respect to any such amendment, the Corporation
receives either an unqualified opinion of nationally recognized
independent tax counsel selected by the Corporation or a private
letter ruling or similar form of authorization from the Internal
Revenue Service (the "IRS") to the effect that such an amendment would
not apply to a dividend payable on the shares of the Series, then such
amendment will not result in the adjustment provided for pursuant to
the DRD Formula with respect to such dividend. The opinion referenced
in the previous sentence shall be based upon the legislation amending
or establishing the DRP or upon a published pronouncement of the IRS
addressing such legislation. The Corporation's calculation of the
dividends payable as so adjusted shall be final and not subject to
review.
(d) Notwithstanding the foregoing, if any amendment to
the Code is enacted and effected after a dividend payable on a
Dividend Payment Date has been declared but not paid, the amount of
the dividend payable on such Dividend Payment Date will not be
increased; instead, additional dividends (the "Post Declaration Date
Dividends"), equal to the excess, if any, of (x) the product of the
dividend paid by the Corporation on such Dividend Payment Date and the
DRD Formula over (y) the dividend paid by the Corporation on such
Dividend Payment Date, will be payable (if declared) to holders of
shares of the Series on the record date applicable to the next
succeeding Dividend Payment Date or, if the Series is called for
redemption prior to such record date, to holders of shares of the
Series on the applicable redemption date, as the case may be, in
addition to any other amounts payable on such date.
(e) In the event that the amount of dividends payable per
share of the Series is adjusted pursuant to the DRD Formula and/or
Post Declaration Date Dividends are to be paid, the Corporation will
give notice of each such adjustment and, if applicable, any Post
Declaration Date Dividends to the holders of the shares of the Series.
4. Redemption. (a) The holders of the shares of the
Series may not require the Corporation to redeem any shares of the
Series. The Corporation, at its option, may redeem shares of the
Series, in whole or in part, at any time and
<PAGE> 19
9
from time to time, on or after October 15, 2001, at a redemption price
of $25 per share, plus accrued and unpaid dividends thereon (whether
or not declared) to the date fixed for redemption.
(b) In the event that fewer than all the outstanding
shares of the Series are to be redeemed, the number of shares to be
redeemed shall be determined by lot or pro rata as may be determined
by the Corporation or by any other method as may be determined by the
Corporation in its sole discretion to be equitable, provided that such
method satisfies any applicable requirements of any securities
exchange on which the Series is listed.
(c) In the event the Corporation shall redeem shares of
the Series, notice of such redemption shall be given by first class
mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the redemption date, to each holder of record of the shares
of the Series to be redeemed, at such holder's address as the same
appears on the stock register of the Corporation. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of
the Series to be redeemed and, if fewer than all the shares held by
such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (iii) the redemption price; (iv) the place
or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares
of the Series to be redeemed cease to accrue on the redemption date.
(d) Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the
Corporation in providing money for the payment of the redemption
price) dividends on the shares of the Series so called for redemption
shall cease to accrue, and said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of
the Corporation (except the right to receive from the Corporation the
redemption price) shall cease. Upon surrender in accordance with said
notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so require
and the notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(e) Any shares of the Series which shall at any time have
been redeemed shall, after such redemption, have the status of
authorized but unissued shares of Preferred Stock, without designation
as to series.
<PAGE> 20
10
(f) Notwithstanding the foregoing provisions of this
Section 4, if any dividends on the shares of the Series or any other
series of cumulative Preferred Stock ranking on a parity with the
Series are in arrears, no shares of the Series or any such parity
series shall be redeemed unless all outstanding shares of the Series
or any such parity series are simultaneously redeemed, and the
Corporation shall not purchase or otherwise acquire any shares of the
Series or any such parity series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of
the Series or any such parity series pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding
shares of the Series.
(g) Notwithstanding the foregoing provisions of this
Section 4, if the Dividends-Received Percentage is less than 50% and,
as a result, the amount of dividends on the Series payable on any
Dividend Payment Date will be or is adjusted upwards as described in
Section 3 above, the Corporation, at its option, may redeem all, but
not less than all, of the outstanding shares of the Series, provided,
that within 60 days of the date on which an amendment to the Code is
enacted which reduces the Dividends-Received Percentage to less than
50%, the Corporation sends notice to holders of the Series of such
redemption pursuant to paragraph (c) of this Section 4. Any
redemption of the Series pursuant to this paragraph will take place on
the date specified in the notice, which shall not be less than 30 nor
more than 60 days from the date such notice is sent to holders of the
Series. Any redemption of the Series in accordance with this
paragraph shall be on notice as aforesaid at the applicable redemption
price set forth in the following table, in each case plus accrued and
unpaid dividends (whether or not declared) thereon to the date fixed
for the redemption, including any changes in dividends payable due to
changes in the Dividends-Received Percentage and Post Declaration Date
Dividends, if any:
<TABLE>
<CAPTION>
Redemption Period Redemption Price
----------------- ----------------
<S> <C>
September 23, 1996 to October 14, 1997 . . . . . . . . . . . . . . . . . . $26.25
October 15, 1997 to October 14, 1998 . . . . . . . . . . . . . . . . . . . $26.00
October 15, 1998 to October 14, 1999 . . . . . . . . . . . . . . . . . . . $25.75
October 15, 1999 to October 14, 2000 . . . . . . . . . . . . . . . . . . . $25.50
October 15, 2000 to October 14, 2001 . . . . . . . . . . . . . . . . . . . $25.25
On or after October 15, 2001 . . . . . . . . . . . . . . . . . . . . . . . $25.00
</TABLE>
5. Conversion. The holders of shares of the Series
shall not have any rights to convert such shares into shares of any
other class or series of capital stock of the Corporation.
<PAGE> 21
11
6. Liquidation Rights. (a) Upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
the holders of the shares of the Series shall be entitled to receive
and to be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution
shall be made on the common stock or on any other class of stock
ranking junior to the Series, a liquidating distribution in the amount
of $25 per share plus an amount equal to accrued and unpaid dividends
thereon (whether or not declared).
(b) After the payment to the holders of the shares of the
Series of the full preferential amounts provided for in this Section
6, the holders of the Series as such shall have no right or claim to
any of the remaining assets of the Corporation.
(c) If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the amounts payable with
respect to the shares of the Series and any other shares of stock of
the Corporation ranking as to any such distribution on a parity with
the shares of the Series are not paid in full, the holders of the
shares of the Series and of such other shares will share ratably in
any such distribution of assets of the Corporation in proportion to
the full preferential amounts to which they are entitled.
(d) Neither the sale of all or substantially all of the
assets of the Corporation, nor the merger or consolidation or share
exchange of the Corporation into or with any other corporation or the
merger or consolidation or share exchange of any other corporation
into or with the Corporation, shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, for the purposes
of this Section 6.
7. Ranking. Any stock of any class or classes of the
Corporation shall be deemed to rank:
(a) senior to the shares of the Series, either as to
dividends or upon liquidation, if the holders of such class or classes
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up of the
Corporation, as the case may be, in preference or priority to the
holders of shares of the Series;
(b) on a parity with shares of the Series, either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share
or sinking fund provisions, if any, be different from those of the
Series, if the holders of such stock shall be entitled to the receipt
of dividends or of amounts distributable upon liquidation, dissolution
or
<PAGE> 22
12
winding up of the Corporation, as the case may be, without preference
or priority, one over the other, as between the holders of such stock
and the holders of shares of the Series; and
(c) junior to shares of the Series, either as to
dividends or upon liquidation, if such class shall be common stock or
if the holders of shares of the Series shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes.
8. Voting Rights. (a) Except as indicated below, the
shares of the Series shall not be entitled to vote on any matter
including, but not limited to:
(i) Any merger, consolidation, share
exchange or sale of all or substantially all of the assets of
the Corporation except to the extent such action amends,
alters or repeals the preferences, conversion and other
rights, voting powers, restrictions, limitation as to
dividends, qualifications and terms and conditions of the
redemption of the Series as expressly set forth herein in a
manner adverse to the holders of the Series, or,
(ii) An increase in the authorized amount
of the Series or the creation, authorization or issuance of an
additional series ranking on a parity with the shares of the
Series as to dividends or upon liquidation, or to reclassify
any authorized stock of the Corporation into any such shares
ranking on a parity with, or to authorize or issue any
obligation or security convertible into or evidencing the
right to purchase any such pari passu shares.
(b) Notwithstanding the foregoing:
(i) The affirmative vote of at least
two-thirds of the votes entitled to be cast by holders of
shares of the Series and all other series of Preferred Stock
ranking on a parity with shares of the Series as to dividends
or upon liquidation upon which like voting rights have been
conferred and are exercisable, voting together as a single
class without regard to series, shall be necessary for any
amendment, alteration or repeal, whether by merger,
consolidation, share exchange or otherwise, of the Charter of
the Corporation, including any articles supplementary thereto,
which adversely affects the preferences,
<PAGE> 23
13
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
conditions of the redemption of the Series as expressly set
forth herein in a manner adverse to the holders of the Series;
(ii) The affirmative vote of at least
two-thirds of the votes entitled to be cast by the holders of
the shares of the Series and all other series of Preferred
Stock ranking on a parity with shares of the Series as to
dividends or upon liquidation upon which like voting rights
have been conferred and are exercisable, voting together as a
single class without regard to series, shall be necessary to
authorize or issue any shares of any class of stock of the
Corporation ranking prior to the shares of the Series as to
dividends or upon liquidation, or to reclassify any authorized
stock of the Corporation into any such prior shares, or
authorize or issue any obligation or security convertible into
or evidencing the right to purchase any such prior shares; and
(iii) If at the time of any annual meeting
of the Corporation's stockholders for the election of
directors there is a default in preference dividends (as
defined below) on the Series, the number of directors
constituting the Board of Directors of the Corporation shall
be increased by two, and the holders of the shares of the
Series (together with the holders of the Preferred Stock of
all other series upon which like voting rights have been
conferred and are exercisable), shall have the right at such
meeting, voting together as a single class without regard to
series, to the exclusion of the holders of common stock, to
elect two directors of the Corporation (each a "Preferred
Director") to fill such newly created directorships. Each
holder of shares of the Series will have one vote for each
share of stock held and each holder of each other series of
Preferred Stock with like voting rights will have such number
of rights, if any, for each share of stock held as may be
granted to such holder. Such right shall continue until there
are no dividends in arrears upon the Series, subject to
re-vesting in the event of each and every subsequent default
in preference dividends on the Series. Any Preferred Director
may be removed with or without cause by the vote of the
holders of record of the outstanding shares of Preferred Stock
entitled to elect such Preferred Director, voting together as
<PAGE> 24
14
a single class without regard to series, at a meeting of the
Corporation's stockholders, or of the holders of such shares
of Preferred Stock, called for that purpose. Any Preferred
Director may be removed for cause by the vote of the holders
of outstanding shares of stock of the Corporation entitled to
vote for the election of directors. So long as a default in
any preference dividends on the Series shall exist, (a) any
vacancy in the office of a Preferred Director may be filled
(except as provided in the following clause (b)) by an
instrument in writing signed by the remaining Preferred
Director and filed with the Corporation and (b) in the case of
the removal of any Preferred Director, the vacancy may be
filled by the vote of the holders of the outstanding shares of
Preferred Stock, voting together as a single class without
regard to series, at the same meeting at which such removal
shall be voted. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes
hereof, to be a Preferred Director. Whenever a default in
preference dividends shall no longer exist, subject to the
rights of the holders of any other series of Preferred Stock,
the number of directors constituting the Board of Directors of
the Corporation shall be reduced by two. For the purposes
hereof, a "default in preference dividends" on the Series
shall be deemed to have occurred whenever the amount of
accrued dividends upon the Series shall be equivalent to six
full quarterly dividends or more (whether or not consecutive),
and, having so occurred, such default shall be deemed to exist
thereafter until, but only until, all accrued dividends on all
shares of the Series shall have been paid to the end of the
last preceding dividend period.
SECOND: The shares of the Series have been classified and the
terms of the Series have been fixed by a committee of the Board of
Directors pursuant to a general formula adopted by the Board of
Directors under authority set forth in the Charter of the Corporation.
<PAGE> 25
15
IN WITNESS WHEREOF, MBNA Corporation has caused this
instrument to be signed in its name and on its behalf by its Executive Vice
President, and attested by its Secretary, this 18th day of September, 1996.
The undersigned Executive Vice President acknowledges these
Articles Supplementary to be the corporate act of the Corporation and states
that to the best of his knowledge, information and belief the matters and facts
set forth herein with respect to the authorization and approval thereof are
true in all material respects and that this statement is made under the
penalties of perjury.
MBNA CORPORATION
By:
------------------------
Executive Vice President
Attest:
- ------------------------------
Secretary
<PAGE> 1
EXHIBIT 4(b)
MBNA CORPORATION
COMPOSITE BYLAWS
ARTICLE I - STOCKHOLDERS
SECTION 1. ANNUAL MEETING
The annual meeting of the stockholders of the Corporation, for the
election of the directors and for the transaction of such other business within
the power of the Corporation as properly may come before the meeting, shall be
held at such place as the Board of Directors may designate, at such date and
hour during the month of April as shall be determined by the Board of
Directors.
SECTION 2. SPECIAL MEETING
At any time in the intervals between annual meetings, a special
meeting of the stockholders may be called by the Chairman of the Board of
Directors or by the President or by the Board of Directors. Upon the request in
writing by stockholders entitled to cast at least 25% of all the votes entitled
to be cast at the meeting, the Secretary shall call a special meeting of the
stockholders. The request shall state the purpose of the meeting and the
matters proposed to be acted on. The Secretary shall inform such stockholders
of the reasonably estimated costs of preparing and mailing the notice of the
meeting and, upon payment to the Corporation of such costs, the Secretary shall
give notice of the time, place and purpose of the meeting in the manner
provided in these Bylaws. Unless requested by stockholders entitled to cast a
majority of all the votes entitled to be cast at the meeting, a special meeting
need not be called to consider any matter which is substantially the same as a
matter voted on at any special meeting of the stockholders held during the
preceding 12 months.
SECTION 3. NOTICE OF MEETING
Not less than ten (10) days nor more than ninety (90) days before the
date of every stockholder's meeting, the Secretary shall give to each
stockholder entitled to vote thereat, written or printed notice stating the
time and place of such meeting, and in the case of a special meeting, the
purpose or purposes for which the meeting is called, by first-class mail,
postage prepaid, mailed to each stockholder of record at his address as shown
upon the books of the Corporation.
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<PAGE> 2
SECTION 4. NOTICE OF STOCKHOLDER BUSINESS
At any annual or special meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual or special meeting, the
business, including any nomination for election of directors, must be (i)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the board of directors, (ii) otherwise properly brought before
the meeting by or at the direction of the board of directors, or (iii)
otherwise properly brought before the meeting by a stockholder.
For business to be properly brought before an annual or special
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, any such notice
must be delivered or mailed to the principal executive offices of the Company
not later than sixty (60) days prior to the date of the meeting. If less than
seventy (70) days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, any such notice by a stockholder to be timely
must be so received not later than the close of business on the tenth day
following the day on which notice of the date of the annual or special meeting
was given or such public disclosure was made.
Any such notice by a stockholder shall set forth as to each matter the
stockholder proposes to bring before the annual or special meeting (i) a brief
description of the business desired to be brought before the annual or special
meeting and the reasons for conducting such business at the annual or special
meeting, (ii) the name and address, as they appear on the Corporation's books,
of the stockholder proposing such business, (iii) the class and number of
shares of the capital stock of the Corporation which are beneficially owned by
the stockholder and (iv) any material interest of the stockholder in such
business. If a stockholder proposes the nomination for election of directors,
such notice by the stockholder shall also set forth as to each person whom the
stockholder proposes to nominate (i) the name, age, business address and
residence address of such person, (ii) the principal occupation or employment
of such person, (iii) the class and number of shares of the capital stock of
the Corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for the election of Directors pursuant to Regulation
14A under the Securities Exchange Act of 1934 or any successor regulation
thereto, including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a Director if
elected and whether any person intends to seek reimbursement from the
Corporation of the expenses of any solicitation of proxies should such person
be elected a Director of the Corporation. No person shall be entitled to
receive reimbursement from the Corporation of the expenses of a solicitation of
proxies for the election as a Director of a person named in such notice unless
such notice states that such reimbursement will be sought from the Corporation.
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<PAGE> 3
Notwithstanding anything in these bylaws to the contrary, no business
shall be conducted at any annual or special meeting except in accordance with
the procedures set forth in this Section. The chairman of the annual or special
meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Section and, if he should so determine, he shall so declare
to the meeting that any such business not properly brought before the meeting
shall not be considered or transacted.
SECTION 4. QUORUM
At any meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast a majority of the votes thereat shall constitute
a quorum.
A meeting of stockholders convened on the date for which it was called
may be adjourned from time to time by vote of a majority of the shares present
in person or by proxy even if less than a quorum without further notice to a
date not more than 120 days after the original record date. At such reconvened
meeting at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting originally called. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 5. PROXIES
At all meetings of stockholders, a stockholder may vote the shares
owned of record by him either in person or by proxy executed in writing by the
stockholder or by his duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after eleven (11) months from the date of its
execution, unless otherwise provided in the proxy.
SECTION 6. VOTING
Each stockholder shall be entitled to one vote for each share of stock
held by him. At all elections of directors of the Corporation, each stockholder
shall have the right to vote, in person or by proxy, the shares owned of record
by him, for as many persons as there are directors to be elected and for whose
election he has a right to vote. A plurality of the votes cast at a meeting of
stockholders, duly called and at which a quorum is present, shall be sufficient
to elect any director. A majority of the votes cast at a meeting of
stockholders, duly called and at which a quorum is present, shall be sufficient
to take or authorize action upon any other matter which may properly come
before the meeting unless more than a majority of votes is required by law or
the Charter.
3
<PAGE> 4
ARTICLE II - DIRECTORS
SECTION 1. POWERS
The business and affairs of the Corporation shall be managed by or
under the direction of its Board of Directors, which may exercise all of the
powers of the Corporation, except such as are by statute expressly conferred
upon or reserved to the stockholders.
SECTION 2. NUMBER AND TENURE
The number of directors of the Corporation shall be that number as may
be fixed from time to time by resolution of the Board of Directors but in no
event shall be less than the lesser of three (3) or the number of stockholders
or more than twenty (20).
SECTION 3. VACANCIES
Any vacancy occurring in the Board of Directors, other than one
occurring because of an increase in the number of directors, may be filled by
the affirmative vote of a majority of the remaining directors. A vacancy
occurring in the Board of Directors by reason of an increase in the number of
directors may be filled by a majority of the entire Board of Directors. A
director elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office.
SECTION 4. REGULAR MEETINGS
The Board of Directors shall meet for the purpose of organization, the
election of officers, and the transaction of other business as soon as
practicable after each annual election of directors. Notice of such meeting
need not be given .
The Board of Directors shall also meet regularly at such times as may
be stated from time to time by the Board.
SECTION 5. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by the
Chairman of the Board of Directors, the President or by a majority of the
Board.
4
<PAGE> 5
SECTION 6. NOTICE
Notice of every regular, except as otherwise provided in Article II,
Section 4 of these Bylaws, or special meeting of the Board shall be given to
each director at least one (l) day previous thereto by written notice delivered
personally or mailed to his last known business or residence address, or by
telegram sent to his last known business or residence address, or by personal
telephone call. Any director may waive notice of any meeting by written waiver
filed with the records of the meeting, either before or after the holding
thereof. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
SECTION 7. QUORUM
A majority of the Board of Directors shall constitute a quorum for the
transaction of business, but if less than such quorum is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice.
SECTION 8. MANNER OF ACTING
The action of a majority of the directors present at a meeting at
which a quorum is present shall be the action of the Board of Directors unless
the concurrence of a greater proportion is required for such action by law, the
Charter or these Bylaws.
SECTION 9. COMMITTEES
The Board of Directors may establish committees, composed of at least
two directors, from among its members. Any such committee shall serve at the
pleasure of the Board of Directors and shall have such powers in the management
of the business and affairs of the Corporation as may be delegated by the Board
of Directors consistent with law. The Board of Directors may fill any vacancy
on a committee. Committees shall meet at the call of the Chairman of the Board
of Directors or any two or more members. A majority of the members of a
committee shall constitute a quorum for the transaction of business and the
actions of a majority of the members present at a meeting at which a quorum is
present shall be the action of the committee. The members of any committee
present at a meeting, whether or not they constitute a quorum, may appoint a
director to act in the place of an absent member. Each committee shall report
its actions to the Board of Directors. Any action taken by a committee shall be
subject to review or alteration by the Board of Directors, provided that no
rights of third persons arising from any action taken or permitted upon the
failure of approval of such committee shall be affected by any such review or
alteration or by disapproval by the Board of Directors of any report by the
committee.
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<PAGE> 6
SECTION 10. COMPENSATION
Directors shall receive for their services as directors of the
Corporation such compensation as shall be determined by resolution of the Board
of Directors. A director may serve the Corporation or its subsidiaries in any
other capacity and receive compensation therefor.
SECTION 11. INFORMAL ACTION
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting, if a written consent to such
action is signed by all members of the Board of Directors and such written
consent is filed with the minutes of proceedings of the Board of Directors.
ARTICLE III - OFFICERS
SECTION 1. NUMBER
The officers of the Corporation shall be a Chairman of the Board, a
President, one or more Vice Presidents, a Secretary, a Treasurer, and such
other officers as the Board of Directors may elect or may be appointed as
provided in Section 2 hereof. Any two offices may be held by the same persons,
except those of President and Vice President, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required to be executed, acknowledged or verified by any two or
more officers. In its discretion, the Board of Directors may leave unfilled any
offices except those of President, Treasurer and Secretary.
SECTION 2. ELECTION AND TENURE
The officers of the Corporation shall be elected by the Board of
Directors at the first meeting of the Board of Directors held after each
annual meeting of the stockholders, or as soon after such first meeting as may
be convenient. Each officer shall hold office for a term of one (l) year and
until his successor shall have been duly elected and shall have qualified.
SECTION 3. REMOVAL
Any officer or agent of the Corporation may be removed by the Board of
Directors whenever, in its judgment, the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. The Board of Directors may authorize
any officer to remove subordinate officers.
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<PAGE> 7
SECTION 4. VACANCIES
A vacancy in any office may be filled by the Board of Directors for
the unexpired portion of the term.
SECTION 5. CHAIRMAN OF THE BOARD
The Chairman of the Board, if one is elected by the Board of
Directors, shall be the chief executive officer of the Corporation, shall have
general charge and supervision of the policies and affairs of the Corporation,
shall preside at all meetings of the Board of Directors and stockholders and
shall have such other duties as are provided in these Bylaws and as from time
to time may be assigned by the Board of Directors.
SECTION 6. PRESIDENT
The President shall have such duties as are provided in these Bylaws
or as from time to time may be assigned by the Board of Directors and the
Chairman of the Board. In the absence of the Chairman of the Board of Directors
or if one is not elected, the President shall perform the duties and exercise
the functions of the Chairman of the Board of Directors.
SECTION 7. VICE PRESIDENTS
The Vice President or Vice Presidents shall have such duties and
functions as from time to time may be assigned by the Board of Directors or the
Chairman of the Board or the President, except as may otherwise be provided by
the Board of Directors.
SECTION 8. SECRETARY
The Secretary shall be responsible for the minute books of the
Corporation, in which he shall maintain and preserve the organization papers of
the Corporation, the Articles of Incorporation, the Bylaws and the proceedings
of regular and special meetings of the stockholders, the Board of Directors and
any committees. He shall be responsible for the custody of the seal of the
Corporation and shall be responsible for such other duties and functions as may
be assigned from time to time by the Board of Directors, the Chairman of the
Board or the President.
SECTION 9. TREASURER
The Treasurer shall have general charge of the financial affairs of
the Corporation. He shall in general have all powers and perform all duties and
functions incident to the office of Treasurer and such as may from time to time
be prescribed by the Board of Directors, the Chairman of the Board or the
President.
7
<PAGE> 8
SECTION 10. OTHER OFFICERS
Such other officers as may be elected by the Board of Directors shall
have such powers and perform such duties as the Board of Directors, the
Chairman of the Board of Directors or the President may from time to time
prescribe.
SECTION 11. SALARIES
Salaries to be paid to all officers and employees shall be fixed in
such manner as the Board of Directors may determine from time to time and no
officer shall be prevented from receiving such salary by reason of the fact
that he is also a director of the Corporation.
SECTION 12. SPECIAL APPOINTMENTS
In the absence or incapacity of any officer, or in the event of a
vacancy in any office, the Board of Directors may designate any person to fill
any such office pro tempore or for any particular purpose.
SECTION 13. VOTING STOCK HELD BY THE CORPORATION
Unless otherwise ordered by the Board of Directors, the Chairman of
the Board of Directors, the President or a Vice President or other officer
thereunto duly authorized by the Chairman of the Board of Directors or the
President shall have full power and authority on behalf of the Corporation to
attend and to vote at any meeting of stockholders of any corporation in which
this Corporation may hold stock, and may exercise on behalf of the Corporation
any and all of the rights and powers incident to the ownership of such stock at
any such meeting, and shall have power and authority to execute and deliver
proxies and consents on behalf of this Corporation in connection with the
exercise by this Corporation of the rights and powers incident to the ownership
of such stock. The Board of Directors, from time to time, may confer like
powers upon any other person or persons.
ARTICLE IV - INDEMNIFICATION
The Corporation shall indemnify its directors to the fullest extent
that indemnification of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify its officers to the same
extent as its directors and to such further extent as is consistent with law.
The Corporation shall indemnify its directors and officers who, while serving
as directors or officers of the Corporation, also serve at the request of the
Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan to the fullest extent consistent with law.
The indemnification and other rights provided by this Article shall continue as
to a person who has ceased to be a
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<PAGE> 9
director or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Any director or officer seeking indemnification within the scope of
this Article shall be entitled to advances from the Corporation for payment of
the reasonable expenses incurred by him in connection with the matter as to
which he is seeking indemnification in the manner and to the fullest extent
permissible under the Maryland General Corporation Law without requiring a
preliminary determination of ultimate entitlement of indemnification.
The Board of Directors may make further provision consistent with law
for indemnification and advance of expenses to directors, officers, employees
and agents by resolution, agreement or otherwise. The indemnification provided
by this Article shall not be deemed exclusive of any other right, with respect
to indemnification or otherwise, to which those seeking indemnification may be
entitled under any insurance or other agreement or resolution of stockholders
or disinterested directors or otherwise.
References in this Article are to the Maryland General Corporation Law
as from time to time amended. No amendment of these Bylaws shall affect any
right of any person under this Article based on any event, omission or
proceeding prior to the amendment. (As amended 4/23/91)
ARTICLE V - SEAL
The seal of the Corporation shall be in the form of two concentric
circles inscribed with the name of the Corporation and the year and State in
which it is incorporated.
ARTICLE VI - ISSUE AND TRANSFER OF STOCK
SECTION 1. ISSUE
Certificates representing shares of the Corporation shall be in such
form as shall be determined by the Board of Directors. Each certificate shall
be signed manually by, or bear the facsimile signature of, the Chairman of the
Board, the President, or a Vice President and countersigned by, or bear the
facsimile signature of, the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer and shall be sealed with the corporate seal
or a facsimile thereof. All certificates surrendered to the Corporation for
transfer shall be cancelled, and no new certificates shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, stolen, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the Corporation as the Board of Directors may prescribe.
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<PAGE> 10
SECTION 2. TRANSFER OF SHARES
Transfer of shares of the Corporation shall be made only on its stock
transfer books by the holder of record thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the Corporation
shall be deemed to be the owner thereof for all purposes.
SECTION 3. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS' RIGHTS
The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining stockholders entitled to notice of, or to vote
at, any meeting of stockholders, or stockholders entitled to receive payment of
any dividend or the allotment of any rights, or in order to make a
determination of stockholders for another proper purpose. Only stockholders of
record on such date shall be entitled to notice of, and to vote at, such
meeting or to receive such dividends or rights, as the case may be and
notwithstanding any transfer of any stock on the books of the Corporation after
such record date fixed as aforesaid.
ARTICLE VII - EMERGENCIES
During the period of an emergency declared by the President of the
United States, or the person performing his functions, of a nature and
sufficient severity to prevent the conduct and management of the affairs and
business of the Corporation by its directors, officers and committees in the
manner contemplated by these Bylaws (other than this Article VII), any two or
more available members of the Board of Directors shall constitute a quorum of
the Board of Directors for the full conduct and management of the affairs and
business of the Corporation. Other provisions of the Bylaws or resolutions
contrary to or inconsistent with the provisions hereof shall be suspended until
it shall be determined by said interim Board of Directors that it shall be to
the advantage of the Corporation to resume the conduct and management of its
affairs and business under all the other provisions of the Bylaws and
resolutions.
If during any such emergency any authorized place of business of the
Corporation shall be unable to function, all or part of the business ordinarily
conducted at such location may be relocated elsewhere in suitable quarters as
may be designated by the interim Board of Directors or by such persons as are
then conducting the affairs of the Corporation. Any such temporarily relocated
place of business of the Corporation shall be returned to its authorized
location as soon as practicable.
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<PAGE> 11
ARTICLE VIII - CONTROL SHARE ACQUISITION STATUTE EXEMPTIONS
(As amended by adding this new Article VIII and renumbering existing
Article VIII as Article IX 1/21/91)
Any acquisition of shares of the Corporation on or after January 21,
1991 by Alfred Lerner (or his successor in interest) ("Lerner") or by The
Progressive Corporation (or its successors in interest) ("Progressive"), or by
any present or future affiliate or associate thereof so long as such affiliate
or associate is at the time in question such an affiliate or associate (or any
person acting in concert or in a group with any of the foregoing) is, pursuant
to Section 3-702(b) of the Maryland General Corporation Law (the "MGCL") (or
any successor or replacement provision or statute), hereby approved for
purposes of, and exempted from the provisions of, Subtitle 7 of Title 3 of the
MGCL (or any successor or replacement provision or statute) with the result
that any shares acquired by any such person shall have all voting rights
otherwise appurtenant thereto, notwithstanding Subtitle 7 of Title 3 of the
MGCL (or any successor or replacement provision or statute).
Notwithstanding anything in the Charter or Bylaws of the Corporation
(as each may be amended from time to time) to the contrary, this ARTICLE may
not be amended, altered or repealed except with the unanimous approval of all
of the members of the Board of Directors and the written consent of all persons
or entities then in existence and specified above that may be adversely
affected, or that may lose any privilege or right, as a result of such
amendment, alteration or repeal. (As amended by deleting the second paragraph
of Article VIII and inserting in lieu thereof the foregoing second paragraph
1/28/91)
ARTICLE IX - AMENDMENTS
These Bylaws may be altered, amended or repealed, and new Bylaws may
be adopted, by the Board of Directors. The stockholders of the Corporation
shall have no power to make, amend or repeal any Bylaw.
Adopted: 12/7/90
Amended: 1/21/91
1/28/91
4/23/91
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<PAGE> 1
EXHIBIT 5(a)
December 10, 1996
MBNA Corporation
Wilmington, Delaware 19884
This Opinion is delivered in connection with Amendment No. 2 to the
Registration Statement on Form S-3 (the "Registration Statement") filed under
the Securities Act of 1933, as amended (the "Act"), by MBNA Corporation, a
Maryland corporation ("MBNA"), and MBNA Capital I, Capital II, Capital III,
MBNA Capital IV and MBNA Capital V, each a Delaware business trust (the
"Trusts", and together with MBNA, the "Registrants"), which Registration
Statement relates to (i) preferred securities representing beneficial ownership
interests in such Trusts (the "Preferred Securities"), (ii) junior subordinated
deferrable interest debentures (the "Debentures") to be issued by MBNA and
(iii) unconditional and irrevocable guarantees (the "Guarantees" and each a
"Guarantee") of the obligations of the Trusts under the Preferred Securities
that may be issued by MBNA.
I, as Executive Vice President, Secretary and General Counsel have
examined: (i) the Registration Statement; (ii) the form of Junior Subordinated
Indenture (an "Indenture") between MBNA and The Bank of New York, as Trustee
(the "Trustee"), as filed as an exhibit to the Registration Statement, pursuant
to which the Debentures, are to be issued; and (iii) the forms of Guarantee
Agreement (the "Guarantee Agreements" and each a "Guarantee Agreement") to be
executed by MBNA and The Bank of New York, as Guarantee Trustee (the "Guarantee
Trustee"), as filed as an exhibit to the Registration Statement. In addition,
I have examined, and have relied as to matters of fact upon, originals or
copies, certified or otherwise identified to my satisfaction, of such
corporate records, agreements, documents and other instruments and such
certificates or comparable documents of public officials and of officers and
representatives of MBNA, and have made such other and further investigations,
as I have deemed relevant and necessary as a basis for the opinions
hereinafter set forth.
In such examination, I have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such latter documents. I have also assumed
that the Registration Statement, and any applicable amendments thereto
(including post-effective amendments), will have become effective under the Act
at the time of issuance, offering and sale of any such Preferred Securities,
Debentures or Guarantees.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, it is my opinion that:
<PAGE> 2
MBNA Corporation
December 8, 1996
Page 2
1. With respect to the Debentures to be issued under an
Indenture, when (i) such Indenture has been duly authorized and validly
executed and delivered by MBNA and by the Trustee, (ii) the Board of Directors
of MBNA (the "Board") has taken all necessary corporate action to approve the
issuance and specific terms of such Debentures, and (iii) such Debentures have
been duly executed, authenticated, issued and delivered in accordance with the
provisions of such Indenture upon payment of the consideration therefor as
contemplated by the Registration Statement, such Debentures will constitute
valid and legally binding obligations of MBNA.
2. With respect to the Guarantee to be issued under each
Guarantee Agreement, when (i) such Guarantee Agreement has been duly authorized
and validly executed and delivered by MBNA and by the Guarantee Trustee, (ii)
the Board has taken all necessary corporate action to approve the issuance and
specific terms of such Guarantee and (iii) such Guarantee, has been duly
executed, authenticated, issued and delivered in accordance with the provisions
of such Guarantee Agreement, such Guarantee will constitute a valid and legally
binding obligation of MBNA.
3. My opinions set forth in paragraphs 1 and 2 above are
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
I am admitted to the Bar of the State of Maryland and do not express
any opinion herein as to the law of any jurisdiction other than the laws of
the State of Maryland and the United States of America. For the purposes of
the opinions set forth herein I have assumed that the laws of the State of
New York are the same as the laws of the State of Maryland.
I hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement and to the reference to me under the caption
"Validity of Securities" in the Prospectus Supplement forming a part of the
Registration Statement. In giving such consent, I do not thereby admit that I
am in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
/s/ JOHN W. SCHEFLEN
John W. Scheflen
<PAGE> 1
EXHIBIT 8
December 9, 1996
Re: Issuance and Sale of Capital
Securities by MBNA Capital I
MBNA Corporation
Wilmington, Delaware 19884
MBNA Capital I
c/o MBNA Corporation
Wilmington, Delaware 19884
Ladies and Gentlemen:
We have acted as special tax counsel ("Tax Counsel") to MBNA
Corporation, a Maryland corporation (the "Corporation"), and MBNA Capital I, a
statutory business trust organized under the Business Trust Act of the State of
Delaware (the "Trust"), in connection with the preparation and filing by the
Corporation and the Trust with the Securities and Exchange Commission (the
"Commission") of a Registration Statement on Form S-3 (Registration No.
333-15721) (as amended, the "Registration Statement") under the Securities Act
of 1933, as amended, and with respect to: (i) the issuance and sale of the
Series A Subordinated Debentures by the Corporation pursuant to a form of
Indenture (the "Indenture") between the Corporation and The Bank of New York, a
New York banking corporation, as trustee (in such capacity, the "Indenture
Trustee"), in the form filed as an exhibit to the Registration Statement; and
(ii) the issuance and sale of Capital Securities, Series A (the "Series A
Capital Securities") and
<PAGE> 2
-2- December 9, 1996
the Series A Common Securities (collectively, the "Series A Securities")
pursuant to the Trust's Amended and Restated Declaration of Trust (the
"Declaration") in the form filed as an exhibit to the Registration Statement.
The Series A Capital Securities will be offered for sale to investors pursuant
to the Registration Statement.
The Series A Securities are guaranteed by the Corporation with
respect to the payment of distributions and payments upon liquidation,
redemption and otherwise pursuant to, and to the extent set forth in, the
Series A Guarantee Agreement (the "Series A Guarantee"), between the
Corporation and The Bank of New York, a New York banking corporation, as
trustee (in such capacity, the "Guarantee Trustee"), for the benefit of the
holders of the Series A Securities, in the form filed as an exhibit to the
Registration Statement.
All capitalized terms used in this opinion letter and not
otherwise defined herein shall have the meaning ascribed to such terms in the
Registration Statement.
In delivering this opinion letter, we have reviewed and relied
upon: (i) the Registration Statement, (ii) a form of the Indenture; (iii) a
form of the Junior Subordinated Debentures; (iv) a form of the Declaration; (v)
a form of the Series A Guarantee; and (vi) forms of the Series A Securities,
each as filed as exhibits to the Registration Statement. Further, we have
relied upon certain other statements and representations contained in the
Corporation's letter of representation attached hereto as Exhibit A. We also
have examined and relied upon originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Corporation and the
Trust
<PAGE> 3
-3- December 9, 1996
and such other documents, certificates and records as we have deemed necessary
or appropriate as a basis for the opinions set forth herein.
In our examination of such material, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals and the conformity to original documents of all copies of
documents submitted to us. In addition, we also have assumed that the
transactions related to the issuance of the Series A Subordinated Debentures
and the Series A Securities will be consummated in accordance with the terms of
the documents and forms of documents described herein .
On the basis of the foregoing and assuming that the Trust was
formed and will be maintained in compliance with the terms of the Declaration,
we hereby confirm (i) our opinions set forth in the Registration Statement
under the caption "Certain Federal Income Tax Consequences" and (ii) that,
subject to the qualifications set forth therein, the discussion set forth in
the Registration Statement under such caption is an accurate summary of the
United States federal income tax matters described therein.
We express no opinion with respect to the transactions referred
to herein or in the Registration Statement other than as expressly set forth
herein. Moreover, we note that there is no authority directly on point dealing
with securities such as the Series A Capital Securities or transactions of the
type described herein and that our opinion is not binding on the Internal
Revenue Service ("IRS") or the courts, either of which could take a contrary
position. Nevertheless, we believe that if challenged, the opinions we express
herein would be sustained by a court with jurisdiction in a properly presented
case.
<PAGE> 4
-4- December 9, 1996
Our opinion is based upon the Code, the Treasury regulations
promulgated thereunder and other relevant authorities and law, all as in effect
on the date hereof. Consequently, future changes in the law may cause the tax
treatment of the transactions referred to herein to be materially different
from that described above.
We are admitted to practice law only in the State of New York and
the opinions we express herein are limited solely to matters governed by the
federal law of the United States.
We hereby consent to the use of this opinion for filing as
Exhibit 8 to the Registration Statement and the use of our name in the
Registration Statement under the captions "Certain Federal Income Tax
Consequences" and "Validity of the Securities".
Very truly yours,
/s/ SIMPSON THACHER & BARTLETT
Simpson Thacher & Bartlett
<PAGE> 5
EXHIBIT A
December 9, 1996
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3
(Registration No. 333-15721) (as amended, the "Registration Statement") related
to the issuance and sale of the Capital Securities, Series A (the "Series A
Capital Securities") by MBNA Capital I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), Simpson Thacher & Bartlett,
special tax counsel to the Trust and MBNA Corporation, a Maryland corporation
(the "Corporation"), will render its opinion (the "Tax Opinion") with respect
to certain material United States federal income tax consequences related to
the issuance and sale of the Series A Capital Securities. In connection with
the issuance of the Tax Opinion, the undersigned, an officer of the
Corporation, recognizing that Simpson Thacher & Bartlett will rely on this
certificate in delivering the Tax Opinion, hereby certifies as of the date
hereof as to the matters set forth in paragraphs one through six hereof, to the
best of his or her knowledge and belief after due inquiry and investigation as
to such matters. (Capitalized terms used and not otherwise defined herein
shall have the same meanings ascribed to such terms in the Registration
Statement.)
1. The Corporation and the Trust intend to create a
debtor-creditor relationship between the Corporation, as
debtor, and the Trust, as a creditor, upon the issuance
and sale of the Series A Subordinated
<PAGE> 6
-2- December 9, 1996
Debentures to the Trust by the Corporation, and the
Corporation will (i) record and at all times continue to
reflect the Series A Subordinated Debentures as
indebtedness on its separate books and records for
financial accounting purposes and (ii) treat the Series A
Subordinated Debentures as indebtedness for all United
States tax purposes.
2. The sole assets of the Trust will be the Series A
Subordinated Debentures.
3. The Corporation has no present intent to exercise its
right to defer payments of interest by extending the
interest payment period on the Series A Subordinated
Debentures.
4. The Corporation believes that the likelihood that it
would exercise its right to defer payments of interest by
extending the interest payment period on the Series A
Subordinated Debentures at any time during which the
Series A Subordinated Debentures are outstanding is
remote because of the restrictions that would be imposed
on the Corporation's ability to pay dividends on its
outstanding capital stock in the event it elected to
defer payments of interest on the Series A Subordinated
Debentures.
5. The Series A Capital Securities issued by the Trust are
expected to be rated "investment grade" by at least one
nationally recognized statistical credit rating agency.
6. The Corporation expects that it will be able to cause its
wholly-owned subsidiaries to pay dividends to the
Corporation in amounts and at times
<PAGE> 7
-3- December 9, 1996
sufficient to enable the Corporation to make timely
payments of interest and principal on the Series A
Subordinated Debentures.
The Corporation acknowledges that if any of the foregoing
certifications is inaccurate, the Tax Opinion may not accurately describe the
proper United States federal income tax treatment of the Series A Subordinated
Debentures or the Series A Capital Securities and the discussion set forth in
the Registration Statement under the caption "Certain Federal Income Tax
Consequences" may not accurately describe the United States federal income tax
consequences of the transactions described in the Registration Statement. The
Corporation will promptly and timely notify Simpson Thacher & Bartlett if it
discovers that any of the above certifications ceases to be true, correct or
complete.
Very truly yours,
MBNA CORPORATION
/s/ VERNON H.C. WRIGHT
-------------------------------
By: Vernon H.C. Wright
Title: Executive Vice
President and
Chief Corporate
Finance Officer
<PAGE> 1
Exhibit 23(a)
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement Form S-3 (No. 333-15721) and
related Prospectus of MBNA Corporation, MBNA Capital I, MBNA Capital II, MBNA
Capital III, MBNA Capital IV and MBNA Capital V for the registration of Junior
Subordinated Deferrable Interest Debentures and Preferred Securities and to the
incorporation by reference therein of our report dated January 17, 1996 with
respect to the consolidated financial statements of MBNA Corporation
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Baltimore, Maryland
December 9, 1996
