<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1994
REGISTRATION NO. 33-53643
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
KEYCORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-6542451
(I.R.S. EMPLOYER
(STATE OR OTHER JURISDICTION OF IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
127 PUBLIC SQUARE CLEVELAND, OHIO 44114 (216) 689-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
CARTER B. CHASE, ESQ., EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL, AND SECRETARY
KEYCORP 127 PUBLIC SQUARE CLEVELAND, OHIO 44114 (216) 689-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
THOMAS C. STEVENS, ESQ. THOMPSON, HINE STUART K. FLEISCHMANN,
AND FLORY 1100 NATIONAL CITY BANK ESQ.SHEARMAN & STERLING599
BUILDINGCLEVELAND, OHIO 44114 (216) 566- LEXINGTON AVENUENEW YORK,
5500 NEW YORK 10022(212) 848-4000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
<TABLE>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED(1) REGISTERED(2) PER UNIT(3) PRICE(4) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
))) ))) )))
Debt Securities.......... ) ) )
- ------------------------- ) ) )
Debt Warrants............ ) ) )
- ------------------------- ) ) )
Preferred Stock, with a ) ) )
par value of $1 each.... ) ) )
- ------------------------- ) ) )
Depositary Shares........ ) ) )
- ------------------------- ) ) )
Preferred Stock Warrants. )) $160,600,000 )) $160,600,000 )) $55,380
- ------------------------- ) ) )
Depositary Share ) ) )
Warrants................ ) ) )
- ------------------------- ) ) )
Common Shares, with a par ) ) )
value of $1 each(5)..... ) ) )
- ------------------------- ) ) )
Common Share Warrants.... ) ) )
- ------------------------- ) ) )
Capital Securities(4).... ) ) )
))) ))) )))
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(Footnotes continued on net page)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(Continued from previous page)
(1) This Registration Statement also covers contracts which may be issued by
the Registrant under which the counterparty may be required to purchase
Debt Securities. Preferred Stock, or Depositary Shares. Such contracts
would be issued with the Debt Securities, Preferred Stock, Depositary
Shares, and/or Warrants covered hereby. In addition, securities registered
hereunder may be sold separately, together, or as units with other
securities registered hereunder.
(2) In no event will the aggregate initial offering price of the Debt
Securities, Debt Warrants, Preferred Stock, Preferred Stock Warrants,
Depositary Shares, Depositary Share Warrants, Common Shares, Common Share
Warrants, and Capital Securities issued under this Registration Statement
and in the case of Warrants for which separate consideration is payable
upon issuance of underlying securities, securities issued uon exercise of
Warrants, exceed $750,000,000 (including those previously registered under
the Securities Act of 1933, as amended (the "Securities Act")) or the
equivalent thereof in one or more foreign currencies or units of one or
more foreign currencies or companies currencies (such as European Currency
Units). The aggregate amount of Common Shares registered hereunder is
further limited to that which is permissable under Rule 415(a)(4) under
the Securities Act. If any securities are issued at an original issue
discount, then additional securities may be issued so long as the
aggregate initial offering price of all such securities, together with the
initial offering price of all other securities reregistered hereunder or
previously registered under the Securities Act, does not exceed
$750,000,000.
(3) The proposed maximum offering price per unit will be determined from time
to time by the Registrant in connection with the issuance by the
Registrant of the securities registered hereunder or previously registered
under the Securities Act.
(4) No separate consideration will be received for (i) Common Shares or other
Capital Securities (which may consist of Common Shares or Preferred Stock)
that are issued upon conversion at the option of a holder of Debt
Securities. Preferred Stock, or Depositary Shares, or (ii) Capital
Securities or other debt securities that are issued upon conversion at the
option of the Corporation of Debt Securities, Preferred Stock, or
Depositary Shares. The proposed maximum aggregate offering price has been
estimated solely for the purpose of computing the registration fee
pursuant to Rule 457 of the Securities Act of 1933.
(5) Includes associated rights (the "Rights") to purchase Common Shares. Until
the occurrence of certain prescribed events, none of which has occured,
the Rights are not exercisable, are evidenced by the certificates
representing the Common Shares, and will be transferred along with and
only with the Common Shares.
In accordance with Rule 429 under the Securities Act, the Prospectus
included herein is a combined prospectus which also relates to KeyCorp's
Registration Statements on Form S-3, File No. 33-51652 (originally filed under
the name Society Corporation), effective date October 1, 1992, with respect to
debt securities, and File No. 33-39734 (originally filed under the name
Society Corporation), effective date May 22, 1991, with respect to preferred
stock and depositary shares. This Registration Statement, which is a new
Registration Statement on Form S-3, also constitutes a first post-effective
amendment to KeyCorp's Registration Statements on Form S-3, File No. 33-51652
and File No. 33-39734. Each such post-effective amendment shall hereafter
become effective concurrently with the effectiveness of this Registration
Statement and in accordance with Section 8(c) of the Securities Act. The
aggregate amount of securities covered by this Registration Statement and the
other Registration Statements referred to above to which the Prospectus
contained herein relates shall not exceed $750,000,000.
The Registration hereby amends this Registration Statement on such date as
may be necessary to delay its effective date until the Registration 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 or until the Registration Statement shall become effective on
such date as the commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE , 1994
$750,000,000
[LOGO OF KEYCORP APPEARS HERE]
Senior Medium-Term Notes, Series B
Subordinated Medium-Term Notes, Series A
Due Nine Months or More From Date of Issue
-----------
KeyCorp (also referred to herein as the "Corporation") may offer from time to
time its senior Medium-Term Notes, Series B (the "Senior Notes") and its
subordinated Medium-Term Notes, Series A (the "Subordinated Notes" and together
with the Senior Notes, the "Notes") with an aggregate principal amount of up to
U.S. $750,000,000, (or, if any Notes are to be Original Issue Discount Notes,
Foreign Currency Notes or Indexed Notes (as each term is defined under
"Description of Notes"), such principal amount as shall result in an initial
aggregate offering price equivalent to no more than $750,000,000), subject to
reduction as a result of the sale of other Securities of the Corporation. See
"Plan of Distribution." Each Note will mature on any day nine months or more
from its date of issue, as agreed upon by the Corporation and the purchaser,
and may be subject prior to maturity to redemption at the option of the
Corporation or repayment at the option of the registered holder. Each Note will
bear interest either at a fixed rate (a "Fixed Rate Note") established by the
Corporation at the date of issue of such Note, which may be zero in the case of
certain Original Issue Discount Notes, or at a floating rate (a "Floating Rate
Note"), as set forth therein and specified in the applicable Pricing Supplement
(as defined below). A Fixed Rate Note may pay a level amount in respect of both
interest and principal amortized over the life of the Note (an "Amortizing
Note"). The Notes may be issued as Senior Notes or Subordinated Notes, as set
forth in the applicable Pricing Supplement. Subordinated Notes will be
subordinated to all existing and future Senior Indebtedness and, in certain
events involving the insolvency of the Corporation, to Other Senior
Obligations. See "Description of Debt Securities--Subordination of Subordinated
Debt Securities" in the accompanying Prospectus.
Unless otherwise specified in the applicable Pricing Supplement, interest on
each Fixed Rate Note will be payable each June 1 and December 1 and at
maturity. Interest on each Floating Rate Note is payable on the dates set forth
herein and in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement, Amortizing Notes will pay principal and
interest semiannually each June 1 and December 1, or quarterly each March 1,
June 1, September l and December 1, and at maturity. See "Description of
Notes." Unless otherwise specified in the applicable Pricing Supplement, the
Notes may not be redeemed by the Corporation or repaid at the option of the
holder prior to maturity. Notes denominated in U.S. dollars will be issued in
denominations of $100,000 or any amount in excess thereof which is an integral
multiple of $1,000. The authorized denominations of Foreign Currency Notes will
be set forth in the applicable Pricing Supplement. Any terms relating to Notes
being denominated in one or more foreign currencies, currency units, or
composite currencies ("Specified Currency") will be set forth in the applicable
Pricing Supplement.
Each Note will be issued only in fully registered form and will be represented
either by a Global Security registered in the name of The Depository Trust
Company, as Depository or a nominee thereof (a "Book-Entry Note"), or by a
certificate issued in definitive form (a "Certificated Note"), as set forth in
the applicable Pricing Supplement. Beneficial interests in Global Securities
representing Book-Entry Notes will be shown on, and transfer thereof will be
effected through, the records maintained by the Depository (with respect to
participants' interests) and its participants. Book-Entry Notes will not be
issuable as Certificated Notes except as described under "Description of Debt
Securities--Book-Entry Procedures" in the accompanying Prospectus.
-----------
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, ANY SUPPLEMENT HERETO OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE NOTES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS BUT ARE UNSECURED
DEBT OBLIGATIONS OF KEYCORP AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY.
<TABLE>
<CAPTION>
Agents'
Discounts
Price to and Proceeds to
Public(1) Commissions(2) Corporation(2)(3)
------------- -------------- -----------------------------
<S> <C> <C> <C>
Per Note.................................... 100% .125%-.750% 99.875%-99.250%
Total(4).................................... $750,000,000 $937,500-
5,625,000 $749,062,500-$744,375,000
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes
will be sold at 100% of their principal amount. If the Corporation issues
any Note at a discount from or at a premium over its principal amount, the
Price to Public of such Note will be set forth in the applicable Pricing
Supplement. Notes may be resold by the Agents, acting as principals, at
market prices prevailing at the time of sale, at prices related to such
prevailing prices, or at negotiated prices.
(2) Unless otherwise specified in the applicable Pricing Supplement, with
respect to Notes with Maturity Dates from 9 months to 30 years from the
date of issue, the Corporation will pay a commission to the Agents (as
defined below in "Plan of Distribution") ranging from .125% to .750% of
the principal amount of each Note. With respect to Notes with a Maturity
Date that is longer than 30 years from the date of issue sold through any
Agent, the rate of commission will be negotiated at the time of sale and
will be specified in the applicable Pricing Supplement. The Corporation
may also sell Notes to an Agent, as principal, at negotiated discounts,
for resale to investors and other purchasers. The Corporation has agreed
to indemnify each Agent against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
(3) Before deducting expenses payable by the Corporation estimated to be
$535,000.
(4) Or the equivalent thereof, if any of the Notes are denominated other than
in U.S. dollars.
-----------
The Notes are being offered by the Corporation on a continuous basis through
the Agents, each of which has agreed to use its reasonable efforts to solicit
offers to purchase Notes. The Corporation may also sell Notes to an Agent
acting as principal for its own account or for resale to one or more investors
and other purchasers. No termination date for the offering of the Notes has
been established. The Corporation or an Agent may reject any offer in whole or
in part. The Corporation reserves the right to withdraw, cancel or modify the
offer made hereby without notice. The Corporation reserves the right to sell
Notes directly on its own behalf and accept (but not solicit) offers to
purchase Notes through additional agents on substantially the same terms and
conditions (including commission rates) as would apply to purchases of Notes
by or through the Agents. The Notes will not be listed on any securities
exchange, and there can be no assurance that the Notes offered hereby will be
sold or that there will be a secondary market for the Notes. See "Plan of
Distribution."
CS First Boston
Goldman, Sachs & Co.
Kidder, Peabody & Co.
Incorporated
Lehman Brothers
J.P. Morgan Securities Inc.
Salomon Brothers Inc
The date of this Prospectus Supplement is June , 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING MADE PURSUANT TO THIS PROSPECTUS SUPPLEMENT
AND THE APPLICABLE PRICING SUPPLEMENT, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-1
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents summary consolidated financial data derived
from the consolidated financial statements of the Corporation and notes
thereto. On March 1, 1994, KeyCorp ("old KeyCorp"), a New York corporation and
financial services holding company headquartered in Albany, New York, merged
with and into Society Corporation ("Society"), an Ohio corporation and a
financial services holding company headquartered in Cleveland, Ohio, pursuant
to an Agreement and Plan of Merger and a related Supplemental Agreement to
Agreement and Plan of Merger, each dated as of October 1, 1993, and each as
amended. In the merger, Society was the surviving corporation, but changed its
name to KeyCorp. The Merger was accounted for as a pooling of interests and,
accordingly, the financial data below is presented as if old KeyCorp and
Society had been combined for all periods presented. This summary is qualified
in its entirety by the detailed information and financial statements included
in the documents incorporated by reference under "Incorporation of Certain
Documents by Reference." The data presented for the three-month periods ended
March 31, 1994 and March 31, 1993 are derived from unaudited financial
statements of the Corporation and include, in the opinion of management, all
adjustments necessary to present fairly the data for such periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
(UNAUDITED)
1994 1993 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Interest income........ $ 1,045.0 $ 1,047.4 $ 4,213.9 $ 4,198.8 $ 4,652.4 $ 4,528.8 $ 4,410.2
Interest expense....... 376.9 393.3 1,534.9 1,750.1 2,519.4 2,667.7 2,615.8
Net interest income.... 668.1 654.1 2,679.0 2,448.7 2,133.0 1,861.1 1,794.4
Provision for loan
losses.................. 36.8 55.9 211.7 338.4 466.2 517.2 306.2
Noninterest income..... 226.6 222.6 1,001.7 925.2 849.3 744.2 635.1
Noninterest expense.... 542.8 535.0 2,385.1 2,170.4 2,065.7 1,819.5 1,705.8
Income before income
taxes................... 315.1 285.8 1,083.9 865.1 450.4 268.6 417.5
Net income............. 208.6 189.9 709.9 592.1 313.7 256.1 286.7
Net income applicable
to Common Shares........ 204.6 184.4 691.8 568.1 297.5 249.0 281.3
---------- ---------- ---------- ---------- ---------- ---------- ----------
PER COMMON SHARE
Net income............. $ .85 $ .77 $ 2.89 $ 2.42 $ 1.31 $ 1.13 $ 1.26
Cash dividends......... .32 .28 1.12 .98 .92 .88 .80
Weighted average Common
Shares (000)............ 241,925.8 237,925.7 239,775.2 235,004.8 227,116.2 220,078.6 223,901.3
---------- ---------- ---------- ---------- ---------- ---------- ----------
AT PERIOD-END
Loans.................. $ 41,379.8 $ 38,371.7 $ 40,071.3 $ 36,021.8 $ 35,534.3 $ 34,193.7 $ 31,570.4
Earning assets......... 55,913.5 52,346.4 54,352.7 49,380.8 48,207.9 44,668.2 41,871.4
Total assets........... 61,475.8 57,850.8 59,631.2 55,068.4 53,600.9 49,953.4 47,205.1
Deposits............... 46,880.6 44,964.3 46,499.1 43,433.1 42,835.0 40,935.3 37,375.4
Long-term debt......... 1,744.5 1,904.1 1,763.9 1,790.1 1,224.5 1,145.2 1,177.4
Common shareholders'
equity.................. 4,376.3 3,852.4 4,233.6 3,683.3 3,272.4 2,941.7 2,929.1
Total shareholders'
equity.................. 4,536.3 4,036.4 4,393.6 3,927.3 3,516.4 3,025.7 2,979.4
---------- ---------- ---------- ---------- ---------- ---------- ----------
PERFORMANCE RATIOS
Return on average total
assets.................. 1.41% 1.38% 1.24% 1.13% .60% .54% .64%
Return on average
common equity........... 19.20 19.83 17.27 16.33 9.29 8.39 9.56
Efficiency (1)......... 60.13 60.04 60.50 60.96 65.27 66.92 67.09
Overhead (2)........... 47.27 46.84 46.85 47.21 52.63 54.58 56.50
Net interest margin.... 5.03 5.40 5.31 5.31 4.71 4.53 4.64
---------- ---------- ---------- ---------- ---------- ---------- ----------
CAPITAL RATIOS AT PERIOD
END
Tangible equity to
tangible assets......... 6.55 5.89 6.51 6.11 5.45 4.79 5.39
Tier 1 risk-adjusted
capital................. 8.91 8.05 8.73 8.56 7.67 6.75 N/A
Total risk-adjusted
capital................. 12.34 11.24 12.22 11.73 9.80 9.17 N/A
Leverage............... 6.85 6.37 6.72 6.56 5.97 5.23 N/A
========== ========== ========== ========== ========== ========== ==========
ASSET QUALITY DATA
Nonperforming loans.... $ 316.8 $ 497.5 $ 336.3 $ 552.9 $ 729.5 $ 798.9 $ 555.4
Nonperforming assets... 464.0 839.6 500.1 900.2 1,071.9 1,013.2 683.1
Allowance for loan
losses.................. 812.6 793.2 802.7 782.6 793.5 677.3 452.7
Nonperforming loans to
period-end loans........ .77% 1.30% .84% 1.53% 2.05% 2.34% 1.76%
Nonperforming assets to
period-end loans plus
OREO and other
nonperforming assets.. 1.12 2.17 1.24 2.47 2.99 2.94 2.16
Allowance for loan
losses to
nonperforming loans... 256.53 159.46 238.69 141.54 108.79 84.78 81.51
Allowance for loan
losses to period-end
loans................... l.96 2.07 2.00 2.17 2.23 1.98 1.43
Net loan charge-offs to
average loans........... .31 .66 .56 1.02 1.11 1.02 .89
---------- ---------- ---------- ---------- ---------- ---------- ----------
RATIO OF EARNINGS TO
FIXED CHARGES (3)
Excluding deposit
interest................ 4.44x 4.37x 4.15x 3.67x 2.07x 1.57x 1.74x
Including deposit
interest................ 1.81 1.71 1.69 1.48 1.18 1.10 1.16
========== ========== ========== ========== ========== ========== ==========
</TABLE>
- --------
The comparability of the information presented above is affected by certain
acquisitions and divestitures that KeyCorp has completed in the time periods
presented.
(1) Calculated as noninterest expense (excluding merger and integration
charges and other nonrecurring charges) divided by taxable-equivalent net
interest income plus noninterest income (excluding net securities
transactions and certain gains on asset sales).
(2) Calculated as noninterest expense (excluding merger and integration
charges and other nonrecurring charges) less noninterest income (excluding
net securities transactions and certain gains on assets sales) divided by
taxable-equivalent net interest income.
(3) Earnings represent consolidated income before income taxes plus fixed
charges. Fixed charges include consolidated interest expense (excluding or
including interest on deposits as the case may be) and the proportion
deemed representative of the interest factor of rental expense net of
income from subleases.
S-2
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth under the
heading "Description of Debt Securities" in the accompanying Prospectus, to
which reference is hereby made. The particular terms of the Notes sold pursuant
to any pricing supplement (a "Pricing Supplement") will be described therein.
The terms and conditions set forth in "Description of Notes" will apply to each
Note unless otherwise specified in the applicable Pricing Supplement and in
such Note. Capitalized terms not defined herein shall have the same meanings
assigned to such terms in the Prospectus or the Applicable Indenture. Reference
herein to "U.S. dollars" or "U.S. $" or "$" are to the currency of the United
States of America.
GENERAL
The Notes offered hereby, if Senior Debt Securities, will be issued under the
Senior Indenture, as amended or supplemented. Notes issued under the Senior
Indenture will rank equally with all other unsecured and unsubordinated
indebtedness of the Corporation which is not accorded a priority under
applicable law. Notes issued under the Subordinated Indenture will be
subordinated in right of payment to the prior payment in full of the Senior
Indebtedness of the Corporation and, in certain events involving the insolvency
of the Corporation, Other Senior Obligations of the Corporation. See
"Description of Debt Securities--Subordination of Subordinated Debt Securities"
in the accompanying Prospectus. As of March 31, 1994, the Corporation had
outstanding approximately $537.2 million aggregate principal amount of Senior
Indebtedness and $297.8 million of Other Senior Obligations.
The Notes will be offered on a continuous basis. The Notes offered by this
Prospectus Supplement issued under the Applicable Indenture will constitute all
or part of a single series for purposes of such Indenture. The Notes of such
series offered hereby are limited to an aggregate initial offering price of
U.S. $750,000,000 subject to reduction as a result of the sale by the
Corporation of other Securities referred to in the accompanying Prospectus. See
"Plan of Distribution." For purposes of this Prospectus Supplement, (i) the
principal amount of any Original Issue Discount Note means the Issue Price (as
defined below) of such Note and (ii) the principal amount of any Note issued in
the Specified Currency means the U.S. dollar equivalent on the date of issue of
the Issue Price of such Note.
Each Note will mature on any day nine months or more from its date of issue,
as selected by the initial purchaser and agreed to by the Corporation (the
"Stated Maturity") which date may be subject to extension at the option of the
Corporation (subject to applicable regulatory approval in the case of
subordinated Notes) or the holder, and may be subject to redemption at the
option of the Corporation or repayment at the option of the holder prior to its
Stated Maturity as specified in the applicable Pricing Supplement. See
"Optional Redemption" and "Repayment at the Noteholder's Option" below.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. Except as set forth under "Description of Debt Securities--
Book-Entry Procedures" in the accompanying Prospectus, Book-Entry Notes will
not be issuable as Certificated Notes. See "Book-Entry System" below.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal and any premium,
and interest on the Notes will be made in U.S. dollars. Except as specified for
Notes not denominated in U.S. dollars or as otherwise provided in the
applicable Pricing Supplement, the Notes will be issued only in fully
registered form in denominations of U.S.$100,000
S-3
<PAGE>
or any amount in excess thereof which is an integral multiple of U.S.$1,000. If
any of the Notes are to be denominated in a Specified Currency other than U.S.
dollars, additional information pertaining to the terms of such Notes and other
matters relevant to the holders thereof will be described in the applicable
Pricing Supplement.
The Notes may be issued as Original Issue Discount Notes (including Zero
Coupon Notes, as defined below) as indicated in the applicable Pricing
Supplement. An "Original Issue Discount Note" means any Note that provides for
an amount less than the entire principal amount thereof to be payable upon
declaration of acceleration of the maturity thereof pursuant to the Applicable
Indenture. See "United States Federal Income Taxation--Discount Notes" below.
The Notes may be issued as Indexed Notes, Amortizing Notes, Renewable Notes
and Extendible Notes, as indicated in the applicable Pricing Supplement. See
"Indexed Notes", "Amortizing Notes", "Renewable Notes" and "Extendible Notes"
below.
The Pricing Supplement relating to each Note will specify the price
(expressed as a percentage of the aggregate principal amount thereof) at which
such Note will be issued if other than 100% (the "Issue Price"), the principal
amount, the interest rate or interest rate formula, ranking, maturity,
currency, (including one or more foreign currencies, currency units or
composite currencies), any redemption or repayment provisions and any other
terms on which each such Note will be issued that are not inconsistent with the
provisions of the Applicable Indenture.
Unless otherwise specified in the applicable Pricing Supplement, the Notes,
except for Amortizing Notes, will not be subject to any sinking fund.
The Notes may be presented for payment of principal and interest, transfer of
the Notes will be registrable, and the Notes will be exchangeable, at Society
National Bank, as paying agent (the "Paying Agent") in The City of Cleveland;
provided that Book-Entry Notes will be exchangeable only in the manner and to
the extent set forth below under "Description of Debt Securities--Book-Entry
Procedures" in the accompanying Prospectus.
As used herein, "Business Day" shall mean any day other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are generally authorized or required by law or regulation to close in The City
of New York and (i) in respect of LIBOR Notes (as defined below), in the city
of London, (ii) with respect to Notes denominated or payable in a Specified
Currency other than ECUs in the financial center of the country issuing the
Specified Currency, (iii) with respect to Notes denominated or payable in ECUs,
in the financial center of each country that issues a component currency of the
ECU, and that is not a non-ECU settlement day. "London Banking Day" shall mean
any day on which dealings in deposits in U.S. dollars are transacted in the
London interbank market.
As used herein, an "Interest Payment Date" with respect to any Note shall be
a date on which, under the terms of such Note, regularly scheduled interest
shall be payable. Unless otherwise specified in the applicable Pricing
Supplement, "Record Date" with respect to any Interest Payment Date shall be
the date fifteen calendar days (whether or not such date is a Business Day)
prior to such Interest Payment Date.
PAYMENT CURRENCY AND CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for Notes denominated in a Specified Currency
in such Specified Currency, and payments of principal, premium, if any, and
interest on such Notes will be made in such Specified Currency, unless
otherwise provided in the applicable Pricing Supplement. Currently, there are
limited facilities in the United States for the conversion of U.S. dollars into
foreign currencies and vice versa. In addition, most banks do not currently
offer non-U.S. dollar denominated checking or savings account
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facilities in the United States. Accordingly, unless otherwise specified in the
applicable Pricing Supplement, or unless alternative arrangements are made,
payment of principal, premium, if any, and interest on Notes in a Specified
Currency other than U.S. dollars will be made to an account at a bank outside
the United States.
If the applicable Pricing Supplement provides for payments of principal of,
premium, if any, and interest on a non-U.S. dollar denominated Note to be made
in U.S. dollars or for payments of principal of, premium, if any, and interest
on a U.S. dollar denominated Note to be made in a Specified Currency other than
U.S. dollars, the conversion of the Specified Currency into U.S. dollars or
U.S. dollars into the Specified Currency, as the case may be, will be handled
by the Exchange Rate Agent identified in the applicable Pricing Supplement. The
costs of such conversion will be borne by the holder of such Note through
deductions from such payments.
If the applicable Pricing Supplement provides for payments of principal of,
premium, if any, and interest on a non-U.S. dollar denominated Note to be made,
at the option of the holder of such Note, in U.S. dollars, conversion of the
Specified Currency into U.S. dollars will be based on the highest bid quotation
in The City of New York received by the Exchange Rate Agent at approximately
11:00 a.m., New York City time, on the second Business Day preceding the
applicable payment date from three recognized foreign exchange dealers (one of
which may be the Exchange Rate Agent unless the Exchange Rate Agent is the
applicable Agent) for the purchase by the quoting dealer of the Specified
Currency for U.S. dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to the holders of Notes and at which
the applicable dealer commits to execute a contract. If such bid quotations are
not available, payments will be made in the Specified Currency. All currency
exchange costs will be borne by the holders of Notes by deductions from such
payments.
Except as set forth below, if the principal of, premium, if any, or interest
on, any Note is payable in a Specified Currency other than U.S. dollars and
such Specified Currency is not available to the Corporation for making payments
thereof due to the imposition of exchange controls or other circumstances
beyond the control of the Corporation or is no longer used by the government of
the country issuing such currency or for the settlement of transactions by
public institutions within the international banking community, then the
Corporation will be entitled to satisfy its obligations to holders of the Notes
by making such payments in U.S. dollars on the basis of the Market Exchange
Rate on the date of such payment or, if the Market Exchange Rate is not
available on such date, as of the most recent practicable date. Any payment
made under such circumstances in U.S. dollars where the required payment is in
a Specified Currency other than U.S. dollars will not constitute an Event of
Default or Default under the Applicable Indenture.
If payment in respect of a Note is required to be made in ECUs and ECUs are
unavailable due to the imposition of exchange controls or other circumstances
beyond the Corporation's control or are no longer used in the European Monetary
System, then all payments in respect of such Note shall be made in U.S. dollars
until ECUs are again available or so used. The amount of each payment in U.S.
dollars shall be computed on the basis of the equivalent of the ECU in U.S.
dollars, determined as described below, as of the second Business Day prior to
the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date shall be determined
by the Corporation or its agent on the following basis. The component
currencies of the ECU for this purpose (the "Components") shall be the currency
amounts that were components of the ECU as of the last date on which the ECU
was used in the European Monetary System. The equivalent of the ECU in U.S.
dollars shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Corporation or such agent on the basis of the most recently
available Market Exchange Rates for such Components.
If the official unit of any Component is altered by way of combination or
subdivision, the number of units of that currency as a Component shall be
divided or multiplied in the same proportion. If two or more Components are
consolidated into a single currency, the amounts of those currencies as
Components shall be
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replaced by an amount in such single currency equal to the sum of the
appropriate amounts of the consolidated component currencies expressed in such
single currency. If any Component is divided into two or more currencies, the
amount of the original component currency shall be replaced by the appropriate
amounts of such two or more currencies, the sum of which shall be equal to the
amount of the original component currency.
All determinations referred to above made by the Corporation or its agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on holders of Notes.
INTEREST AND PRINCIPAL PAYMENTS
Interest will be payable to the person in whose name the Note is registered
at the close of business on the applicable Record Date; provided that the
interest payable upon maturity, redemption or repayment (whether or not the
date of maturity, redemption or repayment is an Interest Payment Date) will be
payable to the person to whom principal is payable. Unless otherwise specified
in the applicable Pricing Supplement, the initial interest payment on a Note
will be made on the first Interest Payment Date falling after the date the Note
is issued; provided, however, that payments of interest (or, in the case of an
Amortizing Note, principal and interest) on a Note issued less than 15 calendar
days before an Interest Payment Date will be paid on the next succeeding
Interest Payment Date to the holder of record on the Record Date with respect
to such succeeding Interest Payment Date, unless otherwise specified in the
applicable Pricing Supplement. See "United States Federal Income Taxation--
Payment of Interest" below.
U.S. dollar payments of interest, other than interest payable at maturity (or
on the date of redemption or repayment, if a Note is redeemed or repaid prior
to maturity), will be made by check mailed to the address of the person
entitled thereto as shown on the Note register. U.S. dollar payments of
principal, premium, if any, and interest upon maturity, redemption or repayment
will be made in immediately available funds against presentation and surrender
of the Note. Notwithstanding the foregoing, (a) the Depositary, as holder of
Book-Entry Notes, shall be entitled to receive payments of interest by wire
transfer of immediately available funds and (b) a holder of U.S.$1,000,000 (or
the equivalent) or more in aggregate principal amount of Certificated Notes
having the same Interest Payment Date shall be entitled to receive payments of
interest by wire transfer of immediately available funds upon written request
to the Paying Agent not later than 15 calendar days prior to the applicable
Interest Payment Date.
Notwithstanding the foregoing, unless otherwise specified in the applicable
Pricing Supplement, a holder of a Foreign Currency Note may elect to receive
payment of the principal of and any premium and interest on such Note in the
Specified Currency by transmitting a written request for such payment to the
Trustee at its Corporate Trust Office in the Borough of Manhattan, The City of
New York on or prior to the Record Date in the case of an interest payment or
at least 15 days prior to the Stated Maturity in the case of a principal or
premium payment. Such request may be in writing (mailed or hand delivered) or
by cable, telex or other form of facsimile transmission. A holder of a Foreign
Currency Note may elect to receive payment in the Specified Currency for all
principal and any premium and interest payments and need not file a separate
election for each payment. Such election will remain in effect until revoked by
written notice to the Trustee, but written notice of any such revocation must
be received by the Trustee on or prior to the relevant Record Date or at least
15 days prior to the Stated Maturity, as the case may be. Holders of Foreign
Currency Notes whose Notes are to be held in the name of a broker or nominee
should contact such broker or nominee to determine whether and how an election
to receive payments in the Specified Currency may be made.
Unless otherwise specified in the applicable Pricing Supplement, a beneficial
owner of Book-Entry Notes denominated in a Specified Currency electing to
receive payments of principal or any premium or interest in the Specified
Currency must notify the Participant through which its interest is held on or
prior to the applicable Record Date, in the case of a payment of interest, and
on or prior to the fifteenth day prior to the Stated Maturity, in the case of
payment of principal or premium, of such beneficial owner's election to receive
all or a portion of such payment in a Specified Currency. Such Participant must
notify the Depository of
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such election on or prior to the third Business Day after such Regular Record
Date. The Depository will notify the Paying Agent of such election on or prior
to the fifth Market Day after such Regular Record Date. If complete
instructions are received by the Participant and forwarded by the Participant
to the Depository, and by the Depository to the Paying Agent, on or prior to
such dates, the beneficial owner will receive payments in the Specified
Currency.
Unless otherwise specified in the applicable Pricing Supplement or unless
alternative arrangements are made, payments of principal, premium, if any, and
interest on Notes in a Specified Currency other than U.S. dollars will be made
by wire transfer of immediately available funds to an account maintained by the
payee with a bank located outside the United States if the holder of such Notes
provides the Paying Agent with the appropriate wire transfer instructions not
later than 15 calendar days prior to the applicable payment date. If such wire
transfer instructions are not so provided, payments of principal, premium, if
any, and interest on such Notes will be made by check payable in such Specified
Currency mailed to the address of the Person entitled thereto as such address
shall appear in the Note register.
Certain Notes, including Original Issue Discount Notes, may be considered to
be issued with original issue discount, which must be included in income for
United States federal income tax purposes at a constant rate. See "United
States Federal Income Taxation--Discount Notes" below. Unless otherwise
specified in the applicable Pricing Supplement, if the principal of any
Original Issue Discount Note is declared to be due and payable immediately as
described under "Description of Debt Securities--Events of Default" in the
accompanying Prospectus, the amount of principal due and payable with respect
to such Note shall be limited to the aggregate principal amount of such Note
multiplied by the sum of its Issue Price (expressed as a percentage of the
aggregate principal amount) plus the original issue discount amortized from the
date of issue to the date of declaration, which amortization shall be
calculated using the "interest method" (computed in accordance with generally
accepted accounting principles in effect on the date of declaration). Special
considerations applicable to any such Notes will be set forth in the applicable
Pricing Supplement.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issuance at the
annual rate stated on the face thereof, except as described below under
"Extension of Maturity," or "Renewal" until the principal thereof is paid or
made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, such interest will be computed on the basis of a 360-day
year of twelve 30-day months. Unless otherwise specified in the applicable
Pricing Supplement, payments of interest on Fixed Rate Notes other than
Amortizing Notes will be made semiannually on each June 1 and December 1 and at
maturity or upon any earlier redemption or repayment.
If any Interest Payment Date for any Fixed Rate Note would fall on a day that
is not a Business Day, the interest payment shall be postponed to the next day
that is a Business Day, and no interest on such payment shall accrue for the
period from and after the Interest Payment Date. If the maturity date (or date
of redemption or repayment) of any Fixed Rate Note would fall on a day that is
not a Business Day, the payment of principal, premium, if any, and interest may
be made on the next succeeding Business Day, and no interest on such payment
shall accrue for the period from and after the maturity date (or date of
redemption or repayment).
Interest payments for Fixed Rate Notes will include accrued interest from the
date of issue or from the last date in respect of which interest has been paid
or duly provided for, as the case may be, to, but excluding, the Interest
Payment Date or the date of maturity or earlier redemption or repayment, as the
case may be.
Amortizing Notes
Unless otherwise specified in the applicable Pricing Supplement, payments of
principal and interest on Amortizing Notes, which are securities on which
payments of principal and interest are made in equal installments over the life
of the security, will be made either quarterly on each March l, June 1,
September 1
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and December 1 or semiannually on each June l and December 1, as set forth in
the applicable Pricing Supplement, and at maturity or upon any earlier
redemption or repayment. Payments with respect to Amortizing Notes will be
applied first to interest due and payable thereon and then to the reduction of
the unpaid principal amount thereof. A table setting forth repayment
information in respect of each Amortizing Note will be provided to the
original purchaser and will be available, upon request, to subsequent holders.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from the date of issuance until
the principal thereof is paid or made available for payment at a rate
determined by reference to an interest rate basis (the "Base Rate"), which may
be adjusted by a Spread and/or Spread Multiplier (each as defined below). The
applicable Pricing Supplement will designate one or more of the following Base
Rates as applicable to each Floating Rate Note: (a) the CD Rate (a "CD Rate
Note"), (b) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (c)
the Federal Funds Rate (a "Federal Funds Rate Note"), (d) LIBOR (a "LIBOR
Note"), (e) the Prime Rate (a "Prime Rate Note"), (f) the Treasury Rate (a
"Treasury Rate Note"), (g) the CMT Rate (a "CMT Rate Note"), (h) the 11th
District Cost of Funds Rate (an "11th District Cost of Funds Rate Note") or
(i) such other Base Rate as is set forth in such Pricing Supplement and in
such Floating Rate Note. The "Index Maturity" for any Floating Rate Note is
the period of maturity of the instrument or obligation from which the Base
Rate is calculated and will be specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to
the specified Base Rate (i) plus or minus the Spread, if any, and/or (ii)
multiplied by the Spread Multiplier, if any. The "Spread" is the number of
basis points (one one-hundredth of a percentage point) specified in the
applicable Pricing Supplement to be added to or subtracted from the Base Rate
for such Floating Rate Note, and the "Spread Multiplier" is the percentage
specified in the applicable Pricing Supplement to be applied to the Base Rate
for such Floating Rate Note.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or
ceiling, on the rate of interest which may accrue during any interest period
("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the
rate of interest which may accrue during any interest period ("Minimum
Interest Rate"). In addition to any Maximum Interest Rate that may be
applicable to any Floating Rate Note pursuant to the above provisions, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by United
States law of general application. Under current New York law, the maximum
rate of interest, subject to certain exceptions, for any loan in an amount
less than $250,000 is 16% and for any loan in the amount of $250,000 or more
but less than $2,500,000 is 25% per annum on a simple interest basis. These
limits do not apply to loans of $2,500,000 or more.
Unless otherwise specified in the applicable Pricing Supplement, the rate of
interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period~" for such Note, and the first day of each Interest Reset Period being
an "Interest Reset Date"), as specified in the applicable Pricing Supplement.
Unless otherwise specified in the Pricing Supplement, the Interest Reset Date
will be, in the case of Floating Rate Notes which reset daily, each Business
Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) which
reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes
which reset weekly, the Tuesday of each week, except as provided below; in the
case of Floating Rate Notes which reset monthly, the third Wednesday of each
month; in the case of Floating Rate Notes which reset quarterly, the third
Wednesday of March, June, September and December; in the case of Floating Rate
Notes which reset semiannually, the third Wednesday of two months of each
year, as specified in the applicable Pricing Supplement; and in the case of
Floating Rate Notes which reset annually, the third Wednesday of one month of
each year, as specified in the applicable Pricing Supplement; provided,
however, that the interest rate in effect from the date of issue to the first
Interest Reset Date with respect to a Floating Rate Note will be the initial
interest rate set forth in the applicable Pricing Supplement (the "Initial
Interest Rate"). If any Interest Reset Date for any Floating Rate
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Note would otherwise be a day that is not a Business Day, such Interest Reset
Date shall be postponed to the next succeeding Business Day, except that in the
case of a LIBOR Note, if such Business Day is in the next succeeding calendar
month, such Interest Reset Date shall be the next preceding Business Day.
Except as provided below and unless otherwise specified in the applicable
Pricing Supplement, interest on Floating Rate Notes will be payable: (i) in the
case of Floating Rate Notes with a daily, weekly or monthly Interest Reset
Date, on the third Wednesday of each month or on the third Wednesday of March,
June, September and December, as specified in the applicable Pricing
Supplement; (ii) in the case of Floating Rate Notes with a quarterly Interest
Reset Date, on the third Wednesday of March, June, September and December;
(iii) in the case of Floating Rate Notes with a semiannual Interest Reset Date,
on the third Wednesday of the two months specified in the applicable Pricing
Supplement; and (iv) in the case of Floating Rate Notes with an annual Interest
Reset Date, on the third Wednesday of the month specified in the applicable
Pricing Supplement and, in each case, at maturity. If any Interest Payment Date
for any Floating Rate Note would fall on a day that is not a Business Day with
respect to such Floating Rate Note, such Interest Payment Date will be the
following day that is a Business Day with respect to such Floating Rate Note,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding day that is a Business Day with respect to such LIBOR Note. If the
maturity date or any earlier redemption or repayment date of a Floating Rate
Note would fall on a day that is not a Business Day, the payment of principal,
premium, if any, and interest will be made on the next succeeding Business Day,
and no interest on such payment shall accrue for the period from and after such
maturity, redemption or repayment date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments for Floating Rate Notes shall be the amount of interest accrued from,
and including, the date of issue or from, and including, the last date to which
interest has been paid to or duly provided for, to, but excluding, the Interest
Payment Date.
With respect to a Floating Rate Note, accrued interest shall be calculated by
multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which interest is
being paid. Unless otherwise specified in the applicable Pricing Supplement,
the interest factor for each such day is computed by dividing the interest rate
applicable to such day by 360, in the case of CD Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes, CMT Rate Notes, the 11th
District Cost of Funds Rate Notes and Prime Rate Notes or by the actual number
of days in the year, in the case of Treasury Rate Notes.
The interest rate in effect on any Interest Reset Date will be the applicable
rate as reset on such date. The interest rate applicable to any other day is
the interest rate from the immediately preceding Interest Reset Date (or, if
none, the Initial Interest Rate).
All percentages used in or resulting from any calculation of the rate of
interest on a Floating Rate Note will be rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward, and all dollar amounts used in or resulting
from such calculation on Floating Rate Notes will be rounded to the nearest
cent, with one-half cent rounded upward.
The applicable Pricing Supplement shall specify a calculation agent (the
"Calculation Agent") with respect to any issue of Floating Rate Notes. Upon the
request of the holder of any Floating Rate Note, the Calculation Agent will
provide the interest rate then in effect and, if determined, the interest rate
that will become effective on the next Interest Reset Date with respect to such
Floating Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, the
"Interest Determination Date" pertaining to an Interest Reset Date for CD Rate
Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate Notes,
the 11th District Cost of Funds Rate Notes and Prime Rate Notes will be the
second Business Day next preceding such Interest Reset Date. The Interest
Determination Date pertaining to an
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Interest Reset Date for a LIBOR Note will be the second London Banking Day
preceding such Interest Reset Date. The Interest Determination Date pertaining
to an Interest Reset Date for a Treasury Rate Note will be the day of the week
in which such Interest Reset Date falls on which Treasury bills would normally
be auctioned. Treasury bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is normally
held on the following Tuesday, but such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week. If
an auction falls on a day that is an Interest Reset Date, such Interest Reset
Date will be the next following Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date", where applicable, pertaining to an Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day or, (ii) the Business Day preceding the applicable
Interest Payment Date or Stated Maturity, as the case may be.
Interest rates will be determined (which determination, in the absence of
manifest error, will be conclusive and binding) by the Calculation Agent as
follows:
CD Rate Notes
CD Rate Notes will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)," or, if
not so published by 9:00 a.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate on
such Interest Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable Pricing Supplement as published by
the Federal Reserve Bank of New York in its daily statistical release
"Composite 3:30 p.m. Quotations for U.S. Government Securities" (the "Composite
Quotations") under the heading "Certificates of Deposit." If such rate is not
yet published in either H.15(519) or the Composite Quotations by 3:00 p.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the CD Rate on such Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York City time, on such
Interest Determination Date for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity designated
in the Pricing Supplement of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United States
money center banks of the highest credit standing in the market for negotiable
certificates of deposit; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as set forth above, the CD
Rate in effect for the applicable period will be the same as the CD Rate for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Rate Period, the rate of interest payable on the CD Rate Notes for
which such CD Rate is being determined shall be the Initial Interest Rate).
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Commercial Paper Rate Notes and
in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date, the Money
Market Yield (as defined below) of the rate on such date for commercial paper
having the Index Maturity specified in the applicable Pricing Supplement, as
such rate shall be published in H.15(519), under the heading "Commercial
Paper." In the event that such rate is not published by 9:00 a.m., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of the
rate on such Interest Determination Date for commercial paper of the specified
Index Maturity as published in Composite Quotations under the heading
"Commercial Paper." If by 3:00 p.m., New York City time, on such Calculation
Date such rate is not yet available in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate shall be the Money Market Yield of
the arithmetic mean of the offered rates as of 11:00 a.m., New York City time,
on such Interest Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for commercial
paper of the specified Index Maturity, placed for an industrial issuer whose
bond rating is "AA," or the equivalent, from a nationally recognized rating
agency; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting offered rates as mentioned in this sentence,
the Commercial Paper Rate in effect for the applicable period will be the same
as the Commercial Paper Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable on the Commercial Paper Rate Notes for which such Commercial Paper Rate
is being determined shall be the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 X 100
-------------
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rate (calculated
with reference to the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the Federal Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" means, with respect to any Interest Determination Date, the rate on
such date for Federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)," or, if not so published by 9:00 a.m., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the Federal Funds Rate will be the rate on such Interest Determination
Date published in the Composite Quotations under the heading "Federal
Funds/Effective Rate." If such rate is not yet published in either H.15(519) or
the Composite Quotations by 3:00 p.m., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, the Federal Funds Rate for
such Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds, as of 11:00 a.m., New York City time, on such Interest
Determination Date, arranged by three leading brokers of Federal funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as set forth above, the Federal Funds Rate in effect for
the applicable period will be the same as the Federal Funds Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the Federal Funds Rate Notes for
which such Federal Funds Rate is being determined shall be the Initial Interest
Rate).
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LIBOR Notes
LIBOR Notes will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, and subject
to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified
in the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for
each Interest Determination Date will be determined by the Calculation Agent as
follows:
(i) The rate for deposits in U.S. dollars of the Index Maturity specified
in the applicable Pricing Supplement, commencing on the second Business Day
immediately following such Interest Determination Date, that appears on the
Telerate Page 3750 as of 11:00 a.m., London time, on such Interest
Determination Date ("LIBOR Telerate"). "Telerate Page 3750" means the
display designated as page "3750" on the Telerate Service (or such other
page as may replace the page 3750 on that service or such other service or
services as may be designated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for U.S. dollar
deposits).
(ii) As of the Interest Determination Date, the Calculation Agent will
determine the arithmetic mean of the offered rates for deposits in U.S.
dollars for the period of the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second Business Day immediately
following such Interest Determination Date which appear on the Reuters
Screen LIBO Page at approximately 11:00 a.m., London time, on such Interest
Determination Date. "Reuters Screen LIBO Page" means the display designated
as Page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks).
(iii) If (a) in the case where paragraph (i) above applies, no rate
appears on the Telerate Page 3750 or (b) in the case where paragraph (ii)
above applies, fewer than two offered rates appear on the Reuters Screen
LIBO Page, the Calculation Agent will request the principal London offices
of each of four major banks in the London interbank market, as selected by
the Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in United States dollars for the period of the
specified Index Maturity to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such Interest Determination Date
and in a principal amount equal to an amount of not less than U.S. $1
million that is representative of a single transaction in such market at
such time. If at least two such quotations are provided, LIBOR will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR in respect of such Interest Determination Date will be the
arithmetic mean of rates quoted by three major banks in The City of New
York selected by the Calculation Agent (after consultation with the
Corporation) at approximately 11:00 a.m., New York City time, on such
Interest Determination Date for loans in U.S. dollars to leading European
banks, for the period of the specified Index Maturity and in a principal
amount of not less than U.S. $1 million that is representative of a single
transaction in such market at such time; provided however, that if fewer
than three banks selected as aforesaid by the Calculation Agent are quoting
rates as mentioned in this sentence, "LIBOR" for such Interest Reset Period
will be the same as LIBOR for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of
interest payable on the LIBOR Notes for which LIBOR is being determined
shall be the Initial Interest Rate).
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any,
and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Determination Date, the rate set forth
H.15(519) for such date opposite the caption "Bank Prime
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Loan." If such rate is not yet published by 9:00 a.m., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the Prime
Rate for such Interest Determination Date will be the arithmetic mean of the
rates of interest publicly announced by each bank named on the Reuters Screen
NYMF Page (as defined below) as such bank's prime rate or base lending rate as
in effect for such Interest Determination Date as quoted on the Reuters Screen
NYMF Page on such Interest Determination Date, or, if fewer than four such
rates appear on the Reuters Screen NYMF Page for such Interest Determination
Date, the rate shall be the arithmetic mean of the prime rates quoted on the
basis of the actual number of days in the year divided by 360 as of the close
of business on such Interest Determination Date by at least two of the three
major money center banks in The City of New York selected by the Calculation
Agent from which quotations are requested. If fewer than two quotations are
provided, the Prime Rate shall be calculated by the Calculation Agent and shall
be determined as the arithmetic mean on the basis of the prime rates in The
City of New York by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States, or
any State thereof, in each case having total equity capital of at least U.S.
$500 million and being subject to supervision or examination by federal or
state authority, selected by the Calculation Agent to quote such rate or rates.
"Reuters Screen NYMF Page" means the display designated as Page "NYMF" on the
Reuters Monitor Money Rates Services (or such other page as may replace the
NYMF Page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
If in any month or two consecutive months the Prime Rate is not published in
H.15(519) and the banks or trust companies selected as aforesaid are not
quoting as mentioned in the preceding paragraph, the "Prime Rate" for such
Interest Reset Period will be the same as the Prime Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the rate of interest payable on the Prime Rate Notes for which the
Prime Rate is being determined shall be the Initial Interest Rate). If this
failure continues over three or more consecutive months, the Prime Rate for
each succeeding Interest Determination Date until the maturity or redemption or
repayment of such Prime Rate Notes or, if earlier, until this failure ceases,
shall be LIBOR determined as if such Prime Rate Notes were LIBOR Notes, and the
Spread, if any, shall be the number of basis points specified in the applicable
Pricing Supplement as the "Alternative Rate Event Spread."
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rate (calculated with
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any,
and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the Treasury Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Interest Determination Date, the
rate for the auction held on such date of direct obligations of the United
States ("Treasury Bills") having the Index Maturity designated in the
applicable Pricing Supplement, as published in H.15(519) under the heading
"Treasury Bills--auction average (investment)" or, if not so published by 9:00
a.m., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate on such Interest Determination
Date (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) as otherwise announced by
the United States Department of the Treasury. In the event that the results of
the auction of Treasury Bills having the Index Maturity designated in the
applicable Pricing Supplement are not published or reported are provided above
by 3:00 p.m., New York City time, on such Calculation Date or if no such
auction is held on such Interest Determination Date, then the Treasury Rate
shall be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) calculated using the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 p.m., New York City
time, on such Interest Determination Date, of three leading primary United
States government securities dealers selected by the Calculation Agent for the
issue of Treasury Bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that if the
dealers selected as aforesaid
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by the Calculation Agent are not quoting bid rates as mentioned in this
sentence, the Treasury Rate for the applicable period will be the same as the
Treasury Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest payable on the Treasury
Rate Notes for which the Treasury Rate is being determined shall be the Initial
Interest Rate).
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any), and
will be payable on the dates, specified on the face of the CMT Rate Note and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Rate Interest Determinate Date, the rate
displayed on the Designated CMT Telerate Page under the caption ". . . Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 P.M.," under the column for the Designated CMT Maturity
Index for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT
Rate Interest Determination Date and (ii) if the Designated CMT Telerate Page
is 7052, the rate for the week, or the month, as applicable, ended immediately
preceding the week in which the related CMT Rate Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the related Interest Calculation
Date, then the CMT Rate for such CMT Rate Interest Determination Date will be
such Treasury Constant Maturity rate for the Designated CMT Maturity Index as
published in the relevant H.15(519). If such rate is no longer published, or if
not published by 3:00 P.M., New York City time, on the related Interest
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such Treasury Constant Maturity rate for the Designated CMT
Maturity Index (or other United States Treasury rate for the Designated CMT
Maturity Index) for the CMT Rate Interest Determination Date with respect to
such Interest Reset Date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the related Interest Calculation Date, then the CMT Rate for the
CMT Rate Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean (rounded to
the nearest one hundred-thousandth of a percentage point) of the secondary
market closing offer side prices as of approximately 3:30 P.M., New York City
time, on the CMT Rate Interest Determination Date reported, according to their
written records, by three leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of New York (which may include
the Agents) selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Note") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on
the arithemtic mean (rounded to the nearest one hundred-thousandth of a
percentage point) of the secondary market offer side prices as of approximately
3:30 P.M., New York City time, on the CMT Rate Interest Determination Date of
three Reference Dealers in The City of New York (from five such Reference
Dealers selected by the Calculation Agent and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation
(or, in the event of equality, one of the lowest)), for Treasury Notes with an
original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100 million. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean (rounded to the
nearest one hundred-thousandth of a percentage point) of the offer prices
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obtained and neither the highest nor lowest of such quotes will be eliminated;
provided, however, that if fewer than three Reference Dealers selected by the
Calculation Agent are quoting as described herein, the CMT Rate will be the CMT
Rate in effect on such CMT Rate Interest Determination Date. If two Treasury
Notes with an original maturity as described in the third preceding sentence
have remaining terms to maturity equally close to the Designated CMT Maturity
Index, the quotes for the CMT Rate Note with the shorter remaining term to
maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on the service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
11th District Cost of Funds Rate Notes
Each 11th District Cost of Funds Rate Note will bear interest at the interest
rate (calculated with reference to the 11th District Cost of Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in the applicable 11th
District Cost of Funds Rate Notes.
Unless otherwise indicated in the applicable 11th District Cost of Funds Rate
Note, "11th District Cost of Funds Rate" means, with respect to any 11th
District Cost of Funds Interest Determination Date, the monthly 11th District
Cost of Funds Index (the "11th District Cost of Funds Index") normally
published by the Federal Home Loan Bank of San Francisco (the "FHLB of San
Francisco") during the month immediately preceding the Interest Reset Date to
which such 11th District Cost of Funds Interest Determination Date applies.
The 11th District Cost of Funds Index is normally published by the FHLB of
San Francisco on the last day on which the FHLB of San Francisco is open for
business in each month and represents the monthly weighted average cost of
funds for savings institutions in the 11th District of the Federal Home Loan
Bank System for the month preceding the month in which the 11th District Cost
of Funds Index is published. Currently, the 11th District Cost of Funds Index
is computed by the FHLB of San Francisco for each month by diving the cost of
funds (interest paid during the month by 11th District savings institutions on
savings, advances and other borrowings) by the average of the total amount of
those funds outstanding at the end of that month and the prior month and
annualizing and adjusting the result to reflect the actual number of days in
the particular month. If necessary, before these calculations are made, the
component figures are adjusted by the FHLB of San Francisco to neutralize the
effect of events such as member institutions leaving the 11th District or
acquiring institutions outside the 11th District. Receipt by mail of
Information Bulletins announcing 11th District Cost of Funds Index changes may
be arranged by contacting the FHLB of San Francisco.
If the FHLB of San Francisco shall fail in any month to publish the 11th
District Cost of Funds Index (each such failure being referred to herein as an
"Alternative Rate Event"), then the 11th District Cost of Funds Rate for the
11th District Cost of Funds Interest Determination Date after the Alternate
Rate Event shall be calculated on the basis of the 11th District Cost of Funds
Index most recently published prior to such 11th District Cost of Funds
Interest Determination Date. If an Alternate Rate Event occurs in the month
immediately following a month in which a prior Alternate Rate Event occurred,
then the 11th District Cost of Funds Rate for the 11th District Cost of Funds
Interest Determination Date immediately following
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the second Alternate Rate Event shall be calculated on the basis of the 11th
District Cost of Funds Index most recently published prior to such 11th
District Cost of Funds Interest Determination Date and, thereafter, the 11th
District Cost of Funds Rate for each succeeding 11th District Cost of Funds
Interest Determination Date shall be LIBOR, determined as though the Interest
Rate Basis were LIBOR and the Spread shall be plus or minus the number of basis
points specified in the applicable 11th District Cost of Funds Rate Note at the
"Alternate Rate Event Spread," if any.
In determining that the FHLB of San Francisco has failed in any month to
publish the 11th District Cost of Funds Index, the Calculation Agent may rely
conclusively on any written advice from the FHLB of San Francisco to such
effect.
INDEXED NOTES
The Notes may be issued, from time to time, as Notes of which the principal
amount payable on the Stated Maturity and/or on which the amount of interest
payable on an Interest Payment Date and/or any premium payable will be
determined by reference to currencies, currency units, commodity prices,
financial or non-financial indices or other factors (the "Indexed Notes"), as
indicated in the applicable Pricing Supplement. Holders of Indexed Notes may
receive a principal amount at maturity that is greater than or less than the
face amount of such Notes depending upon the fluctuation of the relative value,
rate or price of the specified index. Specific information pertaining to the
method for determining the principal amount payable at maturity, a historical
comparison of the relative value, rate or price of the specified index and the
face amount of the Indexed Note and certain additional United States federal
tax and other relevant considerations will be described in the applicable
Pricing Supplement.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Fixed Rate Note (other than an
Amortizing Note) will indicate whether the Corporation has the option to extend
the maturity of such Fixed Rate Note for one or more periods of one or more
whole years (each an "Extension Period") up to but not beyond the date (the
"Final Maturity Date") set forth in such Pricing Supplement. If the Corporation
has such option with respect to any such Fixed Rate Note (an "Extendible
Note"), the following procedures will apply, unless modified as set forth in
the applicable Pricing Supplement.
The Corporation may exercise such option with respect to an Extendible Note
by notifying the Paying Agent of such exercise at least 45 but not more than 60
days prior to the maturity date originally in effect with respect to such Note
(the "Original Maturity Date") or, if the maturity date of such Note has
already been extended, prior to the maturity date then in effect (an "Extended
Maturity Date"). No later than 38 days prior to the Original Maturity Date or
an Extended Maturity Date, as the case may be (each, a "Maturity Date"), the
Paying Agent will mail to the holder of such Note a notice (the "Extension
Notice") relating to such Extension Period, by first class mail, postage
prepaid, setting forth (a) the election of the Corporation to extend the
maturity of such Note; (b) the new Extended Maturity Date; (c) the interest
rate applicable to the Extension Period; and (d) the provisions, if any, for
redemption during the Extension Period, including the date or dates on which,
the period or periods during which and the price or prices at which such
redemption may occur during the Extension Period. Upon the mailing by the
Paying Agent of an Extension Notice to the holder of an Extendible Note, the
maturity of such Note shall be extended automatically, and, except as modified
by the Extension Notice and as described in the next paragraph, such Note will
have the same terms it had prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 10:00 a.m , New York City time,
on the twentieth calendar day prior to the Maturity Date then in effect for an
Extendible Note (or, if such day is not a Business Day, not later than 10:00
a.m., New York City time, on the immediately succeeding Business Day), the
Corporation may, at its option, revoke the interest rate provided for in the
Extension Notice and establish a higher interest rate for the Extension Period
by causing the Paying Agent to send notice of such higher interest rate to the
holder of such Note by first class mail, postage prepaid, or by such other
means as shall
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be agreed between the Corporation and the Paying Agent. Such notice shall be
irrevocable. All Extendible Notes with respect to which the Maturity Date is
extended in accordance with an Extension Notice will bear such higher interest
rate for the Extension Period, whether or not tendered for repayment.
If the Corporation elects to extend the maturity of an Extendible Note, the
holder of such Note will have the option to require the Corporation to repay
such Note on the Maturity Date then in effect at a price equal to the principal
amount thereof plus any accrued and unpaid interest to such date. In order for
an Extendible Note to be repaid on such Maturity Date, the holder thereof must
follow the procedures set forth below under "Repayment at the Noteholders'
Option" for optional repayment, except that the period for delivery of such
Note or notification to the Paying Agent shall be at least 25 but not more than
35 days prior to the Maturity Date then in effect and except that a holder who
has tendered an Extendible Note for repayment pursuant to an Extension Notice
may, by written notice to the Paying Agent, revoke any such tender for
repayment until 3:00 p.m., New York City time, on the twentieth calendar day
prior to the Maturity Date then in effect (or, if such day is not a Business
Day, until 3:00 p.m., New York City time, on the next succeeding Business Day).
RENEWABLE NOTES
The Company may also issue from time to time variable rate renewable notes
(the "Renewable Notes") that will bear interest at the interest rate
(calculated with reference to a Base Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the Renewable Notes and in the applicable
Pricing Supplement.
The Renewable Notes will mature on an Interest Payment Date as specified in
the applicable Pricing Supplement (the "Initial Maturity Date"), unless the
maturity of all or any portion of the principal amount thereof is extended in
accordance with the procedures described below. On the Interest Payment Dates
in June and December in each year (unless different Interest Payment Dates are
specified in the applicable Pricing Supplement) (each such Interest Payment
Date, an "Election Date"), the maturity of the Renewable Notes will be extended
to the Interest Payment Date occurring twelve months after such Election Date,
unless the holder thereof elects to terminate the automatic extension of the
maturity of the Renewable Notes or of any portion thereof having a principal
amount of $100,000 or any multiple of $100,000 in excess thereof by delivering
a notice to such effect to the Paying Agent not less than nor more than a
number of days to be specified in the applicable Pricing Supplement prior to
such Election Date. Such option may be exercised with respect to less than the
entire principal amount of the Renewable Notes; provided that the principal
amount for which such option is not exercised is at least $100,000 or any
larger amount that is an integral multiple of $100,000. Notwithstanding the
foregoing, the maturity of the Renewable Notes may not be extended beyond the
Final Maturity Date, as specified in the applicable Pricing Supplement (the
"Final Maturity Date"). If the holder elects to terminate the automatic
extension of the maturity of any portion of the principal amount of the
Renewable Notes and such election is not revoked as described below, such
portion will become due and payable on the Interest Payment Date falling six
months (unless another period is specified in the applicable Pricing
Supplement) after the Election Date prior to which the holder made such
election.
An election to terminate the automatic extension of maturity may be revoked
as to any portion of the Renewable Notes having a principal amount of $100,000
or any multiple of $100,000 in excess thereof by delivering a notice to such
effect to the Paying Agent or any day following the effective date of the
election to terminate the automatic extension of maturity and prior to the date
15 days before the date on which such portion would otherwise mature. Such a
revocation may be made for less than the entire principal amount of the
Renewable Notes for which the automatic extension of maturity has been
terminated; provided that the principal amount of the Renewable Notes for which
the automatic extension of maturity has been terminated and for which such a
revocation has not been made is at least $100,000 or any larger amount that is
an integral multiple of $100,000. Notwithstanding the foregoing, a revocation
may not be made during the period from and including a Record Date to but
excluding the immediately succeeding Interest Payment Date.
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An election to terminate the automatic extension of the maturity of the
Renewable Notes, if not revoked as described above by the holder making the
election or any subsequent Holder, will be binding upon such subsequent holder.
The Renewable Notes may be redeemed in whole or in part at the option of the
Company on the Interest Payment Date for the year specified in the applicable
Pricing Supplement, commencing with the Interest Payment Date specified in the
applicable Pricing Supplement, at a redemption price as stated in the
applicable Pricing Supplement, together with accrued and unpaid interest to the
date of redemption. Notwithstanding anything to the contrary in this Prospectus
Supplement, notice of redemption will be provided by mailing a notice of such
redemption to each holder by first class mail, postage prepaid, at least 180
days prior to the date fixed for redemption.
BOOK-ENTRY SYSTEM
Unless otherwise indicated in the applicable Pricing Supplement, upon
issuance, all Fixed Rate Book-Entry Notes having the same Issue Date, interest
rate, if any, amortization schedule, if any, maturity date and other terms, if
any, will be represented by one or more Global Securities, and all Floating
Rate Book-Entry Notes having the same Issue Date, Initial Interest Rate, Base
Rate, Interest Reset Period, Interest Payment Dates, Index Maturity, Spread
and/or Spread Multiplier, if any, Minimum Interest Rate, if any, Maximum
Interest Rate, if any, maturity date and other terms, if any, will be
represented by one or more Global Securities. Each Global Security representing
Book-Entry Notes will be deposited with, or on behalf of, the Depository, and
registered in the name of a nominee of the Depository. Certificated Notes will
not be exchangeable for Book-Entry Notes. Book-Entry Notes will not be
exchangeable for Certificated Notes and will not otherwise be issuable as
Certificated Notes, except under the circumstances described in the Prospectus
under "Description of Debt Securities--Book-Entry Procedures."
A further description of the Depository~'s procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the accompanying
Prospectus under "Description of Debt Securities--Book-Entry Procedures." The
Depository has confirmed to the Corporation, each Agent and the Trustee that it
intends to follow such procedures.
OPTIONAL REDEMPTION
Unless otherwise indicated in the applicable Pricing Supplement, Notes may
not be redeemed by the Corporation prior to maturity. If so specified in the
applicable Pricing Supplement, the Notes will be redeemable prior to maturity
at the option of the Corporation on the terms specified therein. Unless
otherwise indicated in the applicable Pricing Supplement, notice of redemption
will be provided by mailing a notice of such redemption to each holder by first
class mail, postage prepaid, at least 30 days and not more than 60 days prior
to the date fixed for redemption to the respective address of each holder as
that address appears upon the books maintained by the Paying Agent.
REPAYMENT AT THE NOTEHOLDERS' OPTION
Unless otherwise indicated in the applicable Pricing Supplement, Notes may
not be redeemed at the option of the holders thereof prior to maturity. If so
specified in the applicable Pricing Supplement, a Note will be repayable at the
option of the holder on a date or dates specified prior to its maturity date
and, unless otherwise specified in such Pricing Supplement, at a price equal to
100% of the principal amount thereof, together with accrued interest to the
date of repayment, unless such Notes were issued with original issue discount,
in which case the Pricing Supplement will specify the amount payable upon such
repayment.
Unless otherwise indicated in the applicable Pricing Supplement, in order for
such a Note to be repaid, the Paying Agent must receive at least 15 days but
not more than 30 days prior to the repayment date (i) the Note with the form
entitled "Option to Elect Repayment" on the reverse of the Note duly completed
or (ii) a
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telegram, facsimile transmission or a letter from a member of a national
securities exchange, or the National Association of Securities Dealers, Inc.
(the "NASD") or a commercial bank or trust company in the United States setting
forth the name of the holder of the Note, the principal amount of the Note, the
principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of the Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid, together with the duly completed form entitled "Option to Elect
Repayment" on the reverse of the Note, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, facsimile
transmission or letter, provided however, that such telegram, facsimile
transmission or letter shall only be effective if such Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Except
in the case of Extendible Notes, and unless otherwise specified in the
applicable Pricing Supplement, exercise of the repayment option by the holder
of a Note will be irrevocable. The repayment option may be exercised by the
holder of a Note for less than the entire principal amount of the Note but, in
that event, the principal amount of the Note remaining outstanding after
repayment must be an authorized denomination.
If a Note is represented by a Global Security, the Depository's nominee will
be the holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depository's nominee
will timely exercise a right to repayment with respect to a particular Note,
the beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depository of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Note in
order to ascertain the cut-off time by which such an instruction must be given
in order for timely notice to be delivered to the Depository.
REPURCHASE
The Corporation may purchase Notes at any price in the open market or
otherwise. Notes so purchased by the Corporation may, at the discretion of the
Corporation, be held or resold or surrendered to the relevant Trustee for
cancellation.
FOREIGN CURRENCY RISKS
EXCHANGE RATE AND EXCHANGE CONTROLS
Any investment in Notes that are denominated in, or the payment of which is
related to the value of, a Specified Currency other than U.S. dollars entails
significant risks that are not associated with a similar investment in a
security denominated in U.S. dollars. Such risks include, without limitation,
the possibility of significant changes in rates of exchange between the U.S.
dollar and the various foreign currencies (or composite currencies or currency
units) and the possibility of the imposition or modification of exchange
controls by either the U.S. or foreign governments. Such risks generally depend
on economic and political events over which the Corporation has no control. In
recent years, rates of exchange between U.S. dollars and certain foreign
currencies have been highly volatile and such volatility may be expected to
continue in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations
in such rate that may occur during the term of any Note. Depreciation against
the U.S. dollar of the currency in which a Note is payable would result in a
decrease in the effective yield of such Note below its coupon rate and, in
certain circumstances, could result in a loss to the investor on a U.S. dollar
basis. In addition, depending on the specific terms of a currency linked Note,
changes in exchange rates relating to any of the currencies involved may result
in a decrease in its effective yield and, in certain circumstances, could
result in a loss of all or a substantial portion of the principal of a Note to
the investor.
THIS PROSPECTUS SUPPLEMENT, THE ATTACHED PROSPECTUS AND ANY PRICING
SUPPLEMENT DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES
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DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, A FOREIGN
CURRENCY OR A COMPOSITE CURRENCY AND THE CORPORATION DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED IN, OR
THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, SPECIFIED CURRENCIES OTHER
THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS
WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Except as set forth below under "United States Federal Income Taxation--Non-
United States Holders," the information set forth in this Prospectus Supplement
is directed to prospective purchasers who are United States residents, and the
Corporation disclaims any responsibility to advise prospective purchasers who
are residents of countries other than the United States with respect to any
matters that may affect the purchase, holding or receipt of payments of
principal, premium, if any, and interest on the Notes. Such persons should
consult their own counsel with regard to such matters.
Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at the time of payment of principal of,
premium, if any, or interest on a Note. Even if there are no actual exchange
controls, it is possible that the Specified Currency for any particular Note
not denominated in U.S. dollars would not be available when payments on such
Note are due. In that event, the Corporation would make required payments in
U.S. dollars on the basis of the Market Exchange Rate on the date of such
payment, or if such rate of exchange is not then available, on the basis of the
Market Exchange Rate as of the most recent practicable date. See "Description
of Notes--Payment Currency."
With respect to any Note denominated in, or the payment of which is related
to the value of, a foreign currency or currency unit, the applicable Pricing
Supplement will include information with respect to applicable current exchange
controls, if any, and historic exchange rate information on such currency or
currency unit. The information contained therein shall constitute a part of
this Prospectus Supplement and is furnished as a matter of information only and
should not be regarded as indicative of the range of or trends in fluctuations
in currency exchange rates that may occur in the future.
GOVERNING LAW AND JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. In the event an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a Federal or State
court in the United States, it is likely that such court would grant judgment
relating to the Notes only in U.S. dollars. The date used to determine the rate
of conversion of a Specified Currency into United States dollars will depend
upon various factors, including which court renders the judgment. In the event
of an action based on Notes denominated in a Specified Currency other than U.S.
dollars in a state court in the State of New York, such court would be required
to render such judgment in the Specified Currency in which the Note is
denominated, and such judgment would be converted into U.S. dollars at the
exchange rate prevailing on the date of entry of the judgment.
UNITED STATES FEDERAL INCOME TAXATION
In the opinion of Thompson, Hine and Flory, counsel to the Company, the
following summary accurately describes certain material United States federal
income tax statutory and regulatory provisions which may pertain to the
purchase, ownership and disposition of Notes as of the date hereof. Except
where noted, it deals only with Notes held as capital assets by United States
Holders (defined below) and does not deal with special tax situations, such as
those of dealers in securities or currencies, financial institutions, insurance
companies, persons holding Notes as a hedge against, or which are hedged
against, currency or
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interest rate risks or as a position in a "straddle" for tax purposes or United
States Holders whose "functional currency" is not the U.S. dollar. Except as
otherwise provided, it also does not deal with Holders other than original
purchasers of Notes. Furthermore, the discussion below is based upon the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
Treasury regulations (including proposed and temporary Treasury regulations),
rulings and judicial decisions all as in effect on the date hereof, and all of
which are subject to change possibly with retroactive effect or to different
interpretation which could result in federal income tax consequences different
from those discussed below. Additional tax considerations or consequences may
result from the particular terms established in any applicable Pricing
Supplement or any Note. Persons considering the purchase, ownership or
disposition of Notes should consult their own tax advisors concerning the
federal income tax consequences in light of the terms of their particular Notes
and their particular situations, as well as any consequences arising under the
law of any state, local or foreign taxing jurisdiction.
UNITED STATES HOLDERS
As used herein, a "United States Holder" of a Note means a Holder that is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, an estate or trust the income of which is
subject to United States federal income taxation regardless of its source, or
otherwise subject to United States federal income taxation on a net income
basis in respect of a Note. As used herein, the term "Non-United States Holder"
means any holder of a Note that is not a United States Holder.
PAYMENTS OF INTEREST
Except as set forth below, interest on a Note generally will be taxable to a
United States Holder as ordinary income from domestic sources at the time it is
paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
The following is a general summary of the material United States federal
income tax consequences of the ownership of Original Issue Discount Notes (as
defined below) by United States Holders. This summary is based upon Treasury
regulations which were published in the Federal Register on February 2, 1994
(the "OID Regulations") and which became effective as final regulations on
April 4, 1994. The following discussion addresses only Notes providing for
fixed payments or Notes providing for contingent payments that bear qualified
stated interest, as defined below.
Under the OID Regulations, the "issue price" of each Note in a particular
offering will be the first price at which a substantial amount of that
particular offering is sold to the public. A Note with an "issue price" that is
less than its stated redemption price at maturity (which amount is equal to the
sum of all payments to be made on the Note other than "qualified stated
interest", as defined below) will be issued with original issue discount if
such difference is at least 0.25 percent of the stated redemption price at
Maturity multiplied by the number of complete years to Maturity. Notes issued
with original issue discount ("OID") are referred to as "Original Issue
Discount Notes". Notice will be given in the applicable Pricing Supplement when
the Corporation determines that a particular Note will be an Original Issue
Discount Note.
"Qualified stated interest" with respect to a Fixed Rate Note is stated
interest that is unconditionally payable in cash or in property (other than
debt instruments of the issuer) at least annually at a single fixed rate.
Interest is payable at a single fixed rate only if the rate appropriately takes
into account the length of the interval between payments. Notes other than
Fixed Rate Notes will also be treated as bearing qualified stated interest if
they qualify as "variable rate debt instruments".
In general, a Note will be treated as a "variable rate debt instrument" for
purposes of the OID regulations if the Note is issued for an amount that does
not exceed the total of principal payments unconditionally payable by more than
an amount equal to the lesser of (i) 0.015 multiplied by the product of the
total principal unconditionally payable and the number of complete years to
maturity from the issue date; or (ii) 15 percent of the total principal
payments unconditionally payable. In addition, to be a variable rate
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debt instrument, the Note must bear stated interest at (i) one or more
qualified floating rates, (ii) a single fixed rate and one or more qualified
floating rates, (iii) a single objective rate or (iv) a single fixed rate and a
single objective rate that is a "qualified inverse floating rate". In general,
a qualified floating rate is a rate the variations in the value of which can
reasonably be expected to measure contemporaneous variations in the cost of
newly borrowed funds in the currency in which the Note is denominated. An
objective rate is a rate (other than a qualified floating rate) that it
determined using a single fixed formula and that is based on: (i) one or more
qualified floating rates, (ii) one or more rates that would be qualified
floating rates for a debt obligation denominated in a different currency, (iii)
the yield or change in the price of one or more items of actively traded
personal property, other than the stock or debt of the issuer or a related
party or (iv) a combination of the rates described in (i)-(iii) herein. A
"qualified inverse floating rate" is a rate that is equal to a fixed rate minus
a qualified floating rate and the variations in which can reasonably be
expected to inversely reflect contemporaneous variations in the cost of newly
borrowed funds, disregarding certain restrictions on such rate such as caps,
floors or governors.
In the case of a Note issued with de minimis OID (i.e., original issue
discount that is not considered OID because it is less than 0.25 percent of the
stated redemption price at maturity multiplied by the number of complete years
to maturity), the United States Holder generally must include such de minimis
OID in income as stated principal payments are made on the Notes, in proportion
to the amount of principal paid. Any amount of de minimis OID that has not been
included in income prior to sale, exchange or retirement of a Note shall be
treated as capital gain.
The OID Regulations provide that Notes may be redeemed in whole or in part
prior to their Stated Maturity, then such Notes will be treated as having a
maturity date for federal income tax purposes on such redemption date if such
redemption would result in a lower yield to maturity in the case of a
redemption at the issuer's option or a higher yield to maturity in the case of
a redemption at the holder's option. Notice will be given in the applicable
Pricing Supplement when the Corporation determines that a particular Note will
be deemed to have a maturity date for federal income tax purposes prior to its
Stated Maturity.
Generally, United States Holders of Original Issue Discount Notes with a
fixed Maturity of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includable in income by the initial United States Holder of an Original
Issue Discount Note is the sum of the "daily portions" of OID with respect to
the Note for each day during the taxable year or portion of the taxable year in
which such United States Holder held such Note ("accrued OID"). The daily
portion of OID is determined by allocating to each day in any "accrual period"
a ratable portion of the OID allocable to that accrual period. The "accrual
period" for an Original Issue Discount Note may be of any length and may vary
in length over the term of the Note, provided that each such accrual period is
no longer than one year and each scheduled payment of principal or interest
occurs on the first day or the final day of such accrual period. In general,
the computation of OID is simplest if accrual periods correspond to the
intervals between payment dates provided by the terms of a Note. The amount of
OID allocable to any accrual period is an amount equal to the excess, if any,
of (a) the product of the Note's adjusted issue price at the beginning of such
accrual period and its yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for the
length of the accrual period) over (b) the amount of any qualified stated
interest allocable to such accrual period. In determining OID allocable to an
accrual period, if an interval between payments of qualified stated interest
contains more than one accrual period, the amount of qualified stated interest
payable at the end of the interval (including any qualified stated interest
that is payable on the first day of the accrual period immediately following
the interval) is allocated on a pro rata basis to each accrual period in the
interval and the adjusted issue price at the beginning of each accrual period
in the interval must be increased by the amount of any qualified stated
interest that has accrued prior to the first day of the accrual period but is
not payable until the end of the interval. The amount of OID allocable to a
final accrual period is the difference between the amount payable at maturity
(other than a payment of qualified stated interest) and the adjusted issue
price of the Note at the
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beginning of the final accrual period. If all accrual periods are of equal
length, except for either an initial shorter accrual period or an initial and a
final shorter accrual period, the amount of OID allocable to the initial
accrual period may be computed under any reasonable method. The "adjusted issue
price" of a Note at the beginning of any accrual period is equal to its issue
price increased by the accrued OID for each prior accrual period (determined
without regard to the amortization of any acquisition or bond premium, as
described below) and reduced by any prior payments, or any payments made on the
first day of the accrual period with respect to such Note, other than payments
of qualified stated interest. Under these rules, a United States Holder may
have to include in income increasingly greater amounts of OID in successive
accrual periods. The Corporation is required to provide information returns
stating the amount of OID accrued on Notes held of record by persons other than
corporations and other exempt holders.
In the case of certain variable rate debt instruments that are issued with
OID and that bear interest at a single qualified floating rate or a qualified
inverse floating rate, the accrual of OID is to be determined by assuming that
the rate is fixed upon issuance at the initial value of the interest rate. In
the case of certain variable rate debt instruments that are issued with OID and
that bear an objective interest rate (other than a qualified inverse floating
rate), the accrual of OID is calculated by assuming that the Note bears
interest at a fixed rate that reflects the yield that is reasonably expected
for the Note. The method for determining OID on Notes that do not bear interest
at a qualified floating rate, at a qualified inverse floating rate or an
objective rate will be provided in the applicable Pricing Supplement for such
Note.
United States Holders may elect to treat all interest on any Note as OID and
calculate the amount includable in gross income under the constant yield method
described above. For the purposes of this election, interest includes stated
interest, acquisition discount, OID, de minimis OID, market discount, de
minimis market discount and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium. If a United States Holder makes this
election for a Note with market discount or amortizable bond premium, the
United States holder is considered to have also made an election under the
market discount or amortizable bond premium provisions, described below, and
the electing United States Holder will be required to amortize bond premium or
include market discount in income currently for all of the holder's other debt
instruments which have market discount or amortizable bond premium. The
election is to be made for the taxable year in which the United States Holder
acquired the Note, and may not be revoked without the consent of the Internal
Revenue Service (the "IRS").
Notes that have a fixed maturity of one year or less ("Short-Term Notes")
generally will be deemed to have been issued with OID (generally, the excess of
the Short-Term Note's principal amount, including all interest payable on the
Note, over the Note's purchase price). In general, an individual or other cash
method United States Holder is not required to accrue OID on a Short-Term Note
unless the holder elects to do so. If such an election is not made, any gain
recognized by the United States Holder on a taxable disposition (including the
maturity) of the Short-Term Note will be ordinary income to the extent of the
OID accrued on a straight-line basis, or upon election, on a constant yield
method (based on daily compounding) through the date of sale or maturity, and a
portion of the deductions otherwise allowable to the United States Holder for
interest on borrowing allocable to the Short-Term Note will be deferred until a
corresponding amount of income is realized. United States Holders who report
income for federal income tax purposes under the accrual method, and certain
other holders, including banks and dealers in securities, are required to
accrue OID on a Short-Term Note on a straight line basis unless an election is
made to accrue the OID under a constant yield method (based on daily
compounding).
MARKET DISCOUNT
If a United States Holder purchases a Note, other than an Original Issue
Discount Note, for an amount that is less than its stated redemption price at
Maturity, or in the case of an Original Issue Discount Note, for an amount that
is less than its "revised issue price" (defined as the sum of the issue price
of the Note (as defined above) and the aggregate amount of the OID includible
in gross income by all prior holders for all
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periods before the aquisition of the Note by the United States Holder, if any,
without regard to the rules for acquisition premium discussed below), the
amount of the difference will be treated as "market discount" for federal
income tax purposes, unless such difference is less than a specified de minimis
amount. Under the market discount rules, a United States Holder will be
required to treat any principal payment on, or any gain on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to the extent of
the market discount which has not previously been included in income and is
treated as having accrued on such Note at the time of such payment or
disposition. In addition, the United States Holder may be required to defer,
until the maturity of the Note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the
United States Holder elects to accrue on a constant interest rate method. A
United States Holder of a Note may elect to include market discount in income
currently as it accrues (on either a ratable or constant interest rate method),
in which case the rule described above regarding deferral of interest
deductions will not apply. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired on or
after the first taxable year to which the election applies, and may not be
revoked without the consent of the IRS.
ACQUISITION PREMIUM; AMORTIZABLE BOND PREMIUM
A United States Holder who purchases a Note for an amount that is greater
than its adjusted issue price but equal to or less than the sum of all amounts
payable on the Note after the purchase date other than payments of qualified
stated interest will be considered to have purchased such Note at an
"acquisition premium". Under the acquisition premium rules, the amount of OID
which such United States Holder must include in its gross income with respect
to such Note for any taxable year (or portion thereof in which the United
States Holder holds the Note) will be reduced (but not below zero) by the
portion of such acquisition premium properly allocable to such year.
A United States Holder who purchases a Note for an amount in excess of the
sum of all amounts payable on the Note after the purchase date other than
qualified stated interest will be considered to have purchased the Note at a
"premium" and will not be required to include any OID in income. A United
States Holder generally may elect to amortize the premium over the remaining
term of the Note on a constant yield method. The amount amortized in any year
will be treated as a reduction of the United States Holder's interest income
from the Note. However, if the Note may be optionally redeemed after the United
States Holder acquires it at a price in excess of its stated redemption price
at maturity, special rules may apply which could result in a deferral of the
amortization of some bond premium until later in the term of the Note. Bond
premium on a Note held by a United States Holder that does not make such an
election will decrease the gain or increase the loss otherwise recognized upon
a disposition of the Note. The election to amortize premium on a constant yield
method once made applies to all debt obligations held or subsequently acquired
by the electing United States Holder on or after the first day of the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A United States Holder's tax basis in a Note will, in general, be the United
States Holder's cost therefor, increased by OID, market discount, or any
discount with respect to a Short-Term Note, previously included in income by
the United States Holder and reduced by the amount of any amortized premium and
any cash payments on the Note other than payments of qualified stated interest.
Upon the sale, exchange or retirement of a Note, a United States Holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange or retirement (less, in the case of a cash-method taxpayer,
any portion of the proceeds allocable to accrued qualified stated interest) and
the adjusted tax basis of the Note. Except as described above with respect to
certain Short-Term Notes or with respect to market discount, such gain or
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loss generally will be capital gain or loss and will be long-term capital gain
or loss if at the time of sale, exchange or retirement the Note has been held
for more than one year. Under current law, net capital gains of individuals
are, under certain circumstances, taxed at lower rates than items of ordinary
income. The deductibility of capital losses is subject to limitations.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate 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 OID)
on a Note owned by a Non-United States Holder, provided that (i) the
beneficial owner does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Corporation
entitled to vote, (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 a
Note 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;
(b) any amount realized by a Non-United States Holder upon the sale,
exchange or retirement of a Note will not be subject to United States
withholding taxes and any capital gain (which gain would not include
accrued interest or OID) realized on the sale, exchange, retirement or any
other disposition of a Note by a Non-United States Holder will be exempt
from United States federal income tax, provided that (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the Non-United States Holder and (ii) in the case of an
individual, the Non-United States Holder is not present in the United
States for 183 days or more in the taxable year of such sale or disposition
or certain other conditions are not met; and
(c) a Note beneficially owned by an individual who at the time of death
is a Non-United States Holder will not be subject to United States federal
estate tax as a result of such individual's death, provided that such
individual does not actually or constructively own 10% or more of the total
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 provided
that the interest payments with respect to such Note would not have been,
if received at the time of such individual's death, effectively connected
with the conduct of a United States trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial owner
of such Note, or a financial institution holding the Note on behalf of such
owner, must provide, in accordance with specified procedures, the Corporation
or its Paying Agent with a statement to the effect that the beneficial owner is
not a United States person, citizen or resident. Pursuant to current temporary
Treasury regulations, these requirements will be met if (1) the beneficial
owner provides its name and address, and certifies, under penalties of perjury,
that it is not a United States person, citizen or resident (which certification
may be made on an Internal Revenue Service Form W-8 (or successor form)) or (2)
a financial institution holding the Notes on behalf of the beneficial owner
certifies, under penalties of perjury, that such statement has been received by
it and furnishes the Corporation or its Paying Agent with a copy thereof.
Payments to Non-United States Holders not meeting the requirements of
paragraph (a) above and thus subject to withholding of United States federal
income tax may nevertheless be exempt from such withholding if the beneficial
owner of the Note provides the Corporation with a properly executed (1)
Internal Revenue Service Form 1001 (or successor form) claiming an exemption
from withholding under the benefit of a tax treaty or (2) Internal Revenue
Service Form 4224 (or successor form) stating that interest paid on the Note is
not subject to withholding tax because it is effectively connected with the
owner's conduct of a trade or business in the United States, in which case,
however, such interest will be subject to United States federal income tax on a
net income basis at the applicable federal income tax rate.
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FOREIGN CURRENCY NOTES
The following discussion summarizes the material United States federal income
tax consequences to a holder subject to United States federal income tax of the
ownership and disposition of Notes (other than Notes, the principal or interest
on which is determined by reference to one or more currencies or currency
units, as described in "Indexed Notes" above) which are denominated in a
Specified Currency other than the U.S. dollar or the payments of interest or
principal on which are payable in a currency or currency unit other than the
U.S. dollar (a "Foreign Currency Note").
A holder who uses the cash method of accounting and who receives a payment of
interest (including qualified stated interest) in foreign currency with respect
to a Note (other than with respect to an Original Issue Discount Note, except
to the extent any qualified stated interest is received) will be required to
include in income the U.S. dollar value of the foreign currency payment
(determined based on the "spot" exchange rate in effect on the date such
payment is received) regardless of whether the payment is in fact converted to
U.S. dollars at that time, and such U.S. dollar value will be the holder's tax
basis in the foreign currency.
A holder (to the extent the preceding paragraph is not applicable) will be
required to include in income the U.S. dollar value of the amount of interest
income (including original issue discount) that has accrued and is otherwise
required to be taken into account with respect to a Foreign Currency Note
during an accrual period. The U.S. dollar value of such accrued interest income
will be determined by translating such income at the average rate of exchange
for the accrual period or, with respect to an interest accrual period that
spans two taxable years, at the average rate for the partial period within the
taxable year. The average rate of exchange for the interest accrual period (or
partial period) is the simple average of the "spot" exchange rates for each
business day of such period or other average exchange rate for the period if
such rate is reasonably derived and consistently applied by the taxpayer. Such
holder may elect to determine the U.S. dollar value of any interest income
accrued in a foreign currency under an alternative method, as described below
under "Spot Rate Convention Election." Such holder will recognize ordinary
income or loss with respect to foreign currency relating to accrued interest
income on the date such income is actually received. The amount of ordinary
income or loss recognized on the date such interest is actually received will
equal the difference between the U.S. dollar value of the foreign currency
payments received (determined by using the "spot" exchange rate in effect on
the date such payment is received) in respect of such accrual period and the
U.S. dollar value of the interest income that has accrued during such accrual
period as determined by using one of the two conventions described above.
A holder will have a tax basis in any foreign currency received on the sale,
exchange or retirement of a Foreign Currency Note equal to the U.S. dollar
value of such foreign currency, determined by using the "spot" exchange rate in
effect at the time of such sale, exchange or retirement. Any gain or loss
realized by a holder on a sale or other disposition of foreign currency
(including its exchange for U.S. dollars or its use to purchase Foreign
Currency Notes) will be ordinary income or loss.
A holder's tax basis in a Foreign Currency Note, and the amount of any
subsequent adjustment to such holder's tax basis, will be the U.S. dollar value
of the foreign currency amount paid for such Foreign Currency Note, or of the
foreign currency amount of the adjustment, determined on the date of such
purchase or adjustment. A holder who converts U.S. dollars to a foreign
currency and immediately uses that currency to purchase a Foreign Currency Note
denominated in the same currency ordinarily will not recognize gain or loss in
connection with such conversion and purchase. However, a holder who purchases a
Foreign Currency Note with previously owned foreign currency will recognize
ordinary income or loss in an amount equal to the difference, if any, between
such holder's tax basis in the foreign currency and the U.S. dollar fair market
value of the Foreign Currency Note on the date of purchase.
Gain or loss realized with respect to principal upon the sale, exchange or
retirement of a Foreign Currency Note will be ordinary income or loss to the
extent it is attributable to fluctuations in currency exchange rates. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the foreign currency principal amount of such
Note, determined by using the "spot" exchange rate in effect on the date such
payment is received or such Note is disposed of and the U.S. dollar
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value of the foreign currency principal amount of such Note, determined by
using the "spot" exchange rate in effect on the date such Holder acquired such
Note. The foreign currency principal amount of a Foreign Currency Note
generally equals the issue price in foreign currency of such Note. Such foreign
currency gain or loss will be recognized only to the extent of the total gain
or loss recognized by a holder on the sale, exchange or retirement of the
Foreign Currency Note. The source of exchange gain or loss will be determined
by reference to the residence of the holder or the "qualified business unit" of
the holder on whose books the Note is properly reflected. Any gain or loss
recognized by such a holder in excess of such foreign currency gain or loss
will be capital gain or loss (except in the case of a original issue Discount
Note, to the extent of any accrued original issue discount), and generally will
be long-term capital gain or loss if the holding period of the Foreign Currency
Notes exceeds one year.
Any gain or loss which is treated as ordinary income or loss, as described
above, generally will not be treated as interest income or expense except to
the extent provided by administrative pronouncements of the Internal Revenue
Service.
The amount of OID on a Foreign Currency Note is determined in the relevant
foreign currency. The amount of such OID that is taken into account currently
under general rules applicable to Notes other than Foreign Currency Notes is to
be determined for any accrual period in the relevant foreign currency and then
translated into U.S. dollars on the basis of the average exchange rate in
effect during such accrual period (or, with respect to an accrual period that
spans two taxable years, the partial period within the taxable year) unless the
holder elects to use the alternative method, as described below under "Spot
Rate Convention Election."
SPOT RATE CONVENTION ELECTION
For taxable years beginning after March 17, 1992, a United States Holder may
elect to translate foreign currency OID (and, in the case of an accrual basis
United States Holder, accrued interest) into U.S. dollars at the exchange rate
in effect on the last day of an accrual period for such OID or interest, or in
the case of the accrual period that spans two taxable years, at the exchange
rate in effect on the last day of the partial period within the taxable year.
Additionally, if a payment of OID or interest is actually received within five
business days of the last day of the accrual period or partial accrual period
within the taxable year, an electing United States Holder may instead translate
such OID or accrued interest into U.S. dollars at the exchange rate in effect
on the date of such receipt. Any such election will apply to all debt
instruments held by the United States Holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the United
States Holder, and will be irrevocable without the consent of the Internal
Revenue Service.
AMORTIZING NOTES, EXTENDIBLE NOTES, RENEWABLE NOTES AND INDEXED NOTES
The applicable Pricing Supplement will contain a discussion of special United
States federal income tax rules with respect to Amortizing Notes, Extendible
Notes, Renewable Notes and Indexed Notes, payments on which are determined by
reference to any index (other than interest payments determined by reference to
a Qualified Floating Rate or Objective Rate). The applicable Pricing Supplement
also will contain a discussion of any special United States federal income tax
rules with respect to Floating Rate Notes that provide for one Base Rate
followed by a different Base Rate, a Base Rate followed by a fixed rate, or a
fixed rate followed by a Base Rate.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The "backup" withholding and information reporting requirements may apply to
certain payments of principal, premium, if any, and interest (including OID) on
a Note and to certain payments of proceeds of
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<PAGE>
the sale or retirement of a Note. The Corporation, its agent, a broker, or any
paying agent, as the case may be, will be required to withhold tax from any
payment that is subject to backup withholding at a rate of 31% of such payment
if the holder fails to furnish and certify its taxpayer identification number,
to certify that such holder is not subject to backup withholding, or to
otherwise comply with the applicable requirements of the backup withholding
rules. Certain holders (including, among others, all corporations) are not
subject to the backup withholding and reporting requirements.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Corporation or any agent
thereof (in its capacity as such) to a holder of a Note who has provided the
required certification under penalties of perjury that it is not a United
States person as set forth in clause (a)(iv) described above under "Non-United
States Holders" or has otherwise established an exemption (provided that
neither the Corporation nor such agent has actual knowledge that the holder is
a United States person or that the conditions of any other exemption are not in
fact satisfied).
Any amounts withheld under the backup withholding rules from a payment to a
holder may be claimed as a credit against such holder's United States federal
income tax liability.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Corporation through
CS First Boston Corporation, Goldman, Sachs & Co., Kidder, Peabody & Co.
Incorporated, Lehman Brothers, Lehman Brothers Inc. (including its affiliate
Lehman Special Securities Inc.), J.P. Morgan Securities Inc., and Salomon
Brothers Inc (the "Agents"), each of which will agree to use its reasonable
efforts to solicit offers to purchase Notes. The Corporation will have the sole
right to accept offers to purchase Notes and may reject any offer to purchase
Notes in whole or in part. An Agent will have the right to reject any offer to
purchase Notes solicited by it in whole or in part. Payment of the purchase
price of the Notes will be required to be made in immediately available funds.
Unless otherwise specified in the applicable Pricing Supplement, with respect
to Notes with a Stated Maturity of 30 years from the date of issue, the Company
will pay each Agent a commission, in the form of a discount ranging from .125%
to .750% of the principal amount of each Note, depending upon the Stated
Maturity, sold through such Agent. With respect to Notes with a Stated Maturity
that is longer than 30 years from the date of issue sold through any Agent, the
rate of commission will be negotiated at the time of sale and will be specified
in the applicable Pricing Supplement. The Corporation may appoint additional
agents to solicit sales of the Notes or accept (but not solicit) offers from
additional agents for the sale of Notes; provided that any such solicitation
and sale of the Notes shall be on the same terms and conditions as the Agents
have agreed to. The Corporation may also sell Notes directly to investors on
its own behalf. In the case of sales made directly by the Corporation, no
commission will be payable.
The Corporation may also sell Notes to an Agent as principal for its own
account or to a group of underwriters for whom an Agent acts as representative
at discounts or premiums to be agreed upon at the
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<PAGE>
time of sale. Such Notes may be resold to investors and other purchasers at
prevailing market prices, or prices related thereto at the time of such resale,
at negotiated prices or otherwise, as determined by the Agent. In addition, the
Agents may offer the Notes they have purchased as principal to other dealers.
The Agents may sell Notes to any dealer at a discount and, unless otherwise
specified in the applicable Pricing Supplement, such discount allowed to any
dealer will not be in excess of the discount received by such Agent from the
Corporation unless otherwise specified in the applicable Pricing Supplement.
After the initial public offering of Notes to be resold to investors and other
purchasers on a fixed public offering price basis, the public offering price,
concession and discount may be changed.
An Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Corporation and
the Agents have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
made in respect thereof. The Corporation has also agreed to reimburse the
Agents for certain expenses, including the fees and expenses of counsel.
The Corporation does not intend to apply for the listing of the Notes on any
national or regional securities exchange. The Corporation has been advised by
the Agents that the Agents intend to make a market in the Notes, as permitted
by applicable laws and regulations. The Agents are not obligated to do so,
however, and the Agents may discontinue making a market at any time without
notice. No assurance can be given as to the liquidity of any trading market for
the Notes.
Concurrently with the offering of Notes through the Agents as described
herein, the Corporation may issue other Securities as described in the
accompanying Prospectus.
In the ordinary course of their respective businesses, certain of the Agents
and their affiliates have engaged, and may in the future engage, in investment
banking and commercial banking transactions with the Corporation and certain of
its affiliates.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Corporation by any
Senior Managing Counsel to the Corporation authorized to render an opinion in
the State of Ohio or by Thompson, Hine and Flory, Cleveland, Ohio, and for the
Agents by Shearman & Sterling, New York, New York. The Senior Managing Counsel
to the Corporation or Thompson, Hine and Flory, as the case may be, will rely
as to all matters of New York law upon the opinion of Shearman & Sterling.
Shearman & Sterling will rely as to all matters of Ohio law upon the opinion
rendered on behalf of the Corporation.
The opinion of the Senior Managing Counsel to the Corporation or Thompson,
Hine and Flory and Shearman & Sterling will be conditioned upon, and subject to
certain assumptions regarding, future action required to be taken by the
Corporation and the Trustee in connection with the issuance and sale of Notes,
the specific terms of Notes and other matters which may affect the validity of
Notes but which cannot be ascertained on the date of such opinions. As of June
8, 1994, attorneys at Thompson, Hine and Flory owned an aggregate of
approximately 62,200 common shares of the Corporation. In addition, as of June
8, 1994, the Senior Managing Counsel to the Corporation currently authorized to
render the opinion on behalf of the Corporation owned approximately 2,700
common shares of the Corporation and options to purchase 4,000 common shares of
the Corporation which were exercisable within sixty days of such date.
S-29
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED JUNE 10, 1994
PROSPECTUS
[LOGO OF KEYCORP APPEARS HERE]
DEBT SECURITIES DEBT WARRANTS
PREFERRED STOCK PREFERRED STOCK WARRANTS
DEPOSITARY SHARES DEPOSITARY SHARE WARRANTS
COMMON SHARES COMMON SHARE WARRANTS
CAPITAL SECURITIES
KeyCorp, an Ohio corporation (the "Corporation"), intends to issue from time
to time, either separately or together, (i) one or more series of its unsecured
debt securities, which may be either senior debentures, notes, bonds, and/or
other evidences of indebtedness (the "Senior Debt Securities") or subordinated
debentures, notes, bonds, and/or other evidences of indebtedness which may be
convertible at the option of a holder or the Corporation into Capital
Securities (as described herein) of the Corporation (the "Subordinated Debt
Securities" and, together with the Senior Debt Securities, the "Debt
Securities"), (ii) warrants to purchase Debt Securities (the "Debt Warrants"),
(iii) shares of Preferred Stock, with a par value of $1 each (the "Preferred
Stock") which may be convertible, at the option of the holder, into Common
Shares or any other class or series of Capital Securities of the Corporation or
convertible at the option of the Corporation into Capital Securities or other
debt securities of the Corporation, (iv) shares of Preferred Stock represented
by depositary shares ("Depositary Shares"), (v) warrants to purchase shares of
Preferred Stock (the "Preferred Stock Warrants"), (vi) warrants to purchase
Depositary Shares (the "Depositary Share Warrants"), (vii) Common Shares, with
a par value of $1 each (the "Common Shares"), together with the related rights
to purchase Common Shares (the "Rights"), and (viii) warrants to purchase
Common Shares, together with the Rights, (the "Common Share Warrants," and
together with the Debt Warrants, the Preferred Stock Warrants, and the
Depositary Share Warrants, being collectively referred to herein as the
"Securities Warrants") in amounts, at prices, and on terms to be determined at
the time of the offering. The Debt Securities, Securities Warrants, Preferred
Stock, Depositary Shares, and Common Shares offered hereby, together with the
Capital Securities, are collectively referred to herein as the "Securities."
The Securities offered pursuant to this Prospectus may be offered separately
or together in one or more series up to an aggregate initial public offering
price of $750,000,000 or the equivalent thereof in one or more foreign
currencies or units of one or more foreign currencies or composite currencies
(such as European Currency Units), at individual prices and on terms to be set
forth in one or more supplements to this Prospectus (each, a "Prospectus
Supplement"). The particular terms of the Securities offered by any Prospectus
Supplement will be described in the Prospectus Supplement relating to such
Securities (an "Applicable Prospectus Supplement").
The Senior Debt Securities, when issued, will rank equally with all other
unsubordinated and unsecured indebtedness of the Corporation. The Subordinated
Debt Securities will be subordinate to all existing and future Senior
Indebtedness (as defined herein) of the Corporation and, in certain events
involving the insolvency of the Corporation, to Other Senior Obligations (as
defined herein) of the Corporation. See "Description of Debt Securities--
Subordination of Subordinated Debt Securities." The Debt Securities of any
series may be issued with Securities Warrants, and, in the case of the
Subordinated Debt Securities, may be convertible into Capital Securities of the
Corporation. Unless otherwise indicated in a Prospectus Supplement, the
maturity of the Subordinated Debt Securities will be subject to acceleration
only in the event of certain events of bankruptcy, insolvency, or
reorganization of the Corporation or upon receivership of a Major Bank (as
defined herein). See "Description of Debt Securities--Subordination of
Subordinated Debt Securities".
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in a Prospectus Supplement and, among other
things, will include, where applicable, (i) in the case of Debt Securities, the
specific designation, aggregate principal amount, currency, denomination,
maturity, priority, premium, if any, rate of interest (which may be variable or
fixed), time of payment of interest, terms for optional redemption or repayment
by the Corporation or any holder and for sinking fund payments, terms for
conversion, the initial public offering price, any special provisions related
to Debt Securities denominated in a foreign currency or issued as medium-term
notes, original issue discount securities, or with other special terms, and the
designation of any applicable trustee, security registrar, or paying agent,
(ii) in the case of shares of Preferred Stock, the specific title and stated
value, number of shares or fractional interests therein, any dividend,
liquidation, redemption, voting, and other rights, the terms for conversion,
the initial public offering price, and whether such shares are to be issued as
Depositary Shares, and, if so, the fraction of a share to be represented by
each Depositary Share and the designation of the Depositary (as defined
herein), (iii) in the case of Common Shares, the aggregate number of shares
offered and the initial offering price, and (iv) in the case of Securities
Warrants, where applicable, the applicable type and amount of securities
covered thereby, and, where applicable, the aggregate amount, duration,
offering price, exercise price, and detachability.
A Prospectus Supplement will also contain information, where applicable,
about certain U.S. Federal income tax, accounting, and other considerations
relating to, and any listing on a securities exchange of, the Securities
covered by the Prospectus Supplement.
THE SECURITIES WILL BE OBLIGATIONS OF THE CORPORATION, ARE NOT AND WILL NOT
BE SAVINGS ACCOUNTS, DEPOSITS, OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF THE CORPORATION, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION
INSURANCE FUND, OR ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY.
----------
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 Securities may be sold to underwriters pursuant to the terms of the
offering fixed at the time of sale, directly by the Corporation, or through
dealers or agents designated from time to time by the Corporation, which agents
may be affiliates of the Corporation. Each Prospectus Supplement will set forth
the names of the underwriters, dealers, or agents, if any, and any applicable
fees, commissions, or discounts and the net proceeds to the Corporation from
such sale together with the terms of the offering. The Corporation may also
issue contracts under which the counterparty may be required to purchase Debt
Securities, Preferred Stock, or Depositary Shares. Such contracts would be
issued with the Debt Securities, Preferred Stock, Depositary Shares, and/or
Securities Warrants in amounts, at prices, and on terms to be set forth in a
Prospectus Supplement. See "Plan of Distribution."
THE DATE OF THIS PROSPECTUS IS JUNE , 1994.
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy statements, and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements, and other information filed by the Corporation can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at The Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade
Center, Thirteenth Floor, New York, New York 10048. Copies of such material can
be obtained by mail from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Certain
securities of the Corporation are listed on the New York Stock Exchange, and
such reports, proxy statements, and other information concerning the
Corporation also may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus constitutes part of a registration statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Corporation with the Commission under the Securities
Act. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted from this Prospectus
in accordance with the rules and regulations of the Commission. Reference is
made to the Registration Statement and to the exhibits thereto for further
information pertaining to the Corporation and the Securities offered hereby.
The Registration Statement (and exhibits thereto) may be inspected without
charge at the office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies thereof may be obtained from the Commission at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed by the Corporation with the
Commission pursuant to Sections 12 or 13 of the Exchange Act:
1. The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1993;
2. The Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994 (as amended by Amendment No. 1 to Form 10-Q on Form 10-Q/A
filed on June 7, 1994);
3. The Corporation's Current Reports on Form 8-K, filed on January 21,
March 16, (as amended by Amendment No. 1 to Form 8-K on Form 8-K/A filed on
May 4, 1994), April 12, and April 20, 1994 (including as exhibits in the
case of the Form 8-K filed on April 20, 1994 (i) Management's Discussion
and Analysis of Financial Condition and Results of Operations; (ii) Report
of Ernst & Young, Independent Auditors; (iii) Consolidated Financial
Statements for the fiscal year ended December 31, 1993; (iv) Notes to
Consolidated Financial Statements; and (v) descriptions of the
Corporation's business (including a discussion of regulatory and
supervisory matters) and properties, all of which reflect old KeyCorp and
Society (as each is defined below), on a combined basis giving effect to
their March 1, 1994 merger);
4. The description of the Corporation's Common Shares and the Rights to
purchase Common Shares contained in the Corporation's Registration
Statement on Form 8-A dated July 31, 1992 as amended by Form 8-A/A filed on
February 25, 1994 under Section 12 of the Exchange Act; and
5. The description of the Corporation's 10% Cumulative Preferred Stock,
Class A (the "10% Cumulative Preferred Stock") and the Depositary Shares
representing one-fifth of one share of 10% Cumulative Preferred Stock
contained in the Corporation's Registration Statement on Form 8-A, filed on
February 23, 1994 under Section 12 of the Exchange Act.
All reports subsequently filed by the Corporation pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act prior to the termination of the
offering of the Securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a
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<PAGE>
statement contained herein or in a Prospectus Supplement, 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 statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
THE CORPORATION WILL PROVIDE UPON REQUEST AND WITHOUT CHARGE TO EACH PERSON
TO WHOM THIS PROSPECTUS IS DELIVERED A COPY OF ANY OR ALL OF THE FOREGOING
DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED THEREIN BY REFERENCE).
WRITTEN REQUESTS SHOULD BE DIRECTED TO CARTER B. CHASE, EXECUTIVE VICE
PRESIDENT, GENERAL COUNSEL, AND SECRETARY, KEYCORP, 127 PUBLIC SQUARE,
CLEVELAND, OHIO 44114-1306 (TELEPHONE (216) 689-3000).
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
CORPORATION OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS MAY NOT BE USED TO
CONSUMMATE SALES OF THE SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT. THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH THEY RELATE AND DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO SUCH DATE.
UNLESS OTHERWISE INDICATED, CURRENCY AMOUNTS IN THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT ARE STATED IN U.S. DOLLARS ("$," "DOLLARS," "U.S.
DOLLARS," OR "U.S. $").
3
<PAGE>
THE CORPORATION
On March 1, 1994, KeyCorp ("old KeyCorp"), a New York corporation and a
financial services holding company headquartered in Albany, New York, with
approximately $33 billion in assets at year-end 1993, merged with and into
Society Corporation ("Society"), an Ohio corporation and a financial services
holding company headquartered in Cleveland, Ohio with approximately $27 billion
in assets at year-end 1993, pursuant to an Agreement and Plan of Merger, and a
related Supplemental Agreement to Agreement and Plan of Merger, each dated as
of October 1, 1993, and each as amended. In the merger, Society was the
surviving corporation, but changed its name to KeyCorp (also referred to herein
as the "Corporation"). All financial data of the Corporation set forth in this
Prospectus has been restated to give effect to the merger of old KeyCorp with
and into Society.
The merger of old KeyCorp with and into Society created a financial services
holding company which traces its roots back to 1825, when the first predecessor
of old KeyCorp was organized. The merger of old KeyCorp and Society created the
"new" KeyCorp, a financial services company, which at March 31, 1994, was the
tenth largest bank holding company in the United States based on its
consolidated assets of approximately $61 billion.
The Corporation is a legal entity separate and distinct from its banking and
other subsidiaries. Accordingly, the right of the Corporation, its
securityholders and its creditors to participate in any distribution of the
assets or earnings of its banking and other subsidiaries is necessarily subject
to the prior claims of the respective creditors of such banking and other
subsidiaries, except to the extent that claims of the Corporation in its
capacity as a creditor of such banking and other subsidiaries may be
recognized.
The address of the Corporation's principal office is 127 Public Square,
Cleveland, Ohio, 44114 and its telephone number is (216) 689-3000.
BANKING SUBSIDIARIES
As a result of the merger of old KeyCorp and Society, KeyCorp provides
banking and other financial services across the country's northern tier and in
Florida through a network of subsidiaries operating 1,276 full-service banking
offices in 13 states, (as of March 31, 1994), making KeyCorp the fifth largest
bank holding company in terms of domestic branches. KeyCorp's primary banking
subsidiaries include Society National Bank, headquartered in Cleveland, Ohio,
the largest bank in Ohio and one of the nation's major regional banks with
$22.6 billion in total assets and 291 full-service banking offices at March 31,
1994; Key Bank of New York, headquartered in Albany, New York with $14.1
billion in total assets and 331 full-service banking offices at March 31, 1994;
Key Bank of Washington, headquartered in Tacoma, Washington with $7.1 billion
in total assets and 193 full-service banking offices at March 31, 1994; and
Society National Bank, Indiana, headquartered in South Bend, Indiana with $3.2
billion in total assets and 84 full-service banking offices at March 31, 1994.
In addition, the Corporation operates banking subsidiaries in Alaska, Colorado,
Florida, Idaho, Maine, Michigan, Oregon, Utah, and Wyoming.
The Corporation's banking subsidiaries provide a wide range of banking,
fiduciary and other financial services to their corporate, individual and
institutional customers located throughout the country. In addition to the
customary banking services of accepting funds for deposit and making loans, the
Corporation's banking subsidiaries provide specialized services tailored to
specific markets, including investment management services, personal and
corporate trust services, personal financial services, customer access to money
market and other mutual funds, cash management services, investment banking
services, and international banking services.
OTHER FINANCIAL SERVICE SUBSIDIARIES
In addition to the services provided through its banking offices, KeyCorp
engages in a wide range of other financial services through subsidiaries,
including mortgage banking, investment management, mutual
4
<PAGE>
fund advisory, and trust services. At December 31, 1993, through its banking
and other companies, KeyCorp serviced approximately $27 billion in mortgage
loans, managed approximately $34 billion in assets (excluding corporate trust
assets) in its investment management and trust operations, and, among bank
holding companies, operated the nation's thirteenth largest bank mutual fund
business.
The Corporation engages in the mortgage banking business through KeyCorp
Mortgage Inc., a mortgage banking subsidiary of Key Bank of New York. KeyCorp
Mortgage Inc. engages in the business of originating, servicing, packaging and
selling residential mortgage loans, and, to a lesser extent, servicing
commercial and income property loans in all of the states in which the
Corporation's banks have branch offices (Alaska, Colorado, Idaho, Indiana,
Maine, Michigan, New York, Ohio, Oregon, Utah, Washington and Wyoming) and in
Arizona and New Jersey where the Corporation has no branch offices.
The Corporation engages in the investment management business through its
bank and trust company subsidiaries as noted above and also through two bank-
owned registered investment adviser subsidiaries owned by Society National
Bank. Through these entities, the Corporation provides investment management
services to institutional and individual clients, including large corporate and
public retirement plans, Taft-Hartley plans, foundations and endowments, and
high net worth individuals. The Corporation's bank and investment management
subsidiaries also serve as investment advisers to the Corporation's proprietary
mutual funds.
Through its nonbanking subsidiaries, the Corporation provides additional
financial services both in and outside of its primary banking markets. These
include personal and corporate trust services, investment management,
reinsurance of credit life and accident and health insurance on loans made by
subsidiary banks, venture capital and small business investment financing
services, equipment lease financing, community development financing, stock
transfer agent, and other financial services. The Corporation is also a
participant in a joint venture with a number of other unaffiliated bank holding
companies in Electronic Payment Services, Inc., which through its subsidiary,
Money Access Service Inc., is the largest processor of automatic teller machine
transactions in the United States. Money Access Service Inc., which is more
commonly known as the MAC (R) network, is available to bank customers
throughout the United States.
5
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CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The Corporation's ratio of earnings to fixed charges and ratio of earnings to
combined fixed charges and preferred stock dividends are set forth below for
the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
--------------- -----------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on
Deposits..................... 4.44x 4.37x 4.15x 3.67x 2.07x 1.57x 1.74x
Including Interest on
Deposits..................... 1.81x 1.71x 1.69x 1.48x 1.18x 1.10x 1.16x
Earnings to Combined Fixed
Charges and Preferred Stock
Dividends:
Excluding Interest on
Deposits..................... 4.16x 3.98x 3.84x 3.31x 1.96x 1.54x 1.71x
Including Interest on
Deposits..................... 1.78x 1.67x 1.66x 1.45x 1.17x 1.10x 1.15x
</TABLE>
For purposes of computing the above ratios, earnings represent consolidated
income before income taxes plus fixed charges. Fixed charges include interest
expense (excluding or including interest on deposits, as the case may be) and
the proportion deemed representative of the interest factor of rental expense,
net of income from subleases. Pre-tax earnings required for preferred stock
dividends were computed using the effective tax rate for the applicable year.
SUPERVISION AND REGULATION
GENERAL
As a bank holding company, the Corporation is subject to the regulation and
supervision of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended
(the "BHCA"). Under the BHCA, bank holding companies may not, in general,
directly or indirectly acquire the ownership or control of more than 5% of the
voting shares or substantially all of the assets of any company, including a
bank, without the prior approval of the Federal Reserve Board. In addition,
bank holding companies are generally prohibited under the BHCA from engaging in
nonbanking (i.e. commercial or industrial) activities, subject to certain
exceptions. As a result of the 1993 acquisition of the institution that is now
known as Society First Federal Savings Bank ("Society First Federal"), the
Corporation is also subject to the regulation and supervision of the Office of
Thrift Supervision (the "OTS") as a savings and loan holding company registered
under the Home Owners' Loan Act of 1933, as amended (the "HOLA").
The banking and savings association subsidiaries (collectively, the "banking
subsidiaries" or "subsidiary banks") of the Corporation are subject to
extensive supervision, examination, and regulation by applicable Federal and
state banking agencies. Society National Bank, Society National Bank, Indiana,
and Key Bank USA N.A. are national banking associations with full banking
powers, subject to regulation, supervision, and examination by the Office of
the Comptroller of the Currency (the "OCC"). Two other national banking
subsidiaries of the Corporation operate under charters that limit their banking
powers to trust-related activities. These entities are also subject to the
regulation, supervision, and examination of the OCC, although they are not
regulated as banks for purposes of the BHCA. All of the other banking
subsidiaries of the Corporation, other than Society First Federal, are state-
chartered banks that are subject to supervision, examination, and regulation by
the applicable state banking authority in the state in which each such
institution is chartered. In addition, the Corporation's state-chartered banks
are not members of the Federal Reserve System (and are therefore so-called
"nonmember banks"), and, accordingly, are subject to the regulation,
supervision, and examination of the Federal Deposit Insurance Corporation (the
"FDIC"). Because each of the Corporation's banking subsidiaries is insured by
the FDIC, the FDIC also has regulatory
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<PAGE>
and supervisory authority over the banking subsidiaries in that capacity. The
OTS is charged with regulation of Federal savings associations such as Society
First Federal, presently the Corporation's only such institution. Depository
institutions are affected significantly by the actions of the Federal Reserve
Board as it attempts to control the money supply and credit availability in
order to influence the economy. The regulatory regime applicable to bank
holding companies and their subsidiaries is not intended generally for the
protection of investors but is directed toward protecting the interests of
depositors, the FDIC deposit insurance funds, and the U.S. banking system as a
whole.
The Corporation also has nonbanking subsidiaries that are subject to
supervision, regulation, and examination by the Federal Reserve Board, as well
as other applicable regulatory agencies. For example, the Corporation's
insurance subsidiaries are subject to regulation by the insurance regulatory
authorities of the various states, and the Corporation's state chartered trust
company subsidiaries (which are considered nonbanking companies for purposes of
the BHCA) are subject to regulation by state banking authorities. Other
nonbanking subsidiaries are subject to other laws and regulations of both the
Federal government and the various states in which they are authorized to do
business. For example, the Corporation's discount brokerage and investment
adviser subsidiaries are subject to supervision and regulation by the
Commission, the National Association of Securities Dealers, Inc., and state
securities regulators.
The following references to certain statutes and regulations are brief
summaries thereof. The references are not intended to be complete and are
qualified in their entirety by reference to the statutes and regulations
themselves. In addition there are numerous other statutes and regulations not
summarized below that apply to and regulate the operation of the Corporation
and its banking and nonbanking subsidiaries. A change in applicable law or
regulation may have a material effect on the business of the Corporation.
DIVIDEND RESTRICTIONS
The Corporation is a legal entity separate and distinct from its banking and
other subsidiaries. The principal source of cash flow of the Corporation,
including cash flow to pay dividends on the Corporation's common and preferred
shares and debt service on the Corporation's debt, is dividends from its
banking and other subsidiaries. Various Federal and state statutory and
regulatory provisions limit the amount of dividends that may be paid to the
Corporation by its banking subsidiaries without regulatory approval. No such
limits apply to the amount of dividends that may be paid to the Corporation by
its other, nonbanking subsidiaries.
The approval of the OCC is required for the payment of any dividend by a
national bank if the total of all dividends declared by the board of directors
of such bank in any calendar year would exceed the total of (i) the bank's net
profits (as defined and interpreted by regulation) for the current year plus
(ii) the retained net profits (as defined and interpreted by regulation) for
the preceding two years, less any required transfers to surplus or a fund for
the retirement of any preferred stock. In addition, a national bank can pay
dividends only to the extent that retained net profits (including the portion
transferred to surplus) exceed bad debts (as defined and interpreted by
regulation). Three of the Corporation's banking subsidiaries, Society National
Bank, Society National Bank, Indiana, and Key Bank USA N.A., and the
Corporation's trust company subsidiaries which are national banks, are subject
to these restrictions.
The Corporation's state nonmember banks are also subject to various
restrictions on the payment of dividends under state laws. A number of the
Corporation's banking subsidiaries, representing approximately 50% of its
banking assets (other than assets under management for customers) are state
nonmember banks, which are restricted as to the payment of dividends by the
laws and regulations of their respective state chartering authority.
In addition, OTS regulations impose limitations upon all capital
distributions by savings associations. These limitations are applicable only to
Society First Federal.
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<PAGE>
In addition, if, in the opinion of the applicable Federal banking agency, a
depository institution under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound practice, which, depending on the financial
condition of the institution, could include the payment of dividends, the
agency may require, after notice and hearing, that such institution cease and
desist from such practice. Also, the Federal Reserve Board, the OCC, the FDIC,
and the OTS have issued policy statements which provide that insured depository
institutions and their holding companies should generally pay dividends only
out of current operating earnings.
Under all of the laws, regulations, and other restrictions applicable to the
Corporation's banking subsidiaries, management estimates that, as of March 31,
1994, the Corporation's banking subsidiaries could have declared dividends of
approximately $543 million in the aggregate, without obtaining prior regulatory
approval, not including dividends that may be payable by the Corporation's
trust company subsidiaries, Society First Federal and certain other financial
service subsidiaries.
HOLDING COMPANY STRUCTURE
Transactions Involving Banking Subsidiaries. Transactions involving the
Corporation's banking subsidiaries are subject to Federal Reserve Act
restrictions which limit the transfer of funds from such subsidiaries to the
Corporation and (with certain exceptions) to the Corporation's nonbanking
subsidiaries (together, "affiliates") in so-called "covered transactions," such
as loans and other extensions of credit, investments, or asset purchases.
Unless an exemption applies, each such transaction by a banking subsidiary with
one of its non-banking affiliates is limited in amount to 10% of that banking
subsidiary's capital and surplus and, with respect to all such transfers to
affiliates, in the aggregate, to 20% of that banking subsidiary's capital and
surplus. Furthermore, loans and extensions of credit are required to be secured
in specified amounts. "Covered transactions" also include the acceptance of
securities issued by the banking subsidiary as collateral for a loan and the
issuance of a guarantee, acceptance, or letter of credit for the benefit of the
Corporation or any of its affiliates. In addition, a bank holding company and
its banking subsidiaries are prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit, lease or sale of
property, or furnishing of services.
Source of Strength/Commonly Controlled Banking Subsidiaries. Under Federal
Reserve Board policy, a bank holding company is expected to serve as a source
of financial and managerial strength to each of its subsidiary banks and, under
appropriate circumstances, to commit resources to support each such subsidiary
bank. This support may be required by the Federal Reserve Board at times when
the Corporation may not have the resources to provide it or, for other reasons,
would not otherwise be inclined to provide it. Certain loans by a bank holding
company to any of its subsidiary banks are subordinate in right of payment to
deposits in, and certain other indebtedness of, the subsidiary bank. In
addition, the Crime Control Act of 1990 provides that in the event of a bank
holding company's bankruptcy, any commitment by a bank holding company to a
Federal bank regulatory agency to maintain the capital of a subsidiary bank
will be assumed by the bankruptcy trustee and entitled to a priority of
payment.
Under Federal law, a depository institution, the deposits of which are
insured by the FDIC, can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC in connection with (i) the default of a
commonly controlled FDIC-insured depository institution or (ii) any assistance
provided by the FDIC to a commonly controlled FDIC-insured depository
institution in danger of default (the so-called "cross guaranty" provision).
"Default" is defined under the FDIC's regulations generally as the appointment
of a conservator or receiver and "in danger of default" is defined generally as
the existence of certain conditions indicating that a "default" is likely to
occur in the absence of regulatory assistance.
CAPITAL REQUIREMENTS
The Federal Reserve Board, the FDIC, and the OCC have issued substantially
similar risk-based and leverage capital guidelines for United States banking
organizations. The minimum ratio of total capital to risk-adjusted assets
(including certain off-balance sheet items, such as standby letters of credit)
required by
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<PAGE>
the Federal Reserve Board for bank holding companies is currently 8%. At least
one-half of the total capital must be comprised of common equity, retained
earnings, qualifying non-cumulative, perpetual preferred stock, a limited
amount of qualifying cumulative, perpetual preferred stock, and minority
interests in the equity accounts of consolidated subsidiaries, less goodwill
and certain other intangible assets ("Tier I capital"). The remainder may
consist of hybrid capital instruments, perpetual debt, mandatory convertible
debt securities, a limited amount of subordinated debt, other preferred stock,
and a limited amount of loan and lease loss reserves ("Tier II capital"). As of
March 31, 1994, the Corporation's Tier I and total capital to risk-adjusted
assets ratios were 8.91% and 12.34%, respectively.
In addition, the Corporation is subject to guidelines relating to its minimum
leverage ratio (Tier I capital to total consolidated quarterly average assets
less goodwill and certain other intangible assets for the relevant period).
These guidelines provide for a minimum leverage ratio of 3% for bank holding
companies that meet certain specified criteria, such as having the highest
supervisory rating. All other bank holding companies are required to maintain
leverage ratios which are at least 100 to 200 basis points higher (i.e., a
leverage ratio of at least 4% to 5%). Neither the Corporation nor any of its
banking subsidiaries has been advised by its appropriate Federal regulatory
agency of any specific leverage ratio applicable to it. As of March 31, 1994,
the Corporation's Tier I leverage ratio was 6.85%. Federal Reserve Board policy
provides that banking organizations generally, and, in particular, those that
are experiencing internal growth or actively making acquisitions will be
expected to maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.
Furthermore, the guidelines indicate that the Federal Reserve Board will
continue to consider a "tangible Tier I leverage ratio" in evaluating proposals
for expansion or new activities. The tangible Tier I leverage ratio is the
ratio of a banking organization's Tier I capital less all intangible assets to
total consolidated quarterly average assets less all intangible assets. For
purposes of this calculation, purchased mortgage servicing rights are not
considered to be intangible assets. As of March 31, 1994, the Corporation's
tangible Tier I leverage ratio was 6.76%.
Each of the Corporation's banking subsidiaries is also subject to capital
requirements adopted by applicable Federal regulatory agencies which are
substantially similar to those imposed by the Federal Reserve Board on bank
holding companies. These requirements also include minimum Tier I, total
capital and leverage ratios. As of March 31, 1994, each of the Corporation's
banking subsidiaries had capital in excess of all minimum regulatory
requirements.
All of the Federal banking agencies have proposed regulations that would add
an additional capital requirement based upon the amount of an institution's
exposure to interest rate risk. The OTS recently adopted its final rule adding
an interest rate component to its risk-based capital rule. Under the final OTS
rule, a savings association with a greater than "normal" level of interest rate
risk exposure will be subject to a deduction from total capital for purposes of
calculating its risk-based capital ratio. The new OTS rule was effective
January 1, 1994, except for limited provisions which are effective July 1,
1994. The other Federal banking agencies have yet to adopt their final rules on
the interest rate risk component of risk-based capital.
The OCC, the Federal Reserve Board, and the FDIC have proposed amendments to
their respective regulatory capital rules to include in Tier I capital for
purposes of calculating the risk-based and leverage ratios, the net unrealized
changes in the value of securities available for sale. The proposed amendments
are in response to the provisions outlined in Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," which takes effect for fiscal years beginning after
December 15, 1993. This new accounting standard requires, among other things,
that net unrealized holding gains and losses on securities available for sale
be recorded as a component of shareholders' equity with no impact on net
income. If adopted as proposed, the rule could cause the amount of an
institution's Tier I capital to fluctuate, thereby causing the institution's
Tier I, total capital and leverage ratios to be subject to greater volatility.
Effective January 1, 1994, the Corporation adopted SFAS No. 115. As a result of
this accounting change, approximately $4.5 billion of securities were
classified as available for sale at March 31, 1994, and shareholders' equity
was reduced by $22.6 million, representing the unrealized loss on these
securities, net of deferred income taxes.
9
<PAGE>
SIGNIFICANT AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT
The Federal Deposit Insurance Corporation Improvement Act of 1991, enacted
December 19, 1991, amended several Federal banking statutes, including the
Federal Deposit Insurance Act (the "FDIA"), and, among other things, increased
the FDIC's borrowing authority to resolve bank failures, mandated least-cost
resolutions and prompt regulatory action with regard to undercapitalized
institutions, expanded consumer protection, and mandated increased supervision
of domestic depository institutions and the U.S. operations of foreign
depository institutions. The 1991 amendments to the FDIA required the Federal
banking agencies to promulgate regulations and specify standards in numerous
areas of bank operations, including interest rate exposure, asset growth,
internal controls, credit underwriting, executive officer and director
compensation, real estate construction financing, additional review of capital
standards, interbank liabilities, and other operational and managerial
standards as the agencies determine appropriate. In general, management
believes that these regulations have increased, and may continue to increase,
the cost of and the regulatory burden associated with the banking business.
Prompt Corrective Action. Effective in December 1992, the OCC, the Federal
Reserve Board, the FDIC, and the OTS adopted new regulations to implement the
so-called "prompt corrective action" provisions of the FDIA. The regulations
group FDIC-insured depository institutions into five broad categories based on
their capital ratios. The five categories are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized," as follows:
. An institution is "well capitalized" if it has a total risk-based capital
ratio (total capital to risk-adjusted assets) of 10% or greater, a Tier I
risk-based capital ratio (Tier I capital to risk-adjusted assets) of 6%
or greater, and a Tier I leverage capital ratio (Tier I capital to
average total assets) of 5% or greater, and it is not subject to a
regulatory order, agreement, or directive to meet and maintain a specific
capital level for any capital measure;
. An institution is "adequately capitalized" if it has a total risk-based
capital ratio of 8% or greater, a Tier I risk-based capital ratio of 4%
or greater, and (generally) a Tier I leverage capital ratio of 4% or
greater, and the institution does not meet the definition of a "well
capitalized" institution;
. An institution is "undercapitalized" if the relevant capital ratios are
less than those specified in the definition of an "adequately
capitalized" institution;
. An institution is "significantly undercapitalized" if it has a total
risk-based capital ratio of less than 6%, a Tier I risk-based capital
ratio of less than 3%, or a Tier I leverage capital ratio of less than
3%; and
. An institution is "critically undercapitalized" if it has a ratio of
tangible equity (as defined in the regulations) to total assets of 2% or
less.
An institution may be downgraded to, or be deemed to be in, a capital
category that is lower than is indicated by its actual capital position if it
is determined to be in an unsafe or unsound condition or if it receives an
unsatisfactory examination rating with respect to certain matters.
The capital-based prompt corrective action provisions of the FDIA and their
implementing regulations apply to FDIC insured depository institutions such as
all of the Corporation's banking subsidiaries, but they are not applicable to
holding companies, such as the Corporation, which control such institutions.
However, both the Federal Reserve Board and the OTS have indicated that, in
regulating holding companies, they will take appropriate action at the holding
company level based on their assessment of the effectiveness of supervisory
actions imposed upon subsidiary depository institutions pursuant to such
provisions and regulations. Although the capital categories defined under the
prompt corrective action regulations are not directly applicable to the
Corporation under existing laws and regulations, based upon its ratios the
Corporation would qualify, and its subsidiary banks do qualify, as well-
capitalized as of December 31, 1993. However, an institution's capital
category, as determined by applying the prompt corrective action provisions
10
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of the law, may not constitute an accurate representation of the overall
financial condition or prospects of the Corporation or its banking
subsidiaries, and should be considered in conjunction with other available
information regarding the Corporation's financial condition and results of
operations.
The FDIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the institution would thereafter be undercapitalized.
Undercapitalized depository institutions are also subject to restrictions on
borrowing from the Federal Reserve System, increased monitoring by the
appropriate Federal banking agency and limitations on growth, and are required
to submit a capital restoration plan to their primary Federal regulatory
agency. The Federal banking agencies may not accept a capital plan without
determining, among other things, that the plan is based on realistic
assumptions and is likely to succeed in restoring the institution's capital. In
addition, for a capital restoration plan to be acceptable, the depository
institution's parent holding company must guarantee that the institution will
comply with such capital restoration plan. The aggregate liability of the
parent holding company with respect to such a guarantee is limited to the
lesser of: (a) an amount equal to 5% of the depository institution's total
assets at the time that it became undercapitalized or (b) the amount which is
necessary (or would have been necessary) to bring the institution into
compliance with all capital standards applicable to it as of the time it failed
to comply with the plan. If a depository institution fails to submit an
acceptable plan, it is treated as if it were significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of additional requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized and requirements to
reduce total assets, and are prohibited from receiving deposits from
correspondent banks. "Critically undercapitalized" institutions are subject to
the appointment of a receiver or conservator.
FDIC Insurance. Under the risk-related insurance assessment system adopted in
final form effective beginning with the January 1, 1994 assessment period, a
bank or savings association is required to pay an annual assessment ranging
from $.23 to $.31 per $100 of deposits based on the institution's risk
classification. The risk classification is based on an assignment of the
institution by the FDIC to one of three capital groups and to one of three
supervisory subgroups. The capital groups are "well capitalized," "adequately
capitalized," and "undercapitalized." The three supervisory subgroups are Group
"A" (for financially solid institutions with only a few minor weaknesses),
Group "B" (for those institutions with weaknesses which, if uncorrected, could
cause substantial deterioration of the institution and increase the risk to the
deposit insurance fund), and Group "C" (for those institutions with a
substantial probability of loss to the fund absent effective corrective
action). For the period commencing on January 1, 1994 through June 30, 1994,
insurance assessments on deposits of all of the Corporation's banking
subsidiaries owned as of December 31, 1993, were paid at the rate of $.23 per
$100 of deposits.
DEPOSITOR PREFERENCE STATUTE
In August 1993, Federal legislation was enacted providing that insured and
uninsured deposits and certain claims for administrative expenses and employee
compensation against an insured depository institution would be afforded a
priority over other general unsecured claims against such an institution,
including Federal funds and letters of credit, in the "liquidation or other
resolution" of such an institution by any receiver. Under this new legislation,
if an insured depository institution fails, insured and uninsured depositors
along with the FDIC will be placed ahead of all unsecured, nondeposit creditors
in order of priority of payment.
IMPLICATIONS OF BEING A SAVINGS AND LOAN HOLDING COMPANY
By reason of its ownership of Society First Federal, the Corporation is a
savings and loan holding company within the meaning of the HOLA. With certain
exceptions, a savings and loan holding company must obtain prior written
approval from the OTS (as well as the Federal Reserve Board, or other Federal
11
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agencies whose approval may be required, depending upon the structure of the
acquisition transaction) before acquiring control of a savings association or
savings and loan holding company through the acquisition of stock or through a
merger or some other business combination. The HOLA prohibits the OTS from
approving an acquisition by a savings and loan holding company which would
result in the holding company controlling savings associations in more than one
state unless (a) the holding company is authorized to do so by the FDIC as an
emergency acquisition, (b) the holding company controls a savings association
which operated an office in the additional state or states on March 5, 1987, or
(c) the statutes of the state in which the savings association to be acquired
is located specifically permit a savings association chartered by such state to
be acquired by an out-of-state savings association or savings and loan holding
company.
A Federal savings association, however, including one controlled by a savings
and loan holding company, is permitted, subject to certain restrictions, to
branch on a nationwide basis. Thus, a Federal savings association may generally
also acquire the assets and liabilities or the stock of other Federal savings
associations and operate them as branches, whether or not they are located in a
state that would otherwise have permitted the acquiring institution's holding
company to operate a savings association in that state.
CONTROL ACQUISITIONS
The Change in Bank Control Act (the "CBCA") prohibits a "person" (as defined
in the CBCA and the regulations thereunder) or group of persons from acquiring
"control" (as defined in the CBCA and the regulations thereunder) of a bank
holding company unless the Federal Reserve Board has been given 60 days prior
written notice of the proposed acquisition and within that time period the
Federal Reserve Board has not issued a notice disapproving the proposed
acquisition or extending for up to another 30 days the period during which such
a disapproval may be issued. An acquisition may be made prior to the expiration
of the disapproval period if the Federal Reserve Board issues written notice of
its intention not to disapprove the action. Under a rebuttable presumption
established by the Federal Reserve Board, the acquisition of 10% or more of a
class of voting stock of a bank holding company with a class of securities
registered under Section 12 of the Exchange Act, such as the Corporation,
would, under the circumstances set forth in the presumption, constitute the
acquisition of control.
In addition, any "company" (as defined in the CBCA and the regulations
thereunder) is required to obtain the approval of the Federal Reserve Board
under the BHCA before acquiring 25% (5% in the case of an acquiror that is a
bank holding company) or more of the outstanding Common Shares of the
Corporation, or otherwise obtaining control over the Corporation.
USE OF PROCEEDS
Unless otherwise set forth in the Applicable Prospectus Supplement, the
Corporation intends to use the net proceeds from the sale of the Securities for
general corporate purposes, including investments in and advances to the
Corporation's banking and nonbanking subsidiaries, reduction of short-term
borrowings, investments, and financing possible future acquisitions including,
without limitation, the acquisition of banking and nonbanking companies and
financial assets and liabilities.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture, dated as of
June 10, 1994, (the "Senior Indenture"), between the Corporation and Bankers
Trust Company, as Trustee. The Subordinated Debt Securities are to be issued
under an Indenture, dated as of June 10, 1994 (the "Subordinated Indenture"),
also between the Corporation and Bankers Trust Company, as Trustee. Copies of
the Senior Indenture and the Subordinated Indenture have been filed with the
Commission as exhibits to the Registration Statement of which this Prospectus
is a part. The Senior Indenture and the Subordinated Indenture are sometimes
referred
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to collectively herein as the "Indentures". Bankers Trust Company is
hereinafter referred to as the "Senior Trustee" when referring to it in its
capacity as trustee under the Senior Indenture, as the "Subordinated Trustee"
when referring to it in its capacity as trustee under the Subordinated
Indenture, and as the "Trustee" when referring to it in its capacity as trustee
under both of the Indentures. The following summaries of certain provisions of
the Senior Debt Securities, the Subordinated Debt Securities, and the
Indentures do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Debt Securities
and the Indenture applicable to a particular series of Debt Securities (the
"Applicable Indenture"), including the definitions therein of certain terms.
Wherever particular Sections, Articles, or defined terms of the Applicable
Indenture are referred to, it is intended that such Sections, Articles, or
defined terms shall be incorporated herein by reference. Article and Section
references used herein are references to the Applicable Indenture. Capitalized
terms not otherwise defined herein shall have the meaning given to them in the
Applicable Indenture. The following sets forth certain general terms and
provisions of the Debt Securities offered hereby.
GENERAL TERMS
The Indentures provide that the Debt Securities issued thereunder may be
issued without limit as to aggregate principal amount and provide that Debt
Securities may be issued thereunder from time to time in one or more series.
The Senior Debt Securities will rank equally with all other unsecured and
unsubordinated indebtedness of the Corporation which is not accorded a priority
under applicable law. The Subordinated Debt Securities will rank equally with
all other unsecured indebtedness of the Corporation, but, as described below,
will be subordinated in right of payment to the prior payment in full of the
Senior Indebtedness of the Corporation and, in certain events involving the
insolvency of the Corporation, Other Senior Obligations of the Corporation. The
Debt Securities will be unsecured obligations of the Corporation.
Unless otherwise indicated in the Applicable Prospectus Supplement, principal
of (and premium, if any), or interest, if any, on the Debt Securities will be
payable, and the transfer of the Debt Securities will be registrable, at the
office or agency of the Corporation in the Borough of Manhattan, the City of
New York, maintained for such purpose and at any other office or agency
maintained by the Corporation for such purpose, except that, at the option of
the Corporation, interest may be paid by mailing a check to the address of the
person entitled thereto as it appears on the register for the Debt Securities
or by transfer to an account maintained with a bank located in the United
States. (Sections 301, 305, and 1002) Debt Securities of a series may be
issuable solely as Registered Securities, solely as Bearer Securities or as
both Registered Securities and Bearer Securities (both as defined in the
Indentures). Unless otherwise provided in the Applicable Prospectus Supplement,
Debt Securities denominated in U.S. dollars are issuable in denominations of
$1,000 and integral multiples of $1,000 (in the case of Registered Securities)
and in denominations of $5,000 (in the case of Bearer Securities). The
Indentures also provide that Debt Securities of a series may be issuable in
global form, which may be of any denomination. See "Book-Entry Procedures".
Unless otherwise indicated in the Applicable Prospectus Supplement, Bearer
Securities will have interest coupons attached. (Sections 201 and 302) No
service charge will be made for any registration of transfer or exchange of the
Debt Securities, but the Corporation may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.
(Section 305)
The Applicable Prospectus Supplement will describe the following terms of the
Debt Securities offered thereby:
(1) The title of such Debt Securities and whether such Debt Securities
will be Senior Debt Securities or Subordinated Debt Securities.
(2) The aggregate principal amount of such Debt Securities and any limit
on the aggregate principal amount of Debt Securities of such series.
(3) If other than the principal amount thereof, the portion of the
principal amount thereof payable upon declaration of acceleration of the
maturity thereof or the method by which such portion shall be determined.
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(4) The date or dates, or the method by which such date or dates will be
determined or extended, on which the principal of such Debt Securities will
be payable.
(5) The rate or rates at which such Debt Securities will bear interest,
if any, or the method by which such rate or rates will be determined, the
date or dates from which any interest will accrue or the method by which
such date or dates will be determined, the date or dates on which such
interest, if any, will be payable and the regular record date or dates, if
any, for the interest payable on any registered security on any interest
payment date, or the method by which any such date will be determined, and
the basis upon which interest will be calculated if other than that of a
360-day year of twelve 30-day months.
(6) The period or periods within which, the price or prices at which, the
currency or currencies, currency unit or units or composite currency or
currencies in which, and the other terms and conditions upon which, such
Debt Securities may be redeemed in whole or in part at the option of the
Corporation, if the Corporation is to have that option.
(7) The obligation, if any, of the Corporation to redeem, repay, or
purchase such Debt Securities in whole or in part, pursuant to any sinking
fund or analogous provision or at the option of a holder thereof and the
period or periods within which or the date or dates on which, the price or
prices at which, the currency or currencies, currency unit or units or
composite currency or currencies in which and the other terms and
conditions upon which, such Debt Securities will be so redeemed, repaid, or
purchased.
(8) Whether such Debt Securities are to be issuable as Registered
Securities, Bearer Securities, or both, any restrictions applicable to the
offer, sale, or delivery of Bearer Securities and the terms, if any, upon
which Bearer Securities of the series may be exchanged for Registered
Securities of the series and vice versa (if permitted by applicable laws
and regulations), whether such Debt Securities will be issuable initially
in temporary global form, whether any such Debt Securities will be issuable
in permanent global form with or without coupons and, if so, whether
beneficial owners of interests in any such permanent global security may
exchange such interests for Debt Securities of such series and of like
tenor of any authorized form and denomination and the circumstances under
which any such exchanges may occur, if other than in the manner provided in
the Applicable Indenture, and, if Registered Securities are to be issuable
as a global security, the identity of the depository for such Debt
Securities.
(9) If other than U.S. dollars, the currency or currencies, currency unit
or units or composite currency or currencies in which payments of the
principal of (and premium, if any) or interest, if any, on such Debt
Securities will be payable or in which such Debt Securities will be
denominated.
(10) Whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula, or other method (which index, formula, or
method may be based on one or more currency or currencies, currency unit or
units or composite currency or currencies, commodities, equity indices, or
other indices) and the manner in which such amounts will be determined.
(11) Whether the Corporation or a holder may elect payment of the
principal of (and premium, if any), or interest, if any, on such Debt
Securities in one or more currency or currencies, currency unit or units or
composite currency or currencies, other than that in which such Debt
Securities are denominated or stated to be payable, the period or periods
within which, and the terms and conditions upon which, such election may be
made, and the time and manner of determining the exchange rate between the
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are denominated or stated to be
payable and the currency or currencies in which such Debt Securities are to
be so payable.
(12) The place or places, if any, other than or in addition to the City
of New York, where the principal of (and premium, if any) or interest, if
any, on such Debt Securities will be payable, where any Registered
Securities may be surrendered for registration of transfer, where Debt
Securities may be surrendered for conversion and where notices or demands
to or upon the Corporation in respect of such Debt Securities and the
Applicable Indenture may be served.
(13) The denomination or denominations in which such Debt Securities will
be issuable, if other than $1,000 or any integral multiple thereof in the
case of Registered Securities and $5,000 or any integral multiple thereof
in the case of Bearer Securities.
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(14) If other than the applicable Trustee, the identity of each Security
Registrar and/or Paying Agent.
(15) The date as of which any Bearer Securities of the series and any
temporary Debt Security issued in global form representing outstanding
Securities of the series will be dated if other than the date of original
issuance of the first Debt Security of the series to be issued.
(16) The applicability, if at all, to such Debt Securities of the
provisions of Article Thirteen of the respective Indenture described under
"Defeasance and Covenant Defeasance" and any provisions in modification of,
in addition to or in lieu of any of the provisions of such Article.
(17) The person to whom any interest on any Registered Security of the
series shall be payable, if other than the person in whose name such
Registered Security (or one or more predecessor securities) is registered
at the close of business on the Regular Record Date for such interest, the
manner in which, or the person to whom, any interest on any Bearer Security
of the series will be payable, if otherwise than upon presentation and
surrender of the coupons appertaining thereto as they severally mature, and
the extent to which, or the manner in which, any interest payable on a
temporary Debt Security issued in global form will be paid in other than in
the manner provided in the applicable Indenture.
(18) If such Debt Securities are to be issuable in definitive form
(whether upon original issue or upon exchange of a temporary Debt Security
of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, the form and/or terms of
such certificates, documents or conditions.
(19) If such Debt Securities will be issuable upon the conversion of
other Securities or upon the exercise of Debt Warrants, the time, manner,
and place for such Debt Securities to be authenticated and delivered.
(20) The provisions, if any, granting special rights to the holders of
such Debt Securities upon the occurrence of such events as may be
specified.
(21) Any deletions from, modifications of or additions to the Events of
Default and in the case of the Subordinated Debt Securities, the Defaults,
or covenants of the Corporation with respect to such Debt Securities,
whether or not such Events of Default, Defaults, or covenants are
consistent with the Events of Default, Defaults, or covenants set forth in
the general provisions of the Applicable Indenture.
(22) The designation of the initial Exchange Rate Agent, if any.
(23) Whether such Subordinated Debt Securities will be convertible into
Capital Securities of the Corporation and, if so, the terms and conditions
upon which such Subordinated Debt Securities will be so convertible.
(24) Any other terms of such Debt Securities not inconsistent with the
provisions of the Applicable Indenture.
The Corporation may be required to pay Additional Amounts, as contemplated by
Section 1004 of each Indenture, to any holder of Debt Securities who is not a
U.S. person (including any modification to the definition of such term as
contained in the Applicable Indenture as originally executed) in respect of
certain taxes, assessments, or governmental charges and, if so, the Corporation
may have the option to redeem such Debt Securities rather than pay such
Additional Amounts (and the terms of any such option) The Indentures provide
that "Additional Amounts" means any additional amounts which are required by
the Debt Securities or by or pursuant to a resolution of the Board of Directors
to be paid by the Corporation in respect of certain taxes imposed on such non-
U.S. persons and which are owing to such holders. If the terms of any series of
Debt Securities provide that the Corporation must pay Additional Amounts in
respect thereof, for purposes of this Prospectus, any reference to the payment
of (or premium, if any, on) or interest, if any, on such Debt Securities will
be deemed to include mention of the payment of Additional Amounts provided for
by the terms of such Debt Securities.
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Debt Securities may provide for an amount less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities"). (Section 101) Certain Federal
income tax and other considerations pertaining to any such Original Issue
Discount Securities will be described in the Applicable Prospectus Supplement.
The Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be offered and sold at a substantial discount from the
principal amount thereof and may also be issued under the Indentures upon
exercise of Debt Warrants issued by the Corporation. See "Description of
Securities Warrants."
Unless otherwise indicated in the Applicable Prospectus Supplement, the
covenants contained in the Indentures and the Debt Securities will not afford
holders protection in the event of a sudden decline in credit rating that might
result from a recapitalization, restructuring, or other highly leveraged
transaction.
BOOK-ENTRY PROCEDURES
Upon issuance, the Debt Securities may be issued in the form of one or more
fully registered global securities (the "Global Securities"). Each such Global
Security will be deposited with, or on behalf of, The Depository Trust Company,
as depository, (the "Depository") and registered in the name of the Depository
or a nominee thereof. Unless and until it is exchanged in whole or in part for
Debt Securities in definitive form, no Global Security may be transferred
except as a whole by the Depository to a nominee of such Depository or by a
nominee of such Depository to such Depository.
The Depository has advised the Corporation as follows: The Depository is a
limited-purpose trust company organized under the Banking Law of the State of
New York, 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. The Depository was created to hold securities of its participating
organizations ("Participants") and to facilitate the clearance and settlement
of transactions among its Participants in such securities through electronic
book-entry changes in accounts of the Participants, thereby eliminating the
need for physical movement of securities certificates. The Depository's
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of which (and/or
their representatives) own the Depository. Access to the Depository's book-
entry system is also available to others, such as banks, brokers, dealers, and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. The rules applicable to the
Depository and its Participants are on file with the Commission.
Ownership of beneficial interests in the Debt Securities will be limited to
Participants or persons that may hold interests through Participants
("Beneficial Owners"). The Depository has advised the Corporation that upon the
issuance of Global Securities representing the Debt Securities, the Depository
will credit, on its book-entry registration and transfer system, the
Participants' accounts with the respective principal amounts of the Debt
Securities beneficially owned by such Participants. Ownership of beneficial
interests in the Debt Securities represented by such Global Securities will be
shown on, and the transfer of such ownership interests will be effected only
through, records maintained by the Depository (with respect to interests of
Participants) and on the records of Participants (with respect to interests of
Beneficial Owners). The laws of some states may require that certain purchasers
of securities take physical delivery of such securities in definitive form.
Such laws may impair the ability to own, transfer, or pledge beneficial
interests in Debt Securities represented by Global Securities.
So long as the Depository, or its nominee, is the registered owner of a
Global Security, the Depository or its nominee, as the case may be, will be
considered the sole owner or holder of the Debt Securities
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represented by such Global Security for all purposes under the Applicable
Indenture. Except as provided below, Beneficial Owners will not be entitled to
have the Debt Securities represented by Global Securities registered in their
names, will not receive or be entitled to receive physical delivery of the Debt
Securities in definitive form, and will not be considered the owners or holders
thereof under the Applicable Indenture. Accordingly, each Participant must rely
on the procedures of the Depository and, if such person is a Beneficial Owner,
on the procedures of the Participant through which such Beneficial Owner owns
its interest, to exercise any rights of a holder under the Applicable
Indenture. The Corporation understands that under existing industry practices,
in the event that the Corporation requests any action of holders, or a
Beneficial Owner desires to give or take any action which a holder is entitled
to give or take under the Applicable Indenture, the Depository would authorize
the Participants holding the relevant beneficial interests to give or take such
action, and such Participants would authorize Beneficial Owners owning through
such Participants to give or take such action or would otherwise act upon the
instructions of Beneficial Owners holding through them.
Payment of principal of (premium, if any) and interest, if any, owing on Debt
Securities registered in the name of the Depository or its nominee will be made
to the Depository or its nominee, as the case may be, as the holder of such
Debt Securities represented by the Global Securities. None of the Corporation,
the Trustee, or any other agent of the Corporation or agent of the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests or for
supervising or reviewing any records relating to such beneficial ownership
interests. The Corporation expects that the Depository, upon receipt of any
payment of principal, premium, if any, or interest in respect of Debt
Securities represented by Global Securities, will credit the accounts of the
Participants with payment in amounts proportionate to their respective
beneficial interests in the Debt Securities represented by such Global
Securities as shown on the records of the Depository. The Corporation also
expects that payments by Participants to Beneficial Owners will be governed by
standing customer 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," and will be the responsibility of such Participants subject to
any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal (premium, if any) and interest to the Depository is the
responsibility of the Corporation, disbursement of such payments to
Participants is the responsibility of the Depository, and disbursement of such
payments to the Beneficial Owners is the responsibility of the Participants.
If (a) the Depository notifies the Corporation that it is at any time
unwilling or unable to continue as depository for the Global Securities or the
Depository ceases to be a clearing agency registered under the Exchange Act,
(b) the Corporation executes and delivers to the Trustee an order of the
Corporation to the effect that the Global Securities shall be transferable and
exchangeable, or (c) an Event of Default has occurred and is continuing with
respect to the Debt Securities, or any event which after notice or lapse of
time, or both, would constitute an Event of Default has occurred and is
continuing, the Global Securities will be transferable or exchangeable for Debt
Securities in definitive form of like tenor and of an equal aggregate principal
amount, in denominations of $1,000 and integral multiples thereof. Such
definitive Debt Securities shall be registered in such name or names as the
Depository shall instruct the Trustee. It is expected that such instructions
may be based upon directions received by the Depository from Participants with
respect to ownership of beneficial interests in Debt Securities represented by
such Global Securities.
In the event of an issuance of Global Securities, procedures for initial
settlement and secondary trades will be set forth in the Applicable Prospectus
Supplement.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Applicable Prospectus Supplement, the
following provisions shall apply to the Subordinated Debt Securities and the
Subordinated Indenture.
In 1992 the Federal Reserve Board issued an interpretation of its capital
adequacy regulations, and a clarification of such interpretation (collectively,
the "Interpretation"), that imposed additional restrictions
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on subordinated debt securities in order for such securities to qualify as Tier
II capital and which provided that subordinated debt of bank holding companies
issued on or after September 4, 1992 cannot qualify as Tier II capital unless
the subordination of the debt meets certain criteria, the subordinated debt is
not subject to covenants and other provisions inconsistent with safe and sound
banking practices and the subordinated debt may be accelerated only upon the
bankruptcy of the bank holding company or the receivership of a major banking
subsidiary. See "Supervision and Regulation--Capital Requirements." Since the
Federal Reserve Board issued the Interpretation, the Corporation has not issued
any subordinated debt securities, but in part in response to the
Interpretation, the Corporation and the Subordinated Trustee have entered into
a new Subordinated Indenture to permit the Corporation to issue Subordinated
Debt Securities that would qualify as Tier II capital, subject to the limits
thereon. As of March 31, 1994, all of the Old KeyCorp Subordinated Indebtedness
(as defined below) and the Society Subordinated Indebtedness (as defined
below), which was incurred by old KeyCorp and Society, respectively, prior to
the issuance of the Interpretation, continued to constitute, and be treated by
the Corporation as, Tier II capital.
The Subordinated Debt Securities will be direct unsecured subordinated
obligations of the Corporation and the indebtedness evidenced by the
Subordinated Debt Securities and the payment of the principal of, premium, if
any, and interest, if any, on the Subordinated Debt Securities will be
subordinated in right of payment to the extent described below to the prior
payment in full of all Senior Indebtedness. (Section 1602) In addition, no
payments shall be made by the Corporation on account of the Subordinated Debt
Securities if there shall have occurred and be continuing a default in any
payment with respect to any Senior Indebtedness, or an event of default with
respect to any Senior Indebtedness permitting the holders thereof to accelerate
the maturity thereof, or if any judicial proceeding shall be pending with
respect to any such default or event of default. (Section 1603) In certain
circumstances relating to an insolvency, bankruptcy, reorganization or similar
proceedings of or relating to the Corporation, or any liquidation, dissolution
or winding-up, or any assignment for the benefit of creditors or marshalling of
assets, of the Corporation (an "insolvency event"), the payment of the
principal of, premium, if any, and interest, if any, on the Subordinated Debt
Securities also will be subordinated in right of payment to the extent
described below to the prior payment in full of all Other Senior Obligations
(as defined below). (Section 1614)
The Subordinated Indenture provides that "Senior Indebtedness" shall mean the
principal of (and premium, if any) and interest on (a) all indebtedness of the
Corporation for money borrowed, whether outstanding on the date of execution of
the Subordinated Indenture or thereafter created, assumed, incurred or
guaranteed, except (i) indebtedness on account of all Subordinated Debt
Securities issued under the Subordinated Indenture, indebtedness on account of
all Existing Subordinated Indebtedness (as defined below) and all indebtedness
which specifically by its terms ranks equally with and not prior to the
Subordinated Debt Securities or the Existing Subordinated Indebtedness in right
of payment upon an insolvency event and (ii) indebtedness which specifically by
its terms ranks junior to and not equally with or prior to indebtedness
referred to in clause (i) above in right of payment upon an insolvency event
and (b) any renewals, extensions, modifications and refundings of any such
Senior Indebtedness. The term "indebtedness of the Corporation for money
borrowed" shall mean the principal of (and premium, if any) and interest, if
any, on all indebtedness of the Corporation (including indebtedness of others
guaranteed by the Corporation), whether outstanding on the date of the
Subordinated Indenture or thereafter created, incurred, assumed or guaranteed,
which is for money borrowed. (Section 101) As of March 31, 1994, the
Corporation had outstanding approximately $537.2 million aggregate principal
amount of Senior Indebtedness.
The Subordinated Indenture provides that "Other Senior Obligations" shall
mean any obligation of the Corporation to its creditors, whether outstanding on
the date of execution of the Subordinated Indenture or thereafter created,
assumed, incurred or guaranteed, except (i) Senior Indebtedness, (ii)
indebtedness on account of all Subordinated Debt Securities issued under the
Subordinated Indenture, indebtedness on account of all Existing Subordinated
Indebtedness and all indebtedness which specifically by its terms ranks equally
with and not prior to the Subordinated Debt Securities or the Existing
Subordinated Indebtedness in right of payment upon the happening of an
insolvency event and (iii) indebtedness which specifically by its
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terms ranks junior to and not equally with or prior to indebtedness referred to
in clause (ii) above in right of payment upon any insolvency event. (Section
101) As of March 31, 1994, the Corporation had $297.8 million of Other Senior
Obligations outstanding.
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness or Other Senior Obligations, and additional
Senior Indebtedness may include indebtedness of the Corporation for money
borrowed that is senior to the Subordinated Debt Securities, but subordinate to
other obligations of the Corporation. The Senior Debt Securities, if issued,
will constitute Senior Indebtedness.
The Subordinated Indenture provides that "Existing Subordinated Indebtedness"
shall include all indebtedness for borrowed money of the Corporation under its
8.40% Subordinated Capital Notes due April 1, 1999 (originally issued by old
KeyCorp and assumed by the Corporation), 8.125% Subordinated Notes due June 15,
2002 (originally issued by Society), 8.00% Subordinated Notes due July 1, 2004
(also originally issued by old KeyCorp and assumed by the Corporation), Medium-
Term Notes Series IV due 1998, 2000, 2002, and 2003 (originally issued by old
KeyCorp and assumed by the Corporation), and any renewals, extensions,
modifications and refundings of any such indebtedness. All of the Existing
Subordinated Indebtedness originally issued by old KeyCorp and assumed by the
Corporation as a result of the merger on March 1, 1994 is referred to herein as
"Old KeyCorp Subordinated Indebtedness" and all of the Existing Subordinated
Indebtedness originally issued by Society is referred to herein as "Society
Subordinated Indebtedness". (Section 101) As of March 31, 1994, the Corporation
had outstanding $566.7 aggregate principal amount of Existing Subordinated
Indebtedness, which included $365.0 million aggregate principal amount of Old
KeyCorp Subordinated Indebtedness and $200.0 million aggregate principal amount
of Society Subordinated Indebtedness.
The Society Subordinated Indebtedness is subordinated and subject in right of
payment, by its terms, to the prior payment in full of all "senior
indebtedness" (as defined in the indenture relating to the Society Subordinated
Indebtedness, generally, as indebtedness of the Corporation whenever created,
guaranteed, incurred, or assumed, for borrowed money, but excluding the Society
Subordinated Indebtedness and any other indebtedness as to which it is provided
in the instrument evidencing or creating such indebtedness that such
indebtedness is not superior in right of payment to the Society Subordinated
Indebtedness). The Old KeyCorp Subordinated Indebtedness is subordinate and
junior in right of payment, by its terms, to all "senior indebtedness" (as
defined in the indentures relating to the Old KeyCorp Subordinated
Indebtedness, generally, as any obligations of the Corporation to its
creditors, whenever incurred, other than Old KeyCorp Subordinated Indebtedness
and any obligation as to which, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligation is not "senior indebtedness". Because the Old KeyCorp Subordinated
Indebtedness and the Society Subordinated Indebtedness were issued by old
KeyCorp and Society, respectively, prior to the merger of old KeyCorp and
Society, the relationship between the Old KeyCorp Subordinated Indebtedness and
the Society Subordinated Indebtedness is not expressly provided for in the
respective indentures relating to such indebtedness.
The Subordinated Indenture excludes Existing Subordinated Indebtedness from
the definition of Senior Indebtedness and, accordingly, the Subordinated Debt
Securities will not be subordinated in right of payment to Existing
Subordinated Indebtedness. The Subordinated Indenture also provides that the
Subordinated Debt Securities are not superior in right of payment to any of the
Existing Subordinated Indebtedness and do not constitute "senior indebtedness"
as defined in the indentures governing the Society Subordinated Indebtedness
and the Old KeyCorp Subordinated Indebtedness and, accordingly, the
Subordinated Debt Securities will not have the benefit of the subordination
provisions contained in such indentures.
Upon any payment or distribution of assets to creditors upon an insolvency
event relating to the Corporation, the holders of all Senior Indebtedness will
first be entitled to receive payment in full of all amounts due on or in
respect of all Senior Indebtedness before the holders of the Subordinated Debt
Securities will be entitled to receive any payment on account of the principal
of, premium, if any, or interest, if any, on the Subordinated Debt Securities
or before the holders of Existing Subordinated Indebtedness will be entitled
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to receive any payment on account of the principal of and interest on such
Existing Subordinated Indebtedness. In addition, upon any payment or
distribution of assets to creditors upon an insolvency event, the holders of
all Other Senior Obligations will first be entitled to receive payment in full
of all amounts due on or in respect of such Other Senior Obligations before the
holders of the Old KeyCorp Subordinated Indebtedness will be entitled to
receive any payment on account of the principal of and interest on the Old
KeyCorp Subordinated Indebtedness. If upon any such payment or distribution of
assets to creditors, after giving effect to such subordination provisions
applicable to the Subordinated Debt Securities and the Existing Subordinated
Indebtedness in favor of the holders of Senior Indebtedness and also, in the
case of the Old KeyCorp Subordinated Indebtedness, in favor of the holders of
Other Senior Obligations, there remain any amounts of cash, property, or
securities available for payment or distribution in respect of Subordinated
Debt Securities ("Excess Proceeds") and if, at such time, any Entitled Persons
(as defined below) in respect of Other Senior Obligations have not received
payment in full of all amounts due on or in respect of such Other Senior
Obligations, then such Excess Proceeds shall first be applied to pay or provide
for the payment in full of such Other Senior Obligations before any payment or
distribution may be made in respect of the Subordinated Debt Securities.
(Section 1614) "Entitled Persons" means persons who are entitled to payment
pursuant to the terms of Other Senior Obligations. (Section 101)
By reason of the subordination of the Subordinated Debt Securities in favor
of the holders of Senior Indebtedness and Other Senior Obligations, in the
event of a distribution of assets upon an insolvency event involving the
Corporation, the holders of the Subordinated Debt Securities may recover less
than the holders of Senior Indebtedness and the holders of Other Senior
Obligations, and as a result of the differences among the subordination
provisions applicable to the Society Subordinated Indebtedness, the Old KeyCorp
Subordinated Indebtedness and the Subordinated Debt Securities, including
differences in the definitions of senior indebtedness in the various
indentures, in an insolvency event involving the Corporation, any distribution
of assets among the holders of Society Subordinated Indebtedness, Old KeyCorp
Subordinated Indebtedness and the Subordinated Debt Securities may not be
ratable.
OWNERSHIP OF VOTING STOCK OF SIGNIFICANT BANKS
The Senior Indenture provides that the Corporation will not sell or otherwise
dispose of, or grant a security interest in, or permit a Significant Bank (as
defined below) to issue, any shares of voting stock of such Significant Bank
(as defined below), unless the Corporation will own free of any security
interest at least 80% of the issued and outstanding voting stock of such
Significant Bank; provided, however, that the foregoing will not apply to (i)
any sale or disposition where the proceeds are invested, within 90 days
thereof, in any subsidiary (including any corporation which upon such
investment becomes a subsidiary) engaged in a banking business or any business
legally permissible for bank holding companies; provided, however, that if the
proceeds are so invested in any subsidiary engaged in a business legally
permissible for bank holding companies other than a banking business, the
Corporation shall be prohibited from selling or otherwise disposing of, or
granting a security interest in, or permitting such subsidiary to issue, any
shares of voting stock of such subsidiary to the same extent as if such
subsidiary were a Significant Bank if, upon making such investment, the assets
of or held for the account of such subsidiary constitutes 10% or more of the
consolidated assets of the Corporation, or (ii) any disposition in exchange for
stock of any bank. (Section 1009) The term "Significant Bank" is defined in the
Senior Indenture as Society National Bank, Key Bank of New York, Key Bank of
Washington and any banking subsidiary of the Corporation the assets of which
constitute 10% or more of the consolidated assets of the Corporation. (Section
101)
The Subordinated Indenture does not contain a similar restriction on the
Corporation's ability to sell or otherwise dispose of or grant a security
interest in, or permit a Significant Bank to issue any shares of voting stock
of any Significant Bank because inclusion of such a provision, under the
Interpretation, would result in the Subordinated Debt Securities issued
thereunder not qualifying as Tier II capital. The holders of Society
Subordinated Indebtedness have the benefit of a covenant in the subordinated
indenture relating thereto substantially similar to the covenant described
above and the holders of Old KeyCorp Subordinated Indebtedness have the benefit
of a covenant in the subordinated indentures relating thereto that restricts
the
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sale, issuance or disposition of shares of stock of, or mergers or asset sales
involving, certain banking subsidiaries. In order to conform to the
Interpretation, the Subordinated Indenture does not contain either such
covenant.
EVENTS OF DEFAULT
The Senior Indenture. The Senior Indenture defines an "Event of Default"
(with respect to any series of Senior Debt Securities) as any one of the
following events: (a) default in the payment of any interest upon any Senior
Debt Security when such interest becomes due and payable, and continuance of
such default for a period of 30 days; (b) default in the payment of the
principal of (or premium, if any, on) any Senior Debt Security when due and
payable at its maturity; (c) failure to deposit any sinking fund payment when
and as due; (d) failure to perform, or default in the performance of, any other
covenants, warranties, or agreements of the Corporation in the Senior Indenture
(other than a covenant or warranty included in the Senior Indenture solely for
the benefit of a series of Senior Debt Securities thereunder other than that
series) continued for a period of 60 days after the holders of at least 25% in
principal amount of the outstanding Senior Debt Securities of such series have
given written notice as provided in the Senior Indenture; (e) acceleration of
any indebtedness for borrowed money in an aggregate principal amount exceeding
$20 million of the Corporation or a Significant Bank if such acceleration is
not annulled within 10 days after written notice is given by at least 25% in
principal amount of the outstanding Senior Debt Securities of such series
requiring the Corporation to cause such acceleration to be annulled as provided
in the Senior Indenture; (f) certain events involving the bankruptcy,
insolvency, or reorganization of the Corporation or the receivership or
conservatorship of any Significant Bank and (g) any other Event of Default with
respect to Senior Debt Securities of that series. (Section 501) Under certain
circumstances not involving a default in the payment of principal of (premium,
if any), or interest, if any, owing on the Senior Debt Securities of any
series, or in the payment of any sinking fund installment, the Senior Trustee
shall be protected in withholding notice to the holders of the Senior Debt
Securities of such series of a default if the Senior Trustee in good faith
determines that the withholding of such notice is in the interests of such
holders and the Senior Trustee shall withhold such notice for certain defaults
for a period of 60 days. (Section 601)
If an Event of Default described in clauses (a), (b), (c), (d), (e), or (g)
above with respect to Senior Debt Securities of any series at the time
outstanding occurs and is continuing, either the Senior Trustee or the holders
of at least 25% in principal amount of the outstanding Senior Debt Securities
of that series may declare the principal amount (or, if the Senior Debt
Securities of that series are Original Issue Discount Debt Securities or
Indexed Securities, such portion of the principal amount as may be specified in
the terms thereof) of all the Senior Debt Securities of that series to be due
and payable immediately. If an Event of Default described in clause (f) above
occurs and is continuing, either the Senior Trustee or the holders of at least
25% in principal amount of all outstanding Senior Debt Securities may declare
the principal amount (or, if the Senior Debt Securities of any series are
Original Issue Discount Debt Securities or Indexed Securities, such portion of
the principal amount as may be specified in the terms thereof) of all the
Senior Debt Securities to be due and payable immediately. At any time after a
declaration of acceleration with respect to Senior Debt Securities of any
series has been made, but before a judgment or decree based on acceleration has
been obtained, the holders of a majority in aggregate principal amount of
outstanding Senior Debt Securities of that series may, under certain
circumstances, rescind and annul such acceleration. (Section 502)
The Subordinated Indenture. The Subordinated Indenture defines an "Event of
Default" (with respect to any series of Subordinated Debt Securities) as
certain (a) events involving the bankruptcy, insolvency, or reorganization of
the Corporation or the receivership of a Major Bank (as defined below) and (b)
any other Event of Default provided with respect to Subordinated Debt
Securities of that series. (Section 501). The term "Major Bank" is defined in
the Subordinated Indenture as any banking subsidiary of the Corporation, the
assets of which constitute 75% or more of the consolidated assets of the
Corporation. As of the date of
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this Prospectus, no banking subsidiary of the Corporation constitutes a Major
Bank. If an Event of Default described in clause (a) above occurs and is
continuing, either the Subordinated Trustee or the holders of not less than 25%
in principal amount of the outstanding Subordinated Debt Securities may declare
the principal amount (or, if the Subordinated Debt Securities of any series are
Original Issue Discount Debt Securities or Indexed Securities, such portion of
the principal amount as may be specified in the terms of that series) of all
Subordinated Debt Securities to be due and payable immediately. If an Event of
Default described in clause (b) above with respect to Subordinated Debt
Securities of any series at the time outstanding occurs and is continuing,
either the Subordinated Trustee or the holders of not less than 25% in
principal amount of the outstanding Subordinated Debt Securities of that series
may declare the principal amount (or, if the Subordinated Debt Securities of
that series are Original Issue Discount Debt Securities or Indexed Securities,
such portion of the principal amount as may be specified in the terms of that
series) of all Subordinated Debt Securities of that series to be due and
payable immediately. At any time after a declaration of acceleration with
respect to Subordinated Debt Securities of any series has been made, but before
a judgment or decree based on the acceleration has been obtained, the holders
of a majority in principal amount of the outstanding Subordinated Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration. (Section 502)
Unless otherwise provided in the terms of a series of Subordinated Debt
Securities, there will be no right of acceleration of the payment of principal
of a series of Subordinated Debt Securities upon a default in the payment of
principal of (premium, if any), or interest, if any, owing on, or in the
performance of any covenant or agreement in, the Subordinated Debt Securities
of the particular series, or in the Subordinated Indenture.
In case a Default (as defined below) shall occur and be continuing, the
Subordinated Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the holders of Subordinated Debt Securities by
appropriate judicial proceeding as the Subordinated Trustee deems most
effective. The Subordinated Indenture defines a "Default" (with respect to any
series of Subordinated Debt Securities) as any one of the following events: (a)
an Event of Default; (b) default in the payment of any installment of interest,
if any, on any Subordinated Debt Security when such interest becomes due and
payable, and the continuance of such default for a period of 30 days (whether
or not such payment is prohibited by the subordination provisions); (c) default
in payment of principal of (or premium, if any, on) any Subordinated Debt
Security at its maturity (whether or not such payment is prohibited by the
subordination provisions); (d) failure to deposit any sinking fund payment when
due; (e) failure to perform any other covenants or warranties of the
Corporation in the Subordinated Indenture (other than a covenant or warranty
included in the Subordinated Indenture solely for the benefit of a series of
Subordinated Debt Securities other than that series) continued for a period of
60 days after holders of at least 25% in principal amount of outstanding
Subordinated Debt Securities have given written notice as provided in the
Subordinated Indenture; and (f) any other Default specified in the Subordinated
Indenture with respect to Subordinated Debt Securities of that series. (Section
503) Under certain circumstances not involving a default in the payment of
principal of (premium, if any), or interest, if any, owing on the Subordinated
Debt Securities of any series, or in the payment of any sinking fund
installment, the Subordinated Trustee shall be protected in withholding notice
to the holders of the Subordinated Debt Securities of such series of a default
if the Subordinated Trustee in good faith determines that the withholding of
such notice is in the interests of such holders and the Subordinated Trustee
shall withhold such notice for certain defaults for a period of 60 days.
(Section 601)
In comparison to the Events of Default provided for in the Subordinated
Indenture and the subordinated indenture relating to the Old Key Subordinated
Indebtedness, the holders of Society Subordinated Indebtedness have the benefit
of broader events of default and related acceleration rights in the
subordinated indenture relating thereto, including, without limitation, any one
of the following "events of default" as defined in the subordinated indenture:
(a) default in the payment of any interest upon the Society Subordinated
Indebtedness when such interest becomes due and payable; (b) default in the
payment of principal of (or premium, if any, on) any Society Subordinated
Indebtedness when due and payable at its maturity; (c) default in the
performance, or breach, of any covenant or warranty of the Corporation; and (d)
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acceleration of any indebtedness for borrowed money of the Corporation or a
principal bank (as defined in such subordinated indenture). In order to conform
to the Interpretation, the Subordinated Indenture does not contain any of such
events of default or acceleration rights.
Senior and Subordinated Indentures. Subject to the duty of the Trustee during
default to act with the required standard of care, under both the Senior
Indenture and the Subordinated Indenture, the applicable Trustee will be under
no obligation to exercise any of the rights or powers vested in it by the
Applicable Indenture at the request or direction of any of the holders of Debt
Securities of any series, unless such holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee. (Section 602)
Subject to such provisions for the indemnification of the Trustee and to
certain other conditions, the holders of a majority in aggregate principal
amount of outstanding Senior Debt Securities or outstanding Subordinated Debt
Securities of any series will have the right, subject to certain limitations,
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Senior Trustee or Subordinated Trustee, respectively,
or exercising any trust or power conferred on the Senior Trustee or
Subordinated Trustee, respectively. (Section 512)
No holder of any series of Debt Securities will have any right to institute
any proceeding with respect to the Applicable Indenture, or for the appointment
of a receiver or trustee, or for any remedy thereunder, unless such holder
shall have previously given to the Trustee under the Applicable Indenture
written notice of a continuing Event of Default (in the case of Senior Debt
Securities) or a continuing Event of Default or Default (in the case of
Subordinated Debt Securities) and unless the holders of not less than 25% in
principal amount of the outstanding Debt Securities of that series shall have
made written request, and offered security or indemnity reasonably satisfactory
to the Trustee, to such Trustee to institute such proceeding as trustee, and
such Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Debt Securities of that series a
direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days. (Section 507) However, such limitations do not
apply to a suit instituted by a holder of a Debt Security for enforcement of
payment of the principal of (premium, if any,) or subject to certain
conditions, or interest, if any, on or after the respective due dates expressed
in such Debt Security. (Section 508)
The Corporation is required to furnish to the Trustee annually a statement as
to the performance by the Corporation of certain of its obligations under the
Indentures and as to any default in such performance. (Section 1005)
MODIFICATION AND WAIVER
Modifications and amendments of each of the Senior Indenture and the
Subordinated Indenture may be made by the Corporation and the Trustee under the
Applicable Indenture with the consent of the holders of not less than 66 2/3%
in principal amount of the outstanding Debt Securities of each series issued
under such Indenture and affected by the modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
holders of each outstanding Debt Security of the series affected thereby, (1)
change the stated maturity of any principal of (or premium, if any), or any
installment of principal of or interest, if any, on, any Debt Security of such
series; (2) reduce the principal amount of, the rate of interest on, or any
premium payable upon the redemption of any, Debt Security of such series
(including in the case of an Original Issue Discount Debt Security the amount
payable upon acceleration of the maturity thereof); (3) change any obligation
of the Corporation to pay Additional Amounts in respect of any Debt Security of
such series; (4) reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon a declaration of acceleration of
the maturity thereof or provable in bankruptcy; (5) adversely affect any right
of repayment at the option of the holder of any Debt Security of such series;
(6) change the place or currency or currencies of payment of principal of or
any premium or interest on any
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Debt Security of such series; (7) impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof or on
or after any Redemption Date or Repayment Date; (8) adversely affect the right
to convert any Debt Security of such series as may be provided pursuant to the
Applicable Indenture; (9) in the case of the Subordinated Indenture, modify the
subordination provisions in a manner adverse to the holders of the Subordinated
Debt Securities of such series; (10) reduce the percentage in principal amount
of the outstanding Debt Securities, the consent of whose holders is required
for modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indentures or for waiver of certain defaults; (11)
reduce the requirements for voting or quorum relating to Bearer Securities; or
(12) modify any of the provisions relating to supplemental indentures requiring
the consent of holders, relating to the waiver of past defaults or relating to
the waiver of certain covenants, except to increase the percentage of such
Outstanding Securities required for such actions or to provide that certain
other provisions of such Indenture cannot be modified or waived without the
consent of the holder of each Outstanding Security affected thereby. (Section
902)
In addition, under the Subordinated Indenture, no modification or amendment
thereof may adversely affect the rights of any holder of Senior Indebtedness or
Other Senior Obligations under Article Sixteen of such Indenture (described
under the caption "Subordination of Subordinated Debt Securities") without the
consent of such holder of Senior Indebtedness or Other Senior Obligations.
(Subordinated Indenture Section 907)
The holders of at least 66 2/3% in aggregate principal amount of the
outstanding Senior Debt Securities of any series or outstanding Subordinated
Debt Securities of any series may, on behalf of all holders of the outstanding
Senior Debt Securities of that series or outstanding Subordinated Debt
Securities of that series, respectively, waive compliance by the Corporation
with certain restrictive provisions of the Applicable Indenture. (Senior
Indenture Section 1010; Subordinated Indenture Section 1009). The holders of
not less than 66 2/3% in aggregate principal amount of the outstanding Senior
Debt Securities of any series or the outstanding Subordinated Debt Securities
of any series may, on behalf of all holders of the outstanding Senior Debt
Securities of that series or the outstanding Subordinated Debt Securities of
that series, respectively, waive any past default under the Applicable
Indenture, except a default in the payment of principal (or premium, if any),
or interest, if any, or in the performance of certain covenants. (Section 513)
SATISFACTION AND DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Corporation may discharge certain obligations to holders of Debt
Securities of a series that have not already been delivered to the applicable
Trustee for cancellation and that either have become due and payable or are by
their terms due and payable within one year (or scheduled for redemption within
one year) by irrevocably depositing with the applicable Trustee, in trust,
funds in an amount sufficient to pay the entire indebtedness on such Debt
Securities for principal (and premium, if any) and interest, with respect
thereto, to the date of such deposit (if such Debt Securities have become due
and payable) or to the Stated Maturity or Redemption Date, as the case may be.
(Section 401)
Each Indenture provides that, if the provisions of Article Thirteen are made
applicable to the Debt Securities of or within a series pursuant to Section 301
thereunder, the Corporation may elect either (i) to defease and be discharged
from any and all obligations with respect to such Debt Securities (except for
the obligations to pay Additional Amounts, if any; to register the transfer or
exchange of such Debt Securities; to replace temporary or mutilated, destroyed,
lost or stolen Debt Securities; to maintain one or more offices or agencies in
respect of such Debt Securities; and to hold moneys for payment in trust)
("defeasance") or (ii) to be released (a) in the case of any such Debt
Securities that are Senior Debt Securities, from its obligations under Section
1009 of such Indenture or (b) in the case of any such Debt Securities (whether
they are Senior Debt Securities or Subordinated Debt Securities), if so
provided in the Applicable Prospectus
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Supplement, from its obligations with respect to any other covenant and, in
the case of either (a) or (b) above, any omission to comply with such
obligations will not constitute a Default or an Event of Default with respect
to such Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Corporation with the applicable Trustee (or other
qualifying trustee), in trust, of (1) an amount, in the currency or currencies
in which such Debt Securities are then specified as payable at Stated
Maturity, (2) Government Obligations (as defined in the Indenture) applicable
to such Debt Securities (with such applicability being determined on the basis
of the currency in which such Debt Securities are then specified as payable at
Stated Maturity) that, through the payment of principal and interest in
accordance with their terms, will provide money in an amount, or (3) a
combination thereof in an amount, sufficient to pay the principal of (and
premium, if any, on) and interest, if any, on such Debt Securities, and any
mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor.
Such a trust may only be established if, among other things, the Corporation
has delivered to the applicable Trustee an opinion of counsel to the effect
that the holders of such Debt Securities to be defeased will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to U.S. federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such defeasance or covenant defeasance had not occurred,
and such opinion of counsel, in the case of defeasance under clause (i) above,
must refer to and be based upon a ruling of the Internal Revenue Service or a
change in applicable U.S. federal income tax law occurring after the date of
the Applicable Indenture. (Article Thirteen)
Unless otherwise provided in the Applicable Prospectus Supplement, if, after
the Corporation has deposited funds, Government Obligations, or both to effect
defeasance or covenant defeasance with respect to Debt Securities of a series,
(a) the holder of a Debt Security of such series is entitled to, and does,
elect pursuant to the terms of such Debt Security to receive payment in a
currency or currency unit other than that in which such deposit has been made
in respect of such Debt Security or (b) a Currency Conversion Event (as
defined in the applicable Indenture) occurs, then the indebtedness represented
by such Debt Security will be deemed to have been, and will be, fully
discharged and satisfied through the payment of the principal of (and premium,
if any) and interest, if any, on such Debt Security as they become due out of
the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency in which such Debt Security becomes payable as
a result of such election or such Currency Conversion Event based on the
applicable Market Exchange Rate. (Section 1305) Unless otherwise provided in
the Applicable Prospectus Supplement, all payments of principal of (and
premium, if any) and interest, if any, on any Debt Security that is payable in
a foreign currency with respect to which a Currency Conversion Event occurs
shall be made in U.S. dollars. (Section 312)
In the event the Corporation effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because
of the occurrence of any Event of Default other than the Event of Default
described in clause (d) under "Events of Default" with respect to the
obligations described under "Ownership of Voting Stock of Significant Banks"
above (which obligations would no longer be applicable to such Debt
Securities) or described in clause (d) or (g) under "Events of Default" with
respect to any other covenant with respect to which there has been defeasance,
the amount in such currency in which such Debt Securities are payable, and
Government Obligations on deposit with the applicable Trustee will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of
Default. However, the Corporation would remain liable to make payment of such
amounts due at the time of acceleration.
If the applicable Trustee or any Paying Agent is unable to apply any money
in accordance with the applicable Indenture by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Corporation's obligations under such
Indenture and such Debt Securities shall be revived and reinstated as though
no deposit had occurred pursuant to such
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Indenture, until such time as such Trustee or Paying Agent is permitted to
apply all such money in accordance with such Indenture; provided, however,
that, if the Corporation makes any payment of principal of (or premium, if any)
or interest on any such Debt Security or coupon following the reinstatement of
its obligations, the Corporation shall be subrogated to the rights of the
holders of such Debt Securities to receive such payment from the money held by
such Trustee or Paying Agent.
The Applicable Prospectus Supplement may further describe the provisions, if
any, permitting defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Debt Securities of or
within a particular series and any related coupons.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Corporation, without the consent of the holders of any of the Debt
Securities under the Indentures, may consolidate with or merge into any other
corporation, may convey, transfer, or lease its assets substantially as an
entirety to any person, or may acquire or lease the assets of any person
substantially as an entirety, or may permit any person to merge into or
consolidate with the Corporation, provided that: (1) any successor or purchaser
is a corporation organized under the laws of any domestic jurisdiction; (2) any
such successor or purchaser assumes the Corporation's obligations on such Debt
Securities and under the Indentures; (3) after giving effect to the
transaction, with respect to any Senior Debt Securities, no Event of Default
and no event which, after notice of or lapse of time or both would become an
Event of Default or, with respect to any Subordinated Debt Securities, no
Default and no event that, after notice or lapse of time, would become an Event
of Default or a Default, shall have occurred and be continuing; (4) with
respect to the Senior Indenture, if, as a result of any such consolidation or
merger or such conveyance, transfer or lease, shares of voting stock of any
Significant Bank would become subject to a security interest not permitted
under the Senior Indenture, the Corporation or successor, as the case may be,
shall take such steps as shall be necessary effectively to secure the Senior
Debt Securities equally and ratably with (or prior to) all indebtedness secured
thereby; and (5) certain other conditions are met. (Section 801)
CONVERSION
The holders of Subordinated Debt Securities of a specified series that are
convertible into Capital Securities ("Subordinated Convertible Debt
Securities") may be entitled or, if so provided in the Applicable Prospectus
Supplement, may be required at such time or times specified in the Applicable
Prospectus Supplement relating to such Subordinated Convertible Debt
Securities, subject to prior redemption, repayment, or repurchase, to convert
any Subordinated Convertible Debt Securities of such series into Capital
Securities, at the conversion price set forth in such Applicable Prospectus
Supplement, subject to adjustment and to such other terms as are set forth in
such Applicable Prospectus Supplement. No separate consideration will be
received for any Capital Securities issued upon conversion of Subordinated
Convertible Debt Securities.
RISK FACTORS OF DEBT SECURITIES DENOMINATED IN FOREIGN CURRENCIES
Debt Securities denominated or payable in foreign currencies may entail
significant risks. These risks include, without limitation, the possibility of
significant fluctuations in the foreign currency market, the imposition of
foreign exchange controls, and potential illiquidity in the secondary market.
These risks will vary depending upon the currency involved. These risks may be
more fully described in the Applicable Prospectus Supplement.
CONCERNING THE TRUSTEE
Bankers Trust Company is Trustee under both the Senior Indenture and the
Subordinated Indenture. The Corporation and certain of its subsidiaries
maintain deposit accounts and conduct other banking transactions with Bankers
Trust Company in the ordinary course of business.
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DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the shares of Preferred Stock,
which sets forth certain general terms and provisions of the Preferred Stock to
which any Prospectus Supplement may relate, does not purport to summarize any
particular series of Preferred Stock. Certain terms of any offered series of
Preferred Stock will be described in the Applicable Prospectus Supplement
relating to such series of Preferred Stock. If so indicated in the Applicable
Prospectus Supplement, the terms of any series may differ from the terms set
forth below. The description of certain provisions of the Preferred Stock set
forth below does not purport to be complete and is subject to and qualified in
its entirety by reference to the Amended and Restated Articles of Incorporation
(the "Articles") and the Certificate of Amendment of the Amended and Restated
Articles of Incorporation of the Corporation that relates to a particular
series of Preferred Stock (the "Certificate") which will be filed with the
Secretary of State of the State of Ohio at or prior to the time of the sale of
the related series of Preferred Stock and which will be filed as an exhibit to
or incorporated by reference in the Registration Statement.
GENERAL
The Corporation is authorized by its Articles to issue from time to time up
to 25,000,000 shares of Preferred Stock, with a par value of $1 each. All
shares of Preferred Stock must be of equal rank and the express terms thereof
must be identical, except in respect of the terms that may be fixed by the
Board of Directors as described below, and each share of each series shall be
identical with all other shares of such series, except that in the case of a
series as to which dividends are cumulative, the dates from which dividends are
cumulative may vary to reflect differences in the dates of issue. The Preferred
Stock will, when issued against payment therefor, be fully paid and
nonassessable. The Corporation currently has issued and outstanding 1,280,000
shares of 10% Cumulative Preferred Stock. See "Preferred Stock Outstanding"
below for a discussion of the 10% Cumulative Preferred Stock.
The Board of Directors is authorized by the Articles to cause shares of
Preferred Stock to be issued in one or more series and with respect to each
such series to fix: (1) the designation of the series, which may be by
distinguishing number, letter, or title; (2) the authorized number of shares of
such series, which number the Board of Directors may, except to the extent
otherwise provided in the creation of the series, from time to time, increase
or decrease, but not below the number of shares thereof then outstanding; (3)
the dividend rate or rates (which may be fixed or adjustable) of the shares of
the series; (4) the dates on which dividends, if declared, shall be payable
and, in the case of series on which dividends are cumulative, the dates from
which dividends shall be cumulative; (5) the redemption rights and price or
prices, if any, for shares of the series, (6) the amount, terms, conditions,
and manner of operation of any retirement or sinking fund to be provided for
the purchase or redemption of shares of the series; (7) the amounts payable on
shares of the series in the event of any liquidation, dissolution, or winding
up of the affairs of the Corporation; (8) whether the shares of the series
shall be convertible into Common Shares or shares of any other series or class,
and, if so, the specification of such other class or series, the conversion
price or prices or rate or rates, any adjustment thereof, and all other terms
and conditions upon which such conversion may be made; and (9) the
restrictions, if any, upon the issue of any additional shares of the same
series or of any other class or series. The Board of Directors is authorized to
amend from time to time the Articles fixing, with respect to any unissued
shares of Preferred Stock, the matters described in clauses (1) through (9).
Each series of Preferred Stock will be offered on such of the above terms and
at such offering price as specified in the Applicable Prospectus Supplement.
As described under "Depositary Shares" below, the Corporation may, at its
option, elect to offer Depositary Shares (evidenced by depositary receipts)
which will represent a fraction to be specified in the Applicable Prospectus
Supplement relating to the particular series of Preferred Stock of a share of
the particular series of Preferred Stock issued and deposited with the
Depositary (as defined below), in lieu of offering full shares of such series
of the Preferred Stock.
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CERTAIN DEFINITIONS
For the purposes of this Description of Preferred Stock:
Whenever reference is made to shares "ranking prior to the Preferred Stock,"
such reference shall mean and include all shares of the Corporation in respect
of which the rights of the holders thereof either as to the payment of
dividends or as to distribution in the event of a liquidation, dissolution, or
winding up of the Corporation are given preference over the rights of the
holders of Preferred Stock.
Whenever reference is made to shares "on a parity with the Preferred Stock,"
such reference shall mean and include all shares of the Corporation in respect
of which the rights of the holders thereof as to the payment of dividends or as
to distributions in the event of a liquidation, dissolution, or winding up of
the Corporation rank on an equality or parity with the rights of the holders of
Preferred Stock.
Whenever reference is made to shares "ranking junior to the Preferred Stock,"
such reference shall mean and include all shares of the Corporation in respect
of which the rights of the holders thereof as to the payment of dividends and
as to distributions in the event of a liquidation, dissolution, or winding up
of the Corporation are junior or subordinate to the rights of the holders of
Preferred Stock.
DIVIDENDS
The holders of Preferred Stock of each series, in preference to the holders
of Common Shares and of any other class of shares of the Corporation ranking
junior to the Preferred Stock shall be entitled to receive, out of any funds
legally available for the payment of dividends and when and as declared by the
Board of Directors, cash dividends at the rates set forth in the Applicable
Prospectus Supplement, and no more, payable on the dividend payment dates fixed
for such series set forth therein (each, a "Dividend Payment Date"). If any
date specified as a Dividend Payment Date is not a business day, dividends, if
declared, on the Preferred Stock will be paid on the immediately succeeding
business day, without interest. Such rates may be fixed or variable. If
variable, the formula used for determining the dividend rate for each dividend
period will be set forth in the Applicable Prospectus Supplement. Dividends on
the Preferred Stock may be cumulative or non-cumulative as provided in the
Applicable Prospectus Supplement.
No full dividends may be paid upon, declared, or set apart for the payment of
dividends on shares ranking on a parity with or junior to the Preferred Stock
unless dividends shall have been paid or set apart for payment on the Preferred
Stock.
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Corporation or the holder thereof upon terms and at
the redemption prices set forth in the Applicable Prospectus Supplement
relating to such series.
RIGHTS UPON LIQUIDATION
The holders of shares of Preferred Stock of any series shall, in case of
liquidation, dissolution, or winding up of the Corporation, be entitled to
receive in full out of the assets of the Corporation, including its capital,
before any amount shall be paid or distributed among the holders of Common
Shares or any other shares ranking junior to the Preferred Stock, the amounts
set forth in the Applicable Prospectus Supplement with respect to shares of
such series, plus all accrued and unpaid dividends for such series, in
accordance with the terms set forth in the Applicable Prospectus Supplement.
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CONVERSION
The holders of specified series of Preferred Stock may be entitled or, if so
provided in the Applicable Prospectus Supplement, may be required, to convert
such shares into Common Shares or any other class or series of Capital
Securities or, in the case of Preferred Stock that is convertible at the option
of the Corporation, other debt securities of the Corporation, at such
conversion price or prices and on such other terms as may be set forth in the
Applicable Prospectus Supplement relating to such series of Preferred Stock.
VOTING RIGHTS
The holders of Preferred Stock shall not be entitled to vote upon matters
presented to the shareholders, except as provided herein or as required by law.
If the Corporation shall fail to pay full cumulative dividends on any series
of Preferred Stock or the 10% Cumulative Preferred Stock (if then outstanding)
for six quarterly dividend payment periods, whether or not consecutive, the
number of directors will be increased by two, and the holders of all
outstanding series of Preferred Stock and the 10% Cumulative Preferred Stock,
voting as a single class without regard to series, will be entitled to elect
such additional two directors until full cumulative dividends for all past
dividend payment periods on all series of Preferred Stock and the 10%
Cumulative Preferred Stock have been paid or declared and set apart for payment
or until non-cumulative dividends have been paid regularly for at least one
full year. Such right to vote separately as a class to elect directors shall,
when vested, be subject, always, to the same provisions for the vesting of such
right to elect directors separately as a class in the case of future dividend
defaults. At any time when such right to elect directors separately as a class
shall have so vested, the Corporation may, and upon the written request of the
holders of record of not less than twenty percent of the total number of shares
of the Preferred Stock and 10% Cumulative Preferred Stock of the Corporation
then outstanding shall, call a special meeting of shareholders for the election
of such directors. In the case of such a written request, such special meeting
shall be held within ninety days after the delivery of such request and, in
either case, at the place and upon the notice provided by law and in the
Regulations of the Corporation, provided that the Corporation shall not be
required to call such a special meeting if such request is received less than
120 days before the date fixed for the next ensuing annual meeting of
shareholders of the Corporation. Directors elected as aforesaid shall serve
until the next annual meeting of shareholders of the Corporation or until their
respective successors shall be elected and qualify. If, prior to the end of the
term of any director elected as aforesaid, a vacancy in the office of such
director shall occur during the continuance of a default in dividends on any
series of Preferred Stock by reason of death, resignation, or disability, such
vacancy shall be filled for the unexpired term by the appointment by the
remaining director or directors elected as aforesaid of a new director for the
unexpired term of such former director.
Under existing interpretations of the Federal Reserve Board and the OTS, if
the holders of any series of Preferred Stock (including, in this case, the 10%
Cumulative Preferred Stock) become entitled to vote for the election of
directors because dividends on such series are in arrears, such series may then
be deemed a "class of voting securities" and a holder of 25% or more of such
series (or a holder of 5% or more if such holder otherwise exercises a
"controlling influence" over the Corporation) may then be subject to regulation
as a bank holding company in accordance with the BHCA, and as a savings and
loan holding company in accordance with the HOLA. In addition, at such time,
(i) any bank holding company or foreign bank with a U.S. presence may be
required to obtain the approval of the Federal Reserve Board under the BHCA to
acquire or retain 5% or more of such series and (ii) any person other than a
bank holding company may be required to obtain the approval of the Federal
Reserve Board and the OTS under the CBCA to acquire or retain 10% or more of
such series.
The affirmative vote or consent of the holders of at least two-thirds of the
then outstanding shares of Preferred Stock, given in person or by proxy, either
in writing or at a meeting called for the purpose at which the holders of
Preferred Stock shall vote separately as a class, shall be necessary to effect
any amendment, alteration, or repeal of any of the provisions of the
Corporation's Articles or the Regulations of the
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Corporation which would be substantially prejudicial to the voting powers,
rights, or preferences of the holders of Preferred Stock (but so far as the
holders of Preferred Stock are concerned, such action may be effected with such
vote or consent); provided, however, that neither the amendment of the
Corporation's Articles to authorize or to increase the authorized or
outstanding number of shares of any class ranking junior to or on a parity with
the Preferred Stock, nor the amendment of the Regulations so as to change the
number of directors of the Corporation shall be deemed to be substantially
prejudicial to the voting powers, rights, or preferences of the holders of
Preferred Stock (and any such amendment referred to in this proviso may be made
without the vote or consent of the holders of the Preferred Stock); and
provided further that if such amendment, alteration, or repeal would be
substantially prejudicial to the rights or preferences of one or more but not
all then outstanding series of Preferred Stock, the affirmative vote or consent
of the holders of at least two-thirds of the then outstanding shares of the
series so affected shall be required.
The affirmative vote or consent of the holders of at least two-thirds of the
then outstanding shares of Preferred Stock and, if the holders of 10%
Cumulative Preferred Stock are entitled to vote on such matter pursuant to
Section 5 of Part A of Article IV of the Articles, the 10% Cumulative Preferred
Stock, given in person or by proxy, either in writing or at a meeting called
for the purpose at which the holders of Preferred Stock and, if applicable, 10%
Cumulative Preferred Stock shall vote as a single class shall be necessary to
effect any one or more of the following:
(a) The authorization of, or the increase in the authorized number of,
any shares of any class ranking prior to the Preferred Stock; or
(b) The purchase or redemption for sinking fund purposes or otherwise of
less than all of the then outstanding Preferred Stock except in accordance
with a purchase offer made to all holders of record of Preferred Stock,
unless all dividends on all Preferred Stock then outstanding for all
previous dividend periods shall have been declared and paid or declared and
funds therefor set apart and all accrued sinking fund obligations
applicable thereto shall have been complied with.
PREEMPTIVE RIGHTS
No holder of Preferred Stock is entitled as a matter of right to subscribe
for or purchase any part of any issue of shares of the Corporation, of any
class whatsoever, or any part of any issue of securities convertible into
shares of the Corporation, of any class whatsoever, and whether issued for
cash, property, services, or otherwise.
REPURCHASE OF SHARES
Subject to the express terms of any series of Preferred Stock or the 10%
Cumulative Preferred Stock, the Corporation, by action of its Board of
Directors and without action by its shareholders, is authorized by its Articles
to purchase any shares of any series of Preferred Stock from time to time in
accordance with the provisions of the Ohio General Corporation Law. Such
purchases may be made either in the open market, or at public or private sales,
in such manner and amounts and at such price as the directors shall, from time
to time determine.
PREFERRED STOCK OUTSTANDING
The Corporation has issued and outstanding 1,280,000 shares of the 10%
Cumulative Preferred Stock, which is the only class or series of Preferred
Stock of the Corporation currently outstanding. Dividends, which are
cumulative, are payable on the 10% Cumulative Preferred Stock quarterly on
March 31, June 30, September 30, and December 31 of each year at the rate per
annum equal to 10% of the liquidation preference of $125, or $12.50, per share.
The 10% Cumulative Preferred Stock ranks prior to the Common Shares as to
payment of dividends and upon distribution in the event of a liquidation,
dissolution, or winding up of the Corporation. Unless full cumulative dividends
on the 10% Cumulative Preferred Stock have been paid for all past dividend
payment periods, no dividends (other than in Common Shares or another stock
ranking
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junior to the 10% Cumulative Preferred Stock as to dividends and upon
liquidation) shall be declared or paid or set aside for payment nor shall any
other distribution be made upon the Common Shares or on any other stock of the
Corporation ranking junior to or on a parity with the 10% Cumulative Preferred
Stock as to dividends or upon liquidation. Except as expressly required by
applicable law, the holders of shares of 10% Cumulative Preferred Stock are not
entitled to vote on matters presented to shareholders except under certain
circumstances, including (a) if the Corporation fails to pay full cumulative
dividends on the 10% Cumulative Preferred Stock or on any class of Preferred
Stock for six quarterly dividend periods, whether or not consecutive, in which
case the number of directors of the Corporation will be increased by two and
the holders of all outstanding shares of 10% Cumulative Preferred Stock,
together with the holders of all other outstanding classes of Preferred Stock,
will be entitled to vote separately as a single class without regard to series
to elect such additional two Directors until full cumulative dividends for all
past dividend payment periods on all classes of Preferred Stock and the 10%
Cumulative Preferred Stock have been paid or declared and set apart for
payment, and (b) the adoption of any amendment to the Corporation's Articles
that would adversely affect the powers, preferences, privileges, or rights of
the shares of the 10% Cumulative Preferred Stock, subject to certain
exceptions.
The holders of shares of 10% Cumulative Preferred Stock have no preemptive
rights to acquire any additional shares of the Corporation.
The 10% Cumulative Preferred Stock is not redeemable prior to June 30, 1996.
On and after such date, the 10% Cumulative Preferred Stock will be redeemable
in cash at the option of the Corporation, in whole or in part, from time to
time upon not less than 30 nor more than 60 days' notice, with the prior
approval of the Federal Reserve Board (if such approval is required), at $125
per share plus all accrued and unpaid dividends to the date fixed for
redemption. Shares of the 10% Cumulative Preferred Stock that are redeemed will
be deemed retired.
The 10% Cumulative Preferred Stock is not convertible into shares of any
other class or series of the capital stock of the Corporation.
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the Corporation, the holders of shares of 10% Cumulative
Preferred Stock will be entitled to receive out of the assets of the
Corporation available for distribution to shareholders, before any distribution
of assets is made to holders of Common Shares or any other class of stock of
the Corporation ranking junior to the 10% Cumulative Preferred Stock upon
liquidation, liquidating distributions in the amount of $125 per share plus
accrued and unpaid dividends. If, upon any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation the amounts payable
with respect to the 10% Cumulative Preferred Stock and any other shares of
stock of the Corporation ranking as to any such distribution on a parity with
the 10% Cumulative Preferred Stock are not paid in full, the holders of shares
of the 10% Cumulative Preferred Stock and of such other shares will share
ratably in any such distribution of assets of the Corporation in proportion to
the full respective preferential amounts to which they are entitled.
The 10% Cumulative Preferred Stock is evidenced by depositary shares, each of
which represents a one-fifth interest in a share of 10% Cumulative Preferred
Stock. The 10% Cumulative Preferred Stock is deposited under a Deposit
Agreement, dated July 27, 1991 between the Corporation and Society National
Bank, successor to The Chase Manhattan Bank, as depositary.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts (as defined below) does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
forms of Deposit
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Agreement and Depositary Receipt relating to each series of the Preferred
Stock, which are filed with the Commission as exhibits to the Registration
Statement of which this Prospectus is a part, copies of which may be obtained
from the Corporation upon request.
GENERAL
The Corporation may elect to offer fractional shares of Preferred Stock
rather than full shares of Preferred Stock. In such event, the Corporation will
cause depositary receipts ("Depositary Receipts") to be issued for Depositary
Shares, each of which will represent a fraction (to be set forth in the
Applicable Prospectus Supplement relating to a particular series of Preferred
Stock) of a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Corporation and a bank or trust company selected by the Corporation having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000, and any successor as depositary (the
"Depositary"). Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, in proportion to the applicable fraction of
a share of Preferred Stock represented by such Depositary Share, to all the
rights, preferences, and privileges of the Preferred Stock represented thereby,
including any and all dividend, voting, redemption, conversion, and liquidation
rights provided for in the Certificate.
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Depositary Receipts will be distributed to
those persons purchasing the fractional shares of Preferred Stock in accordance
with the terms of the offering.
Pending the preparation of definitive Depositary Receipts, the Depositary
will, upon the written order of the Corporation or any holder of Preferred
Stock, execute and deliver temporary Depositary Receipts which are
substantially identical to, and entitle the holders thereof to all the benefits
pertaining to, the definitive Depositary Receipts. Definitive Depositary
Receipts will be prepared thereafter without unreasonable delay, and temporary
Depositary Receipts will be exchangeable for definitive Depositary Receipts
upon surrender of the temporary Depositary Receipts at the Depositary's
principal office or such other office or offices, if any, as the Depositary may
designate, at the Corporation's expense and without charge to the holder.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute cash dividends or other cash distributions
received in respect of the deposited shares of Preferred Stock, including any
cash received upon redemption of any shares of Preferred Stock, to the record
holders of Depositary Receipts relating to such Preferred Stock in such amounts
as are, as nearly as practicable, in proportion to the numbers of Depositary
Shares evidenced by the Depositary Receipts held by such holders.
In the event of a distribution other than in cash on the deposited shares of
Preferred Stock, the Depositary will distribute property received by it to the
record holders of Depositary Receipts in such amounts as are, as nearly as
practicable, in proportion to the numbers of such Depositary Shares evidenced
by the Depositary Receipts held by such holders, in any manner that the
Depositary and the Corporation may deem equitable and practicable for
accomplishing such distribution. If the Depositary, after consultation with the
Corporation, determines that such distribution cannot be made proportionately
or that it is otherwise not feasible to make such distribution, it may, with
the approval of the Corporation, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the
public or private sale of the property received. The Depositary will distribute
or make available for distribution the net proceeds of any such sale to the
holders entitled thereto.
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REDEMPTION OF PREFERRED STOCK
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Corporation or the holder thereof, as set forth in
the Applicable Prospectus Supplement relating to such series of Preferred
Stock. Whenever the Corporation elects to redeem shares of Preferred Stock held
by the Depositary, the Depositary will redeem as of the same redemption date
the number of Depositary Shares representing shares of Preferred Stock so
redeemed, provided the Corporation shall have paid in full to the Depositary
the redemption price of the Preferred Stock to be redeemed. In the event of
such a redemption at the option of the Corporation, the Depositary Shares will
be redeemed from the proceeds received by the Depositary resulting from the
redemption of such Preferred Stock held by the Depositary. If fewer than all
the outstanding Depositary Shares are to be redeemed, the Depositary Shares to
be redeemed will be selected by the Depositary by lot or pro rata or by any
other equitable method, in each case as may be determined by the Corporation.
In addition, although Depositary Shares, as such, are not redeemable at the
option of the holder of Depositary Receipts evidencing Depositary Shares, such
holder may, if so specified in the Applicable Prospectus Supplement relating to
an offering of Depositary Shares, surrender Depositary Receipts with written
instructions to the Depositary to instruct the Corporation to cause the
redemption of any specified number of whole or fractional shares of Preferred
Stock represented by the Depositary Shares evidenced by such Depositary
Receipts. The Corporation will thereafter cause the redemption of the Preferred
Stock at the redemption price utilizing the same procedures as those provided
for delivery of Preferred Stock to effect such redemption.
In the event of redemption at the option of either the Corporation or the
holders of Depositary Receipts, the redemption price per Depositary Share will
be equal to the applicable fraction of the redemption price per share paid in
respect of the shares of the deposited Preferred Stock so redeemed, plus any
other money and other property, if any, represented by each such Depositary
Share, including an amount equal to any accrued and unpaid dividends thereon to
the date of such redemption.
Unless the Corporation defaults in the payment of the redemption price of any
Preferred Stock called for redemption by the Corporation or the holder thereof
and unless otherwise specified in the Certificate, (i) from and after the
redemption date, all dividends in respect of the shares of Preferred Stock
called for redemption will cease to accrue, the Depositary Shares so called for
redemption shall no longer be deemed outstanding, and, except as set forth in
clause (ii) below, all rights of holders of such Depositary Shares shall
terminate except for the right to receive the redemption price thereof, and
(ii) in the case of any redemption at the option of the Corporation or at the
option of the holder, any rights of conversion in respect of such shares of
Preferred Stock shall terminate on the close of business on the redemption
date.
CONVERSION OF PREFERRED STOCK AT THE OPTION OF THE CORPORATION
The holders of Depositary Shares may be obligated at any time or upon
maturity of the Preferred Stock represented by the Depositary Shares to convert
the Depositary Shares for the number of whole shares of Capital Securities or
other debt securities of the Corporation (as the case may be, in accordance
with the terms of such series of Preferred Stock) in proportion to the number
of shares of Preferred Stock represented by the Depositary Shares. Whenever the
Corporation exercises its option to convert shares of Preferred Stock held by
the Depositary in whole or in part, the Depositary will convert as of the same
conversion date the number of Depositary Shares representing shares of
Preferred Stock so converted provided the Corporation shall have issued and
deposited with the Depositary the Capital Securities or other debt securities
for the Preferred Stock to be converted and paid in full to the Depositary any
accrued and unpaid dividends thereon. In the event of such conversion at the
option of the Corporation, the Depositary Shares will be converted at a
conversion rate per Depositary Share equal to the applicable fraction of the
conversion rate per share then in effect in respect of the shares of deposited
Preferred Stock so converted as such conversion rate may be adjusted from time
to time as provided in the Certificate of Amendment, plus any other money and
other
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property, if any, represented by each such Depositary Share, including all
amounts paid by the Corporation in respect of dividends which on the conversion
date have accrued on the shares of Preferred Stock to be so converted and have
not theretofore been paid. If fewer than all the outstanding Depositary Shares
are to be converted, the Depositary Shares to be converted will be selected by
the Depositary by lot or pro rata or by any other equitable method, in each
case as may be determined by the Corporation.
From and after the dated fixed for conversion, all dividends in respect of
the shares of Preferred Stock called for conversion shall cease to accrue to
the extent set forth in the Certificate, any rights of conversion or redemption
at the option of the holders of the Depositary Shares represented by Depositary
Receipts evidencing the shares of Preferred Stock called for conversion shall
terminate at the close of business on such conversion date to the extent set
forth in the Certificate, the Depositary Shares called for conversion will no
longer be deemed to be outstanding, and all rights of the holders of the
Depositary Receipts evidencing the Depositary Shares will cease, except the
right to receive the securities payable upon such conversion and any money and
other property, if any, to which the holders of such Depositary Shares were
entitled upon such conversion upon surrender to the Depositary of the
Depositary Receipts evidencing such Depositary Shares.
CONVERSION OF PREFERRED STOCK AT THE OPTION OF THE HOLDER
The Depositary Shares, as such, are not convertible at the option of the
holder thereof into Common Shares or any other securities or property of the
Corporation. Nevertheless, if so specified in the Applicable Prospectus
Supplement relating to an offering of Depositary Shares, any holder of
Depositary Shares representing any series of Preferred Stock which is
convertible at the option of the holder, upon surrender of the Depositary
Receipts therefor and delivery of instructions to the Depositary, may cause the
Corporation to convert any specified number of shares of Preferred Stock
represented by the Depositary Shares evidenced by such Depositary Receipts into
the number of whole Common Shares or whole number of shares of any other class
or series of Capital Securities of the Corporation (as the case may be, in
accordance with the terms of such series of the Preferred Stock) as are
issuable, as provided in the Certificate upon conversion of such shares of
Preferred Stock at the conversion rate (as such term is defined in the
Certificate) then in effect, as such conversion rate may be adjusted by the
Corporation from time to time as provided in the Certificate. In the event that
a holder delivers Depositary Receipts to the Depositary for conversion which in
the aggregate are convertible either into less than one whole Common Share or
one whole share of any other class or series of Capital Securities or into any
number of whole Common Shares or whole shares of any other class or series of
Capital Securities plus an excess constituting less than one whole Common Share
or one whole share of any other class or series of Capital Securities, the
holder shall receive payment in lieu of such fractional Common Shares or
fractional shares of such Capital Securities.
WITHDRAWAL OF PREFERRED STOCK
Any holder of Depositary Receipts may, upon surrender of such Depositary
Receipts therefor to the Depositary (unless the related Preferred Stock has
previously been called for redemption or conversion at the option of the
Corporation), receive the number of whole shares of the related series of
Preferred Stock and any money and other property represented by such Depositary
Receipts. Holders of Depositary Receipts making such withdrawals will be
entitled to receive whole shares of Preferred Stock on the basis set forth in
the Applicable Prospectus Supplement for such series of Preferred Stock, but
holders of such whole shares of Preferred Stock will not thereafter be entitled
to deposit such Preferred Stock under the Deposit Agreement or to receive
Depositary Shares therefor. If the Depositary Shares represented by the
Depositary Receipts surrendered by the holder in connection with such
withdrawal exceed the number of Depositary Shares that represent the number of
whole shares of Preferred Stock to be withdrawn, the Depositary will deliver to
such holder at the same time a new Depositary Receipt evidencing such excess
number of Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of shares of the
Preferred Stock are entitled to vote, the Depositary will, as soon as
practicable thereafter, mail the information contained in such notice
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of meeting to the record holders of the Depositary Receipts representing the
Depositary Shares relating to such Preferred Stock. Each record holder of such
Depositary Receipt on the record date (which will be the same date as the
record date of the Preferred Stock) will be entitled to instruct the Depositary
as to the exercise of the voting rights pertaining to the amount of Preferred
Stock represented by such holder's Depositary Shares. Upon the written request
of a record holder of such Depositary Receipt, the Depositary will, insofar as
practicable, vote or cause to be voted the amount of Preferred Stock
represented by such Depositary Shares evidenced by such Depositary Receipt in
accordance with such instructions, and the Corporation will agree to take all
reasonable actions which may be deemed necessary by the Depositary in order to
enable the Depositary to do so. The Depositary will abstain from voting shares
of the Preferred Stock to the extent it does not receive specific instructions
from the holder of Depositary Receipts evidencing the Depositary Shares
representing such Preferred Stock. The Depositary will not be required to
exercise discretion in voting any Preferred Stock represented by the Depositary
Shares evidenced by such Receipts.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time and from time to time be
amended by agreement between the Corporation and the Depositary in any respect
that they may deem necessary or desirable. However, any amendment which
materially and adversely alters the rights of the holders of Depositary
Receipts or which would be materially and adversely inconsistent with the
rights granted to the holders of the Preferred Stock will not be effective
unless such amendment has been approved by the holders of at least a majority
of the Depositary Shares then outstanding.
The Deposit Agreement automatically terminates if (i) all outstanding
Depositary Shares have been redeemed, converted, or withdrawn; (ii) each share
of Preferred Stock has been converted into Common Shares or shares of any other
class or series of Capital Securities; or (iii) there has been a final
distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution, or winding up of the Corporation and such
distribution has been distributed to the holders of Depositary Receipts. The
Deposit Agreement also may be terminated by the Corporation at any time upon
not less than 60 days prior written notice to the Depositary, in which case the
Depositary will, upon a date not later than 30 days after the date of such
notice, deliver to the record holders, upon surrender of the Depositary
Receipts, such number of whole shares of Preferred Stock as are represented by
such Depositary Receipts. In the event that such Depositary Receipts represent
a fractional number of shares of Preferred Stock, the Depositary will aggregate
all interests in such fractional shares, and, with the approval of the
Corporation, adopt such method as it deems equitable and practicable for the
purpose of effecting the distribution of such interests, including the public
or private sale of the whole number of shares of Preferred Stock so aggregated,
or any part thereof, after which the Depositary will distribute or make
available for distribution to the holders of such Depositary Receipts, as the
case may be, the net proceeds of any such sale.
CHARGES OF DEPOSITARY AND OTHER TAXES AND CHARGES
The Corporation will pay all fees and expenses of the Depositary, and all
charges of the Depositary in connection with the initial deposit of the
Preferred Stock and the initial issuance of the Depositary Shares evidenced by
the Depositary Receipts, all withdrawals of shares of Preferred Stock by
holders of Depositary Shares, any redemption or conversion of the Preferred
Stock at the option of such holder and any redemption or conversion of the
Preferred Stock at the option of the Corporation. The Corporation will pay all
transfer and other taxes and governmental charges arising solely from the
existence of the depositary arrangements. Holders of Depositary Shares will pay
such other transfer and other taxes and governmental charges as are expressly
provided in the Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Corporation notice
of its election to do so, and the Corporation may at any time remove the
Depositary by notice of such removal delivered to the
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Depositary, any such resignation or removal to take effect upon the appointment
of a successor Depositary and its acceptance of such appointment. Such
successor Depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Receipts all notices
and reports from the Corporation which are delivered to the Depositary in its
capacity as holder of Preferred Stock and which the Corporation is required to
furnish to the holders of the Preferred Stock.
Neither the Depositary nor the Corporation will be liable to any holder of
any Depositary Receipt if it is prevented or delayed by reason of any present
or future law or regulation of the United States or of any other governmental
authority, or by reason of any present or future provision of the Articles or
the Certificate or by any other circumstance beyond its control in performing
its obligations under the Deposit Agreement or by reason of any exercise of, or
failure to exercise, any discretion provided for in the Deposit Agreement. The
obligations and liabilities of the Corporation to holders of Depositary
Receipts and the Depositary under the Deposit Agreement or any Depositary
Receipt will be limited to performance in good faith of such duties as are
specifically set forth in the Deposit Agreement and the Corporation and the
Depositary will not be obligated to appear in, prosecute, or defend any action,
suit, or other proceeding in respect of deposited shares of Preferred Stock,
Depositary Shares, or Depositary Receipts that in its opinion may subject it to
expense or liability unless satisfactory indemnity is furnished. The Depositary
and the Corporation may rely upon the written advice of counsel and the written
advice of and information provided by any accountant, any holders of Depositary
Receipts and any other persons believed by it in good faith to be competent to
give such advice or information and upon documents believed by it to be genuine
and to have been signed or presented by the proper party or parties.
In the event the Depositary shall receive conflicting claims, requests, or
instructions from any holders of Depositary Receipts, on the one hand, and the
Corporation, on the other hand, the Depositary shall be entitled to act on such
claims, requests, or instructions received from the Corporation.
DESCRIPTION OF COMMON SHARES
The description of certain provisions of the Common Shares set forth below
does not purport to be complete and is subject to and qualified in its entirety
by reference to the Articles and the Regulations (i.e. By-Laws) of KeyCorp
which are exhibits to the Registration Statement.
GENERAL
The Corporation's Common Shares as of March 31, 1994 consisted of 900,000,000
authorized shares, with a par value of $1 each, of which there were 244,763,166
shares outstanding (exclusive of treasury shares). The Common Shares are traded
on the New York Stock Exchange. The transfer agent and registrar for the Common
Shares is Society National Bank.
Common Shares of the Corporation may be issued from time to time, in such
amounts and proportion and for such consideration as may be fixed by the Board
of Directors of the Corporation. No holder of Common Shares has any preemptive
or preferential rights to purchase or to subscribe for any shares of capital
stock or other securities which may be issued by the Corporation. The Common
Shares have no redemption or sinking fund provisions applicable thereto. Common
Shares do not have any conversion rights. The rights of holders of Common
Shares will be subject to, and may be adversely affected by, the rights of
holders of any Preferred Stock that may be issued in the future.
The Corporation may issue authorized but unissued Common Shares in connection
with several employee benefit and stock option and incentive plans maintained
by the Corporation or its subsidiaries, and the Corporation's Automatic
Dividend Reinvestment and Cash Payment Plan.
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The outstanding Common Shares are fully paid and non-assessable and future
issuances of Common Shares, when fully paid for, will be non-assessable except
that in both cases Section 1701.95 of the Ohio General Corporation Law provides
that a shareholder who knowingly receives any dividend, distribution, or
payment made contrary to law or the articles of a corporation shall be liable
to the Corporation for the amount received by him that is in excess of the
amount that could have been paid or distributed without violation of law or the
articles.
DIVIDENDS
When, as, and if dividends, payable in cash, stock, or other property, are
declared by the Board of Directors of the Corporation out of funds legally
available therefor, the holders of Common Shares are entitled to share equally,
share for share, in such dividends. The payment of dividends on the Common
Shares is subject to the prior payment of dividends on the Preferred Stock and
on the 10% Cumulative Preferred Stock.
VOTING
Except as described under "Outstanding Preferred Stock" above, holders of
Common Shares have exclusive voting rights of the Corporation and are entitled
to one vote for each share on all matters voted upon by the shareholders.
Holders of Common Shares do not have the right to cumulate their voting power.
LIQUIDATION
In the event of any liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Common Shares
are entitled to receive, on a share for share basis, any assets or funds of the
Corporation which are distributable to its holders of Common Shares upon such
events, subject to the prior rights of creditors of the Corporation and holders
of the Corporation's outstanding Preferred Stock and the 10% Cumulative
Preferred Stock.
SHAREHOLDER RIGHTS PLAN
In August 1989, the Corporation's Board of Directors declared a dividend
consisting of Rights to Purchase Common Shares ("Rights"). One of the Rights
was distributed with respect to each Common Share outstanding on September 12,
1989. Rights have been and will continue to be issued in respect to all Common
Shares that are issued after September 12, 1989 but before the earlier of the
expiration or redemption of the Rights or the occurrence of a Triggering Event
(as defined below), or upon the exercise of any employee stock option granted
prior to a Triggering Event. The description and terms of the Rights are set
forth in the Rights Agreement, dated as of August 25, 1989, between the
Corporation and First Chicago Trust Company of New York, as Rights Agent, as
amended by the First Amendment to Rights Agreement, dated as of February 21,
1991, between the Corporation and the First Chicago Trust Company of New York,
as Rights Agent, a Second Amendment to Rights Agreement, dated as of September
12, 1991, between the Corporation and First Chicago Trust Company of New York,
as Rights Agent, a letter of resignation of First Chicago Trust Company of New
York, dated June 26, 1992, a letter of the Corporation, dated June 26, 1992, to
Ameritrust Texas National Association (now Society National Bank), and a Third
Amendment to Rights Agreement, dated as of October 1, 1993, between the
Corporation and Society National Bank, as Rights Agent (such documents being
hereinafter collectively referred to as "Rights Agreement" which is filed as an
exhibit to the Registration Statement). The Rights are designed to protect the
interests of the Corporation and its shareholders against coercive takeover
tactics. The purpose of the Rights Agreement is to encourage potential
acquirors to negotiate with the Corporation's Board of Directors prior to
attempting a takeover and to give the Board leverage in negotiating on behalf
of all shareholders the terms of any proposed takeover. The Rights Agreement
may, but is not intended to, deter takeover proposals.
Each of the Rights initially represents the right to purchase one Common
Share for $65 (the "Purchase Price"). The Rights will become exercisable 20
days after the earlier of (1) the commencement of a tender offer or exchange
offer that would result in a person or group becoming an Acquiring Person (as
defined below), or (2) a public announcement that a person or group has become
the beneficial owner of 15% or more of the outstanding Common Shares (such
person or group being an "Acquiring Person").
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Until the Rights become exercisable, they will trade with the Common Shares,
and any transfer of Common Shares will also constitute a transfer of the
associated Rights. When the Rights become exercisable, they will begin to trade
separate and apart from the Common Shares. At that time, separate certificates
representing the Rights will be mailed to holders.
Twenty days after certain events occur ("Flip-in Events"), each of the Rights
will become the right to purchase one Common Share for the then par value per
share (now $1.00 per share), and the Rights beneficially owned by an Acquiring
Person will become void. The Flip-in Events are (1) the beneficial ownership by
a person or group of 15% or more of the outstanding Common Shares, unless the
Common Shares are acquired in a tender or exchange offer for all of the Common
Shares at a price and on other terms approved in advance by the Corporation's
Board of Directors, (2) certain self-dealing transactions between the
Corporation and an Acquiring Person, and (3) a reclassification or
recapitalization of the Corporation that has the effect of increasing by more
than 1% the percentage of the Common Shares owned by an Acquiring Person.
If, after a person or group becomes an Acquiring Person, the Corporation is
acquired in a merger or other business combination or 50% or more of its assets
or earning power is sold, each of the Rights will "flip-over" and become the
right to purchase common shares of the acquiror (a "Flip-over Event"). The
holder (other than the Acquiring Person) of each Right would, upon the
occurrence of a Flip-over Event, be entitled to purchase for the then par value
of a Common Share (now $1.00) the number of common shares of the acquiror
having a market price equal to the market price of a Common Share.
The Purchase Price and/or the number of Common Shares (or common shares of an
acquiror) to be purchased upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution in the event the Corporation: (1)
declares a dividend on the Common Shares payable in Common Shares, (2)
subdivides or combines the outstanding Common Shares, (3) issues any shares
other than Common Shares in a reclassification of the Common Shares or (4)
makes a distribution to all holders of Common Shares, of debt securities,
subscription rights, warrants, or other assets (except regular cash dividends).
With certain exceptions, no adjustment will be required until a cumulative
adjustment of at least 1% is required. The Corporation is not required to issue
fractional shares and, instead, may make a cash payment based on the market
price of the Common Shares.
The Corporation's Board of Directors may redeem the Rights for 1/2c each (the
"Redemption Price") at any time before a "Triggering Event" (which is defined
as the occurrence of a Flip-over Event or the 20th day after a Flip-in Event).
However, the Rights may not be redeemed while there exists an Acquiring Person
unless (1) Continuing Directors, as defined below, constitute a majority of the
Board of Directors and (2) a majority of the Continuing Directors approves the
redemption. "Continuing Directors" are defined as directors who were in office
prior to a person or group becoming an Acquiring Person or whose election to
office was recommended by a majority of the Continuing Directors and who are
not affiliated with the Acquiring Person. The Rights will expire on September
12, 1999, unless they are redeemed before that date.
Until the Rights are exercised, the holders of the Rights, as such, will have
no rights as shareholders of the Corporation, including the right to vote or
receive dividends. Upon exercise of the Rights, the holder of the Common Share
received upon the exercise thereof will be entitled to all the rights of any
other holder of Common Shares.
The provisions of the Rights Agreement may be amended by the Corporation's
Board of Directors to cure any ambiguity or correct any defect or inconsistency
or, prior to a Triggering Event, to make other changes that the Board of
Directors deems to be desirable and not adverse to the interests of the
Corporation and its shareholders.
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DESCRIPTION OF CAPITAL SECURITIES
The following description of Capital Securities is included in this
Prospectus because a Prospectus Supplement may provide that Capital Securities
will be issuable upon conversion at the option of the Corporation of a series
of Subordinated Debt Securities or Preferred Stock. Whenever Capital Securities
are issued upon conversion of Subordinated Debt Securities, the Corporation
will be obligated to deliver Capital Securities with a Market Value (as defined
below) equal to the principal amount of such Subordinated Debt Securities. In
addition, the Corporation will unconditionally undertake to sell the Capital
Securities in a sale (the "Secondary Offering") on behalf of any holders who
elect to receive cash for the Capital Securities in which event the Corporation
will bear all expenses of the Secondary Offering, including underwriting
discounts and commissions. There can be no assurance, however, that there will
be a market for the Capital Securities when issued or at any time thereafter.
If the Corporation fails to deliver any Capital Securities when required to be
delivered, the Trustee may institute judicial proceedings for (i) specific
performance, (ii) money damages equal to the principal amount of the
Subordinated Debt Securities for which Capital Securities were to be converted
or (iii) any other proper remedy. If the Corporation fails to effect the
Secondary Offering, it will deliver to the holders Capital Securities and not
cash, upon exchange of the Subordinated Debt Securities. In such event, the
Corporation will have no specifically enforceable obligation to effect the
Secondary Offering, but will not be relieved of any liability for money damages
it would have for breach of its obligation to effect a Secondary Offering of
sufficient amounts of Capital Securities. The "Market Value" of any Capital
Securities means their sale price in the Secondary Offering. If the Corporation
does not effect the Secondary Offering, the Market Value of such Capital
Securities shall be their fair value when exchanged as determined by three
independent nationally recognized investment banking firms selected by the
Corporation.
Whenever Preferred Stock is convertible at the option of the Corporation into
Capital Securities, the Corporation will be obligated to deliver Capital
Securities in an amount either based upon a conversion price or with a required
conversion value. The conversion value will be determined by then market
prices, by an auction or bidding procedure or by such other method as set forth
in the Applicable Prospectus Supplement.
The staff of the Commission has advised that Rules 13e-4 and 14e-1 of the
Commission's rules and regulations relating to tender offers by issuers, as
currently in effect and interpreted, would be applicable to the conversion of
Capital Securities for Subordinated Debt Securities of any series and the
Secondary Offering. If, at the time of the conversion of Capital Securities for
Subordinated Debt Securities of any series and the Secondary Offering, Rule
13e-4 or Rule 14e-1 (or any successor rule or rules) applies to such
transactions, the Corporation will comply with such rule (or any successor rule
or rules) and will afford holders of such Subordinated Securities all rights
and will make all filings required by such rule (or successor rule or rules).
Rule 13e-4 and Rule 14e-1 may also be deemed to apply to Preferred Stock that
is convertible at the option of the Corporation.
The Capital Securities may consist of Common Shares or Preferred Stock. All
Capital Securities which will be issuable upon conversion of Subordinated Debt
Securities or Preferred Stock will, upon issuance, be duly authorized, validly
issued and, if applicable, fully paid and non-assessable.
Any shares of Preferred Stock to be so issued will have such designations,
preferences, dividend, and other rights, qualifications, limitations, and
restrictions as may be determined by the Corporation and approved by the Board
of Directors.
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<PAGE>
DESCRIPTION OF SECURITIES WARRANTS
The Corporation may issue, separately or together with any Debt Securities,
Preferred Stock, Common Shares, or Depositary Shares, Securities Warrants for
the purchase of other Debt Securities, Preferred Stock, Common Shares, or
Depositary Shares (collectively, the "Underlying Securities"). The Securities
Warrants will be issued under a warrant agreement (a "Securities Warrant
Agreement") to be entered into between the Corporation and a bank or trust
company, as warrant agent (the "Securities Warrant Agent"), all as set forth in
the Applicable Prospectus Supplement relating to the particular issue of
Securities Warrants. The form of Securities Warrant Agreement, including the
form of certificates representing the Securities Warrants ("Securities Warrant
Certificates"), reflecting the alternative provisions to be included in the
Securities Warrant Agreements that will be entered into with respect to
particular offerings of Securities Warrants, is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Securities Warrant Agreement and the Securities Warrant Certificates, which are
filed as exhibits to the Registration Statement, do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Securities Warrant Agreement and the Securities Warrant
Certificates, respectively, including the definitions therein of certain terms.
Wherever defined terms of the Securities Warrant Agreement are referred to, it
is intended that such defined terms shall be incorporated herein by reference.
GENERAL
The Applicable Prospectus Supplement relating to the particular issue of
Securities Warrants offered thereby will describe the terms of the offered
Securities Warrants, the Securities Warrant Agreement relating to the offered
Securities Warrants, and the Securities Warrant Certificates representing the
offered Securities Warrants, including the following where applicable: (1) if
the Securities Warrants are offered for separate consideration, the offering
price and the currency for which Securities Warrants may be purchased; (2) the
title, aggregate principal amount, currency, and terms of the series of Debt
Securities purchasable upon exercise of the Debt Warrants and the price at
which such Debt Securities may be purchased upon such exercise; (3) the title,
number of shares, stated value, and terms (including, without limitation,
liquidation, dividend, conversion, redemption, and voting rights) of the series
of Preferred Stock purchasable upon exercise of Preferred Stock Warrants and
the price at which such number of shares of Preferred Stock of such series may
be purchased upon such exercise; (4) the number of Common Shares purchasable
upon the exercise of Common Share Warrants and the price at which such number
of Common Shares may be purchased upon such exercise; (5) the number of
Depositary Shares purchasable upon the exercise of Depositary Share Warrants,
the terms of the Preferred Stock which the Depositary Shares represent and the
price at which such number of Depositary Shares may be purchased upon such
exercise; (6) the date, if any, on and after which the offered Securities
Warrants and the related Debt Securities, Preferred Stock, Common Shares and/or
Depositary Shares will be separately transferable; (7) the time or times at
which, or period or periods during which, the offered Securities Warrants may
be exercised and the final date on which the offered Securities Warrants may be
exercised (the "Expiration Date"); (8) a discussion of the specific United
States Federal income tax, accounting, and other considerations applicable to
the Securities Warrants; (9) the location where the offered Securities Warrants
represented by the Securities Warrant Certificates may be transferred and
registered; and (10) any other terms of the offered Securities Warrants.
Securities Warrant Certificates will be exchangeable on the terms specified
in the Applicable Prospectus Supplement for new Securities Warrant Certificates
of different denominations evidencing the same aggregate number of Warrants of
the same title, and may be transferred in whole or in part on the terms
specified in the Applicable Prospectus Supplement.
Prospective purchasers of Securities Warrants should be aware that special
U.S. federal income tax, accounting and other considerations may be applicable
to instruments such as Securities Warrants. The Applicable Prospectus
Supplement relating to any issue of Securities Warrants will describe such
considerations.
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EXERCISE OF WARRANTS
Each Securities Warrant will entitle the holder to purchase the principal
amount of or number of Underlying Securities provided for therein, at such
exercise price as shall in each case be set forth in, or be determinable from,
the Applicable Prospectus Supplement relating to the Securities Warrants, by
payment of such exercise price (the "Warrant Price") in full in the currency
and in the manner specified in the Applicable Prospectus Supplement. Securities
Warrants may be exercised at any time at or before 5:00 P.M., New York City
time on the Expiration Date (or such later date to which such Expiration Date
may be extended by the Corporation), and unexercised Securities Warrants will
become void at such time. Securities Warrants may be exercised at the corporate
trust office of the Securities Warrant Agent or any other office indicated in
the Applicable Prospectus Supplement relating to the Securities Warrants.
Upon receipt at the corporate trust office of the Securities Warrant Agent or
any other office indicated in the Applicable Prospectus Supplement of (i)
payment of the Warrant Price and (ii) the form of election to purchase set
forth on the reverse side of the Securities Warrant Certificate properly
completed and duly executed, the Corporation will, as soon as practicable,
issue the Underlying Securities purchasable upon such exercise. If fewer than
all of the Securities Warrants represented by such Securities Warrant
Certificate are exercised, a new Securities Warrant Certificate will be issued
for the remaining number of unexercised Securities Warrants.
MODIFICATIONS
The Warrant Agreement may be supplemented or amended by the Corporation and
the Warrant Agent from time to time, without the approval of any Holder (as
defined in the Warrant Agreement), in order to cure any ambiguity, to correct
or supplement any defective or inconsistent provision contained therein, or to
make any other provision in regard to matters or questions arising thereunder
that the Corporation and the Warrant Agent may deem necessary or desirable and
which will not adversely affect the interests of the Holders.
The Corporation and the Warrant Agent may also modify or amend the Warrant
Agreement and the Securities Warrant Certificates with the consent of the
Holders of not fewer than a majority in number of the then outstanding
unexercised Warrants affected by such modification or amendment, for any
purpose, provided that no such modification or amendment that shortens the
period of time during which the Warrants may be exercised, or otherwise
materially and adversely affects the exercise rights of the Holders or reduces
the percentage of Holders of outstanding Warrants the consent of which is
required for modification or amendment of the Warrant Agreement or the Warrants
may be made without the consent of each Holder affected thereby.
COMMON SHARE WARRANT ADJUSTMENTS
The terms and conditions on which the Warrant Price of and/or the number of
Common Shares covered by a Warrant to purchase Common Shares (a "Common Share
Warrant") are subject to adjustment will be set forth in the Warrant Agreement
and the Applicable Prospectus Supplement. Such terms will include provisions
for adjusting the Warrant Price and/or the number of Common Shares covered by
such Common Share Warrant; the events requiring such adjustment; the events
upon which the Corporation may, in lieu of making such adjustment, make proper
provision so that the holder of such Common Share Warrant, upon exercise
thereof, would be treated as if such holder had exercised such Common Share
Warrant prior to the occurrence of such events; and provisions affecting
exercise in the event of certain events affecting the Common Shares.
MERGER, CONSOLIDATION, SALE, OR OTHER DISPOSITIONS
If at any time there shall be a merger, consolidation, sale, conveyance,
transfer, lease, or other disposition of substantially all of the assets of the
Corporation, then the successor or assuming corporation shall succeed
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to and be substituted for the Corporation in, and the Corporation will be
relieved of any further obligation under, the Warrant Agreement or the
Warrants.
ENFORCEABILITY OF RIGHTS OF HOLDERS
The Warrant Agent will act solely as an agent of the Corporation in acting
under the Warrant Agreement and in connection with any Warrant Certificate. The
Warrant Agent shall have no duty or responsibility in case of any default by
the Corporation in the performance of its covenants or agreements contained in
the Warrant Agreement or in any Warrant Certificate. Each Holder may, without
the consent of the Warrant Agent, enforce by appropriate legal action, on its
own behalf, the Holder's right to exercise its Warrants in the manner provided
in the Warrant Agreement and its Warrant Certificate.
NO RIGHTS AS HOLDERS OF UNDERLYING SECURITIES
Prior to the exercise of any Securities Warrants to purchase Underlying
Securities, holders of such Securities Warrants will not have any of the rights
of holders of the Underlying Securities purchasable upon such exercise,
including, without limitation, the right to receive the payment of principal
of, or premium on, if any, or interest, if any, dividends or distributions of
any kind, if any, on Underlying Securities, the right to enforce any of the
covenants in the Indentures, if applicable, or the right to exercise any voting
rights.
PLAN OF DISTRIBUTION
The Corporation may sell Securities to one or more underwriters for public or
private offering and sale by them or may sell Securities to investors directly
or through agents (which agents may be affiliates of the Corporation) that
solicit or receive offers on behalf of the Corporation or through dealers or
through a combination of any such methods of sale.
The Applicable Prospectus Supplement will set forth the terms of the offering
of the particular series of Securities to which such Applicable Prospectus
Supplement relates, including (i) the name or names of any underwriters or
agents with whom the Corporation has entered into arrangements with respect to
the sale of such series of Securities, (ii) the initial public offering or
purchase price of such series of Securities, (iii) any underwriting discounts,
commissions, and other items constituting underwriters' compensation from the
Corporation and any other discounts, concessions, or commissions allowed or
reallowed or paid by any underwriters to other dealers, (iv) any commissions
paid to any agents, (v) the net proceeds to the Corporation and (vi) the
securities exchanges, if any, on which such series of Securities will be
listed.
Unless otherwise set forth in the Applicable Prospectus Supplement relating
to a particular series of Securities, the obligations of the underwriters to
purchase such series of Securities will be subject to certain conditions
precedent and each of the underwriters with respect to such series of
Securities will be obligated to purchase all of the Securities of such series
allocated to it if any such Securities are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
The Securities may be offered and sold by the Corporation directly or through
agents designated by the Corporation from time to time. Unless otherwise
indicated in the Applicable Prospectus Supplement, each such agent will be
acting on a reasonable efforts basis for the period of its appointment. Any
agent participating in the distribution of Securities may be deemed to be an
"underwriter," as that term is defined in the Securities Act, of the Securities
so offered and sold. The Securities also may be sold to dealers at the
applicable price to the public set forth in the Applicable Prospectus
Supplement relating to a particular series of Securities who later resell to
investors. Such dealers may be deemed to be "underwriters" within the meaning
of the Securities Act.
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Underwriters, dealers, and agents may be entitled, under agreements entered
into with the Corporation, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act.
The Corporation may also issue contracts under which the counterparty may be
required to purchase Debt Securities, Preferred Stock, or Depositary Shares.
Such contracts would be issued with Debt Securities, Preferred Stock, or
Depositary Shares and/or Securities Warrants in amounts, at prices and on terms
to be set forth in a Prospectus Supplement.
If so indicated in the Applicable Prospectus Supplement, the Corporation will
authorize underwriters, dealers, or agents to solicit offers by certain
institutions to purchase Securities of a series from the Corporation at the
public offering price set forth in the Prospectus Supplement pursuant to
delayed delivery contracts (each a "Contract") providing for payment and
delivery at a future date. Each Contract will be subject only to those
conditions set forth in the Applicable Prospectus Supplement and the Applicable
Prospectus Supplement will set forth the commission payable for solicitation of
such offers.
Any of the underwriters, dealers, and agents of the Corporation and their
associates may be customers of, engage in transactions with, and perform
services for the Corporation in the ordinary course of business.
The place and time of delivery of the Securities will be set forth in the
Applicable Prospectus Supplement.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Corporation, as shall be indicated in the Applicable Prospectus Supplement, by
either the General Counsel or a Senior Managing Counsel to the Corporation or
by Thompson, Hine and Flory, 1100 National City Bank Building, Cleveland, Ohio
44114, and for the Underwriters by Shearman & Sterling, 599 Lexington Avenue,
New York, New York 10022. Shearman & Sterling will rely as to all matters of
Ohio law on the opinion rendered on behalf of the Corporation. The General
Counsel or a Senior Managing Counsel to the Corporation or Thompson, Hine and
Flory, as the case may be, will rely as to all matters of New York law on the
opinion of Shearman & Sterling. As of May 4, 1994, attorneys at Thompson, Hine
and Flory owned an aggregate of approximately 62,412 Common Shares. In the
event that either the General Counsel or a Senior Managing Counsel to the
Corporation renders the opinion on behalf of the Corporation, the aggregate
number of shares owned by such General Counsel or Senior Managing Counsel will
be set forth in the Applicable Prospectus Supplement.
EXPERTS
The following consolidated financial statements have been audited by Ernst &
Young, independent auditors, as set forth in their reports thereon, included
therein and incorporated herein by reference in reliance upon such reports
given upon the authority of such firms as experts in accounting and auditing:
(a) consolidated financial statements for the year ended December 31, 1993
of KeyCorp, as restated to give effect to the March 1, 1994 merger of
old KeyCorp and Society Corporation, which was accounted for as a
pooling of interests, such financial statements are included in and
incorporated by reference into the Corporation's Current Report on Form
8-K filed with the Commission on April 20, 1994;
(b) consolidated financial statements for the year ended December 31, 1993
of old KeyCorp (the combining company), which on March 1, 1994 merged
with Society Corporation, subsequently renamed KeyCorp, included in the
Corporation's Current Report on Form 8-K filed with the Commission on
March 16, 1994; and
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(c) supplemental consolidated financial statements for the year ended
December 31, 1993 of KeyCorp (the combined entity) included in
KeyCorp's Annual Report on Form 10-K filed with the Securities and
Exchange Commission. The supplemental consolidated financial statements
became the historical financial statements of KeyCorp upon the filing
of the Corporation's Current Report on Form 8-K with the Commission on
April 20, 1994.
In addition, the consolidated financial statements for the year ended
December 31, 1993 of Society included in KeyCorp's Annual Report on Form 10-K
filed with the Securities and Exchange Commission have been audited by Ernst &
Young, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing. Society
Corporation's consolidated financial statements subsequently have been restated
to give effect to the March 1, 1994 merger of old KeyCorp and Society.
With respect to the unaudited consolidated interim financial information for
the three-month periods ended March 31, 1994 and March 31, 1993, incorporated
by reference in this Prospectus, Ernst & Young have reported that they have
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report, included in
KeyCorp's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994,
and incorporated herein by reference, states that they did not audit and they
do not express an opinion on that interim financial information. Accordingly,
the degree of reliance on their report on such information should be restricted
in light of the limited nature of the review procedures applied. The
independent auditors are not subject to the liability provisions of Section 11
of the Securities Act of 1933, as amended, for their report on the unaudited
interim financial information because that report is not a "report" or a "part"
of the Registration Statement prepared or certified by the auditors within the
meaning of Sections 7 and 11 of the Act.
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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 THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Selected Consolidated Financial Data...................................... S-2
Description of Notes...................................................... S-3
Foreign Currency Risks.................................................... S-19
United States Federal Income Taxation..................................... S-20
Plan of Distribution...................................................... S-28
Validity of the Notes..................................................... S-29
PROSPECTUS
Available information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Corporation........................................................... 4
Consolidated Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends..................... 6
Supervision and Regulation................................................ 6
Use of Proceeds........................................................... 12
Description of Debt Securities............................................ 12
Description of Preferred Stock............................................ 27
Description of Depositary Shares.......................................... 31
Description of Common Shares.............................................. 36
Description of Capital Securities......................................... 39
Description of Securities Warrants........................................ 40
Plan of Distribution...................................................... 42
Legal Opinions............................................................ 43
Experts................................................................... 43
</TABLE>
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$750,000,000
KEYCORP
SENIOR MEDIUM-TERM NOTES, SERIES B
SUBORDINATED MEDIUM-TERM NOTES,
SERIES A
Due Nine Months or More From Date of Issue
---------------
[LOGO OF KEYCORP APPEARS HERE]
---------------
CS First Boston
Goldman, Sachs & Co.
Kidder, Peabody & Co.
Incorporated
Lehman Brothers
J.P. Morgan Securities Inc.
Salomon Brothers Inc
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses in connection with the issuance and distribution of the
securities being registered other than underwriting compensation are as
follows:
<TABLE>
<S> <C>
SEC Registration Fee............................................ $ 55,380
Fees of Rating Agencies......................................... 150,000
Printing and Engraving Expenses................................. 25,000
Legal Fees and Expenses......................................... 225,000
Accounting Fees and Expenses.................................... 20,000
Fees of Indenture Trustees ..................................... 8,000
Blue Sky Fees and Expenses...................................... 25,000
Miscellaneous................................................... 26,620
--------
Total......................................................... $535,000
========
</TABLE>
- --------
All the above amounts except the SEC registration fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Ohio law, Ohio corporations are authorized to indemnify directors,
officers, employees, and agents within prescribed limits and must indemnify
them under certain circumstances. Ohio law does not provide statutory
authorization for a corporation to indemnify directors, officers, employees,
and agents for settlements, fines, or judgments in the context of derivative
suits. However, it provides that directors (but not officers, employees, and
agents) are entitled to mandatory advancement of expenses, including attorneys'
fees, incurred in defending any action, including derivative actions, brought
against the director, provided the director agrees to cooperate with the
corporation concerning the matter and to repay the amount advanced if it is
proved by clear and convincing evidence that his act or failure to act was done
with deliberate intent to cause injury to the corporation or with reckless
disregard for the corporation's best interests.
Ohio law does not authorize payment of judgments to a director, officer,
employee, or agent after a finding of negligence or misconduct in a derivative
suit absent a court order. Indemnification is required, however, to the extent
such person succeeds on the merits. In all other cases, if a director, officer,
employee, or agent acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation,
indemnification is discretionary except as otherwise provided by a
corporation's articles, code of regulations, or by contract except with respect
to the advancement of expenses of directors.
Under Ohio law, a director is not liable for monetary damages unless it is
proved by clear and convincing evidence that his action or failure to act was
undertaken with deliberate intent to cause injury to the corporation or with
reckless disregard for the best interests of the corporation. There is,
however, no comparable provision limiting the liability of officers, employees,
or agents of a corporation. The statutory right to indemnification is not
exclusive in Ohio, and Ohio corporations may, among other things, procure
insurance for such persons.
The KeyCorp Regulations provide that KeyCorp shall indemnify to the fullest
extent permitted by law any person made or threatened to be made a party to any
action, suit, or proceeding by reason of the fact that he is or was a director,
officer, or employee of KeyCorp or of any other bank, corporation, partnership,
trust, or other enterprise for which he was serving as a director, officer, or
employee at the request of KeyCorp.
II-1
<PAGE>
Reference is made to the Form of Underwriting Agreement and the Distribution
Agreement for additional provisions for the indemnification of directors,
controlling persons, and certain officers of the Registrant by the
underwriters. The Forms of Underwriting Agreement and Distribution Agreement
are exhibits to the Registration Statement.
Except as stated above, neither the Amended and Restated Articles of
Incorporation of KeyCorp nor any other contract or arrangement to which KeyCorp
is a party provides for such indemnification. Under the terms of KeyCorp's
directors' and officers' liability and company reimbursement insurance policy,
directors and officers of KeyCorp are insured against certain liabilities,
including liabilities arising under the Securities Act.
KeyCorp is a party to Employment Agreements with, respectively, Victor J.
Riley, Jr., Robert W. Gillespie, and Roger Noall, and KeyCorp is party to
Change of Control Agreements with certain other executive officers (the
provisions of which became effective as a result of the merger of old KeyCorp
with and into Society), pursuant to which KeyCorp has agreed to indemnify the
officer, to the full extent permitted or authorized by Ohio law, if the officer
is made or threatened to be made a party to any action, suit, or proceeding by
reason of the officer's serving as an employee, officer, or director of KeyCorp
and/or any of its subsidiaries or any other company at the request of KeyCorp
or any of its subsidiaries, and KeyCorp has agreed to advance expenses incurred
by the officer in defending any such action, suit, or proceeding.
ITEM 16. EXHIBITS.
See Index to Exhibits.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) to remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby further undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
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 the
registration
II-2
<PAGE>
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby further undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act ("Act") in accordance
with the rules and regulations prescribed by the Commission under section
305(b)(2) of the Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
the 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 the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the 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, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 NO. 2 TO
FORM S-3 REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF CLEVELAND, STATE OF OHIO, ON THIS
TENTH DAY OF JUNE, 1994.
KeyCorp
By /s/ Carter B. Chase
-----------------------------------
CARTER B. CHASE
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL, AND SECRETARY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO FORM S-3 REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED.
TITLE AND DESCRIPTION
---------------------
Victor J. Riley, Jr., Chairman of the Board, Chief Executive Officer, and
Director (Principal Executive Officer); James W. Wert, Chief Financial
Officer (Principal Financial Officer); Lee G. Irving, Executive Vice
President, Treasurer, and Chief Accounting Officer (Principal Accounting
Officer); H. Douglas Barclay, Director; William G. Bares, Director;
Albert C. Bersticker, Director; Thomas A. Commes, Director;
John C. Dimmer, Director; Lucie J. Fjeldstad, Director;
Henry S. Hemingway, Director; Charles R. Hogan, Director;
Lawrence A. Leser, Director; Steven A. Minter, Director;
M. Thomas Moore, Director; John C. Morley, Director;
Richard W. Pogue, Director; Robert A. Schumacher, Director;
Dennis W. Sullivan, Director; Peter G. Ten Eyck, II, Director; and
Nancy B. Veeder, Director.
By /s/ Carter B. Chase
-----------------------------------
CARTER B. CHASE
ATTORNEY-IN-FACT
June 10, 1994
II-4
<PAGE>
KEYCORP
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
FORM S-3
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
(1)(a) Form of Underwriting Agreement.
(1)(b) Form of Distribution Agreement.
(4)(a) Amended and Restated Articles of Incorporation of KeyCorp.
Incorporated herein by reference to Exhibit 7 to Form 8-A/A filed
on February 25, 1994.
(4)(b) Regulations of KeyCorp. Incorporated herein by reference to
Exhibit 6 to Form 8-A/A filed on February 25, 1994.
(4)(c) Form of Senior Indenture, between KeyCorp and Bankers Trust
Company, as Trustee.**
(4)(d) Form of Subordinated Indenture between KeyCorp and Bankers Trust
Company, as Trustee.**
(4)(e) Form of Senior Debt Securities.**
(4)(f) Form of Subordinated Debt Securities.**
(4)(g) Form of Warrant Agreement.**
(4)(h) Form of Warrant Certificate.**
(4)(i) Form of Deposit Agreement.**
(4)(j) Form of Depositary Receipt.**
(4)(k) Rights Agreement, dated as of August 25, 1989, between Society
Corporation (renamed KeyCorp on March 1, 1994) and First Chicago
Trust Company of New York, as Rights Agent, including as Exhibit
A thereto the form of Rights Certificate. Incorporated herein by
reference to Exhibit 1 to Form 8-A filed on August 29, 1989.
(4)(l) Amendment No. 1 to Rights Agreement, dated February 21, 1991,
between Society Corporation (renamed KeyCorp on March 1, 1994)
and First Chicago Trust Company of New York, as Rights Agent.
Incorporated herein by reference to Exhibit 1 to Form 8-A filed
on February 28, 1991.
(4)(m) Amendment No. 2 to Rights Agreement, dated September 12, 1991,
between Society Corporation (renamed KeyCorp on March 1, 1994)
and First Chicago Trust Company of New York, as Rights Agent.
Incorporated herein by reference to Exhibit 4 to Schedule 13D
filed on September 23, 1991.
(4)(n) Amendment No. 3 to Rights Agreement, dated October 1, 1993,
between Society Corporation (renamed KeyCorp on March 1, 1994)
and Society National Bank, as Rights Agent. Incorporated herein
by reference to Exhibit 4 to Schedule 13D filed on October 12,
1993.
(5) Opinion of Thompson, Hine and Flory as to the legality of the
securities to be registered.**
(12) Computation of KeyCorp's Consolidated Ratios of Earnings to Fixed
Charges and Combined Fixed Charges and Preferred Stock Dividends.
(15) Letter Regarding Unaudited Interim Financial Information.
(23)(a) Consent of Ernst & Young.
(23)(b) Consent of Thompson, Hine and Flory (included as part of Exhibit
(5)).**
(23)(c) Consent of Thompson, Hine and Flory.
(24)(a) Powers of Attorney.*
(24)(b) Certified Resolutions of Board of Directors of KeyCorp.*
(25) Form T-1 Statement of Eligibility and Qualifications under the
Trust Indenture Act of 1939 of Bankers Trust Company, as
Trustee.*
</TABLE>
- --------
* Previously filed with the SEC as Exhibits with the same respective numbers
to KeyCorp's Registration Statement on Form S-3, filed with the SEC on May
16, 1994.
** Previously filed with the SEC as Exhibits with the same respective numbers
to Amendment No. 1 to KeyCorp's Registration Statement on Form S-3, filed
with the SEC on May 19, 1994.
<PAGE>
KeyCorp
(an Ohio corporation)
Senior Debt
Securities, Subordinated
Debt Securities, Preferred Stock,
Depositary Shares representing Preferred
Stock and Warrants to Purchase Debt Securities,
Preferred Stock, Depositary Shares or Common Stock
UNDERWRITING AGREEMENT STANDARD PROVISIONS
------------------------------------------
From time to time, KeyCorp, an Ohio corporation (the "Company"), may
enter into one or more Terms Agreements in the form of Exhibit A hereto (each a
"Terms Agreement") that provide for the sale of designated securities to the
several underwriters named therein. The standard provisions set forth herein
may be incorporated by reference in any such Terms Agreement. The Terms
Agreement including the provisions incorporated therein by reference, is herein
referred to as "this Agreement". Unless otherwise defined herein, terms defined
in the Terms Agreement are used herein as therein defined.
1. Description of Securities. The Company proposes to issue and sell
-------------------------
from time to time, either together or separately, certain of its (i) senior debt
securities (the "Senior Debt Securities") and/or (ii) subordinated debt
securities (the "Subordinated Debt Securities", and together with the Senior
Debt Securities, the "Debt Securities"), and/or (iii) preferred stock (the
"Preferred Stock"), and/or (iv) depositary shares which represent fractional
interests in the Preferred Stock (the "Depositary Shares") and/or (v) warrants
(the "Warrants") to purchase Debt Securities, Preferred Stock, Depositary Shares
or the Company's Common Shares, with a par value of $1 each (the "Common
Stock"), in one or more offerings on terms determined at the time of sale and
set forth in a Terms Agreement. The Subordinated Debt Securities may be
convertible into Capital Securities (as defined below) of the Company and the
Preferred Stock may be convertible into shares of Common Stock, Debt Securities
or any class or series of Capital Securities in each case as set forth in the
applicable Terms Agreement relating thereto. As used herein, "Capital
Securities" means any securities issued by the Company which consist of (i)
Common Stock, (ii) perpetual preferred stock or (iii) other capital securities
of the Company permitted by the Company's
<PAGE>
2
primary federal banking regulator. Capital Securities may have such terms,
rights and preferences as may be determined by the Company.
The Senior Debt Securities are to be issued under an Indenture dated
as of June __, 1994, as amended or supplemented (the "Senior Indenture"),
between the Company and Bankers Trust Company, as trustee (the "Senior
Trustee"). The Subordinated Debt Securities are to be issued under an Indenture
dated as of June __, 1994, as amended or supplemented (the "Subordinated
Indenture"), between the Company and Bankers Trust Company, as trustee (the
"Subordinated Trustee", and together with the Senior Trustee, the "Trustees").
The Senior Indenture and the Subordinated Indenture are collectively referred to
herein as the "Indentures". The Senior Debt Securities and the Subordinated
Debt Securities may have varying titles, maturities, rates and times of payment
of interest, if any, selling prices, redemption terms, if any, conversion terms,
if any, and other specific terms as set forth in the applicable Terms Agreement
relating thereto.
The Warrants are to be issued under warrant agreements (each a
"Warrant Agreement"), between the Company and a bank or trust company, as
warrant agent (the "Warrant Agent"). The Warrants may have varying titles,
expiration dates, selling prices, redemption terms, if any, adjustment terms, if
any, and other specific terms as set forth in the applicable Terms Agreement
relating thereto.
Each issue of Preferred Stock may vary as to the specific number of
shares, title, stated value and liquidation preference, issuance price, dividend
rate or rates (or method of calculation), dividend payment dates, redemption or
sinking fund requirements, conversion provisions and any other variable terms as
set forth in the applicable Terms Agreement relating to such Preferred Stock.
If the shares of Preferred Stock are to be offered in the form of Depositary
Shares, the Preferred Stock will, when issued, be deposited by the Company
against delivery of depositary receipts (the "Depositary Receipts") to be issued
under a deposit agreement (the "Deposit Agreement"), to be entered into among
the Company, a depositary institution (the "Depositary") and the holders from
time to time of the Depositary Receipts issued thereunder. The Depositary
Receipts will evidence the Depositary Shares and each Depositary Share will
represent a fraction of a share of Preferred Stock. The Preferred Stock,
together, if applicable, with the Depositary Shares is hereinafter referred to
as the "Shares".
The Debt Securities, Warrants and Shares to be issued and sold as
specified in the applicable Terms Agreement, shall collectively be referred to
herein as the "Offered Securities". The Company may also grant to the
Underwriters an option to purchase additional Offered Securities to cover over-
allotments, if any, as specified in the applicable Terms Agreement (the "Option
Securities"). The Offered Securities and Option Securities, if any, shall
collectively be referred to as the "Securities". As used herein, unless the
context otherwise requires, the term "Underwriters" shall mean the firm or firms
specified as Underwriter or Underwriters in the applicable Terms Agreement
relating to the Securities and the term "you" shall mean the Underwriter or
Underwriters, if no underwriting syndicate
<PAGE>
3
is purchasing the Securities, or the representative or representatives of the
Underwriters specified in the applicable Terms Agreement (the
"Representatives"), if an underwriting syndicate is purchasing the Securities,
as specified in the applicable Terms Agreement.
The Debt Securities, Preferred Stock, Depositary Shares and Warrants
may be sold either separately or as units (the "Units").
Whenever the Company determines to make an offering of Securities, the
Company will enter into a Terms Agreement providing for the sale of the
applicable Securities to, and the purchase and offering thereof by, the
Underwriters. The Terms Agreement relating to the Securities shall specify the
type of Securities to be issued, the names of the Underwriters participating in
such offering (subject to substitution as provided in Section 9 hereof), the
number of Offered Securities which each such Underwriter severally agrees to
purchase, the price at which the Securities are to be purchased by the
Underwriters from the Company, the initial public offering price of the
Securities, the time and place of delivery and payment and other specific terms.
The Terms Agreement may take the form of an exchange of any standard form of
written telecommunication between you and the Company. Each offering of
Securities will be governed by this Agreement and shall inure to the benefit of
and be binding upon the Company and each Underwriter participating in the
offering of such Securities.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No. 33-
53643), including a prospectus, relating to the Securities and the offering
thereof from time to time in accordance with Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act" and the rules and regulations thereto
being referred to as the "Securities Act Regulations"), which registration
statement also constitutes post-effective amendment no. 1 to registration
statement no. 33-51652 relating to the Company's debt securities and post-
effective amendment no. 1 to registration statement no. 33-39734 relating to the
Company's Preferred Stock and Depositary Shares. Such registration statement
and such post-effective amendments, as amended, have been declared effective by
the Commission. As provided in Section 4(a), a prospectus supplement reflecting
the terms of the Securities, the terms of the offering thereof and the other
matters set forth therein has been prepared and will be filed pursuant to Rule
424 under the Securities Act. Such prospectus supplement, in the form first
filed after the date of the applicable Terms Agreement pursuant to Rule 424, is
herein referred to as the "Prospectus Supplement". Such registration statement
and such post-effective amendments, as amended at the date of the applicable
Terms Agreement, including the exhibits thereto and the documents incorporated
by reference therein, are herein called the "Registration Statement", and the
basic prospectus included therein relating to all offerings of securities under
the Registration Statement, as supplemented by the Prospectus Supplement, is
herein called the "Prospectus", except that, if such basic prospectus is amended
or supplemented on or prior to the date on which the Prospectus Supplement is
first filed pursuant to Rule 424, the term "Prospectus" shall refer to the basic
prospectus as so amended or supplemented and as supplemented by the Prospectus
Supplement, in either case
<PAGE>
4
including the documents filed by the Company with the Commission pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference therein. Any preliminary prospectus supplement
included in such Registration Statement or filed with the Commission pursuant
to Rule 424(a) of the Securities Act Regulations is herein called a
"Preliminary Prospectus".
2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, each Representative and each
Underwriter that:
(a) The Registration Statement has been declared effective by the
Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of the
Company, threatened by the Commission.
(b) The Company meets the requirements for use of Form S-3 under the
Securities Act and the Registration Statement and the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission thereunder; each part of the Registration Statement and
any amendment or supplement thereto, as of the date such part became or
becomes effective, did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; each
Prospectus, and any amendment or supplement thereto, as of the date
thereof, did not or will not include an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
provided, however, that the Company makes no representations or warranties
as to (i) that part of the Registration Statement which shall constitute
the Statement of Eligibility (Form T-1) under the Trust Indenture Act of
the Trustee or (ii) the information contained in or omitted from the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for use in connection with the
preparation of the Registration Statement and such Prospectus.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, comply, or will comply, as the case may be, in all material respects to
the requirements of the Exchange Act and, if applicable, the Securities Act
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
<PAGE>
5
Prospectus, or any 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 Exchange
Act and, as applicable, the Securities Act 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.
(d) (i) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Ohio, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus, and is duly registered as a
bank holding company under the Bank Holding Company Act of 1956, as
amended, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure
to be so qualified or in good standing, considering all such cases in the
aggregate, does not involve a material risk to the business, properties,
financial position or results of operations of the Company and its
subsidiaries; (ii) each of its national bank subsidiaries is a duly
organized and validly existing national banking association under the laws
of the United States, continues to hold a valid certificate to do business
as such and has full power and authority to conduct its business as such;
each of its state-chartered bank subsidiaries is a duly organized and
validly existing state-chartered bank under the laws of the jurisdiction of
its organization, continues to hold a valid certificate to do business as
such and has full power and authority to conduct its business as such; each
of its federal savings association subsidiaries is a duly organized and
validly existing federal savings association under the laws of the United
States, continues to hold a valid certificate to do business as such and
has full power and authority to conduct its business as such; each of its
other significant subsidiaries, as defined in Regulation S-X (the
"Significant Subsidiaries") is duly organized and validly existing under
the laws of the jurisdiction of its organization with corporate power and
authority under such laws to conduct its business; and (iii) all of the
outstanding shares of capital stock of each such subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable (except,
with respect to any subsidiary that is a national bank, as provided by
Section 55 of Title 12 of the United States Code; and, with respect to any
subsidiary that is a bank incorporated under state law, except as provided
by the laws of any such states and (except as otherwise stated in the
Registration Statement) are owned beneficially by the Company subject to no
security interest, pledge, lien, charge or other encumbrance or adverse
claim.
(e) The execution and delivery of this Agreement, the Indentures, the
Warrant Agreement, and the Deposit Agreement, if any, and the consummation
of the transactions contemplated herein and therein, have been duly
authorized by all necessary corporate action and when executed by the
Company and the other parties thereto will not result in any breach of any
of the terms, conditions or provisions of,
<PAGE>
6
or constitute a default under, or result in the creation or imposition of
any security interest, lien, charge or encumbrance upon any property or
assets of the Company or its subsidiaries, pursuant to any indenture,
loan agreement, contract or other material agreement or instrument to
which the Company or its subsidiaries is a party or by which the Company
may be bound or to which any of the property or assets of the Company or
its subsidiaries is subject, nor will such action result in any violation
of the provisions of the Amended and Restated Articles of Incorporation
or the Regulations of the Company or its subsidiaries or any applicable
statute, rule or regulation or, to the best of its knowledge, any order
of any court or governmental agency or body having jurisdiction over the
Company, its subsidiaries or any of their respective properties.
(f) If the Securities include Debt Securities, such Debt Securities
shall, on the date of the Terms Agreement relating to such Securities, be
duly authorized and, when such Debt Securities are duly executed,
authenticated and delivered in the manner provided for in the applicable
Indenture and issued and paid for in accordance with this Agreement and the
applicable Terms Agreement, such Debt Securities will constitute legal,
valid and binding obligations of the Company entitled to the benefits of
the applicable Indenture and enforceable against the Company in accordance
with their terms subject, as to enforcement, to bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and to general equity principles; and, if the
Securities include Subordinated Debt Securities that are convertible into
Capital Securities, then such Subordinated Debt Securities shall be
convertible into Capital Securities in accordance with their terms and the
terms of the Subordinated Indenture.
(g) If the Securities include Preferred Stock, such shares of
Preferred Stock shall, on the date of the Terms Agreement relating to such
Securities, be duly authorized and, when such shares of Preferred Stock are
duly executed and delivered and issued and paid for in accordance with this
Agreement and the applicable Terms Agreement, such shares of Preferred
Stock will have been validly issued, fully paid and non-assessable; no
holder thereof will be subject to personal liability by reason of being
such a holder; such shares of Preferred Stock will not be subject to the
preemptive rights of any stockholder of the Company; and all corporate
action required to be taken for the authorization, issue and sale of such
shares of Preferred Stock has been, or at the Closing Date will be, validly
and sufficiently taken; and, if the Securities include shares of Preferred
Stock that are to be represented by Depositary Shares, then, upon deposit
by the Company of such shares of Preferred Stock with the Depositary
pursuant to the Deposit Agreement and the execution by the Depositary of
the Depositary Receipts evidencing the Depositary Shares, such Depositary
Shares shall represent legal and valid interests in such shares of
Preferred Stock; and, if the Securities include shares of Preferred Stock
that are convertible into Capital Securities, Debt Securities or other
preferred stock, then such shares of
<PAGE>
7
Preferred Stock shall be convertible into Capital Securities, Debt
Securities or other preferred stock in accordance with their terms and
the terms of the Certificate of Amendment establishing a series of a
class of stock relating to such shares of Preferred Stock (the
"Certificate of Amendment").
(h) If the Securities include Warrants, such Warrants shall, on the
date of the Terms Agreement relating to such Securities, be duly authorized
and, when such Warrants are duly executed, countersigned and delivered in
the manner provided for in the Warrant Agreement and issued and paid for in
accordance with this Agreement and the applicable Terms Agreement, such
Warrants will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Warrant Agreement and enforceable
against the Company in accordance with their terms subject, as to
enforcement, to bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally and to
general equity principles; and the Warrants shall be exercisable for Debt
Securities or Preferred Stock in accordance with their terms and the terms
of the Warrant Agreement.
(i) If the Securities include Preferred Stock convertible into Debt
Securities or Debt Securities, the Indentures have been duly authorized by
the Company and qualified under the Trust Indenture Act, will be
substantially in the forms filed as exhibits to the Registration Statement
and, when duly executed and delivered by the Company and the Trustees, will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms subject, as to
enforcement, to bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally and to
general equity principles; and the summary descriptions of the Indentures
set forth in the Prospectus conform in all material respects to the
provisions contained in the Indentures.
(j) If the Securities include Preferred Stock convertible into
Capital Securities or other preferred stock and/or Subordinated Debt
Securities convertible into Capital Securities, the Capital Securities or
preferred stock issuable upon conversion of the shares of Preferred Stock
pursuant to their terms and the terms of the Certificate of Amendment
and/or the Capital Securities issuable upon conversion of the Subordinated
Debt Securities pursuant to their terms and the terms of the Subordinated
Indenture, on the date of the Terms Agreement relating to such Securities,
shall be duly authorized and validly reserved for issuance upon such
conversion by all necessary corporate action and such Capital Securities or
other preferred stock, when issued upon such conversion will be validly
issued, fully paid and non-assessable; no holder thereof will be subject to
personal liability by reason of being such a holder; and the issuance of
such Capital Securities or other preferred stock upon such conversion will
not be subject to preemptive rights.
<PAGE>
8
(k) If the Securities include Depositary Shares, the Deposit Agreement
has been duly authorized by the Company, will be substantially in the form
filed as an exhibit to the Registration Statement and, when duly executed
and delivered by the Company and the Depositary, will constitute a legal,
valid and binding obligation of the Company enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and to general equity principles; and the
summary description of the Deposit Agreement set forth in the Prospectus
conforms in all material respects to the provisions contained in the
Deposit Agreement.
(l) If the Securities include Warrants, the Warrant Agreement has
been duly authorized by the Company, will be substantially in the form
filed as an exhibit to the Registration Statement and, when duly executed
and delivered by the Company and the Warrant Agent, will constitute a
legal, valid and binding obligation of the Company enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency (including, without limitation, laws relating to fraudulent
transfer), reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally and to general equity principles; and
the summary description of the Warrant Agreement conforms in all material
respects to the provisions contained in the Warrant Agreement.
(m) If applicable, the shares of a Company's Common Stock, issuable
upon conversion or exercise of any issue of Offered Securities have been
duly authorized and reserved for issuance upon such conversion by all
necessary corporate action and, when issued and delivered in accordance
with the provisions of this Agreement relating thereto, will be validly
issued, fully paid and non-assessable, no holder thereof will be subject to
personal liability by reason of being such a holder; and the issuance of
such shares upon such conversion will not be subject to preemptive rights.
(n) The Securities conform in all material respects to the summary
descriptions thereof contained or incorporated by reference in the
Prospectus and such summary descriptions conform to the rights set forth in
the instruments defining the same.
(o) To the knowledge of the Company and except as set forth in the
Prospectus, there is no threatened action, suit or proceeding that could
reasonably be expected to result in any material adverse change in the
condition (financial or other), business or results of operations of the
Company and its subsidiaries, or could reasonably be expected to materially
and adversely affect the properties or assets thereof.
<PAGE>
9
(p) The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities or the Capital Securities.
(q) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition (financial or other), business or
results of operations of the Company and its subsidiaries, otherwise than
as set forth or contemplated in the Prospectus.
(r) The Company has complied and will comply with all applicable
provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida
statutes, and all regulations promulgated thereunder relating to issuers
doing business in Cuba.
(s) The aggregate amount of Securities to be purchased pursuant to
this Agreement does not exceed the amount remaining registered under the
Registration Statement.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with an
offering of Securities shall be deemed a representation and warranty by the
Company, as to the matters covered thereby, to each Underwriter participating in
such offering.
3. Purchase, Sale and Delivery of Securities. On the basis of the
-----------------------------------------
representations, warranties and agreements herein contained and contained in the
applicable Terms Agreement, but subject to the terms and conditions herein and
therein set forth, the Company agrees to issue and sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
pursuant to the terms of a Terms Agreement.
If so authorized in the Terms Agreement, the Underwriters may solicit
offers from investors of the types set forth in the Prospectus to purchase
Securities from the Company pursuant to delayed delivery contracts ("Delayed
Delivery Contracts"). Such contracts shall be substantially in the form of
Exhibit I hereto but with such changes therein as the Company may approve. As
compensation for arranging Delayed Delivery Contracts, the Company will pay to
the Representatives on the Closing Date, for the accounts of the Underwriters, a
fee as follows: (i) in the case of Debt Securities, Debt Warrants and Units
consisting of Debt Securities and Debt Warrants, an amount equal to the
percentage set forth in the applicable Terms Agreement of the principal amount
of the Debt Securities or number of Debt Warrants for which such Delayed
Delivery Contracts are made, (ii) in the case of Preferred Stock, Depositary
Shares and Units consisting of Preferred Stock and any other Securities, an
amount equal to the percentage set forth in the applicable Terms Agreement of
the aggregate liquidation preference of the Preferred Stock, including shares
represented by such Depositary Shares, for which Delayed Delivery Contracts are
made, (iii) in the case of
<PAGE>
10
all other Securities, an amount as set forth in the applicable Terms Agreement
of Securities for which such Delayed Delivery Contracts are made. Securities to
be purchased pursuant to Delayed Delivery Contracts are herein called "Contract
Securities". When Delayed Delivery Contracts are authorized in the applicable
Terms Agreement, the Company will enter into a Delayed Delivery Contract in each
case where a sale of Contract Securities arranged through you has been approved
by the Company but, except as the Company may otherwise agree, such Delayed
Delivery Contracts must be for at least the minimum amount of Contract
Securities set forth in the applicable Terms Agreement hereto, and the aggregate
amount of Contract Securities may not exceed the amount set forth in such
Schedule. The Company will advise you not later than 10:00 A.M., New York City
time, on the third full business day preceding the Closing Date (or at such
later time as you may otherwise agree) of the sales of Contract Securities that
have been so approved. You and the other Underwriters will not have any
responsibility in respect of the validity or performance of Delayed Delivery
Contracts.
The Representatives shall submit to the Company, at least three
business days prior to Closing Date, the names of any institutional investors
with which it is proposed that the Company will enter into Delayed Delivery
Contracts and the amount or number of Securities to be purchased by each of
them, and the Company will advise the Representatives, at least two business
days prior to Closing Date, of the names of the institutions with which the
making of Delayed Delivery Contracts is approved by the Company and the amount
or number of Securities to be covered by each such Delayed Delivery Contract.
The amount of Securities to be purchased by each Underwriter as set
forth in the applicable Terms Agreement shall be reduced by an amount which
shall bear the same proportion to the total amount of Contract Securities as the
amount of Securities set forth opposite the name of such Underwriter bears to
the total amount of Securities set forth in the applicable Terms Agreement,
except to the extent that you determine that such reduction shall be otherwise
than in such proportion and so advise the Company; provided, however, that the
total amount of Securities to be purchased by all Underwriters shall be the
total amount of Securities set forth in the applicable Terms Agreement less the
aggregate amount of Contract Securities.
The Offered Securities to be purchased by the Underwriters will be
delivered by the Company to you for the accounts of the several Underwriters at
the office specified in the applicable Terms Agreement against payment of the
purchase price therefor by certified or official bank check or checks in New
York Clearing House (next day) funds payable to the order of the Company at the
office, on the date and at the times specified in such Terms Agreement, or at
such other time not later than eight full business days thereafter as you and
the Company determine, such time being herein referred to as the "Offered
Securities Closing Date". The Option Securities to be purchased by the
Underwriters will be delivered by the Company to you for the accounts of the
several Underwriters at the office specified in the applicable Terms Agreement
against payment of the purchase price therefor by certified
<PAGE>
11
or official bank check or checks in New York Clearing House (next day) funds
payable to the order of the Company at the office, on the date and at the times
specified in such Terms Agreement, or at such other time not later than eight
full business days thereafter as you and the Company determine, such time being
herein referred to as the "Option Closing Date". The Offered Securities Closing
Date and the Option Securities Closing Date are hereinafter collectively
referred to as the "Closing Date". Such Securities will be prepared in
definitive form and in such authorized denominations and registered in such
names as you may require upon at least two business days' prior notice to the
Company and will be made available for checking and packaging at the office at
which they are to be delivered on the applicable Closing Date (or such other
office as may be specified for that purpose in the Terms Agreement) at least one
business day prior to the applicable Closing Date.
It is understood that you, acting individually and not in a
representative capacity, may (but shall not be obligated to) make payment to the
Company on behalf of any other Underwriter for Securities to be purchased by
such Underwriter. Any such payment by you shall not relieve any such Underwriter
of any of its obligations hereunder.
The Company will pay to you on the applicable Closing Date for the
account of each Underwriter any commission or other compensation that is
specified in the Terms Agreement. Such payment will be made by certified or
official bank check in New York Clearing House (next day) funds.
4. Covenants. The Company covenants and agrees with each
---------
Representative and each Underwriter that:
(a) (i) If reasonably requested by you in connection with the
offering of the Offered Securities, the Company will prepare a Preliminary
Prospectus containing such information concerning the Securities as you and
the Company deem appropriate and (ii) immediately following the execution
of each Terms Agreement, the Company will prepare a Prospectus Supplement
that complies with the Securities Act and the Securities Act Regulations
and that sets forth the number or principal amount of Securities covered
thereby, the names of the Underwriters participating in the offering and
the number or principal amount of Securities which each severally has
agreed to purchase, the name of each Underwriter, if any, acting as
representative in connection with the offering, the price at which the
Securities are to be purchased by the Underwriters from the Company, the
initial public offering price, the selling concession and reallowance, if
any, and such other information concerning the Securities as you and the
Company deem appropriate in connection with the offering of the Securities.
The Company will promptly transmit copies of the Prospectus Supplement to
the Commission for filing pursuant to Rule 424 under the Securities Act and
will furnish to the Underwriters named therein as many copies of any
Preliminary Prospectus, the Prospectus and the Prospectus Supplement as you
shall reasonably request.
<PAGE>
12
(b) If at any time when the Prospectus is required by the Securities
Act to be delivered in connection with sales of the Offered Securities any
event shall occur or condition exist as a result of which it is necessary,
in the opinion of counsel for the Underwriters or counsel for the Company,
to amend the Registration Statement or amend or supplement the Prospectus
in order that the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances
under which they were made, or if it shall be necessary, in the opinion of
either such counsel, at any such time to amend the Registration Statement
or amend or supplement the Prospectus in order to comply with the
requirements of the Securities Act or the Securities Act Regulations, the
Company will promptly prepare and file with the Commission, subject to
Section 4(d), such amendment or supplement as may be necessary to correct
such untrue statement or omission or to make the Registration Statement or
the Prospectus comply with such requirements. Neither the Representatives'
consent to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of the conditions set forth in Section
5.
(c) During the period when the Prospectus is required by the
Securities Act to be delivered in connection with sales of the Offered
Securities, the Company will, subject to Section 4(d), file promptly all
documents required to be filed with the Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(d) During the period between the date of the applicable Terms
Agreement and the Closing Date, the Company will inform you of its
intention to file any amendment to the Registration Statement, any
supplement to the Prospectus or any document that would as a result thereof
be incorporated by reference in the Prospectus, will furnish you with
copies of any such amendment, supplement or other document and will not
file any such amendment, supplement or other document in a form to which
you or your counsel shall reasonably object.
(e) During the period when the Prospectus is required by the
Securities Act to be delivered in connection with sales of the Offered
Securities, the Company will notify you immediately, and confirm the notice
in writing, (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for filing
of any supplement to the Prospectus or any document that would as a result
thereof be incorporated by reference in the Prospectus, (iii) of the
receipt of any comments from the Commission with respect to the
Registration Statement, the Prospectus or the Prospectus Supplement, (iv)
of any request by the Commission for any amendment to the Registration
Statement or any supplement to the Prospectus or for additional information
relating thereto or to any document incorporated by reference in the
Prospectus and (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, of the
suspension of the qualification of the Offered Securities for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceeding for
<PAGE>
13
any of such purposes. The Company will use every reasonable effort to
prevent the issuance of any such stop order or of any order suspending such
qualification and, if any such order is issued, the Company will use every
reasonable effort to obtain the lifting thereof at the earliest possible
moment.
(f) The Company has furnished or will furnish to you as many copies
of the Registration Statement as originally filed and of all amendments
thereto, whether filed before or after the Registration Statement becomes
effective, copies of all exhibits and documents filed therewith (including
documents incorporated by reference into the Prospectus pursuant to Item 12
of Form S-3 under the Securities Act) and copies of all consents and
certificates of experts as you may reasonably request, and has furnished or
will furnish to you, for each other Underwriter, one copy of the
Registration Statement as originally filed and of each amendment thereto
(including documents incorporated by reference into the Prospectus but
without exhibits).
(g) The Company will use its reasonable best efforts to qualify the
Offered Securities and, if applicable, any Debt Securities, Preferred Stock
or Common Stock which may be issuable pursuant to the exercise of the
applicable Warrants and Capital Securities into or for which the
Subordinated Debt Securities are convertible and the Capital Securities,
other preferred stock or Debt Securities into which the shares of Preferred
Stock are convertible for offering and sale under the applicable securities
laws of such states and other jurisdictions as you may reasonably designate
and to maintain such qualifications in effect for a period of not less than
one year from the effective date of the Terms Agreement applicable to such
Offered Securities; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in respect
of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Offered Securities
have been qualified as above provided.
(h) With respect to each sale of Offered Securities, the Company will
make generally available to its security holders as soon as practicable,
but not later than 90 days after the close of the period covered thereby,
an earnings statement of the Company (in form complying with the provisions
of Rule 158 of the Securities Act Regulations) covering a period of 12
months beginning, in each case, not later than the first day of the
Company's fiscal quarter next following the effective date (as defined in
Rule 158) of the Registration Statement relating to the Offered Securities.
(i) If and to the extent specified in the applicable Terms Agreement,
the Company will use its best efforts to effect the listing of the Offered
Securities and, if applicable, any Debt Securities, Preferred Stock or
Common Stock which may be
<PAGE>
14
issuable pursuant to the exercise of the applicable Warrants and the
Capital Securities, other preferred stock or Debt Securities issuable upon
conversion of Preferred Stock and/or Capital Securities issuable upon
conversion of Subordinated Debt Securities, on the New York Stock Exchange
or such other national securities exchange as may be designated in the
applicable Terms Agreement by the Closing Date with respect to the
applicable Terms Agreement.
(j) For a period of five years after the Closing Date, the Company
will furnish to you copies of all annual reports, quarterly reports and
current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or
such other similar forms as may be designated by the Commission, and such
other documents, reports and information as shall be furnished by the
Company to its stockholders generally.
(k) Between the date of the applicable Terms Agreement and the
Closing Date or such other date as is set forth in such Terms Agreement,
the Company will not, without your prior written consent, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of, the securities set forth in such Terms Agreement,
other than as set forth in such Terms Agreement.
(l) The Company, whether or not the transactions contemplated
hereunder are consummated or the Agreement is terminated, will pay all
expenses incident to the performance of its obligations hereunder, will pay
the expenses of printing or otherwise producing all documents relating to
the offering, and will pay, or reimburse the Underwriters, for any
reasonable expenses (including fees and disbursements of counsel) incurred
by them in connection with the matters referred to in Section 4(g) hereof
and the preparation of memoranda relating thereto, for any filing fee of
the National Association of Securities Dealers, Inc. relating to the
Securities, for any fees charged by investment rating agencies for rating
the Securities, for any fees and expenses of any Trustee and any agent of
any Trustee in connection with any Indenture and the Securities, for any
listing fees and for the cost of mailing any Preliminary Prospectus.
Notwithstanding the foregoing, if there is a mistake in the written
information furnished by the Representative or Representatives to the
Company for use in the Prospectus and if such Prospectus is required to be
reprinted pursuant to Sections 4(b) and 4(d), then the expense of
reprinting such Prospectus shall be borne, severally, by the Underwriter or
Underwriters who shall have furnished such incorrect information to such
Representative or Representatives.
(m) The Company will apply the net proceeds from the sale of the
Securities as set forth in the Prospectus.
5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
several Underwriters to purchase and pay for the Offered Securities as provided
herein shall be subject to the accuracy, as of the date hereof and the date of
any such Terms Agreement and the Closing Date (as if made at the Closing Date),
of the representations and warranties of
<PAGE>
15
the Company herein, to the accuracy of the statements of the Company's officers
made in any certificate furnished pursuant to the provisions hereof, to the
performance by the Company of all of its covenants and other obligations
hereunder and to the following additional conditions:
(a) The Prospectus shall have been filed with the Commission in
accordance with the Securities Act Regulations and Section 4(a) of this
Agreement. No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall
have been instituted or, to the knowledge of the Company or any
Underwriter, threatened by the Commission.
(b) Subsequent to the execution of the Terms Agreement, there shall
not have occurred (i) any change or any development in or affecting
particularly the business or properties of the Company or its subsidiaries
which, in the judgment of a majority in interest of the Underwriters,
materially impairs the investment quality of the Securities (ii) trading in
any securities of the Company has been suspended by the Commission or a
national securities exchange or if trading on the New York Stock Exchange
or the American Stock Exchange shall have been suspended, or minimum or
maximum prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required, on the New York Stock
Exchange or the American Stock Exchange, by such Exchange or by order of
the Commission or any other governmental authority having jurisdiction,
(iii) any banking moratorium declared by Federal or New York authorities,
(iv) any downgrading 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)(2) under the Securities Act or any public announcement that any
such organization has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities or
Preferred Stock, or (v) any outbreak or escalation of hostilities in which
the United States is involved, a declaration of war by Congress, any other
substantial national or international calamity or any other event or
occurrence of a similar character if, in the judgment of a majority in
interest of the Underwriters, including any Representatives, the effect of
any such outbreak, escalation, declaration, calamity or other event or
occurrence makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Securities. Promptly after
the determination by such majority in interest of the Underwriters that it
is impractical or inadvisable to proceed with the completion of the sale
and payment for the Securities, the Representatives shall notify the
Company of such determination in writing; but the omission so to notify the
Company shall not act to modify the rights of the Underwriters under this
Section 5(b).
(c) On the applicable Closing Date, you shall have received the
opinion of the General Counsel or any Senior Managing Counsel to the
Company and/or Thompson, Hine and Flory, counsel to the Company, as
indicated in the applicable
<PAGE>
16
Prospectus Supplement (it being understood that any opinion with respect to
Key Bank of New York or Key Bank of Washington may be delivered by the
General Counsel or any Senior Managing Counsel to the Company), dated the
Closing Date, together with signed or reproduced copies of such opinion for
each of the other Underwriters, in form and substance satisfactory to you
or your counsel, to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of Ohio and is duly
registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended; each of Society National Bank and Society
National Bank, Indiana (the "National Banks") is a duly organized and
validly existing national banking association under the laws of the
United States and continues to hold a valid certificate to do business
as such; each of Key Bank of New York and Key Bank of Washington (the
"State Banks") is a duly organized and validly existing state
chartered banking association under the laws of the State of New York
and the State of Washington, respectively, and each continues to hold
a valid certificate to do business as such; each of the Company, the
National Banks and the State Banks has full corporate power and
authority to conduct its business as described in the Registration
Statement and Prospectus and is duly qualified to do business in each
jurisdiction in which it owns or leases real property, except where
the failure to be so qualified, considering all such cases in the
aggregate, does not involve a material risk to the business,
properties, financial position or results of operations of the Company
and its subsidiaries taken as a whole; and all of the outstanding
shares of capital stock of each of the National Banks and the State
Banks have been duly authorized and validly issued, are fully paid and
non-assessable (exceptions to be specified) and (except as otherwise
stated in the Registration Statement) are owned beneficially by the
Company subject to no security interest, other encumbrance or adverse
claim.
(ii) This Agreement, the applicable Terms Agreement and any
Delayed Delivery Contracts have been duly authorized, executed and
delivered by the Company.
(iii) The Offered Securities conform in all material respects to
the description thereof contained or incorporated by reference in the
Prospectus and such description conforms in all material respects to
the rights set forth in the instruments defining the same.
(iv) If the Offered Securities include Debt Securities, such
Debt Securities have been duly authorized and, when such Debt
Securities are duly executed, authenticated and delivered in the
manner provided for in the applicable Indenture and issued and paid
for in accordance with this Agreement and the applicable Terms
Agreement, such Debt Securities will
<PAGE>
17
constitute valid and binding obligations of the Company entitled to
the benefits of the applicable Indenture and enforceable against the
Company in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles; and, if the Offered Securities include
Subordinated Debt Securities that are convertible into Capital
Securities, then such Subordinated Debt Securities are convertible
into Capital Securities in accordance with their terms and the terms
of the Subordinated Indenture.
(v) If the Offered Securities include Preferred Stock, such
shares of Preferred Stock have been duly authorized and, when such
shares of Preferred Stock are duly executed and delivered and issued
and paid for in accordance with this Agreement and the applicable
Terms Agreement, such shares of Preferred Stock will have been validly
issued, fully paid and non-assessable and no holder thereof will be
subject to personal liability by reason of being such a holder; such
shares of Preferred Stock will not be subject to the preemptive rights
of any stockholder of the Company; and all corporate action required
to be taken for the authorization, issue and sale of such shares of
Preferred Stock has been validly and sufficiently taken; and, if the
Offered Securities include shares of Preferred Stock that are to be
represented by Depositary Shares, then, upon deposit by the Company of
such shares of Preferred Stock with the Depositary pursuant to the
Deposit Agreement and the execution by the Depositary of the
Depositary Receipts evidencing the Depositary Shares, such Depositary
Shares shall represent legal and valid interests in such shares of
Preferred Stock; and, if the Offered Securities, Debt Securities and
Debt Securities include shares of Preferred Stock that are convertible
into Capital Securities, Debt Securities or other preferred stock,
then such shares of Preferred Stock are convertible into Capital
Securities, Debt Securities or other preferred stock in accordance
with their terms and the terms of the Certificate of Amendment.
(vi) If the Offered Securities include Warrants, such Warrants
have been duly authorized and, when such Warrants are duly executed,
authenticated and delivered in the manner provided for in the Warrant
Agreement and issued and paid for in accordance with this Agreement
and the applicable Terms Agreement, such Warrants will constitute
valid and binding obligations of the Company entitled to the benefits
of the Warrant Agreement and enforceable against the Company in
accordance with their terms subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; and the Warrants are exercisable for Debt
Securities, shares of Preferred Stock or Common Stock in accordance
with their terms and the terms of the Warrant Agreement.
<PAGE>
18
(vii) If the Offered Securities include Debt Securities or
Preferred Stock convertible into Debt Securities, the applicable
Indenture has been duly authorized, executed and delivered by the
Company and constitutes a valid and legally binding instrument of
the Company enforceable in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and each
applicable Indenture has been duly qualified under the Trust
Indenture Act.
(viii) If the Offered Securities include Preferred Stock
convertible into Capital Securities or other preferred stock and/or
Subordinated Debt Securities convertible into Capital Securities, the
Capital Securities or other preferred stock issuable upon conversion
of the shares of Preferred Stock pursuant to their terms and the terms
of the Certificate of Amendment and/or the Capital Securities issuable
upon conversion of the Subordinated Debt Securities pursuant to their
terms and the terms of the Subordinated Indenture, have been duly
authorized and validly reserved for issuance upon such conversion by
all necessary corporate action and such Capital Securities or other
preferred stock, when issued upon such conversion, will be validly
issued, fully paid and nonassessable and no holder thereof will be
subject to personal liability by reason of being such a holder; and
the issuance of such Capital Securities or other preferred stock upon
such conversion will not be subject to preemptive rights.
(ix) If the Offered Securities include Depositary Shares, the
Deposit Agreement has been duly authorized, executed and delivered by
the Company, and assuming due authorization, execution and delivery
thereof by the Depositary, constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(x) If the Offered Securities include Warrants, the Warrant
Agreement has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery
thereof by the Warrant Agent, constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(xi) The issue and sale of the Offered Securities and the
performance by the Company of its obligations under the Offered
Securities, the Indenture
<PAGE>
19
and this Agreement or other agreement pursuant to which the
Underwriters purchase Offered Securities 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 and provisions of,
or constitute a default under, any statute, rule or regulation, any
agreement or instrument known to such counsel to which the Company is
a party or by which it is bound, the Company's Articles of
Incorporation or Regulations, or any order known to such counsel of
any court or governmental agency or body having jurisdiction over the
Company.
(xii) No consent, approval, authorization, order, registration
or qualification of or filing with any court or governmental agency or
body is required for the issue and sale of Securities or the
consummation of the other transactions contemplated by this Agreement,
any applicable Terms Agreement or other agreement pursuant to which an
Underwriter purchases Securities, except such consents, approvals,
authorizations, registrations or qualifications as have been obtained
under the Securities Act and the Trust Indenture Act and as may be
required under state securities or Blue Sky laws in connection with
purchases of Securities.
(xiii) The Registration Statement has become effective under the
Securities Act; any required amendment or supplement to the Prospectus
has been filed as required by Section 4(a) hereof; and to the best
knowledge of such counsel no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceeding for
that purpose has been instituted or threatened by the Commission.
(xiv) Such counsel is of the opinion ascribed to it in the
Prospectus under the caption "Taxation", if any.
(xv) The Registration Statement and the Prospectus, each as
amended or supplemented on the Closing Date (except for the financial
statements and other financial and statistical data contained therein
or omitted therefrom and the Statement of Eligibility (Form T-1) under
the Trust Indenture Act of the Trustee as to which such counsel need
express no opinion) complied as to form in all material respects with
the requirements of the Act and the Exchange Act and the respective
rules thereunder, and such counsel has no reason to believe that the
Registration Statement, as amended (except for the financial
statements and other financial or statistical data contained or
incorporated therein or omitted therefrom and the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of the Trustee as
to which such counsel need express no opinion) at the time it became
effective and at the date of this Agreement, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, as amended
<PAGE>
20
or supplemented (except for the financial statements and other
financial or statistical data contained or incorporated therein or
omitted therefrom and the Statement of Eligibility (Form T-1 under the
Trust Indenture Act of the Trustee as to which such counsel need
express no opinion) as of the Closing Date, contains any 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 amendment to the Registration Statement required to be
filed which is not filed as required.
Such opinion or opinions shall be to such further effect with respect to
other legal matters relating to this Agreement, any Delayed Delivery
Contracts and the sale of the Offered Securities, pursuant to this
Agreement as counsel for the Underwriters may reasonably request. Such
opinion or opinions shall be limited to New York, Ohio, Washington and
federal law and, if applicable, the law of the state of incorporation of
any other Significant Subsidiary. In giving such opinion, such counsel may
rely, as to all matters governed by the laws of jurisdictions in which such
counsel is not qualified and the federal law of the United States, upon
opinions of other counsel, who shall be counsel satisfactory to counsel for
the Underwriters, in which case the opinion shall state that they believe
you and they are entitled to so rely. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company, the
National Banks and the State Banks and the Significant Subsidiaries and
certificates of public officials.
In rendering their opinion, such counsel may rely upon the opinion of
Shearman & Sterling referred to below as to any matters governed by New
York law covered therein.
(d) At the applicable Closing Date, you shall have received the
favorable opinion of Shearman & Sterling, counsel for the Underwriters,
such opinion or opinions, dated the Closing Date, together with signed or
reproduced copies of such opinion for each of the other Underwriters, to
the effect that the opinion delivered pursuant to Section 5(c) appears on
its face to be appropriately responsive to the requirements of this
Agreement and the applicable Terms Agreement and with respect to the
incorporation of the Company, the validity of the Securities, the
Registration Statement, the Prospectus and other related matters as you
reasonably may request and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters. In
rendering their opinion, such counsel may rely upon the opinion rendered on
behalf of the Company referred to above as to all matters governed by Ohio
law.
<PAGE>
21
(e) At or prior to the time of execution of the applicable Terms
Agreement and on the Closing Date, you shall have received a letter from
Ernst & Young, dated the date of delivery thereof, to the effect set forth
in Exhibit II hereto.
(f) You shall have received from the Company a certificate, signed by
the Chairman of the Board, the President or an Executive Vice President,
and by the principal financial or accounting officer, of the Company, dated
the Closing Date, to the effect that, to the best of their knowledge based
upon reasonable investigation:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made at and as of the Closing
Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date; and
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that
purpose has been instituted or is threatened by the Commission.
(g) The Securities shall have been duly authorized for listing on
such exchange, if any, and at such time as specified in the applicable
Terms Agreement.
(h) In the event the Underwriters exercise their option provided in a
Terms Agreement to purchase all or a portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall be
true and correct as of each Option Securities Closing Date, and you shall
have received:
(1) A certificate, dated such Option Securities Closing Date,
signed by the Chairman of the Board, the President or an Executive
Vice President, and by the principal financial or accounting officer
of the Company, confirming that the certificate delivered at the
Closing Date pursuant to Section 5(f) hereof remains true and correct
as of such Option Securities Closing Date.
(2) The favorable opinion of the General Counsel or any Senior
Managing Counsel to the Company and/or Thompson, Hine and Flory,
Counsel to the Company, in the form and substance satisfactory to
Counsel for the Underwriters, dated the Option Securities Closing
Date, relating to the Option Securities and otherwise in substantially
to the same effect as the opinion required by Section 5(c) hereof.
(3) The favorable opinion of Shearman & Sterling, Counsel for
the Underwriters, dated the Option Securities Closing Date, relating
to the Option
<PAGE>
22
Securities and otherwise in substantially to the same effect as the
opinion required by Section 5(d) hereof.
(4) A letter from Ernst & Young in the form and substance
satisfactory to you and dated the Option Securities Closing Date,
substantially the same in scope and substance as the letter furnished
to you pursuant to Section 5(e) hereof, except that the "specified
date" in the letter shall be a date not more than five days prior to
such Option Securities Closing Date.
(i) The Company shall have furnished to you such further certificates
and documents as you shall have reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you. The Company will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall reasonably
request. If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, the applicable Terms Agreement
may be terminated by you by notice to the Company at any time at or prior to the
applicable Closing Date, and such termination shall be without liability of any
party to any other party except as provided in Section 4 hereof.
Notwithstanding any such termination, the provisions of Sections 6, 7, 8 and 9
shall remain in effect.
6. Underwriters' Expenses. If the sale of the Securities provided
----------------------
for herein is not consummated by reason of any failure, refusal or inability on
the part of the Company to perform any agreement on its part to be performed, or
because any other condition of the Underwriters' obligations hereunder required
to be fulfilled by the Company is not fulfilled, other than by reason of a
default by any of the Underwriters or the occurrence of any event specified in
clause (ii), (iii) or (v) of Section 5(b), the Company will reimburse the
Underwriters severally upon demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities. Except as otherwise provided for herein or in the applicable Terms
Agreement, the Underwriters shall pay their own expenses (including fees and
disbursements of counsel) in connection with the offering and sale of the
Securities.
7. Indemnification and Contribution. (a) The Company 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 Securities 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
part of the Registration Statement when such part became effective, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or any other prospectus with respect to the Securities, 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
<PAGE>
23
to make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending against such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that (i)
the Company shall not 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
therein in reliance upon and in conformity with written information furnished to
the Company by you, or by any Underwriter through you, specifically for use
therein and (ii) such indemnity with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter (or any person controlling such
Underwriter) to the extent that any such loss, claim, damage or liability of
such Underwriter results from the fact that such Underwriter sold Securities to
a person as to whom it shall be established that there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) or of the Prospectus as then
amended or supplemented (excluding documents incorporated by reference) in any
case where such delivery is required by the Securities Act if the Company has
previously furnished copies thereof in sufficient quantity to such Underwriter
and the loss, claim, damage or liability of such Underwriter results from an
untrue statement or omission of a material fact contained in the Preliminary
Prospectus which was corrected in the Prospectus (excluding documents
incorporated by reference) or in the Prospectus as then amended or supplemented
(excluding documents incorporated by reference).
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Securities 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 part of the Registration Statement when such part became
effective, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or any other prospectus relating to the Securities, 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 therein in reliance upon and in conformity with written
information furnished to the Company by you, or by such Underwriter through you,
specifically for use therein, and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending against any such loss, claim, damage, liability or
action 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 the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
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
<PAGE>
24
brought against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; provided, however,
that, if the defendants in any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party and
representations of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them, the indemnified party
or parties shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties (and the
reasonable fees and expenses of one such separate counsel shall be paid by the
indemnifying party). No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party.
(d) If the indemnification provided for in this Section 7 is
unavailable 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,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or if the indemnified party failed to
give the notice required under subsection (c) above, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering of the Securities
(before deducting expenses) received by the Company bear to the total
compensation or profit (before deducting expenses) received or realized by the
Underwriters from the purchase and resale, or underwriting, of the Securities.
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 Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (d)
were to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
first sentence of this subsection (d). The amount paid by an indemnified party
as a result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such
<PAGE>
25
indemnified party in connection with investigating or defending against any
action or claim which is the subject of this subsection (d). 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 Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute shall be several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Securities Act; and the obligations of the
Underwriters under this Section 7 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Securities Act.
8. Representations and Agreements to Survive Delivery. All
--------------------------------------------------
representations, warranties, indemnities and agreements of the Company herein or
in certificates of officers of the Company delivered pursuant hereto, and the
agreements of the several Underwriters contained in Section 7 hereof, shall
remain operative and 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, or the Company or any of its officers,
directors or any controlling person, and shall survive delivery of and payment
for the Securities.
9. Substitution of Underwriters. If one or more of the Underwriters
----------------------------
participating in an offering of Offered Securities shall fail at the applicable
Closing Date to purchase the Offered Securities which it or they are obligated
to purchase hereunder and under the applicable Terms Agreement (the "Defaulted
Securities"), you shall have the right, within 36 hours thereafter, to make
arrangements satisfactory to you and the Company for one or more of the
nondefaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, you have not completed such
arrangements within such 36-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Offered Securities to be purchased pursuant to such Terms
Agreement, the
<PAGE>
26
nondefaulting Underwriters named in such Terms Agreement shall be obligated
to purchase the full amount thereof in the proportions that their
respective underwriting obligations bear to the underwriting obligations of
all nondefaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the Offered
Securities to be purchased pursuant to such Terms Agreement, the applicable
Terms Agreement shall terminate without liability on the part of any
nondefaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default under this Agreement and
the applicable Terms Agreement.
In the event of any such default that does not result in the
termination of the applicable Terms Agreement, either you or the Company shall
have the right to postpone the applicable Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 9.
10. Notices. All notices or communications hereunder shall be in
-------
writing and if sent to you shall be mailed, delivered, telexed or telecopied and
confirmed to you at the address set forth for that purpose in the Terms
Agreement, or if sent to the Company, shall be mailed, delivered, telexed,
telecopied or telegraphed and confirmed to the Company at 127 Public Square,
Cleveland, Ohio 44114, Attention: Secretary and General Counsel, telecopy
---------
number: (216) 689-5681, with a copy to Senior Managing Counsel -- Securities.
---- --
Notice to any Underwriter pursuant to Section 7 hereof shall be mailed,
delivered, telexed, telecopied or telegraphed and confirmed to such
Underwriter's address as it appears in such Underwriter's questionnaire or other
notice furnished to the Company in writing for the purpose of communications
hereunder. Any party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.
11. Parties. This Agreement shall inure solely to the benefit of and
-------
be binding upon the Company and the Underwriters and their respective successors
and the controlling persons, officers and directors referred to in Section 7
hereof, and no other person will have any right or obligation hereunder. In all
dealings with the Company under this Agreement, you shall act on behalf of each
of the several Underwriters, and any action under this Agreement taken by you or
by any one of you designated in the applicable Terms Agreement will be binding
upon all the Underwriters.
12. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of New York.
<PAGE>
EXHIBIT A
KEYCORP
(an Ohio corporation)
[Title of Securities]
TERMS AGREEMENT
---------------
Dated: ______________, 199_
To: KeyCorp
127 Public Square
Cleveland, Ohio 44114
Attention:
Dear Sirs:
We (the "Representative") understand that KeyCorp, an Ohio corporation
(the "Company"), proposes to issue and sell [[$ aggregate principal amount] of
its [senior debt securities] [and] [subordinated [convertible] debt securities]
(the "Debt Securities")] [and] [_________ shares of its [convertible]] preferred
stock (the "Preferred Stock")] [________ depositary shares (the "Depositary
Shares") each representing ______ of a share of ____ preferred stock]. Subject
to the terms and conditions set forth herein or incorporated by reference
herein, the Underwriters named below (the "Underwriters") offer to purchase,
severally and not jointly, the respective amounts of [Debt Securities] [and]
[Preferred Stock] [Depositary Shares] set forth below.
Principal Principal Principal
Amount of Amount of Amount of
Name of Debt Preferred Depositary
Underwriter Securities Stock Shares
- ------------- ---------- --------- ----------
_________ ________ _________
Total $_________ $________ $_________
<PAGE>
A-2
Debt Securities
---------------
Title of Debt Securities:
Principal amount to be issued: $
Senior or Subordinated:
Currency:
Current ratings:
Interest rate or formula: %
Interest payment dates:
Date of maturity:
Redemption provisions:
Sinking fund requirements:
Initial public offering price: % of the principal amount, plus accrued
interest, if any, [or amortized original
issue discount, if any,] from ____, 19__.
Purchase price: % of the principal amount, plus accrued
interest, if any, [or amortized original
issue discount, if any,] from ____, 19__
(payable in next day funds).
Listing requirement: [None] [NYSE] [OTHER]
Convertible:
Conversion provisions:
Closing date and location:
Additional representations, if any:
Redemption provisions:
<PAGE>
A-3
Lock-up provisions:
Sinking fund requirements:
Number of Option Securities, if any:
Other terms and conditions:
<PAGE>
A-4
Preferred Stock
---------------
Title of Preferred Stock:
Principal amount to be issued: $
Currency:
Annual cash dividend rate: % Payable:
Liquidation preference per Share:
Initial public offering price: %, plus accrued interest or amortized original
issue discount, if any, from ______, 19___.
Purchase price: %, plus accrued interest or amortized original
issue discount, if any, from ______, 19____
(payable in next day funds).
Listing requirement: [None] [NYSE] [OTHER]
Convertible:
Initial Conversion price: $___ per share of [Common Stock] [Preferred
Stock] [Capital Securities].
Other conversion provisions:
Closing date and location:
Additional representations, if any:
Redemption provisions:
Lock-up provisions:
Sinking fund requirements:
Number of Option Securities, if any:
Other terms and conditions:
<PAGE>
A-5
Depositary Shares
-----------------
Title of Depositary Shares:
Principal amount to be issued: $
Currency:
Fractional amount of Preferred
Stock represented by
each Depositary Share:
Initial public offering price
per Depositary Share: % of the principal amount, plus accrued
interest [or amortized original issue
discount], if any, from _______, 19__.
Purchase price per Depositary Share:
(amount equal to the initial public
offering price set forth above, less
$_____ per Depositary Share).
Annual cash dividend amount: $ Payable:
Closing date and location:
Additional representations, if any:
Redemption provisions:
Lock-up provisions:
Sinking fund requirements:
Number of Option Securities, if any:
Other terms and conditions:
<PAGE>
A-6
Warrants
--------
Title of Warrants:
Number to be issued:
Currency:
Initial public offering price per Warrant: $
Purchase price per Warrant: $
Listing requirement: [None] [NYSE] [OTHER]
Exercisable for:
Exercise price:
Exercise provisions:
Closing date and location:
Additional representations, if any:
Redemption provisions:
Lock-up provisions:
Other terms and conditions:
Each Underwriter severally agrees, subject to the terms and provisions
of the above referenced Underwriting Agreement Standard Provisions which is
incorporated herein in its entirety and made a part hereof, to purchase the
principal amount of Offered Securities set forth opposite its name and a
proportionate share of Option Securities to the extent any are purchased.
This Agreement shall be governed by and construed in accordance with,
the laws of the State of New York.
<PAGE>
A-7
If the foregoing is in accordance with your understanding of the
agreement between you and the Company, please sign and return to the Company a
counterpart hereof, whereupon this instrument, along with all counterparts and
together with the Underwriting Agreement Standard Provisions, shall be a binding
agreement between the Underwriters named herein and the Company in accordance
with its terms and the terms of the Underwriting Agreement Standard Provisions.
[Representative[s]]
By ______________________________________
Acting on behalf of themselves and the
other named Underwriters
Confirmed and accepted as of
the date first above written:
KeyCorp
By _________________________
Name and Title:
<PAGE>
EXHIBIT I
KEYCORP
[Title of Securities]
DELAYED DELIVERY CONTRACT
-------------------------
_________________________________________________________________
[Insert date]
KeyCorp
[Names of Representatives]
Gentlemen:
The undersigned hereby agrees to purchase from KeyCorp (the
"Company"), and the Company agrees to sell to the undersigned, as of the date
hereof, for delivery on _______, 19__ ("Delivery Date") $_________ principal
amount of the Company's [insert title of Security] (the "Securities"), offered
by the Company's Prospectus relating thereto, receipt of a copy of which is
hereby acknowledged, at a purchase price of [__% of the principal amount thereof
plus accrued interest, if any, from ______, 19__,] [and $____ per share of
Preferred Stock] [and $_____ per Warrant, respectively] to the Delivery Date and
on the further terms and conditions set forth in this contract.
Payment for the Securities that the undersigned has agreed to purchase
for delivery on a Delivery Date shall be made to the Company or its order by
certified or official bank check in New York Clearing House (next day) funds at
the office of _______________________ at _____ A.M. on that Delivery Date upon
delivery to the undersigned of the Securities to be purchased by the undersigned
for delivery on that Delivery Date in definitive form and in such denominations
and registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than five full
business days prior to that Delivery Date.
The obligation of the Company to make delivery of and accept payment
for, and the obligation of the undersigned to take delivery of and make payment
for, Securities on the Delivery Date shall be subject only to the conditions
that (1) investment in the Securities shall not on the Delivery Date be
prohibited under the laws of any jurisdiction to which the undersigned is
subject, which investment the undersigned represents is not prohibited on the
date hereof, and (2) the Company, on or before _______, 19__, shall have sold to
the
<PAGE>
I-2
Underwriters the amount of the Securities to be sold to them pursuant to the
Underwriting Agreement referred to in the Prospectus mentioned above.
Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that the Company will not accept Delayed Delivery
Contracts for an aggregate principal amount of Securities in excess of
$__________ and that the acceptance of this contract and any other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first-come, first-served basis. If this contract is
acceptable to the Company, it is requested that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned when such counterpart is so mailed or
delivered.
<PAGE>
I-3
This contract shall be governed by, and construed in accordance with,
the laws of the State of New York.
Very truly yours,
________________________________________
(Name of Purchaser)
By:
________________________________________
(Title of Signatory)
________________________________________
________________________________________
(Address of Purchaser)
Accepted, as of the above date.
KeyCorp
By: ___________________________
[Insert title]
<PAGE>
EXHIBIT II
Pursuant to Section 5(e) of the Underwriting Agreement, the
independent auditors shall furnish letters to the Underwriters to the effect
that:
(1) They are independent public accountants with respect to the
Company and its subsidiaries within the meaning of the Securities Act and the
applicable published Securities Act Regulations.
(2) In their opinion, the consolidated financial statements and any
supplemental financial information or schedules audited by them and included or
incorporated by reference in the Registration Statement or Prospectus comply as
to form in all material respects with the applicable accounting requirements of
the Securities Act or the Exchange Act, as applicable, and the published rules
and regulations thereunder.
(3) On the basis of procedures referred to in such letter, including
a reading of the minute books of the Company since the end of the most recent
fiscal year with respect to which an audit report has been issued, performing
the procedures specified by the American Institute of Certified Public
Accountants for a review of interim financial information as described in SAS
No. 71, Interim Financial Information, on the unaudited consolidated interim
financial statements of the Company included or incorporated by reference in the
Registration Statement and Prospectus and reading the internal unaudited
consolidated interim financial data, if any, for the period from the date of the
latest balance sheet included or incorporated by reference in the Registration
Statement and Prospectus to the date of the latest available internal interim
financial data (which internal unaudited interim financial data, if any, will be
attached to each such letter to the Underwriters); and making inquiries of
officials of the Company responsible for financial and accounting matters
(including inquiries with respect to whether the unaudited consolidated
financial statements comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and inquiries of certain
officials of the Company who have responsibility for financial and accounting
matters whether the internal unaudited consolidated interim financial statements
are stated on a basis substantially consistent with that of the audited
consolidated financial statements incorporated by reference in the Registration
Statement), nothing caused them to believe that:
(A) (i) any material modifications should be made to the unaudited
consolidated financial statements included in any Quarterly Reports on Form
10-Q which are incorporated by reference in the Registration Statement or
Prospectus (the "10-Q Financials") for them to be in conformity with
generally accepted accounting principles applicable to such financial
statements and (ii) the 10-Q Financials do not comply as to form in all
material respects with the applicable requirements of the Exchange Act as
it applies to Form 10-Q and the related published rules and regulations; or
(B) the internal unaudited consolidated interim financial statements
of the Company are not in conformity with generally accepted accounting
principles applied
<PAGE>
II-2
on a basis substantially consistent with that of the audited consolidated
financial statements incorporated by reference in the Registration
Statement; or
(C) at the date of the latest available internal unaudited
consolidated interim financial statements of the Company, there was any
decrease in consolidated shareholders' equity as compared with amounts
shown in the latest balance sheet included or incorporated by reference in
the Prospectus except in all instances for decreases that the Prospectus
discloses have occurred or may occur or as may be set forth in such letter;
or
(D) for the period from the date of the latest balance sheet included
or incorporated by reference in the Prospectus to the date of the latest
available internal financial statements of the Company, there was any
decrease, as compared with the corresponding period of the previous year,
in consolidated net interest income, consolidated net interest income after
provision for possible loan losses, consolidated income before taxes or in
the total or per common share amounts of consolidated net income, except in
all cases for changes or decreases that the Prospectus discloses have
occurred or may occur or as may be set forth in such letter;
(E) as of a specified date not more than five days prior to the date
of delivery of such letter to the Representative(s), there was any decrease
in consolidated shareholders' equity as compared with the [amount shown in
the latest balance sheet included or incorporated by reference in the
Prospectus/amount shown in the latest internal unaudited consolidated
interim financial statements], except for any decrease that the
Registration Statement discloses has occurred or may occur.
(4) In addition to their examination referred to in their reports
incorporated by reference in the Registration Statement and Prospectus and the
procedures referred to in (3) above, (a) they have carried out certain other
procedures, not constituting an audit, with respect to certain of the dollar
amounts, percentages and other financial information (in each case to the extent
that such dollar amounts, percentages and other financial information, either
directly or by analysis or computation, are derived from the general accounting
records of the Company and its subsidiaries) which are included or incorporated
by reference in the Prospectus (other than those appearing in the audited
financial statements included therein and other than the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 and Current Report on
Form 8-K filed on March 16, 1994) and appear in the Prospectus or incorporated
documents, as agreed to by officers of the Company and the Representative(s),
and have found such dollar amounts, percentages and financial information to be
in agreement with the general accounting records of the Company and its
subsidiaries and (b) if any pro forma financial information is included or
incorporated by reference in the Registration Statement and Prospectus, they
have carried out other procedures, not constituting an audit, with respect to
such pro forma financial information and indicated the results thereof, if
requested by the Representative(s) and agreed to by officers of the Company.
<PAGE>
KeyCorp
$750,000,000
Medium-Term Notes, Series __
Due 9 months or more from Date of Issue
DISTRIBUTION AGREEMENT
----------------------
, 1994
------------
CS FIRST BOSTON CORPORATION
Park Avenue Plaza
55 East 52nd Street
New York, New York 10005
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
KIDDER, PEABODY & CO. INCORPORATED
10 Hanover Square
New York, New York 10005
LEHMAN BROTHERS INC.
World Financial Center
American Express Tower
New York, New York 10285
J.P. MORGAN SECURITIES INC.
60 Wall Street
New York, New York 10260
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
Dear Sirs:
KeyCorp, an Ohio corporation (the "Company"), confirms its agreement
with each of you with respect to the issue and sale from time to time by the
Company of its Medium-Term Notes, Series __ due 9 months or more from date of
issue (the "Notes") in an
<PAGE>
2
aggregate initial offering price of up to $750,000,000 (or the equivalent
thereof in one or more foreign currencies or composite currencies), as such
amount shall be reduced by the aggregate initial offering price of any other
debt securities issued by the Company, whether within or without the United
States ("Other Securities") pursuant to the registration statement referred to
below, and agrees with each of you (individually, an "Agent", and collectively,
the "Agents", which term shall include any additional agents appointed pursuant
to Section 13 hereof) as set forth in this Agreement. The Notes may be issued
as senior indebtedness (the "Senior Notes") or as subordinated indebtedness (the
"Subordinated Notes") of the Company. The Senior Notes will be issued under an
indenture, dated as of June ____, 1994 (as the same may be supplemented or
amended from time to time, the "Senior Indenture"), between the Company and
Bankers Trust Company, as Trustee (the "Senior Trustee"), and the Subordinated
Notes will be issued under an indenture, dated as of June ____, 1994 (as the
same may be supplemented or amended from time to time, the "Subordinated
Indenture"), between the Company and Bankers Trust Company, as Trustee (the
"Subordinated Trustee"). The Senior Indenture and Subordinated Indenture are
herein sometimes collectively referred to individually as an "Indenture" and
collectively as "Indentures" and the Senior Trustee and Subordinated Trustee are
herein sometimes collectively referred to individually as a "Trustee" and
collectively as the "Trustees". Wherever the terms "Indenture" and "Trustee"
are used with respect to a specific issuance of Notes they shall mean the Senior
Indenture and Senior Trustee, in the case of an issuance of unsecured and
unsubordinated Notes, and the Subordinated Indenture and Subordinated Trustee,
in the case of an issuance of unsecured and subordinated Notes. The Notes shall
have the maturities, interest rates, redemption provisions, if any, and other
terms set forth in the supplement to the Basic Prospectus referred to below.
The Notes will be issued, and the terms and rights thereof established, from
time to time by the Company in accordance with the Indenture.
On the basis of the representations and warranties herein contained,
but subject to the terms and conditions stated herein and to the reservation by
the Company of the right to sell Notes directly to investors (other than broker-
dealers, except as provided in Section 2(a)) on its own behalf, the Company
hereby (i) appoints the Agents as the agents of the Company for the purpose of
soliciting and receiving offers to purchase Notes from the Company by others
pursuant to Section 2(a) hereof and (ii) agrees that, except as otherwise
contemplated herein, whenever it determines to sell Notes directly to any Agent
as principal, it will enter into a separate agreement (each such agreement a
"Terms Agreement"), substantially in the form of Exhibit A hereto, relating to
such sale in accordance with Section 2(b) hereof.
The Company has prepared and filed a registration statement on Form
S-3 (No. 33-53643), including a prospectus, relating to the Notes with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Securities Act").
The Company also has filed with, or proposes to file with, the Commission
pursuant to Rule 424 under the Securities Act
<PAGE>
3
supplements to the Basic Prospectus included in the Registration Statement that
will describe certain terms of the Notes. The Registration Statement, including
the exhibits thereto, as amended to the Commencement Date (as hereinafter
defined) is hereinafter referred to as the "Registration Statement" and the
prospectus in the form in which it appears in the Registration Statement is
hereinafter referred to as the "Basic Prospectus". The Basic Prospectus as
supplemented by the prospectus supplement or supplements (each a "Prospectus
Supplement") specifically relating to the Notes in the form filed with, or
transmitted for filing to, the Commission pursuant to Rule 424 under the
Securities Act is hereinafter referred to as the "Prospectus". Any reference in
this Agreement to the Registration Statement, the Basic Prospectus, any
preliminary form of Prospectus (a "preliminary prospectus") previously filed
with the Commission pursuant to Rule 424 or the Prospectus shall be deemed to
refer to and include the documents, if any, incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act which were filed under
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission thereunder (collectively, the "Exchange Act") on or before the
date of this Agreement or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be; and any reference to "amend",
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, any preliminary prospectus or the Prospectus, including any
supplement to the Prospectus that sets forth only the terms of a particular
issue of the Notes (a "Pricing Supplement"), shall be deemed to refer to and
include any documents filed under the Exchange Act after the date of this
Agreement, or the date of the Basic Prospectus, any preliminary prospectus or
the Prospectus, as the case may be, which are deemed to be incorporated by
reference therein.
1. Representations. The Company represents and warrants to, and
---------------
agrees with, each Agent as of the Commencement Date (as hereinafter defined), as
of each date on which you solicit offers to purchase Notes, as of each date on
which the Company accepts an offer to purchase Notes (including any purchase by
an Agent as principal pursuant to a Terms Agreement or otherwise), as of each
date the Company issues and sells Notes and as of each date the Registration
Statement or the Basic Prospectus is amended or supplemented, as follows (it
being understood that such representations and warranties shall be deemed to
relate to the Registration Statement, the Basic Prospectus and the Prospectus,
each as amended or supplemented to each such date):
(a) The Registration Statement has been declared effective by the
Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of the
Company, threatened by the Commission.
(b) The Company meets the requirements for use of Form S-3 under the
Securities Act and the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) comply, or will comply, as the case may be, in all
material respects with the
<PAGE>
4
Securities Act and the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Trust Indenture Act"); each part of the Registration Statement and any
amendment or supplement thereto, as of the date such part became or becomes
effective, did not or will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; each Prospectus,
and any amendment or supplement thereto, as of the date thereof, did not or
will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to (i)
that part of the Registration Statement which shall constitute the
Statement of Eligibility (Form T-1) under the Trust Indenture Act of the
Trustee or (ii) the information contained in or omitted from the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Agent
specifically for use in connection with the preparation of the Registration
Statement and such Prospectus.
(c) The document incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, comply, or will comply, as the case may be, in all material respects to
the requirements of the Securities Act or the Exchange Act, as applicable,
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
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 Securities Act or the Exchange
Act, as applicable, 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.
(d) (i) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Ohio, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus, and is duly registered as a
bank holding company under the Bank Holding Company Act of 1956, as
amended, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure
to be so qualified or in good standing, considering all such cases in the
aggregate, does not involve a material risk to the business, properties,
financial position or results of operations of the Company and its
subsidiaries; (ii) each of its national bank
<PAGE>
5
subsidiaries is a duly organized and validly existing national banking
association under the laws of the United States, continues to hold a valid
certificate to do business as such and has full power and authority to
conduct its business as such; each of its state-chartered bank subsidiaries
is a duly organized and validly existing state-chartered bank under the
laws of the jurisdiction of its organization, continues to hold a valid
certificate to do business as such and has full power and authority to
conduct its business as such; each of its federal savings association
subsidiaries is a duly organized and validly existing federal savings
association under the laws of the United States, continues to hold a valid
certificate to do business as such and has full power and authority to
conduct its business as such; each of its other significant subsidiaries,
as defined in Regulation S-X (the "Significant Subsidiaries"), is duly
organized and validly existing under the laws of the jurisdiction of its
organization with corporate power and authority under such laws to conduct
its business; and (iii) all of the outstanding shares of capital stock of
each such subsidiary have been duly authorized and validly issued, are
fully paid and non-assessable (except, with respect to any subsidiary that
is a national bank, as provided by Section 55 of Title 12 of the United
States Code; and, with respect to any subsidiary that is a bank
incorporated under state law, except as provided by the laws of any such
states and except as otherwise stated in the Registration Statement) are
owned beneficially by the Company subject to no security interest, pledge,
lien, charge or other encumbrance or adverse claim.
(e) Each of this Agreement and any other applicable Terms Agreement
has been duly authorized, executed and delivered by the Company.
(f) The Notes have been duly authorized and established in conformity
with the provisions of the relevant Indenture, and, when issued and
delivered in accordance with the Indenture and delivered to and paid for by
the purchasers thereof in accordance with this Agreement and any applicable
Terms Agreement, will have been duly executed, issued and delivered by the
Company and will constitute valid and binding obligations of the Company
enforceable in accordance with their terms subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles and will be entitled to the benefits provided by the
Indenture, the Indenture has been duly authorized, executed and delivered
by the Company and qualified under the Trust Indenture Act and constitutes
a valid and binding instrument enforceable in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Indenture
conforms, and the Notes of any particular issuance of Notes will conform in
all material respects, to the summary descriptions thereof in the
Prospectus as amended or supplemented to relate to such issuance of Notes.
<PAGE>
6
(g) The execution and delivery by the Company of this Agreement, the
Notes, the Indentures and any applicable Terms Agreement, the issue and
sale of the Notes and the performance by the Company of all of its
obligations under this Agreement, the Notes, the Indentures and any Terms
Agreement, and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, nor will such action contravene or result in any violation of the
provisions of the Amended and Restated Articles of Incorporation or the
Regulations of the Company or any applicable statute, rule or regulation or
to the best of its knowledge, any order of any court or governmental agency
or body having jurisdiction over the Company, its subsidiaries or any of
their respective properties.
(h) To the knowledge of the Company and except as set forth in the
Prospectus, there is no threatened action, suit or proceeding that could
reasonably be expected to result in any material adverse change in the
condition (financial or other), business or results of operations of the
Company and its subsidiaries, or could reasonably be expected to materially
and adversely affect the properties or assets thereof.
(i) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition (financial or other), business or
results of operations of the Company and its subsidiaries, otherwise than
as set forth or contemplated in the Prospectus.
(j) The Company has complied and will comply with all applicable
provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida
Statutes, and all regulations promulgated thereunder relating to issuers
doing business in Cuba.
(k) Immediately after any sale of Notes by the Company hereunder or
under any applicable Terms Agreement, the aggregate amount of Notes which
shall have been issued and sold by the Company hereunder or under any Terms
Agreement and of any securities of the Company (other than the Notes) that
shall have been issued and sold pursuant to the Registration Statement will
not exceed the amount of securities registered under the Registration
Statement.
2. Solicitations as Agent; Purchases as Principal. (a)
----------------------------------------------
Solicitations as Agent. On the basis of the representations and warranties
- ----------------------
herein contained, but subject to
<PAGE>
7
the terms and conditions herein set forth, each of the Agents hereby severally
and not jointly agrees, as agent of the Company, to use its reasonable efforts
to solicit offers to purchase the Notes from the Company upon the terms and
conditions set forth in the Prospectus as amended or supplemented from time to
time. So long as this Agreement shall remain in effect with respect to any
Agent, the Company shall not, without the consent of such Agent, solicit or
accept offers to purchase, or sell, Notes or any other debt securities with a
maturity at the time of original issuance of 9 months or more except pursuant
to this Agreement and any Terms Agreement, or except pursuant to a private
placement not constituting a public offering under the Securities Act or except
in connection with a firm commitment underwriting pursuant to an underwriting
agreement that does not provide for a continuous offering of medium-term debt
securities. However, the Company reserves the right to sell, and may solicit
and accept offers to purchase, Notes directly on its own behalf to investors
(other than broker-dealers, except to the extent set forth in the next
succeeding sentence). The Company may from time to time offer Notes for sale
otherwise than through an Agent; provided, however, that so long as this
Agreement shall be in effect the Issuer shall not solicit or accept offers to
purchase Notes through any agent other than an Agent without amending this
Agreement to appoint such agent an additional Agent hereunder on the same terms
and conditions as provided herein for the Agents and without giving the Agents
prior notice of such appointment; except, that if from time to time the Company
is approached by a prospective agent offering to solicit a specific purchase of
Notes, the Company may engage such agent with respect to such specific purchase,
only if, (i) such agent is engaged on terms substantially similar (including the
same commission schedule as set forth herein) to the applicable terms of this
Agreement (without being required to become a party hereto) and (ii) the Agents
are given notice of such purchase promptly, in each case after the purchase is
agreed to.
The Company reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase Notes. Upon receipt of at least one business
day's prior notice from the Company, each Agent will suspend solicitation of
offers to purchase Notes from the Company until such time as the Company has
advised such Agent or Agents that such solicitation may be resumed. During the
period of time that such solicitation is suspended, the Company shall not be
required to deliver any opinions, letters or certificates in accordance with
Sections 4(i), 4(j) and 4(k); provided that if the Registration Statement or
Prospectus is amended or supplemented during the period of suspension (other
than by an amendment or supplement providing solely for a change in the interest
rates, redemption provisions, amortization schedules or maturities offered for
the Notes or for a change that the Agents deem to be immaterial), no Agent shall
be required to resume soliciting offers to purchase Notes until the Company has
delivered such opinions, letters and certificates as such Agent may request.
The Company agrees to pay each Agent, as consideration for the sale of
each Note resulting from a solicitation made or an offer to purchase received by
such Agent, a
<PAGE>
8
commission in the form of a discount from the purchase price of such Note in an
amount equal to the following applicable percentage of the principal amount of
such Note sold:
<TABLE>
<CAPTION>
Commission
(percentage of
aggregate
principal amount
Range of Maturities of Notes sold)
- ------------------- ----------------
<S> <C>
From 9 months to less than 1 year................... %
From 1 year to less than 18 months.................. %
From 18 months to less than 2 years................. %
From 2 years to less than 3 years................... %
From 3 years to less than 4 years................... %
From 4 years to less than 5 years................... %
From 5 years to less than 6 years................... %
From 6 years to less than 7 years................... %
From 7 years to less than 10 years.................. %
From 10 years to less than 15 years................. %
From 15 years to less than 20 years................. %
From 20 years to 30 years........................... %
Greater than 30 years............................... Negotiated at the
time of issuance
</TABLE>
The Agents are authorized to solicit offers to purchase Notes only in
the principal amount of $100,000 (or, in the case of Notes not denominated in
U.S. dollars, the equivalent thereof in the applicable foreign currency or
composite currency, rounded down to the nearest 1,000 units of such foreign
currency or composite currency) or any amount in excess thereof which is an
integral multiple of $1,000 (or, in the case of Notes not denominated in U.S.
dollars, 1,000 units of such foreign currency or composite currency). Each
Agent shall communicate to the Company, orally or in writing, each offer to
purchase Notes received by such Agent as agent that in its judgment should be
considered by the Company. The Company shall have the sole right to accept
offers to purchase the Notes and may reject any such offer in whole or in part.
Each Agent shall have the right, in its sole discretion, to reject any offer to
purchase Notes, as a whole or in part, that it considers to be unacceptable and
any such rejection shall not be deemed a breach of its agreements herein
contained. The procedural details relating to the issue and delivery of Notes
sold by an Agent as agent and the payment therefor are set forth in the
Administrative Procedures (as hereinafter defined).
(b) Purchase as Principal. Each sale of Notes to any Agent as
---------------------
principal shall be made in accordance with the terms of this Agreement and
(unless such Agent shall otherwise agree) a Terms Agreement which will provide
for the sale of such Notes to, and
<PAGE>
9
the purchase and reoffering thereof by, such Agent. Each Terms Agreement will
take the form of Exhibit A hereto but may take the form of either (i) a written
agreement between you and the Company which may be substantially in the form of
Exhibit A hereto or (ii) an oral agreement between you and the Company confirmed
in writing by you to the Company.
The commitment of any Agent to purchase Notes as principal, whether
pursuant to any Terms Agreement or otherwise, shall be deemed to have been made
on the basis of the representations and warranties (made or deemed to have been
made as of the date of the Terms Agreement and as of the Time of Delivery (as
defined below)) of the Company herein contained and shall be subject to the
terms and conditions set forth herein and in the applicable Terms Agreement.
Each Terms Agreement by an Agent to purchase Notes as principal (pursuant to a
Terms Agreement or otherwise) shall specify the principal amount of Notes to be
purchased by such Agent pursuant thereto, the price to be paid to the Company
for such Notes, the maturity date of such Notes, the interest rate or interest
rate basis, if any, applicable to such Notes, any other terms of such Notes, the
time and date and place of delivery of and payment for such Notes (the time and
date of any and each such delivery and payment, the "Time of Delivery"), any
provisions relating to rights of, and default by, underwriters acting together
with such Agent in the reoffering of Notes, and shall also specify any
requirements for opinions of counsel, accountants' letters and officers'
certificates pursuant to Section 4 hereof. Unless otherwise specified in a
Terms Agreement, the procedural details relating to the issue and delivery of
Notes purchased by an Agent as principal and the payment therefore shall be as
set forth in the Administrative Procedures.
Unless otherwise specified in a Terms Agreement, if you are purchasing
Notes as principal you may resell such Notes to other dealers or to investors
and other purchasers. Any such sales to other dealers may be at a discount,
which shall not exceed the amount set forth in the Prospectus Supplement
relating to such Notes. Any such sales to investors and other purchasers may be
at prevailing market prices, or prices related thereto at the time of such
resale, at negotiated prices or otherwise, as determined by the Agent.
(c) Obligations Several. The Company acknowledges that the
-------------------
obligations of the Agents are several and not joint and, subject to the
provisions of this Section 2, each Agent shall have complete discretion as to
the manner in which it solicits purchasers for the Notes and as to the identity
thereof.
(d) Administrative Procedures. The Agents and the Company agree to
-------------------------
perform their respective duties and obligations specifically provided to be
performed in the Medium-Term Notes Administrative Procedures (the
"Administrative Procedures") attached hereto as Exhibit B, as the same may be
amended from time to time. The Administrative Procedures may be amended only by
written agreement of the Company and the Agents.
<PAGE>
10
3. Commencement Date. The documents required to be delivered
-----------------
pursuant to Section 6 hereof on the Commencement Date (as defined below) or as
a condition precedent to your obligation to begin soliciting offers to
purchase Notes as agent of the Company shall be delivered to the Agents at the
offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York, at
11:00 a.m., New York City time, on the date of this Agreement, which date and
time of such delivery may be postponed by agreement between the Agents and the
Company but in no event shall be later than the day prior to the date on which
solicitation of offers to purchase Notes is commenced or the first date on
which the Company accepts an offer by any Agent to purchase Notes as principal
(such time and date being referred to herein as the "Commencement Date").
4. Covenants of the Company. The Company covenants and agrees
------------------------
with each Agent:
(a) (i) To make no amendment or supplement to the Registration
Statement or the Prospectus prior to the termination of the offering of the
Notes pursuant to this Agreement or any Terms Agreement which shall be
reasonably disapproved by any Agent after reasonable opportunity to comment
thereon, provided, however, that the foregoing shall not apply to any of
the Company's periodic filings with the Commission described in subsection
(iii) below, copies of which filings the Company will cause to be delivered
to the Agents promptly after their transmission to the Commission for
filing; (ii) subject to the foregoing clause (i), promptly to cause each
Prospectus Supplement to be filed with or transmitted for filing to the
Commission in accordance with Rule 424(b) under the Securities Act and to
prepare, with respect to any Notes to be sold through or to such Agent
pursuant to this Agreement, a Pricing Supplement with respect to such Notes
in a form previously approved by such Agent and to file such Pricing
Supplement in accordance with Rule 424(b) under the Securities Act; and
(iii) promptly to file all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Notes. The Company will promptly advise each Agent (i) of the
filing of any amendment or supplement to the Basic Prospectus or any
amendment to the Registration Statement and of the effectiveness of any
such amendment to the Registration Statement, (ii) of the receipt of any
comments from the Commission with respect to the Registration Statement,
the Prospectus or the Prospectus Supplement, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the Notes
for offering or sale in any jurisdiction, or the institution or threatening
of any proceeding for any such purpose, or of any request by the Commission
for any amendment or supplement of the Registration Statement or Prospectus
or for additional information relating thereto or to any document
incorporated by reference in the Prospectus; and (iv) of the receipt by the
Company of any notification with respect to any suspension of the
qualification of the Notes for offering or sale in any jurisdiction, or the
<PAGE>
11
initiation or threatening of any proceeding for any such purpose. The
Company agrees to use every reasonable effort to prevent the issuance of
any such stop order or of any order suspending any such qualification
and, if issued, to use every reasonable effort to obtain the lifting
thereof at the earliest possible moment. If the Basic Prospectus is
amended or supplemented as a result of the filing under the Exchange Act
of any document incorporated by reference in the Prospectus, no Agent
shall be obligated to solicit offers to purchase Notes so long as it is
not reasonably satisfied with such document.
(b) To use its reasonable best efforts to qualify the Notes for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
Agents shall reasonably request and to continue such qualification in
effect so long as reasonably required in connection with the distribution
of the Notes and to pay all fees and expenses (including fees and
disbursements of counsel to the Agents) reasonably incurred in connection
with such qualification and in connection with the determination of the
eligibility of the Notes for investment under the laws of such
jurisdictions as such Agent may reasonably designate; provided, however,
that the Company shall not be required to file a general consent to service
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. The Company will file such
statements and reports as may be required by the laws of each jurisdiction
in which the Notes have been qualified as above provided.
(c) To furnish each Agent and counsel to the Agents, at the expense
of the Company, a signed copy of the Registration Statement (as originally
filed) and each amendment thereto, in each case including exhibits and
documents incorporated by reference therein and, during the period
mentioned in paragraph (d) below, to furnish each Agent as many copies of
the Prospectus (including all amendments and supplements thereto) and
documents incorporated by reference therein as such Agent may reasonably
request.
(d) If at any time when a prospectus relating to the Notes is
required to be delivered under the Securities Act, any event shall occur as
a result of which, in the opinion of counsel for the Agents or counsel for
the Company, 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 not misleading, or, if in the
opinion of the Agents or the Company, it is necessary at any time to amend
or supplement the Prospectus, as then amended or supplemented, to comply
with law, to immediately notify the Agents by telephone (with confirmation
in writing) and request each Agent (i) in its capacity as agent of the
Company, to suspend solicitation of offers to purchase Notes from the
Company (and, if so notified, such Agent shall cease such solicitations and
cease using the Prospectus as soon as practicable, but in
<PAGE>
12
any event not later than one business day later); and (ii) to cease sales
of any Notes such Agent may then own as principal. If the Company shall
decide to amend or supplement the Registration Statement or the
Prospectus, as then amended or supplemented, it shall so advise each
Agent promptly by telephone (with confirmation in writing) and, at its
expense, shall prepare and cause to be filed promptly with the Commission
an amendment or supplement to the Registration Statement or the
Prospectus, as then amended or supplemented, reasonably satisfactory in
all respects to the Agents, that will correct such statement or omission
or effect such compliance and will supply such amended or supplemented
Prospectus to the Agents in such quantities as you may reasonably
request. Notwithstanding the foregoing, if there is a mistake in the
written information furnished by the Agent or Agents to the Company for
use in the Prospectus and if such Prospectus is required to be reprinted,
then the expense of reprinting such Prospectus shall be borne, severally,
by the Agent or Agents who shall have furnished such incorrect
information. If any such amendment or supplement and any documents,
opinions, letters and certificates furnished to the Agents pursuant to
Sections 4(e), 4(i), 4(j) and 4(k) in connection with the preparation and
filing of such amendment or supplement are reasonably satisfactory in all
respects to the Agents, upon the filing with the Commission of such
amendment or supplement to the Prospectus or upon the effectiveness of an
amendment to the Registration Statement, the Agents will resume the
solicitation of offers to purchase Notes hereunder. Notwithstanding any
other provision of this Section 4(d), until the distribution of any Notes
any Agent may own as principal has been completed or in the event such
Agent, in the opinion of its counsel, is otherwise required to deliver a
prospectus in respect of a transaction in the Notes, if any event
described in this Section 4(d) occurs the Company will, at its own
expense, promptly prepare and file with the Commission an amendment or
supplement, satisfactory in all respects to such Agent; that will correct
such statement or omission or effect such compliance, will supply such
amended or supplemented Prospectus to such Agent in such quantities as
such Agent may reasonably request and shall furnish to such Agent
pursuant to Sections 4(e), 4(i), 4(j) and 4(k) such documents,
certificates, opinions and letters as it may request in connection with
the preparation and filing of such amendment or supplement.
(e) To furnish to the Agents during the term of this Agreement such
relevant documents and certificates of officers of the Company relating to
the business, operations and affairs of the Company, the Registration
Statement, the Basic Prospectus, any amendments or supplements thereto, the
Indentures, the Notes, this Agreement, the Administrative Procedures, any
applicable Terms Agreement and the performance by the Company of its
obligations hereunder or thereunder as the Agents may from time to time
reasonably request and shall notify the Agents promptly in writing of any
downgrading, or on its receipt of any notice of (i) any intended or
potential downgrading or (ii) any review or possible change that does not
indicate an improvement in the rating accorded any of the securities of, or
guaranteed by, the
<PAGE>
13
Company by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) under the
Securities Act.
(f) To make generally available to its security holders and to such
Agent as soon as practicable but not later than 90 days after the close of
the period covered thereby earnings statements which shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 of the
Commission promulgated thereunder covering periods of at least twelve
months beginning in each case with the first day of the fiscal quarter of
the Company occurring after the "effective date" (as defined in Rule 158)
of the Registration Statement with respect to each sale of Notes.
(g) So long as any Notes are outstanding, to furnish to such Agent
copies of all reports or other communications (financial or other)
furnished to holders of the Notes and copies of all annual reports,
quarterly reports and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and all material reports or other communications (financial or
other) furnished to or filed with any national securities exchange on which
any class of securities of the Company is listed.
(h) That, from the date of any applicable Terms Agreement with such
Agent or other agreement by such Agent to purchase Notes as principal with
a maturity of one year or longer and continuing to and including the
business day following the related Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of any debt securities of or
guaranteed by the Company which are denominated in the same currency as
such Notes and with a maturity of one year or longer, without the prior
written consent of such Agent.
(i) That each time the Registration Statement or the Prospectus shall
be amended or supplemented (other than by an amendment or supplement
providing solely for a change in the interest rates, redemption provisions,
amortization schedules or maturities offered on the Notes or for a change
the Agents deem to be immaterial) and each time the Company sells Notes to
such Agent as principal pursuant to a Terms Agreement or other agreement
and such Terms Agreement or other agreement specified the delivery of an
opinion under this Section 4(i) as a condition to the purchase of Notes
pursuant to such Terms Agreement or other agreement, the Company shall
furnish or cause to be furnished forthwith to such Agent a written opinion
of Thompson, Hine and Flory, and/or the General Counsel or any Senior
Managing Counsel to the Company, dated the date of such amendment or
supplement, or the related Time of Delivery relating to such sale, as the
case may be, in form satisfactory to such Agent, of the same tenor as the
opinion referred to in Section 6(b) hereof but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented to
the date of such opinion, or, in lieu of such opinion, counsel last
furnishing such an opinion, may furnish to the Agents a letter to the
effect that such Agent may rely on the opinion of such counsel which was
last
<PAGE>
14
furnished to such Agent to the same extent as though it were dated the
date of such letter (except that the statements in such last opinion
shall be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented to date of delivery of such
letter).
(j) That each time the Registration Statement or the Prospectus shall
be amended or supplemented to include or incorporate amended or
supplemented financial information and each time the Company sells Notes to
such Agent as principal pursuant to a Terms Agreement or other agreement
and such Terms Agreement or other agreement specifies the delivery of a
letter under this Section 4(j) as a condition to the purchase of Notes
pursuant to such Terms Agreement or other agreement, the Company shall
cause the independent certified public accountants who have certified the
financial statements of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement forthwith to
furnish such Agent a letter, dated the date of such amendment or supplement
or the related Time of Delivery relating to such sale, as the case may be,
of the same tenor as the letter referred to in Section 6(d) hereof but
modified to relate to the Registration Statement and the Prospectus as
amended or supplemented to the date of such letter with such changes as may
be necessary to reflect such amended or supplemented financial information
included or incorporated by reference in the Registration Statement or the
Prospectus as amended or supplemented, provided, however, that, with
respect to any financial information or other matter, such letter may
reconfirm as true and correct at such date, as though made at and as of
such date, rather than repeat, statements with respect to such financial
information or other matter made in the letter referred to in Section 6(d)
hereof which was last furnished to such Agent.
(k) That each time the Registration Statement or the Prospectus shall
be amended or supplemented (other than by an amendment or supplement
providing solely for a change in the interest rates, redemption provisions,
amortization schedules or maturities offered on the Notes or for a change
the Agents deem to be immaterial), and each time the Company sells Notes to
such Agent as principal and the applicable Terms Agreement or other
agreement specifies the delivery of a certificate under this Section 4(k)
as a condition to the purchase of Notes pursuant to such Terms Agreement or
other agreement, the Company shall furnish or cause to be furnished
forthwith to such Agent a certificate signed by an executive officer of the
Company, dated the date of such amendment or supplement or the related Time
of Delivery relating to such sale, as the case may be, of the same tenor as
the certificates referred to in Section 6(e) but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented to
the date of delivery of such certificate or to the effect that the
statements contained in the certificate referred to in Section 6(e) hereof
which was last furnished to such Agent are true and correct at such date as
though made at and as of such date (except that such statements shall be
deemed to relate to the Registration Statement and the Prospectus as
amended or supplemented to such date).
<PAGE>
15
5. Costs and Expenses. The Company covenants and agrees with each
------------------
Agent that the Company will, whether or not any sale of Notes is consummated,
pay all costs and expenses incident to the performance of its obligations
hereunder and under any applicable Terms Agreement, including without limiting
the generality of the foregoing, all costs and expenses: (i) incident to the
preparation, issuance, execution, authentication and delivery of the Notes,
including any expenses of the Trustee, (ii) incident to the preparation,
printing and filing under the Securities Act of the Registration Statement, the
Prospectus and any preliminary prospectus (including in each case all exhibits,
amendments and supplements thereto), (iii) incurred in connection with the
registration or qualification and determination of eligibility for investment of
the Notes under the laws of such jurisdictions as the Agents (or in connection
with any Terms Agreement, the applicable Agent) may designate (including fees of
counsel for the Agents (or such Agent) and their disbursements), (iv) in
connection with the listing of the Notes on any stock exchange, (v) related to
any filing with the National Association of Securities Dealers, Inc., (vi) in
connection with the printing (including word processing and duplication costs)
and delivery of this Agreement, the Indenture, any Blue Sky Memoranda and any
Legal Investment Survey and the furnishing to the Agents and dealers of copies
of the Registration Statement and the Prospectus, including mailing and
shipping, as herein provided, (vii) payable to rating agencies in connection
with the rating of the Notes, (viii) the reasonable fees and disbursements of
counsel for the Agents incurred in connection with the offering and sale of
the Notes, including any opinions to be rendered by such counsel hereunder and
(ix) any advertising and out-of-pocket expenses incurred by the Agents.
6. Conditions. The obligation of any Agent, as agent of the
----------
Company, at any time ("Solicitation Time") to solicit offers to purchase the
Notes, the obligation of any Agent to purchase Notes as principal pursuant to
any Terms Agreement or otherwise, and the obligation of any other purchaser to
purchase Notes shall in each case be subject (1) to the condition that all
representations and warranties of the Company herein and all statements of
officer's of the Company made in any certificate furnished pursuant to the
provisions hereof are accurate (i) in the case of an Agent's obligation to
solicit offers to purchase Notes, at and as of such Solicitation Time and (ii)
in the case of any Agent's or any other purchaser's obligation to purchase
Notes, at and as of the time the Company accepts the offer to purchase such
Notes and, as the case may be, at and as of the related Time of Delivery or time
of purchase; (2) to the condition that at or prior to such Solicitation Time,
time of acceptance, Time of Delivery or time of purchase, as the case may be,
the Company shall have complied with all its agreements and all conditions on
its part to be performed or satisfied hereunder; and (3) to the following
additional conditions when and as specified:
(a) Prior to such Solicitation Time or corresponding Time of Delivery
or time of purchase, as the case may be:
(i) the Prospectus as amended or supplemented (including, if
applicable, the Pricing Supplement) with respect to such Notes shall
have been filed with the Commission pursuant to Rule 424(b) under the
Securities Act
<PAGE>
16
within the applicable time period prescribed for such filing by the
rules and regulations under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission;
(ii) there shall not have occurred any downgrading, nor shall
any notice have been given of (i) any intended or potential
downgrading or (ii) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of or
guaranteed by the Company by any "nationally recognized statistical
rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act;
(iii) there shall not have occurred any change or any
development in or affecting particularly the business or properties of
the Company or its subsidiaries which, in the judgment of the
applicable Agent, materially impairs the investment quality of the
Notes; and
(iv) (A) trading generally shall not have been suspended on or
by, as the case may be, any of the New York Stock Exchange or the
American Stock Exchange, minimum or maximum prices for trading shall
not have been fixed, or maximum ranges for prices for securities shall
not have been required, on the New York Stock Exchange or the American
Stock Exchange, by such Exchange or by order of the Commission or any
other governmental authority having jurisdiction, (B) trading in any
securities of the Company shall not have been suspended by the
Commission or a national securities exchange or in any over-the-
counter market, (C) a general moratorium on commercial banking
activities in New York shall not have been declared by either Federal
or New York State authorities, or (D) there shall not have occurred
any outbreak or escalation of hostilities in which the United States
is involved, a declaration of war by Congress, any other substantial
national or international calamity or any other event or occurrence of
a similar character if, in the judgment of such Agent or Agents or of
such other purchaser, the effect of any such outbreak, escalation,
declaration, calamity or other event or occurrence makes it
impracticable or inadvisable to market the Notes on the terms and in
the manner contemplated in the Prospectus as amended or supplemented
at the Solicitation Time or at the time such offer to purchase was
made. Promptly after the determination by any such Agent or other
purchaser that it is impractical or inadvisable to market the Notes,
such Agent or other purchaser shall notify the Company of such
determination in writing; but the omission so to notify the Company
shall not act to modify the rights of the Agent or other purchaser
under this Section 6(a)(iv)(A).
(b) On the Commencement Date, and in the case of a purchase of Notes
by an Agent as principal pursuant to a Terms Agreement or otherwise, if
called for by
<PAGE>
17
the applicable Terms Agreement or other agreement, at the corresponding
Time of Delivery, the General Counsel or Senior Managing Counsel to the
Company and/or Thompson, Hine and Flory, counsel to the Company, as
indicated in the applicable Prospectus Supplement (it being understood that
any opinion with respect to Key Bank of New York or Key Bank of Washington
may be delivered by the General Counsel or Senior Managing Counsel to the
Company.) shall have furnished to the relevant Agent or Agents their
written opinion, dated the Commencement Date or Time of Delivery, as the
case may be, in form and substance satisfactory to such Agent or Agents, to
the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of Ohio and is duly
registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended; each of Society National Bank and Society
National Bank, Indiana (the "National Banks") is a duly organized and
validly existing national banking association under the laws of the
United States and continues to hold a valid certificate to do business
as such; each of Key Bank of New York and Key Bank of Washington (the
"State Banks") is a duly organized and validly existing state
chartered banking association under the laws of the State of New York
and the State of Washington, respectively, and each continues to hold
a valid certificate to do business as such; each of the Company, the
National Banks and the State Banks has full corporate power and
authority to conduct its business as described in the Registration
Statement and Prospectus and is duly qualified to do business in each
jurisdiction in which it owns or leases real property, except where
the failure to be so qualified, considering all such cases in the
aggregate, does not involve a material risk to the business,
properties, financial position or results of operations of the Company
and its subsidiaries taken as a whole; and all of the outstanding
shares of capital stock of each of the National Banks and the State
Banks have been duly authorized and validly issued, are fully paid and
non-assessable (exceptions to be specified) and (except as otherwise
stated in the Registration Statement) are owned beneficially by the
Company subject to no security interest, other encumbrance or adverse
claim.
(ii) This Agreement and any applicable Terms Agreement have been
duly authorized, executed and delivered by the Company.
(iii) The Notes conform in all material respects to the
description thereof contained or incorporated by reference in the
Prospectus and such description conforms in all material respects to
the rights set forth in the instruments defining the same.
(iv) The Notes have been duly authorized and, when executed,
authenticated and delivered in accordance with the terms of the
applicable
<PAGE>
18
Indenture and issued to and paid for by any purchaser of Notes sold
through an Agent as agent or any Agent as principal pursuant to any
Terms Agreement or other agreement, will be entitled to the benefits
of such applicable Indenture and will constitute valid and legally
binding obligations of the Company enforceable in accordance with
their terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(v) The Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
instrument of the Company enforceable in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Indenture has been duly qualified under the Trust Indenture Act.
(vi) The issue and sale of the Notes and the performance by the
Company of its obligations under the Notes, the Indenture, this
Agreement and any applicable Terms Agreement or other agreement
pursuant to which an Agent purchases Notes as principal 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 and provisions of, or constitute a default under, any statute,
rule or regulation, any agreement or instrument known to such counsel
to which the Company is a party or by which it is bound, the Company's
Articles of Incorporation or Regulations, or any order known to such
counsel of any court or governmental agency or body having
jurisdiction over the Company.
(vii) No consent, approval, authorization, order, registration
or qualification of or filing with any court or governmental agency or
body is required for the issue and sale of the Notes or the
consummation of the other transactions contemplated by this Agreement,
any applicable Terms Agreement or other agreement pursuant to which an
Agent purchases Notes as principal, or the Indenture, except such
consents, approvals, authorizations, registrations or qualifications
as have been obtained under the Securities Act and the Trust Indenture
Act and as may be required under state securities or Blue Sky laws in
connection offers and sales of the Notes from the Company and with
purchases of Notes.
(viii) The Registration Statement has become effective under the
Securities Act; any required amendment or supplement to the Prospectus
has been filed as required by Section 4(a) hereof; and to the best
knowledge of such counsel no stop order suspending the effectiveness
of the Registration
<PAGE>
19
Statement has been issued and no proceeding for that purpose has been
instituted or threatened by the Commission.
(ix) Such counsel is of the opinion ascribed to it in the
Prospectus under the caption "Taxation", if any.
(x) Such counsel (A) is of the opinion that the Registration
Statement and the Prospectus each as amended or supplemented on the
Commencement Date or the applicable Time of Delivery (except for the
financial statements and other financial and statistical data included
therein or omitted therefrom and the Statement of Eligibility (Form T-
1) under the Trust Indenture Act of the Trustee as to which such
counsel need express no opinion) complied as to form in all material
respects with the requirements of the Securities Act and the Exchange
Act and the respective rules thereunder, (B) has no reason to believe
that (except for the financial statements or other financial and
statistical data included therein or omitted therefrom and the
Statement of Eligibility (Form T-1) under the Trust Indenture Act of
the Trustee as to which such counsel need express no belief) each part
of the Registration Statement, as amended (including the documents
incorporated by reference therein), filed with the Commission pursuant
to the Securities Act relating to the Notes, when such part became
effective and, as of the date such opinion is delivered, contained any
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, (C) has no reason to believe that (except for
the financial statements and other financial and statistical data
included therein or omitted therefrom and the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of the Trustee as to which
such counsel need express no belief) the Prospectus, as amended or
supplemented, if applicable, as of the date such opinion is delivered
contains any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading and (D) does not know of any amendment to the Registration
Statement required to be filed which is not filed as required;
provided that in the case of an opinion delivered on the Commencement
Date or pursuant to Section 4(i) (other than in connection with a
Terms Agreement), the opinion and belief set forth in clauses (A) and
(C) above shall be deemed not to cover information concerning an
offering of particular Notes to the extent such information will be
set forth in a supplement to the Basic Prospectus.
Such opinion or opinions shall be to such further effect with respect
to other legal matters relating to this Agreement, and the sale of the
Notes, pursuant to this Agreement as counsel for the Agents may reasonably
request. Such opinion or opinions shall be limited to New York, Ohio,
Washington and federal law and, if
<PAGE>
20
applicable, the law of the state of incorporation of any other Significant
Subsidiary. In giving such opinion, such counsel may rely, as to all
matters governed by the laws of jurisdictions in which such counsel is not
qualified and the federal law of the United States, upon opinions of other
counsel, who shall be counsel satisfactory to counsel for the Agents, in
which case the opinion shall state that they believe you and they are
entitled to so rely. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company, the National Banks
and the State Banks and the Significant Subsidiaries and certificates of
public officials.
In rendering their opinion, such counsel may rely upon the opinion of
Shearman & Sterling referred to below as to any matters governed by New
York law covered therein.
(c) On the Commencement Date, and in the case of a purchase of Notes
by an Agent as principal pursuant to a Terms Agreement or otherwise, if
called for by the applicable Terms Agreement or other agreement, at the
corresponding Time of Delivery, Shearman & Sterling, counsel to the Agents,
shall have furnished to the relevant Agent or Agents such opinion or
opinions, dated the Commencement Date or Time of Delivery, as the case may
be, to the effect that the opinion delivered pursuant to Section 6(b)
appears on its face to be appropriately responsive to the requirements of
this Agreement and with respect to the incorporation of the Company, the
validity of the Indenture, the securities, the Registration Statement, the
Prospectus as amended or supplemented and other related matters as such
Agent or Agents may reasonably request, and in each case such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters. In rendering their opinion, such
counsel may rely upon the opinion rendered on behalf of the Company
referred to above as to all matters of Ohio law.
(d) On the Commencement Date, and in the case of a purchase of Notes
by an Agent as principal pursuant to a Terms Agreement or otherwise, if
called for by the applicable Terms Agreement or other agreement, at the
corresponding Time of Delivery, the Company's independent certified public
accountants who have certified the financial statements of the Company and
its subsidiaries included or incorporated by reference in the Registration
Statement and Prospectus, as then amended or supplemented, shall have
furnished to the relevant Agent or Agents a letter, dated the Commencement
Date or Time of Delivery, as the case may be to the effect set forth in
Annex I hereto.
(e) On the Commencement Date, and in the case of a purchase of Notes
by an Agent as principal pursuant to a Terms Agreement or otherwise, if
called for by the applicable Terms Agreement or other agreement, at the
corresponding Time of Delivery, the relevant Agent or Agents shall have
received from the Company a certificate or certificates signed by the
Chairman of the Board, the President or an
<PAGE>
21
Executive Vice President, and by the principal financial or accounting
officer, dated the Commencement Date or Time of Delivery, as the case may
be, to the effect that, to the best of their knowledge based upon
reasonable investigation (1) the representations and warranties of the
Company contained herein are true and correct on and as of the Commencement
Date or Time of Delivery, as the case may be, as if made on and as of such
date, and the Company has complied with all agreements and all conditions
on its part to be performed or satisfied hereunder or under the applicable
Terms Agreement or other agreement at or prior to the Commencement Date or
Time of Delivery, as the case may be, and (2) no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceeding for that purpose has been instituted or is threatened by the
Commission.
(f) On the Commencement Date and at each Time of Delivery, the
Company shall have furnished to the relevant Agent or Agents such further
certificates and documents as such Agent or Agents may reasonably request.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form
and substance to the relevant Agent or Agents. The Company will furnish
the relevant Agent or Agents with such conformed copies of such opinions,
certificates, letters and other documents as the relevant Agent or Agents
shall reasonably request.
7. Indemnification and Contribution. (a) The Company will
--------------------------------
indemnify and hold harmless each Agent against any losses, claims, damages or
liabilities, joint or several, to which such Agent may become subject, under the
Securities 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
part of the Registration Statement when such part became effective, any
preliminary prospectus, the Prospectus or any amendment or supplement thereto,
or any other prospectus with respect to the Notes, 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 Agent for any legal or other expenses reasonably
incurred by it in connection with investigating or defending against such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that (i) the Company shall not 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 therein in reliance upon and in conformity with written information
furnished to the Company by you, or by any Agent through you, specifically for
use therein and (ii) such indemnity with respect to any Preliminary Prospectus
shall not inure to the benefit of any Agent (or any person controlling such
Agent) to the extent that any such loss, claim, damage or liability of such
Agent results from the fact that such Agent sold Notes to a person as to whom it
shall be established that there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) in any case
<PAGE>
22
where such delivery is required by the Securities Act if the Company has
previously furnished copies thereof in sufficient quantity to such Agent and the
loss, claim, damage or liability of such Agent results from an untrue statement
or omission of a material fact contained in the Preliminary Prospectus which was
corrected in the Prospectus (excluding documents incorporated by reference) or
in the Prospectus as then amended or supplemented (excluding documents
incorporated by reference).
(b) Each Agent will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Securities 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 part of the Registration Statement when such part became
effective, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or any other prospectus relating to the Notes, 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 therein in reliance upon and in conformity with written
information furnished to the Company by you, or by such Agent through you,
specifically for use therein, and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending against any such loss, claim, damage, liability or
action 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 the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
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 in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party provided,
however, that, if the defendants in any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party and
representations of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them, the indemnified party
or parties shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties (and the
reasonable fees and expenses of one such separate counsel shall be paid by the
indemnifying party). No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party.
<PAGE>
23
(d) If the indemnification provided for in this Section 7 is
unavailable 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,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Agents on the other from the
offering of the Notes or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Agents on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Agents on the other shall be deemed to be in the same proportion as the
total proceeds from the offering of the Notes (before deducting expenses)
received by the Company bear to the total compensation or profit (before
deducting expenses) received or realized by the Agents from the purchase and
resale, or underwriting, of the Notes. 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 Company or the Agents and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Company and the
Agents agree that it would not be just and equitable if contributions pursuant
to this subsection (d) were to be determined by pro rata allocation (even if the
Agents were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of 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 against any action or claim
which is the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), no Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Agent 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 Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Agents'
obligations in this subsection (d) to contribute shall be several in proportion
to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Agent within the meaning of the Securities Act; and the obligations of the
Agents under this Section 7 shall be
<PAGE>
24
in addition to any liability that the respective Agents may otherwise have and
shall extend, upon the same terms and conditions, to each director of the
Company (including any person who, with his consent, is named in the
Registration Statement as about to become a director of the Company), to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
8. Termination. (a) This Agreement may be terminated at any time
-----------
(i) by the Company with respect to any or all of the Agents or (ii) by any Agent
with respect to itself only, in each case upon the giving of written notice of
such termination to each other party hereto. Any Terms Agreement shall be
subject to termination in the discretion of the Agent or Agents that are parties
thereto by notice given to the Company prior to the payment for any Note to be
purchased thereunder, if at or prior to such time any of the conditions
specified in Section 6(a) hereof shall not have been satisfied. The termination
of this Agreement shall not require termination of any agreement by an Agent to
purchase Notes as principal (whether pursuant to a Terms Agreement or otherwise)
and the termination of such an agreement shall not require termination of this
Agreement. In the event this Agreement is terminated with respect to any Agent,
(x) this Agreement shall remain in full force and effect with respect to any
Agent as to which such termination has not occurred, (y) this Agreement shall
remain in full force and effect with respect to the rights and obligations of
any party which have previously accrued or which relate to Notes which are
already issued, agreed to be issued or the subject of a pending offer at the
time of such termination and (z) in any event, the provisions of the fourth
paragraph of Section 2(a), Section 2(c), the last sentence of Section 4(d) and
Sections 4(f), 4(g), 5, 7, 9, 10, 12 and 15 shall survive; provided that if at
the time of termination an offer to purchase Notes has been accepted by the
Company but the time of delivery to the purchaser or its agent of such Notes has
not yet occurred, the provisions of Sections 2(b), 2(d), 4(a) through 4(e), 4(h)
through 4(k) and 6 shall also survive. If any Terms Agreement is terminated,
the provisions of the last sentence of Section 4(d) and Sections 2(b), 2(d),
4(a), 4(b), 4(e), 4(g) through 4(k), 5, 6, 7, 9, 10, 12 and 15 (which shall have
been incorporated by reference in such Terms Agreement) shall survive.
(b) If this Agreement or any Terms Agreement shall be terminated by
an Agent or Agents because of any failure or refusal on the part of the Company
to comply with the terms or to fulfill any of the conditions of this Agreement
or any Terms Agreement or if for any reason the Company shall be unable to
perform its obligations under this Agreement or any Terms Agreement or any
condition of any Agent's obligations cannot be fulfilled, the Company agrees to
reimburse each Agent or such Agents as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and expenses of their counsel) reasonably incurred by such Agent or Agents
in connection with this Agreement or the offering of Notes.
<PAGE>
25
9. Position of the Agents. Each Agent, in soliciting offers to
----------------------
purchase Notes from the Company and in performing the other obligations of such
Agent hereunder (other than in respect of any purchase by an Agent as principal,
pursuant to a Terms Agreement or otherwise), is acting solely as agent for the
Company and not as principal and does not assume any obligation towards or
relationship of agency or trust with any purchaser of Notes. Each Agent will
make reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Notes from the Company was solicited by such
Agent and has been accepted by the Company, but such Agent shall not have any
liability to the Company in the event such purchase is not consummated for any
reason. If the Company shall default on its obligation to deliver Notes to a
purchaser whose offer it has accepted, the Company shall (i) hold the relevant
Agent harmless against any loss, claim, damage or liability arising from or as a
result of such default by the Company and (ii) notwithstanding such default, pay
to the Agent that solicited such offer any commission to which it would be
entitled in connection with such sale.
10. Representations and Agreements to Survive. The respective
-----------------------------------------
indemnities and contribution agreements, representations, warranties and
agreements of the Company herein or certificates of its officers and the Agents
set forth in or made pursuant to this Agreement or any agreement by an Agent to
purchase Notes as principal shall remain in full force and effect regardless of
any termination of this Agreement or any such agreement, any investigation made
by or on behalf of any Agent or any controlling person of any Agent, or the
Company, or any officer or director or any controlling person of the Company,
and shall survive each delivery of and payment for any of the Notes.
11. Notices. Except as otherwise specifically provided herein or in
-------
the Administrative Procedures, all statements, requests, notices and advices
hereunder shall be in writing, and effective only on receipt, and will be
delivered by hand, by mail (postage prepaid), by telegram (charges prepaid) or
by telecopier. Communications to the Agents will be sent, in the case of CS
First Boston Corporation, to Park Avenue Plaza, 55 East 52nd Street, New York,
New York 10005, Attention: Joseph D. Fashano (Facsimile Number: 212-318-0532),
in the case of Goldman, Sachs & Co., to 85 Broad Street, New York, New York
10004, Attention: Credit Department (Credit Control-Medium Term Notes)
(Facsimile Number: 212-357-8680), in the case of Kidder, Peabody & Co.
Incorporated, to 10 Hanover Square, New York, New York 10005, Attention:
Daniel McNamara (Facsimile Number: 212-797-8942), in the case of Lehman
Brothers Inc., to 3 World Financial Center, 12th Floor, New York, New York
10285, Attention: Medium Term Note Department (Facsimile Number: 212-528-1718,
copy to Christoph Becker), in the case of J.P. Morgan Securities Inc., to 60
Wall Street, 3rd Floor, New York, New York 10260, Attention: Medium Term Note
Desk (Facsimile Number: 212-648-5909), in the case of Salomon Brothers Inc.,
Seven World Trade Center, New York, New York 10048, Attention: Medium Term
Note Department (Facsimile Number: 212-783-2274) and, if sent to,the Company,
to it at 127 Public Square, Cleveland, Ohio 44114, Attention: Secretary and
---------
General Counsel (Telephone Number: (216) 689-5128; Telecopier Number: (216)
689-5681) with a Copy to: the Senior Managing Counsel -- Securities.
---- --
<PAGE>
26
12. Successors. This Agreement and any Terms Agreement shall be
----------
binding upon, and inure solely to the benefit of, each Agent and the Company,
and their respective successors and the officers, directors and controlling
persons referred to in Section 7 and (to the extent expressly provided in
Section 6) the purchasers of Notes, and no other person shall acquire or have
any right or obligation under or by virtue of this Agreement or any Terms
Agreement.
13. Amendments. This Agreement may be amended or supplemented if,
----------
but only if, such amendment or supplement is in writing and is signed by the
Company and each Agent; provided that the Company may from time to time, on 7
days prior written notice to the Agents but without the consent of any Agent,
amend this Agreement to add as a party hereto one or more additional firms
registered under the Exchange Act, whereupon each such firm shall become an
Agent hereunder on the same terms and conditions as the other Agents that are
parties hereto. The Agents shall sign any amendment or supplement giving effect
to the addition of any such firm as an Agent under this Agreement.
14. Business Day. Time shall be of the essence in this Agreement and
------------
any Terms Agreement. As used herein, the term "business day" shall mean any day
which is not a Saturday or Sunday or legal holiday or a day on which banks in
New York City are generally required or authorized by law or executive order to
close.
15. Applicable Law. This Agreement and any Terms Agreement shall be
--------------
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to the conflict of laws provisions thereof.
16. Counterparts. This Agreement and any Terms Agreement may be
------------
signed in counterparts, each of which shall be an original, and all of which
together shall constitute one and the same instrument.
17. Headings. The headings of the sections of this Agreement have
--------
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
<PAGE>
27
If the foregoing is in accordance with your understanding, please sign
and return to us five counter-parts hereof, whereupon this letter and the
acceptance by each of you thereof shall constitute a binding agreement between
the Company and each of you in accordance with its terms.
Very truly yours,
KeyCorp
By:
---------------------------
Accepted in New York, New York,
as of the date first above written:
CS First Boston Corporation
By:
-------------------------
Name:
Title:
- ----------------------------
(Goldman, Sachs & Co.)
Kidder, Peabody & Co. Incorporated
By:
-------------------------
Name:
Title:
<PAGE>
28
Lehman Brothers Inc.
By:
-------------------------
Name:
Title:
J.P. Morgan Securities Inc.
By:
-------------------------
Name:
Title:
Salomon Brothers Inc
By:
-------------------------
Name:
Title:
<PAGE>
Exhibit A
KEYCORP
MEDIUM TERM NOTES, SERIES __
TERMS AGREEMENT
________, 199___
KeyCorp
127 Public Square
Cleveland, Ohio 44114
Attention: ______________
Re: Distribution Agreement dated as of ________, 1994 (the "Distribution
Agreement")
The undersigned agrees to purchase your Medium-Term Notes, Series __
having the following terms:
Specified Currency: __________________
Principal Amount: _________________________________
Original Issue Date: _________________
Settlement Date, Time and Place: _____________________
Maturity Date: ______________
Purchase Price: _____% of Principal Amount, plus accrued interest,
if any, from Settlement Date
Price to Public: _____% of Principal Amount, plus accrued interest,
if any, from Settlement Date
Redemption Date (Dates): , commencing
Initial Redemption Price:
Annual Redemption Price decrease:
Repayment Date (Dates):
<PAGE>
2
Repayment Price:
Initial accrual period OID:
Original Yield to Maturity
[(For Fixed Rate Notes)]
Interest Rate: ____________________
Applicability of modified payment upon acceleration:
If yes, state issue price:
Amortization schedule:
[(For Floating Rate Notes)]/*/
Initial Interest Rate: ___________________
Interest Rate Basis (Commercial Paper, LIBOR,
Treasury, ________): ________________
Index Maturity (30, 60, 90 days, 6 months, 1 year,
other): ____________________
Interest Reset Period (monthly, quarterly,
semiannually, annually): ______________________
Interest Payment Period (monthly, quarterly,
semiannually, annually): ______________________
Spread: _____________ points (+/-)
Spread Multiplier: _________%
Maximum Interest Rate: ____________%
Minimum Interest Rate: ____________%
Initial Interest Reset Date: ____________
Interest Reset Dates: ________________
- -------------------------
/*/ See Prospectus Supplement dated ___________ for explanation of terms.
<PAGE>
3
Interest Determination Dates: _____________
Interest Payment Dates: ____________
Calculation Agent: ]
Other terms of Securities:
Provisions relating to underwriter
default, if any:
The provisions of Sections 1, 2(b) and 2(d) and 4 through 7, 10, 11,
12 and 15 of the Distribution Agreement and the related definitions are
incorporated by reference herein and shall be deemed to have the same force and
effect as if set forth in full herein.
This Agreement is subject to termination in our absolute discretion on
the terms incorporated by reference herein. If this Agreement is so terminated,
the provisions set forth in the last sentence of Section 8 of the Distribution
Agreement shall survive for the purposes of this Agreement.
[The certificate referred to in Section 4(k) of the Distribution
Agreement, the opinion referred to in Section 4(i) of the Distribution Agreement
and the accountants' letter referred to in Section 4(j) of the Distribution
Agreement will be required.]
[Agent]
By: ______________________
(Title)
Accepted:
KEYCORP
By: _______________________
(Title)
<PAGE>
Exhibit B
KEYCORP
MEDIUM-TERM NOTES, SERIES __
ADMINISTRATIVE PROCEDURES
The Medium-Term Notes, Series __ (the "Notes"), are to be offered on a
continuous basis by KeyCorp (the "Company"). Each of CS First Boston
Corporation, Goldman Sachs & Co., Kidder, Peabody & Co. Incorporated, Lehman
Brothers Inc., J.P. Morgan Securities Inc. and Salomon Brothers Inc (each an
"Agent") has agreed to solicit offers to purchase the Notes. The Notes are
being sold pursuant to a Distribution Agreement dated as of _________, 1994 (the
"Agreement") between the Company and the Agents. In the Agreement, each Agent
has agreed to use reasonable efforts to solicit purchases of the Notes. Each
Agent, as principal, may purchase Notes for its own account and, if such Agent
so elects, the Company and such Agent will enter into a Terms Agreement, as
contemplated by the Agreement. The Company may also solicit offers to purchase
and may sell Notes directly on its own behalf to investors (other than broker-
dealers).
The Notes will be issued under an Indenture, dated as of _________,
1994 (as supplemented or amended from time to time, the "Senior Indenture")
between the Company and Bankers Trust Company, as trustee (the "Senior
Trustee"), with respect to unsecured and unsubordinated Notes, or the Indenture,
dated as of ________, 1994 (as supplemented or amended from time to time, the
"Subordinated Indenture"), between the Company and Bankers Trust Company, as
trustee (the "Subordinated Trustee"), with respect to unsecured and subordinated
Notes. The Senior Indenture and Subordinated Indenture are herein collectively
referred to as the "Indenture" and the Senior Trustee and Subordinated Trustee
are herein collectively referred to as the "Trustee." Wherever the terms
"Indenture" and "Trustee" are used with respect to a specific issuance of Notes
they shall mean the Senior Indenture and Senior Trustee, in the case of an
issuance of unsecured and unsubordinated Notes, and the Subordinated Indenture
and Subordinated Trustee, in the case of an issuance of unsecured and
subordinated Notes. The Trustee will be the Registrar, Calculation Agent,
Authenticating Agent and Paying Agent for the Notes, and will perform the duties
specified herein. Notes will bear interest at a fixed rate (the "Fixed Rate
Notes"), which may be zero in the case of certain original issue discount notes
(the "OID Notes"), or at floating rates (the "Floating Rate Notes"). Fixed Rate
Notes may pay a level amount in respect of both interest and principal amortized
over the life of the Notes ("Amortizing Notes"). Each Note will be represented
by either a Global Security (as defined below) delivered to the Trustee, as
agent for The Depository Trust Company ("DTC"), and recorded in the book-entry
system maintained by DTC (a "Book-Entry Note") or a certificate delivered to the
holder thereof or a person designated by such holder (a "Certificated Note").
Except in limited circumstances, an owner of a Book-Entry Note will not be
entitled to receive a Certificated Note.
<PAGE>
2
Book-Entry Notes, which may be payable solely in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC's
operating procedures, and Certificated Notes will be issued in accordance with
the administrative procedures set forth in Part I hereof. Unless otherwise
defined herein, terms defined in the Indenture or the Notes shall be used herein
as therein defined.
The Company will advise each Agent in writing of those persons
representing the Company with whom such Agent is to communicate regarding offers
to purchase Securities and the related settlement details.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will
perform the custodial, document control and administrative functions described
below, in accordance with its respective obligations under a Letter of
Representation from the Company and the Trustee to DTC, dated as of the date
hereof (the "Letter of Representation"), and a Medium-Term Note Certificate
Agreement between the Trustee and DTC, dated as of April 18, 1989 and its
obligations as a participant in DTC, including DTC's Same-Day Funds Settlement
System ("SDFS").
Issuance: On any date of settlement (as defined under "Settlement" below)
for one or more Book-Entry Notes, the Company will issue a single
global security in fully registered form without coupons (a
"Global Security") representing up to U.S $150,000,000 principal
amount of all such Notes that have the same Maturity Date,
redemption or repayment provisions, Interest Payment Dates,
Original Issue Date, original issue discount provisions (if any),
and, in the case of Fixed Rate Notes, Interest Rate, modified
payment upon acceleration (if any), amortization schedule (if
any) or, in the case of Floating Rate Notes, Initial Interest
Rate, Interest Payment Dates, Interest Payment Period,
Calculation Agent, Base Rate, Index Maturity, Interest Reset
Period, Interest Reset Dates, Spread or Spread Multiplier (if
any), Minimum Interest Rate (if any) and Maximum Interest Rate
(if any) and, in each case, any other relevant terms
(collectively "Terms"). Each Global Security will be dated and
issued as of the date of its authentication by the Trustee. Each
Global Security will bear an "Interest Accrual Date," which will
be (i) with respect to an original Global Security (or any
portion thereof), its original issuance date and (ii) with
respect to any Global Security (or any portion thereof) issued
subsequently upon exchange of a Global Security, or in lieu of a
destroyed, lost or stolen Global Security, the most recent
Interest Payment Date to which interest has been paid or duly
provided for on the predecessor Global
<PAGE>
3
Security or Securities (or if no such payment or provision has
been made, the original issuance date of the predecessor Global
Security), regardless of the date of authentication of such
subsequently issued Global Security. Book-Entry Notes may
currently be denominated and payable only in U.S. dollars. No
Global Security will represent (i) both Fixed Rate and Floating
Rate Book-Entry Notes or (ii) any Certificated Note. No Note
issued between a Record Date and the related Interest Payment
Date shall be issued as a Global Security within the meaning of
the Indenture.
Identification The Company has arranged with the CUSIP Service Bureau of
Numbers: Standard & Poor's Corporation (the "CUSIP Service Bureau") for
the reservation of a series of approximately 900 CUSIP numbers
(including tranche numbers) for assignment to the Global
Securities representing the Book-Entry Notes. The Company has
obtained from the CUSIP Service Bureau a written list of such
series of reserved CUSIP numbers and has delivered to the Trustee
and DTC the written list of 900 CUSIP numbers of such series.
The Company will assign CUSIP numbers to Global Securities as
described below under Settlement Procedure "B". DTC will notify
the CUSIP Service Bureau periodically of the CUSIP numbers that
the Company has assigned to Global Securities. At any time when
fewer than 100 of the reserved CUSIP numbers remain unassigned to
Global Securities, the Trustee shall so advise the Company and,
if it deems necessary, the Company will reserve additional CUSIP
numbers for assignment to Global Securities representing Book-
Entry Notes. Upon obtaining such additional CUSIP numbers, the
Company shall deliver a list of such additional CUSIP numbers to
the Trustee and DTC.
Registration: Each Global Security will be registered in the name of Cede &
Co., as nominee for DTC, on the security register maintained
under the Indenture. The beneficial owner of a Book-Entry Note
(or one or more indirect participants in DTC designated by such
owner) will designate one or more participants in DTC with
respect to such Note (the "Participants") to act as agent or
agents for such owner in connection with the book-entry system
maintained by DTC and DTC will record in book-entry form, in
accordance with instructions provided by such Participants, a
credit balance with respect to such beneficial owner in such Note
in the account of such Participants. The ownership interest of
such beneficial owner in such Note will be recorded through the
records of such Participants or through the separate records of
such Participants and one or more indirect participants in DTC.
<PAGE>
4
Transfers: Transfers of a Book-Entry Note will be accompanied by book
entries made by DTC and, in turn, by Participants (and in certain
cases, one or more indirect participants in DTC) acting on behalf
of beneficial transferors and transferees of such Note.
Exchanges: The Trustee may deliver to DTC and the CUSIP Service Bureau at
any time a written notice of consolidation specifying (i) the
CUSIP numbers of two or more Outstanding Global Securities that
represent Book-Entry Notes having the same Terms and for which
interest has been paid to the same date, (ii) a date, occurring
at least thirty days after such written notice is delivered and
at least thirty days before the next Interest Payment Date for
such Book-Entry Notes, on which such Global Securities shall be
exchanged for a single replacement Global Security and (iii) a
new CUSIP number to be assigned to such replacement Global
Security. Upon receipt of such a notice, DTC will send to its
Participants (including the Trustee) a written reorganization
notice to the effect that such exchange will occur on such date.
Prior to the specified exchange date, the Trustee will deliver to
the CUSIP Service Bureau a written notice setting forth such
exchange date and the new CUSIP number and stating that, as of
such exchange date, the CUSIP numbers of the Global Securities to
be exchanged will no longer be valid. On the specified exchange
date, the Trustee will exchange such Global Securities for a
single Global Security bearing the new CUSIP number and a new
Interest Accrual Date, and the CUSIP numbers of the exchanged
Global Securities will, in accordance with CUSIP Service Bureau
procedures, be cancelled and not immediately reassigned.
Notwithstanding the foregoing, if the Global Securities to be
exchanged exceed $150,000,000 in aggregate principal amount, one
Global Security will be authenticated and issued to represent
each $150,000,000, principal amount of the exchanged Global
Security and an additional Global Security will be authenticated
and issued to represent any remaining principal amount of such
Global Securities (see "Denominations" below).
Maturities: Each Book-Entry Note will mature on a date from nine months to 30
years from its date of issue.
Notice of The Trustee will give notice to DTC prior to each Redemption Date
Redemption and or Repayment Date (as specified in the Note), if any, at the
Repayment time and in the manner set forth in the Letter of
Dates: Representation.
Denominations: Book-Entry Notes will be issued in principal amounts of $100,000
or an integral multiple of $1,000 in excess thereof. Global
Securities will be denominated in principal amounts not in excess
of $150,000,000. If
<PAGE>
5
one or more Book-Entry Notes having an aggregate principal amount
in excess of $150,000,000 would, but for the preceding sentence,
be represented by a single Global Security, then one Global
Security will be issued to represent each $150,000,000 principal
amount of such Book-Entry Note or Notes and an additional Global
Security will be issued to represent any remaining principal
amount of such Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry Note or Notes
shall be assigned the same CUSIP number.
Interest: General. Interest on each Book-Entry Note will accrue from the
-------
Interest Accrual Date of the Global Security representing such
Note. Unless otherwise specified therein, each payment of
interest on a Book-Entry Note will include interest accrued to
but excluding the Interest Payment Date; provided that in the
case of Floating Rate Notes with respect to which the Interest
Reset Period is daily or weekly, interest payable on any Interest
Payment Date (other than interest payable on any date on which
principal thereof is payable, and, if the Note is a Book-Entry
Gap Note (as defined below), other than interest payable on the
first Interest Payment Date after the Original Issue Date
thereof) will include interest accrued through and including the
Record Date immediately preceding the Interest Payment Date,
except that at maturity or earlier redemption or repayment, the
interest payable will include interest accrued to, but excluding,
the Maturity Date or the date of redemption or repayment, as the
case may be. Interest payable at the maturity or upon redemption
or repayment of a Book-Entry Note will be payable to the person
to whom the principal of such Note is payable. Standard & Poor's
Corporation will use the information received in the pending
deposit message described under Settlement Procedure "C" below in
order to include the amount of any interest payable and certain
other information regarding the related Global Security in the
appropriate weekly bond report published by Standard & Poor's
Corporation.
Record Dates. The Record Date with respect to any Interest
------------
Payment Date shall be the date fifteen calendar days immediately
preceding such Interest Payment Date.
Fixed Rate Book-Entry Notes. Unless otherwise specified pursuant
---------------------------
to Settlement Procedure "A" below, interest payments on Fixed
Rate Book-Entry Notes, other than Amortizing Notes, will be made
semiannually on June 1 and December 1 of each year, and at
maturity or upon any earlier redemption or repayment and
principal and interest payments on Book-Entry Amortizing Notes
will be made semiannually
<PAGE>
6
on June 1 and December 1 of each year or quarterly on March 1,
June 1, September 1 and December 1 of each year, and at maturity
(or any redemption or repayment date); provided, however, that in
-------- -------
the case of a Fixed Rate Book-Entry Note issued between a Record
Date and an Interest Payment Date or on an Interest Payment Date,
the first interest payment will be made on the Interest Payment
Date following the next succeeding Record Date. If any Interest
Payment Date for a Fixed Rate Book-Entry Note is not a Business
Day, the payment due on such day shall be made on the next
succeeding Business Day and no interest shall accrue on such
payment for the period from and after such Interest Payment Date.
Floating Rate Book-Entry Notes. Interest payments will
------------------------------
be made on Floating Rate Book-Entry Notes monthly, quarterly,
semiannually or annually. Unless otherwise specified pursuant to
Settlement Procedure "A" below, interest will be payable, in the
case of Floating Rate Book-Entry Notes with a daily, weekly or
monthly Interest Reset Date, on the third Wednesday of each month
or on the third Wednesday of March, June, September and December,
as specified pursuant to Settlement Procedure "A" below; in the
case of Floating Rate Book-Entry Notes with a quarterly Interest
Reset Date, on the third Wednesday of March, June, September and
December of each year; in the case of Floating Rate Book-Entry
Notes with a semiannual Interest Reset Date, on the third
Wednesday of the two months specified pursuant to Settlement
Procedure "A" below; and in the case of Floating Rate Book-Entry
Notes with an annual Interest Reset Date, on the third Wednesday
of the month specified pursuant to Settlement Procedure "A"
below; provided, however, that if an Interest Payment Date for
-------- -------
Floating Rate Book-Entry Notes would otherwise be a day that is
not a Business Day with respect to such Floating Rate Book-Entry
Notes, such Interest Payment Date will be the next succeeding
Business Day with respect to such Floating Rate Book-Entry Notes,
except in the case of a LIBOR Note if such Business Day is in the
next succeeding calendar month, such Interest Payment Date will
be the immediately preceding Business Day; and provided, further,
-------- -------
that in the case of a Floating Rate Book-Entry Note issued
between a Record Date and the related Interest Payment Date (a
"Book-Entry Gap Note"), the first interest payment will be made
on the Interest Payment Date following the next succeeding Record
Date.
Notice of Interest Payment and Record Dates. On the first
------------------------------------- -----
Business Day of February, May, August and November of each year,
the Trustee will deliver to the Company and DTC a written list of
Record
<PAGE>
7
Dates and Interest Payment Dates that will occur with respect to
Book-Entry Notes during the six-month period beginning on such
first Business Day. Promptly after each date upon which interest
is determined for Floating Rate Notes issued in book-entry form,
the Calculation Agent will notify the Company, the Trustee and
Standard & Poor's Corporation of the interest rates determined on
such dates.
Calculation of Fixed Rate Book-Entry Notes. Interest on Fixed Rate Book-Entry
Interest: ---------------------------
Notes (including interest for partial periods) will be calculated
on the basis of a 360-day year of twelve thirty-day months.
Floating Rate Book-Entry Notes. Interest rates on Floating Rate
------------------------------
Book-Entry Notes will be determined as set forth in the form of
such Notes. Interest on Floating Rate Book-Entry Notes will be
calculated on the basis of actual days elapsed and a year of 360
days, except that, in the case of Treasury Rate Notes, interest
will be calculated on the basis of the actual number of days in
the year.
Payments of Payments of Interest Only. Promptly after each Record Date, the
Principal and -------------------------
Interest: Trustee will deliver to the Company and DTC a written notice
specifying by CUSIP number the amount of interest to be paid on
each Global Security other than an Amortizing Note on the
following Interest Payment Date (other than an Interest Payment
Date coinciding with maturity or any earlier redemption or
repayment date) and the total of such amounts. DTC will confirm
the amount payable on each such Global Security on such Interest
Payment Date by reference to the daily bond reports published by
Standard & Poor's Corporation. In the case of Amortizing Notes,
the Trustee will provide separate written notice to the Company
and to DTC prior to each Interest Payment Date at the time and in
the manner set forth in the Letter of Representation. The
Company will pay to the Trustee, as paying agent, the total
amount of interest due on such Interest Payment Date (and, in the
case of an Amortizing Note, principal and interest) (other than
at maturity), and the Trustee will pay such amount to DTC at the
times and in the manner set forth below under "Manner of
Payment."
Payments at Maturity or upon Redemption or Repayment. On or
------------------------------------------ ---------
about the first Business Day of each month, the Trustee will
deliver to the Company and DTC a written list of principal and
interest to be paid on each Global Security other than an
Amortizing Note maturing either at maturity or on a redemption or
repayment date in the following month. The Company and DTC will
confirm the amounts of such principal and interest payments with
respect to each such Global Security on or about the fifth
Business Day preceding the Maturity Date or redemption or
<PAGE>
8
repayment date of such Global Security. In the case of
Amortizing Notes, the Trustee will provide separate written
notice to the Company and to DTC prior to the Maturity Date and
any redemption or repayment date, as the case may be, at the
times and in the manner set forth in the Letter of
Representation. The Company will pay to the Trustee, as the
paying agent, the principal amount of such Global Security,
together with interest due at such Maturity Date or redemption or
repayment date. The Trustee will pay such amounts to DTC at the
times and in the manner set forth below under "Manner of
Payment."
Payments Not on Business Days. If any Interest Payment Date or
-----------------------------
the Maturity Date or redemption or repayment date of a Global
Security representing Fixed Rate Book-Entry Notes is not a
Business Day, the payment due on such day shall be made on the
next succeeding Business Day and no interest shall accrue on such
payment for the period from and after such Interest Payment Date,
Maturity Date or redemption or repayment date, as the case may
be. If any Interest Payment Date or the Maturity Date or
redemption or repayment date of a Global Security representing a
Floating Rate Book-Entry Note would otherwise fall on a day that
is not a Business Day, the payment due on such day shall be made
on the next succeeding day that is a Business Day with respect to
such Notes with the same effect as if such Business Day were the
Interest Payment Date, Maturity Date or date of redemption or
repayment, as the case may be, except that, in the case of Book-
Entry LIBOR Notes, if such Business Day is in the next succeeding
calendar month, such Interest Payment Date or redemption or
repayment date shall be the immediately preceding day that is a
Business Day with respect to such Book-Entry LIBOR Notes.
Promptly after payment to DTC of the principal and interest due
on the Maturity Date or redemption or repayment date of such
Global Security, the Trustee will cancel such Global Security in
accordance with the terms of the Indenture and deliver it to the
Company with a certificate of cancellation. On the first
Business Day of each month, the Trustee will deliver to the
Company a written statement indicating the total principal amount
of outstanding Book-Entry Notes as of the immediately preceding
Business Day.
Manner of Payment. The total amount of any principal and
-----------------
interest due on Global Securities on any Interest Payment Date or
at maturity or upon redemption or repayment shall be paid by the
Company to the Trustee in funds available for immediate use by
the Trustee as of 9:30 a.m. (New York City time) on such date.
The Company will make such payment on such Global Securities by
wire transfer to the
<PAGE>
9
Trustee or by instructing the Trustee to withdraw funds from an
account maintained by the Company at the Trustee. The Company
will confirm such instructions in writing to the Trustee. Prior
to 10 a.m. (New York City time) on each Maturity Date or
redemption or repayment date or, if either such date is not a
Business Day, as soon as possible thereafter, following receipt
of such funds from the Company the Trustee will pay by separate
wire transfer (using Fedwire message entry instructions in a form
previously specified by DTC) to an account at the Federal Reserve
Bank of New York previously specified by DTC, in funds available
for immediate use by DTC, each payment of principal (together
with interest thereon) due on Global Securities on any Maturity
Date or redemption or repayment date. On each Interest Payment
Date or, if any such date is not a Business Day, as soon as
possible thereafter, interest payments and, in the case of
Amortizing Notes, interest and principal payments shall be made
to DTC in same day funds in accordance with existing arrangements
between the Trustee and DTC. Thereafter on each such date, DTC
will pay, in accordance with its SDFS operating procedures then
in effect, such amounts in funds available for immediate use to
the respective Participants in whose names the Book-Entry Notes
represented by such Global Securities are recorded in the book-
entry system maintained by DTC. Neither the Company nor the
Trustee shall have any responsibility or liability for the
payment by DTC to such Participants of the principal of and
interest on the Book-Entry Notes.
Withholding Taxes. The amount of any taxes rehired under
-----------------
applicable law to be withheld from any interest payment on a
Book-Entry Note will be determined and withheld by the
Participant, indirect participant in DTC or other person
responsible for forwarding payments directly to the beneficial
owner of such Note.
Preparation If any order to purchase a Book-Entry Note is accepted by or on
of Pricing behalf of the Company, the Company will prepare a pricing
Supplement: supplement (a "Pricing Supplement") reflecting the terms of such
Note and will arrange to file 10 copies of such Pricing
Supplement with the Commission in accordance with the applicable
paragraph of Rule 424(b) under the Securities Act and will
deliver the number of copies of such Pricing Supplement to the
relevant Agent as such Agent shall request by the close of
business on the following Business Day. The relevant Agent will
cause such Pricing Supplement to be delivered to the purchaser of
the Note.
<PAGE>
10
Pricing Supplements shall be sent to the applicable Agent as
indicated below:
If to CS First Boston Corporation:
CS First Boston Corporation
Park Avenue Plaza
55 East 52nd Street
New York, New York 10005
Attn: Joseph D. Fashano
Facsimile Number: (212) 318-0532
If to Goldman, Sachs & Co.:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Credit Department
Facsimile Number: (212) 357-8680
If to Kidder, Peabody & Co. Incorporated:
Kidder, Peabody & Co. Incorporated
10 Hanover Square
New York, New York 10005
Attn: Daniel McNamara
Facsimile Number: (212) 797-8942
If to Lehman Brothers Inc.:
Lehman Brothers Inc.
3 World Financial Center, 12th Floor
New York, New York 10285
Attn: Medium-Term Note Department
Facsimile Number: (212) 528-1718
Copy to: Christoph Becker
If to J.P. Morgan Securities Inc.:
J.P. Morgan Securities Inc.
60 Wall Street, 3rd Floor
New York, New York 10260
Attn: Medium-Term Note Desk
Facsimile Number: (212) 648-5909
<PAGE>
11
If to Salomon Brothers Inc:
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Attn: Medium Term Note Department
Facsimile Number: (212) 783-2274
In each instance that a Pricing Supplement is prepared, the Agent
receiving such Pricing Supplement will affix the Pricing
Supplement to Prospectuses prior to their use. Outdated Pricing
Supplements, and the Prospectuses to which they are attached
(other than those retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately available funds in
payment for a Book-Entry Note and the authentication and issuance
of the Global Security representing such Note shall constitute
"settlement" with respect to such Note. All orders accepted by
the Company will be settled on the fifth Business Day following
such acceptance pursuant to the timetable for settlement set
forth below unless the Company and the purchaser agree to
settlement on another day, which shall be no earlier than the
next Business Day.
Settlement Settlement Procedures with regard to each Book-Entry Note sold by
Procedures: the Company to or through an Agent shall be as follows (unless
otherwise specified pursuant to a Terms Agreement, as defined in
the Agreement):
A. The relevant Agent will advise the Company by facsimile
transmission or other acceptable means that such Note is a
Book-Entry Note and of the following settlement information:
1. Principal amount.
2. Maturity Date.
3. In the case of a Fixed Rate Book-Entry Note, the Interest
Rate, whether such Note will pay interest annually or
semi-annually and whether such Note is an Amortizing Note
and, if so, the Amortization Schedule, or, in the case of
a Floating Rate Book-Entry Note, the Initial Interest Rate
(if known at such time), Interest Payment Date(s),
Interest Payment Period, Calculation Agent, Base Rate,
Index Maturity, Interest Reset Period, Initial Interest
Reset Date, Interest
<PAGE>
12
Reset Dates, Spread or Spread Multiplier (if any), Minimum
Interest Rate (if any), Maximum Interest Rate (if any) and
the Alternate Rate Event Spread (if any).
4. Redemption or repayment provisions, if any.
5. Settlement date and time.
6. Price.
7. Agent's commission, if any, determined as provided in the
Agreement.
8. Net proceeds to the Company.
9. Whether the Note is an OID Note, and if it is an OID Note,
the total amount of OID, the yield to maturity, the
initial accrual period OID and the applicability of
Modified Payment upon Acceleration (and, if so, the Issue
Price).
10. Any other applicable Terms.
B. The Company will advise the Trustee by MPI, facsimile
transmission or other acceptable means of the information set
forth in Settlement Procedure "A" above (which transmission
shall constitute "Instructions" as such term is defined in the
Officer's Certificates relating to the Notes pursuant to
Section 301 of the Senior Indenture and the Subordinated
Indenture). The Company will then assign a CUSIP number to
the Global Security representing such Note and will notify the
Company and the Agent of such CUSIP number by telephone or
electronic transmission (confirmed in writing) as soon as
practicable.
C. In the case of the issuance of any Note with an average life
in excess of 10 years, an officer of the Company shall deliver
a certificate to the Trustee, by facsimile transmission or
other acceptable means, certifying that such issuance will not
cause the aggregate principal amount of all outstanding Notes
with an average weighted remaining life of more than 10 years
to exceed at any time $50,000,000.
D. The Trustee will enter a pending deposit message through DTC's
Participant Terminal System, providing the following
settlement
<PAGE>
13
information to DTC, the relevant Agent and Standard & Poor's
Corporation:
1. The information set forth in Settlement Procedure "A".
2. The Initial Interest Payment Date for such Note, the
number of days by which such date succeeds the related DTC
Record Date (which in the case of Floating Rate Notes
which reset daily or weekly, shall be the date five
calendar days immediately preceding the applicable
Interest Payment Date and, in the case of all other Notes,
shall be the Record Date as defined in the Note) and, if
known, the amount of interest payable on such Initial
Interest Payment Date.
3. The CUSIP number of the Global Security representing such
Note.
4. Whether such Global Security will represent any other
Book-Entry Note (to the extent known at such time) and
whether such Note is an Amortizing Note (by an appropriate
notation in the comments field of DTC's Participant
Terminal System).
5. The DTC participant number of the institution through
which the Company will hold the Book-Entry Note.
E. Trustee will complete and authenticate the Global Security
representing such Note in accordance with the terms of the
written order of the Company then in effect.
F. DTC will credit such Note to the Trustee's participant account
at DTC.
G. The Trustee will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i) debit such
Note to the Trustee's participant account and credit such Note
to the relevant Agent's participant settlement account and
credit the Trustee's settlement account for an amount equal to
the price of such Note less such Agent's commission, if any.
The entry of such a deliver order shall constitute a
representation and warranty by the Trustee to DTC that (a) the
Global Security representing such Book-Entry Note has been
issued and authenticated and (b) the Trustee is holding such
Global Security pursuant to the
<PAGE>
14
Medium-Term Note Certificate Agreement between the Trustee and
DTC.
H. Unless the relevant Agent purchased such Note as principal,
such Agent will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC (i) to debit such
Note to such Agent's participant account and credit such Note
to the participant accounts of the Participants with respect
to such Note and (ii) to debit the settlement account of such
Participants and credit the settlement account of such Agent
for an amount equal to the price of such Note.
I. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures "F" and "G" will be settled
in accordance with SDFS operating procedures in effect on the
settlement date.
J. The Trustee, upon confirming receipt of such funds, will
credit to the U.S. dollar account of the Company maintained at
a bank in New York City, notified to the Trustee from time to
time, in funds available for immediate use in the amount
transferred to the Trustee, in accordance with Settlement
Procedure "F".
K. Unless the relevant Agent purchased such Note as principal,
such Agent will confirm the purchase of such Note to the
purchaser either by transmitting to the Participants with
respect to such Note a confirmation order or orders through
DTC's institutional delivery system or by mailing a written
confirmation to such purchaser.
L. Monthly, the Trustee will send to the Company a statement
setting forth the principal amount of Notes Outstanding as of
that date under the Indenture and setting forth a brief
description of any sales of which the Company has advised the
Trustee but which have not yet been settled.
Settlement For sales by the Company of Book-Entry Notes to or through an
Procedures Agent (unless otherwise specified pursuant to a Terms Agreement)
Timetable: for settlement on the first Business Day after the sale date,
Settlement Procedures "A" through "J" set forth above shall be
completed as soon as possible but not later than the respective
times (New York City time) set forth below:
Settlement
Procedure Time
--------- ----
<PAGE>
15
A 11:00 a.m. on the sale date
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 9:00 a.m. on settlement date
E 10:00 a.m. on settlement date
F-G 2:00 p.m. on settlement date
H 4:45 p.m. on settlement date
I-J 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day after the
sale date, Settlement Procedures "A", "B" and "C" shall be
completed as soon as practicable but no later than 11:00 a.m., 12
noon and 2:00 p.m., respectively, on the first Business Day after
the sale date. If the Initial Interest Rate for a Floating Rate
Book-Entry Note has not been determined at the time that
Settlement Procedure "A" is completed, Settlement Procedures "B"
and "C" shall be completed as soon as such rate has been
determined but no later than 12 noon and 2:00 p.m., respectively,
on the second Business Day before the settlement date.
Settlement Procedure "H" is subject to extension in accordance
with any extension of Fedwire closing deadlines and in the other
events specified in the SDFS operating procedures in effect on
the settlement date.
If settlement of a Book-Entry Note is rescheduled or cancelled,
the Trustee, after receiving notice from the Company or the
Agent, will deliver to DTC, through DTC's Participant Terminal
System, a cancellation message to such effect by no later than
2:00 p.m. on the Business Day immediately preceding the scheduled
settlement date.
Failure to If the Trustee fails to enter an SDFS deliver order with
Settle: respect to a Book-Entry Note pursuant to Settlement Procedure
"F", the Trustee may deliver to DTC, through DTC's Participant
Terminal System, as soon as practicable a withdrawal message
instructing DTC to debit such Note to the Trustee's participant
account, provided that the Trustee's participant account contains
a principal amount of the Global Security representing such Note
that is at least equal to the principal amount to be debited. If
a withdrawal message is processed with respect to all the Book-
Entry Notes represented by a Global Security, the Trustee will
mark such Global Security "cancelled", make appropriate entries
in the Trustee's records and send such cancelled Global Security
to the Company. The CUSIP number assigned to such Global
Security shall, in accordance with CUSIP Service Bureau
procedures, be cancelled and not immediately reassigned. If a
withdrawal message is processed with respect to one or more, but
not all, of the Book-Entry Notes
<PAGE>
16
represented by a Global Security, the Trustee will exchange such
Global Security for two Global Securities, one of which shall
represent such Book-Entry Note or Notes and shall be cancelled
immediately after issuance and the other of which shall represent
the remaining Book-Entry Notes previously represented by the
surrendered Global Security and actions described in the
preceding paragraph.
Notwithstanding the foregoing, upon any failure to settle with
respect to a Book-Entry Note, DTC may take any action in
accordance with its SDFS operating procedures then in effect.
In the event of a failure to settle with respect to one or more,
but not all, of the Book-Entry Notes to have been represented by
a Global Security, the Trustee will provide, in accordance with
Settlement Procedures "D" and "F", for the authentication and
issuance of a Global Security representing the Book-Entry Notes
to be represented by such Global Security and will make
appropriate entries in its records.
Posting Rates The Company and the Agents will discuss from time to time the
by Company: rates of interest per annum to be borne by and the maturity of
Securities that may be sold as a result of the solicitation of
offers by an Agent. The Company may establish a fixed set of
interest rates and maturities for an offering period ("posting").
If the Company decides to change already posted rates, it will
promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agent.
Trustee Not To Nothing herein shall be deemed to require the Trustee to risk or
Risk Funds: expend its own funds in connection with any payments to the
Company, the Agents, DTC or any holders of Notes, it being under
stood by all parties that payments made by the Trustee to the
Company, the Agents, DTC or any holders of Notes shall be made
only to the extent that funds are provided to the Trustee for
such purpose.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as registrar in connection with the
Certificated Notes.
Issuance: Each Certificated Note will be dated and issued as of the date of
its authentication by the Trustee. Each Certificated Note will
bear an Original Issue Date, which will be (i) with respect to an
original Certificated Note (or any portion thereof), its original
issuance date (which will be the settlement date) and (ii) with
respect to any
<PAGE>
17
Certificated Note (or any portion thereof) issued subsequently
upon exchange of a Certificated Note, or in lieu of a destroyed,
lost or stolen Certificated Note, the original issuance date of
the predecessor Certificated Note, regardless of the date of
authentication of such subsequently issued Certificated Note.
Registration: Certificated Notes will be issued only in fully registered form
without coupons.
Transfers and A Certificated Note may be presented or transfer or exchange at
Exchanges: the principal corporate trust office of the Trustee.
Certificated Notes will be exchangeable for other Certificated
Notes having identical terms but different authorized
denominations without service charge. Certificated Notes will not
be exchangeable for Book-Entry Notes.
Maturities: Each Certificated Note will mature on a date from nine months to
30 years from its date of issue.
Currency: The currency denomination with respect to any Certificated Note
and the currency of payment of interest and principal with
respect to any such Certificated Note shall be as set forth
therein and in the applicable pricing supplement.
Denominations: Unless otherwise provided in a Prospectus Supplement, the
denomination of any Certificated Note will be a minimum of
$100,000 or any amount in excess thereof that is an integral
multiple of $1,000 (or in the case of Notes not denominated in
U.S. dollars as specified in the applicable Pricing Supplement).
Interest: General. Interest on each Certificated Note will accrue from the
-------
Original Issue Date of such Note for the first interest period
and from the most recent date to which interest has been paid for
all subsequent interest periods. Unless otherwise specified
therein, each payment of interest on a Certificated Note will
include interest accrued to but excluding the Interest Payment
Date; provided that in the case of Floating Rate Notes with
respect to which the Interest Reset Period is daily or weekly,
interest payable on any Interest Payment Date (other than
interest payable on any date on which principal thereof is
payable, and, if the Note is a Certificated Gap Note (as defined
below), other than interest payable on the first Interest Payment
Date after the Original Issue Date thereof) will include interest
accrued through and including the Record Date immediately
preceding the Interest Payment Date, except that at maturity or
earlier redemption or repayment, the interest payable will
include interest accrued to, but excluding, the
<PAGE>
18
Maturity Date or the date of redemption or repayment, as the case
may be.
Record Dates. The Record Date with respect to any Interest
------------
Payment Date in respect of a Certificated Note shall be the date
fifteen calendar days immediately preceding such Interest Payment
Date.
Fixed Rate Certificated Notes. Unless otherwise specified
-----------------------------
pursuant to Settlement Procedure "A" below, interest payments on
Fixed Rate Certificated Notes, other than Amortizing Notes, will
be made semiannually on June 1 and December 1 of each year, and
at maturity or upon any earlier redemption or repayment and
principal and interest payments on Certificated Amortizing Notes
will be made semiannually on June 1 and December 1 of each year
or quarterly on March 1, June 1, September 1 and December 1 of
each year, and at maturity (or any redemption or repayment date);
provided, however, that in the case of a Fixed Rate Certificated
-------- -------
Note issued between a Record Date and an Interest Payment Date or
on an Interest Payment Date, the first interest Payment will be
made on the Interest Payment Date following the next succeeding
Record Date.
Floating Rate Certificated Notes. Interest payments will be made
--------------------------------
on Floating Rate Certificated Notes monthly, quarterly,
semiannually or annually. Unless other wise specified pursuant
to Settlement Procedure "A" below, interest will be payable, in
the case of Floating Rate Certificated Notes with a daily, weekly
or monthly Interest Reset Date, on the third Wednesday of each
month or on the third Wednesday of March, June, September and
December, as specified pursuant to Settlement Procedure "A"
below; in the case of Floating Rate Certificated Notes with a
quarterly Interest Reset Date, on the third Wednesday of March,
June, September and December of each year; in the case of
Floating Rate Certificated Notes with a semiannual Interest Reset
Date, on the third Wednesday of the two months specified pursuant
to Settlement Procedure "A" below; and in the case of Floating
Rate Certificated Notes with an annual Interest Reset Date, on
the third Wednesday of the month specified pursuant to Settlement
Procedure "A" below; provided, however, that if an Interest
-------- -------
Payment Date for Floating Rate Certificated Notes would otherwise
be a day that is not a Business Day with respect to such Floating
Rate Certificated Notes, such Interest Payment Date will be the
next succeeding Business Day with respect to such Floating Rate
Certificated Notes, except in the case of a LIBOR Note if such
Business Day is in the next succeeding calendar month, such
Interest Payment Date will be the immediately preceding Business
Day; and provided, further, that in the case of a
-------- -------
<PAGE>
19
Floating Rate Certificated Note issued between a Record Date and
the related Interest Payment Date (a "Certificated Gap Note"),
the first interest payment will be made on the Interest Payment
Date following the next succeeding Record Date, and in such case,
notwithstanding the fact that an Interest Reset Date may occur
prior to such Interest Payment Date, the Initial Interest Rate
shall remain in effect until the first Interest Reset Date
occurring on or subsequent to such Interest Payment Date.
Notice of Interest Payment and Record Dates. On the first
------------------------------------- -----
Business Day of February, May, August and November of each year,
the Trustee will deliver to the Company a written list of Record
Dates and Interest Payment Dates that will occur with respect to
Certificated Notes during the six-month period beginning on such
first Business Day. Promptly after each date upon which interest
is determined for Floating Rate Notes issued in certificated
form, the Calculation Agent will notify the Company and the
Trustee of the interest rates determined on such dates.
Calculation Fixed Rate Certificated Notes. Interest on Fixed Rate
of Interest: -----------------------------
Certificated Notes (including interest for partial periods) will
be calculated on the basis of a year of twelve thirty-day months.
Floating Rate Certificated Notes. Interest rates on Floating
--------------------------------
Rate Certificated Notes will be determined as set forth in the
form of such Notes. Interest on Floating Rate Certificated Notes
will be calculated on the basis of actual days elapsed and a year
of 360 days, except that, in the case of Treasury Rate Notes,
interest will be calculated on the basis of the actual number of
days in the year.
Payments of The Company will pay to the Trustee, the paying agent, the
Principal and principal amount of each Certificated Note (other than an
Interest: Amortizing Note), together with interest due thereon, at its
Maturity Date or upon redemption or repayment of such Note in
funds available for immediate use by the Trustee. In the case of
an Amortizing Note, the Company will pay to the Trustee, as
paying agent, the principal amount due on such Note on such date,
together with interest due thereon, at its Maturity Date or upon
redemption or repayment of such Note in funds available for
immediate use by the Trustee. The Trustee will pay such amount to
the holder of such Note at its Maturity Date or upon redemption
or repayment of such Note upon presentation and surrender of such
Note to the Trustee. Such payment, together with payment of
interest due at maturity or upon redemption or repayment, will be
made in funds available for immediate use by the holder of such
Note.
<PAGE>
20
Promptly after such presentation and surrender, the Trustee will
cancel such Certificated Note in accordance with the terms of the
Indenture and deliver it to the Company with a certificate of
cancellation. Unless otherwise specified in the applicable
Pricing Supplement, all interest payments on a Certificated Note
or, in the case of a Certificated Amortizing Note, payments of
principal and interest (other than interest (or interest and
principal) due at maturity or upon redemption or repayment) will
be made by check drawn on the Trustee (or another person
appointed by the Trustee) and mailed by the Trustee to the person
entitled thereto as provided in such Note and the Indenture;
provided, however, that (i) the holder of $10,000,000 or more of
-------- -------
Notes having the same Interest Payment Date will be entitled to
receive payment by wire transfer of immediately available funds
and (ii) unless otherwise specified in the applicable Pricing
Supplement or unless alternative arrangements are made, payments
on Notes in a currency other than U.S. dollars will be made by
wire transfer of immediately available funds to an account
maintained by the payee with a bank located outside the United
States and, with respect to clauses (i) and (ii) above, the
holder of such Notes will provide the Trustee with appropriate
and timely wire transfer instructions.
Promptly after each Record Date, the Trustee will deliver to the
Company a written notice specifying the amount of interest to be
paid on each Certificated Note other than an Amortizing Note on
the following Interest Payment Date (other than an Interest
Payment Date coinciding with maturity or any earlier redemption
or repayment date) and the total of such amounts. In the case of
Amortizing Notes, the Trustee will provide separate written
notice to the Company specifying the amount of interest and
principal to be paid on each Amortizing Note on the following
Interest Payment Date (other than an Interest Payment Date
coinciding with maturity or any earlier redemption or repayment
date) and the total of such amounts. Interest at maturity or
upon redemption or repayment will be payable to the person to
whom the payment of principal is payable. On or about the first
Business Day of each month, the Trustee will deliver to the
Company a written list of principal and interest, to the extent
ascertainable, to be paid on each Certificated Note including
Amortizing Notes maturing or to be redeemed or repaid in the
following month. The Trustee will be responsible for withholding
taxes on interest paid on Certificated Notes as required by
applicable law.
If any Interest Payment Date or the Maturity Date or redemption
or repayment date of a Fixed Rate Certificated Note is not a
Business Day, the payment due on such day shall be made on the
next
<PAGE>
21
succeeding Business Day and no interest shall accrue on such
payment for the period from and after such Interest Payment Date,
Maturity Date or redemption or repayment date, as the case may
be. If any Interest Payment Date or the Maturity Date or
redemption or repayment date of a Floating Rate Certificated Note
would otherwise fall on a day that is not a Business Day with
respect to such Note, the payment due on such day shall be made
on the next succeeding day that is a Business Day with respect to
such Note with the same effect as if such Business Day were the
stated Interest Payment Date, Maturity Date or date of redemption
or repayment, as the case may be, except that, in the case of
Certificated LIBOR Notes, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date, Maturity
Date or redemption or repayment date shall be the immediately
preceding day that is a Business Day with respect to such
Certificated LIBOR Notes.
Preparation If any order to purchase a Certificated Note is accepted by or on
of Pricing behalf of the Company, the Company will prepare a Pricing
Supplement: Supplement reflecting the terms of such Note and will arrange
to file 10 copies of such Pricing Supplement with the Commission
in accordance with the applicable paragraph of Rule 424(b) under
the Act and will deliver the number of copies of such Pricing
Supplement to the relevant Agent as such Agent shall request by
the close of business on the following Business Day. The relevant
Agent will cause such Pricing Supplement to be delivered to the
purchaser of the Note.
Pricing Supplements shall be sent to the applicable Agent as
indicated below:
If to CS First Boston Corporation:
CS First Boston Corporation
Park Avenue Plaza
55 East 52nd Street
New York, New York 10005
Attn: Joseph D. Fashano
Facsimile Number: (212) 318-0532
If to Goldman, Sachs & Co.:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Credit Department
<PAGE>
22
Facsimile Number: (212) 357-8680
If to Kidder, Peabody & Co. Incorporated:
Kidder, Peabody & Co. Incorporated
10 Hanover Square
New York, New York 10005
Attn: Daniel McNamara
Facsimile Number: (212) 797-8942
If to Lehman Brothers Inc.:
Lehman Brothers Inc.
3 World Financial Center, 12th Floor
New York, New York 10285
Attn: Medium-Term Note Department
Facsimile Number: (212) 528-1718
Copy to: Christoph Becker
If to J.P. Morgan Securities Inc.:
J.P. Morgan Securities Inc.
60 Wall Street, 3rd Floor
New York, New York 10260
Attn: Medium-Term Note Desk
Facsimile Number: (212) 648-5909
If to Salomon Brothers Inc:
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Attn: Medium Term Note Department
Facsimile Number: (212) 783-2274
In each instance that a Pricing Supplement is prepared, the Agent
receiving such Pricing Supplement will affix the Pricing
Supplement to Prospectuses prior to their use. Outdated Pricing
Supplements, and the Prospectuses to which they are attached
(other than those retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately available funds in
payment for an authenticated Certificated Note delivered to the
relevant Agent and such Agent's delivery of such Note against
receipt of immediately
<PAGE>
23
available funds shall constitute "settlement" with respect to
such Note. All orders accepted by the Company will be settled on
the fifth Business Day following such acceptance pursuant to the
timetable for settlement set forth below unless the Company and
the purchaser agree to settlement on another day, which shall be
no earlier than the next Business Day.
Settlement Settlement Procedures with regard to each Certificated Note sold
Procedures: by the Company to or through an Agent shall be as follows
(unless otherwise specified pursuant to a Terms Agreement):
A. The relevant Agent will advise the Company by facsimile
transmission or other acceptable means that such Note is a
Certificated Note and of the following settlement information:
1. Name in which such Note is to be registered ("Registered
Owner").
2. Address of the Registered Owner and address for payment of
principal and interest.
3. Taxpayer identification number of the Registered Owner (if
available).
4. Currency or currency unit, principal amount and, if
different, currency in which payments of principal and
interest may be made.
5. Maturity Date.
6. In the case of a Fixed Rate Certificated Note, the
Interest Rate, whether such Note will pay interest
annually or semi-annually and whether such Note is an
Amortizing Note and, if so, the Amortization Schedule, or,
in the case of a Floating Rate Certificated Note, the
Initial Interest Rate (if known at such time), Interest
Payment Date(s), Interest Payment Period, Calculation
Agent, Base Rate, Index Maturity, Interest Reset Period,
Initial Interest Reset Date, Interest Reset Dates, Spread
or Spread Multiplier (if any), Minimum Interest Rate (if
any), Maximum Interest Rate (if any) and the Alternate
Rate Event Spread (if any).
7. Redemption or repayment provisions, if any.
<PAGE>
24
8. Settlement date and time.
9. Price.
10. Agent's commission, if any, determined as provided in the
Agreement.
11. Denominations.
12. Net proceeds to the Company.
13. Whether the Note is an OID Note, and if it is an OID Note,
the total amount of OID, the yield to maturity, the
initial accrual period OID and the applicability of
Modified Payment upon Acceleration (and, if so, the Issue
Price).
14. Any other applicable Terms.
B. The Company will advise the Trustee by MPI, facsimile
transmission or other acceptable means of the information set
forth in Settlement Procedure "A" above (which transmission
shall constitute "Instructions" as such term is defined in the
Officer's Certificates relating to the Notes pursuant to
Section 301 of the Senior Indenture and the Subordinated
Indenture).
C. In the case of the issuance of any Note with an average life
in excess of 10 years, an officer of the Company shall deliver
a certificate to the Trustee, by facsimile transmission or
other acceptable means, certifying that such issuance will not
cause the aggregate principal amount of all outstanding Notes
with an average weighted remaining life of more than 10 years
to exceed at any time $50,000,000.
D. The Company will have delivered to the Trustee a pre-printed
four-ply packet for such Note, which packet will contain the
following documents in forms that have been approved by the
Company, the relevant Agent and the Trustee:
1. Note with customer confirmation.
2. Stub One - For the Trustee.
3. Stub Two - For the relevant Agent.
<PAGE>
25
4. Stub Three - For the Company.
E. The Trustee will complete such Note and authenticate such Note
and deliver it (with the confirmation) and Stubs One and Two
to the relevant Agent, and such Agent will acknowledge receipt
of the Note by stamping or otherwise marking Stub One and
returning it to the Trustee. Such delivery will be made only
against such acknowledgement of receipt and evidence that
instructions have been given by such Agent for payment to the
account of the Company maintained at the Trustee, New York,
New York (or, with respect to Notes payable in a Specified
Currency other than U.S. dollars, to an account maintained at
a bank selected by the Company notified to the relevant Agent
from time to time in writing) in funds available for immediate
use, of an amount equal to the price of such Note less such
Agent's commission, if any. In the event that the
instructions given by such Agent for payment to the account of
the Company are revoked, the Company will as promptly as
possible wire transfer to the account of such Agent an amount
of immediately available funds equal to the amount of such
payment made.
F. Unless the relevant Agent purchased such Note as principal,
such Agent will deliver such Note (with confirmation) to the
customer against payment in immediately available funds. Such
Agent will obtain the acknowledgment of receipt of such Note
by retaining Stub Two.
G. The Trustee will send Stub Three to the Company by first-class
mail. Periodically, the Trustee will also send to the Company
a statement setting forth the principal amount of the Notes
outstanding as of that date under the Indenture and setting
forth a brief description of any sales of which the Company
has advised the Trustee but which have not yet been settled.
Settlement For sales by the Company of Certificated Notes to or through an
Procedures Agent (unless otherwise specified pursuant to a Terms Agreement),
Timetables: Settlement Procedures "A" through "F" set forth above shall be
completed on or before the respective times (New York City time)
set forth below:
Settlement
Procedure Time
--------- ----
A 2:00 p.m. on day before settlement date
<PAGE>
26
B 3:00 p.m. on day before settlement date
C-D 2:15 p.m. on settlement date
E 3:00 p.m. on settlement date
F 5:00 p.m. on settlement date
Failure to If a purchaser fails to accept delivery of and make payment
Settle: for any Certificated Note, the relevant Agent will notify the
Company and the Trustee by telephone and return such Note to the
Trustee. Upon receipt of such notice, the Company will
immediately wire transfer to the account of such Agent an amount
equal to the amount previously credited thereto in respect of
such Note. Such wire transfer will be made on the settlement
date, if possible, and in any event not later than the Business
Day following the settlement date. If the failure shall have
occurred for any reason other than a default by such Agent in the
performance of its obligations hereunder and under the Agreement,
then the Company will reimburse such Agent or the Trustee, as
appropriate, on an equitable basis for its loss of the use of the
funds during the period when they were credited to the account of
the Company (such reimbursement for loss of the use of such funds
to be based on the federal funds effective rate then in effect).
Immediately upon receipt of the Certificated Note in respect of
which such failure occurred, the Trustee will mark such Note
"cancelled", make appropriate entries in the Trustee's records
and send such Note to the Company.
Posting Rates The Company and the Agents will discuss from time to time the
by Company: rates of interest per annum to be borne by and the maturity of
Securities that may be sold as a result of the solicitation of
offers by an Agent. The Company may establish a fixed set of
interest rates and maturities for an offering period ("posting").
If the Company decides to change already posted rates, it will
promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agent.
Trustee Not to Nothing herein shall be deemed to require the Trustee to risk or
Risk Funds: expend its own funds in connection with any payments to the
Company, the Agents or any holders of Notes, it being under stood
by all parties that payments made by the Trustee to the Company,
the Agents or any holders of Notes shall be made only to the
extent that funds are provided to the Trustee for such purpose.
<PAGE>
ANNEX I
Pursuant to Section 6(d) of the Distribution Agreement, the independent
auditors shall furnish letters to the Agents to the effect that:
(1) They are independent public accountants with respect to the
Company and its subsidiaries within the meaning of the Securities Act and the
applicable published Securities Act Regulations.
(2) In their opinion, the consolidated financial statements and any
supplemental financial information or schedules audited by them and included or
incorporated by reference in the Registration Statement or Prospectus comply as
to form in all material respects with the applicable accounting requirements of
the Securities Act or the Exchange Act, as applicable, and the published rules
and regulations thereunder.
(3) On the basis of procedures referred to in such letter, including
a reading of the minute books of the Company since the end of the most recent
fiscal year with respect to which an audit report has been issued, performing
the procedures specified by the American Institute of Certified Public
Accountants for a review of interim financial information as described in SAS
No. 71, Interim Financial Information, on the unaudited consolidated interim
financial statements of the Company included or incorporated by reference in the
Registration Statement and Prospectus and reading the internal unaudited
consolidated interim financial data, if any, for the period from the date of the
latest balance sheet included or incorporated by reference in the Registration
Statement and Prospectus to the date of the latest available internal interim
financial data (which internal unaudited interim financial data, if any, will be
attached to each such letter to the Underwriters); and making inquiries of
officials of the Company responsible for financial and accounting matters
(including inquiries with respect to whether the unaudited consolidated
financial statements comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and inquiries of certain
officials of the Company who have responsibility for financial and accounting
matters whether the internal unaudited consolidated interim financial statements
are stated on a basis substantially consistent with that of the audited
consolidated financial statements incorporated by reference in the Registration
Statement), nothing caused them to believe that:
(A) (i) any material modifications should be made to the unaudited
consolidated financial statements included in any Quarterly Reports on Form
10-Q which are incorporated by reference in the Registration Statement or
Prospectus (the "10-Q Financials") for them to be in conformity with
generally accepted accounting principles applicable to such financial
statements and (ii) the 10-Q Financials do not comply as to form in all
material respects with the applicable requirements of the Exchange Act as it
applies to Form 10-Q and the related published rules and regulations; or
(B) the internal unaudited consolidated interim financial statements of
the Company are not in conformity with generally accepted accounting
principles applied on
<PAGE>
a basis substantially consistent with that of the audited consolidated
financial statements incorporated by reference in the Registration Statement;
or
(C) at the date of the latest available internal unaudited consolidated
interim financial statements of the Company, there was any decrease in
consolidated shareholders' equity as compared with amounts shown in the
latest balance sheet included or incorporated by reference in the Prospectus
except in all instances for decreases that the Prospectus discloses have
occurred or may occur or as may be set forth in such letter; or
(D) for the period from the date of the latest balance sheet included or
incorporated by reference in the Prospectus to the date of the latest
available internal financial statements of the Company, there was any
decrease, as compared with the corresponding period of the previous year, in
consolidated net interest income, consolidated net interest income after
provision for possible loan losses, consolidated income before taxes or in
the total or per common share amounts of consolidated net income, except in
all cases for changes or decreases that the Prospectus discloses have
occurred or may occur or as may be set forth in such letter;
(E) as of a specified date not more than five days prior to the date of
delivery of such letter to the Agent(s), there was any decrease in
consolidated shareholders' equity as compared with the [amount shown in the
latest balance sheet included or incorporated by reference in the
Prospectus/amount shown in the latest internal unaudited consolidated interim
financial statements], except for any decrease that the Registration
Statement discloses has occurred or may occur.
(4) In addition to their examination referred to in their reports
incorporated by reference in the Registration Statement and Prospectus and the
procedures referred to in (3) above, (a) they have carried out certain other
procedures, not constituting an audit, with respect to certain of the dollar
amounts, percentages and other financial information (in each case to the extent
that such dollar amounts, percentages and other financial information, either
directly or by analysis or computation, are derived from the general accounting
records of the Company and its subsidiaries) which are included or incorporated
by reference in the Prospectus (other than those appearing in the audited
financial statements included therein and other than the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 and Current Report on
Form 8-K filed on March 16, 1994) and appear in the Prospectus or incorporated
documents, as agreed to by officers of the Company and the Representative(s),
and have found such dollar amounts, percentages and financial information to be
in agreement with the general accounting records of the Company and its
subsidiaries and (b) if any pro forma financial information is included or
incorporated by reference in the Registration Statement and Prospectus, they
have carried out other procedures, not constituting an audit, with respect to
such pro forma financial information and indicated the results thereof, if
requested by the Agent(s) and agreed to by officers of the Company.
<PAGE>
Exhibit No. 12
KEYCORP
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Mar. 31, Year ended December 31,
--------------------------- --------------------------------
1994 1993 1993 1992
------------- ------------ --------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Computation of Earnings:
Net income $208,638 $189,874 $ 709,926 $ 592,098
Add: Provision (credit) for income taxes 106,412 95,915 373,972 279,632
Less: Cumulative effect of accounting change 6,613
------------- ------------- --------------- ---------------
Income before income taxes 315,050 285,789 1,083,898 865,117
Fixed charges, excluding interest on deposits 91,670 84,792 344,585 324,365
------------- ------------- --------------- ---------------
Total earnings for computation,
excluding interest on deposits 406,720 370,581 1,428,483 1,189,482
Interest on deposits 296,121 319,083 1,233,331 1,468,974
------------- ------------- --------------- ---------------
Total earnings for computation,
including interest on deposits $702,841 $689,664 $2,661,814 $2,658,456
============= ============= =============== ===============
Computation of Fixed Charges:
Net rental expense $ 33,071 $ 32,115 $ 130,361 $ 130,973
============= ============= =============== ===============
Portion of net rental expense deemed
representative of interest $ 10,913 $ 10,598 $ 43,019 $ 43,221
Interest on short-term borrowed funds 53,157 42,658 174,664 174,059
Interest on long-term debt 27,600 31,536 126,902 107,085
------------- ------------- --------------- ---------------
Total fixed charges, excluding interest
on deposits 91,670 84,792 344,585 324,365
Interest on deposits 296,121 319,083 1,233,331 1,468,974
------------- ------------- --------------- ---------------
Total fixed charges, including interest
on deposits $387,791 $403,875 $1,577,916 $1,793,339
============= ============= =============== ===============
Combined Fixed Charges and Preferred Stock Dividends:
Preferred stock dividend requirement on
a pre-tax basis $ 6,040 $ 8,262 $ 27,630 $ 35,505
Total fixed charges, excluding interest
on deposits 91,670 84,792 344,585 324,365
------------- ------------- --------------- ---------------
Combined fixed charges and preferred stock
dividends, excluding interest on deposits 97,710 93,054 372,215 359,870
Interest on deposits 296,121 319,083 1,233,331 1,468,974
------------- ------------- --------------- ---------------
Combined fixed charges and preferred stock
dividends, including interest on deposits $393,831 $412,137 $1,605,546 $1,828,844
============= ============= =============== ===============
Ratio of Earnings to Combined Fixed Charges:
Excluding deposit interest 4.44x 4.37x 4.15x 3.67x
Including deposit interest 1.81x 1.71x 1.69x 1.48x
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends:
Excluding deposit interest 4.16x 3.98x 3.84x 3.31x
Including deposit interest 1.78x 1.67x 1.66x 1.45x
<CAPTION>
Year ended December 31,
---------------------------------------------------
1991 1990 1989
--------------- --------------- ---------------
(dollars in thousands)
<S> <C> <C> <C>
Computation of Earnings:
Net income $ 313,696 $ 256,098 $ 286,688
Add: Provision (credit) for income taxes 136,684 15,173 130,800
Less: Cumulative effect of accounting change 2,714
--------------- --------------- ---------------
Income before income taxes 450,380 268,557 417,488
Fixed charges, excluding interest on deposits 422,189 472,468 567,533
--------------- --------------- ---------------
Total earnings for computation,
excluding interest on deposits 872,569 741,025 985,021
Interest on deposits 2,135,651 2,230,759 2,078,692
--------------- --------------- ---------------
Total earnings for computation,
including interest on deposits $3,008,220 $2,971,784 $3,063,713
=============== =============== ===============
Computation of Fixed Charges:
Net rental expense $ 118,855 $ 107,615 $ 92,498
=============== =============== ===============
Portion of net rental expense deemed
representative of interest $ 38,450 $ 35,470 $ 30,454
Interest on short-term borrowed funds 288,220 339,876 418,408
Interest on long-term debt 95,519 97,122 118,671
--------------- --------------- ---------------
Total fixed charges, excluding interest
on deposits 422,189 472,468 567,533
Interest on deposits 2,135,651 2,230,759 2,078,692
--------------- --------------- ---------------
Total fixed charges, including interest
on deposits $2,557,840 $2,703,227 $2,646,225
=============== =============== ===============
Combined Fixed Charges and Preferred Stock Dividends:
Preferred stock dividend requirement on
a pre-tax basis $ 23,292 $ 7,484 $ 7,913
Total fixed charges, excluding interest
on deposits 422,189 472,468 567,533
--------------- --------------- ---------------
Combined fixed charges and preferred stock
dividends, excluding interest on deposits 445,481 479,952 575,446
Interest on deposits 2,135,651 2,230,759 2,078,692
--------------- --------------- ---------------
Combined fixed charges and preferred stock
dividends, including interest on deposits $2,581,132 $2,710,711 $2,654,138
=============== =============== ===============
Ratio of Earnings to Combined Fixed Charges:
Excluding deposit interest 2.07x 1.57x 1.74x
Including deposit interest 1.18x 1.10x 1.16x
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends:
Excluding deposit interest 1.96x 1.54x 1.71x
Including deposit interest 1.17x 1.10x 1.15x
</TABLE>
<PAGE>
EXHIBIT 15
ACKNOWLEDGMENT LETTER OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
KeyCorp
We are aware of the incorporation by reference in KeyCorp's Registration
Statement (No. 33-53643) on Form S-3 dated May 16, 1994 and to be amended June
10, 1994 by a Prospectus Supplement, of our report dated April 19, 1994
relating to the unaudited consolidated interim financial statements of
KeyCorp, included in the Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a
part of the Registration Statements prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ ERNST & YOUNG
Cleveland, Ohio
June 9, 1994
<PAGE>
Exhibit No. 23(a)
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement (Form S-3) and related Prospectus of KeyCorp (or the
"Corporation") dated May 16, 1994, and to the incorporation by reference
therein of our reports:
(a) dated March 1, 1994, with respect to the consolidated financial
statements for the year ended December 31, 1993 of KeyCorp, as restated
to give effect to the March 1, 1994 merger of KeyCorp and Society
Corporation, accounted for as a pooling of interests, such financial
statements are included in and incorporated by reference into the
Corporation's Current Report on Form 8-K filed with the Commission on
April 20, 1994;
(b) dated January 20, 1994, except for Note 2 as to which the date is March
1, 1994, with respect to the consolidated financial statements for the
year ended December 31, 1993, of KeyCorp (the combining company), which
on March 1, 1994 merged with Society Corporation, subsequently renamed
KeyCorp, included in the Corporation's Current Report on Form 8-K filed
with the Commission on March 16, 1994; and
(c) dated March 1, 1994, with respect to the supplemental consolidated
financial statements for the year ended December 31, 1993 of KeyCorp
(the combined entity) included in KeyCorp's Annual Report on Form 10-K
filed with the Securities and Exchange Commission. The supplemental
consolidated financial statements became the historical financial
statements of KeyCorp upon filing of the Corporation's Current
Report on Form 8-K with the Commission on April 20, 1994.
In addition, we consent to the incorporation by reference in this Registration
Statement of our report dated January 28, 1994, except for Note 2 as to which
the date is March 1, 1994, with respect to the consolidated financial
statements for the year ended December 31, 1993 of Society Corporation
included in the Annual Report on Form 10-K filed with the Securities and
Exchange Commission that have subsequently been restated to give effect to the
March 1, 1994 merger of KeyCorp and Society Corporation.
Cleveland, Ohio
May 10, 1994
/s/ Ernst & Young
<PAGE>
EXHIBIT (23)(c)
[LETTERHEAD OF THOMPSON, HINE AND FLORY APPEARS HERE]
June 10, 1994
KeyCorp
127 Public Square
Cleveland, Ohio 44114
Ladies and Gentlemen:
We hereby consent to the quotation of our opinion under the heading
"United States Federal Income Taxation" in the Prospectus Supplement filed as
a part of KeyCorp's Amendment No. 2 to Registration Statement on Form S-3,
filed with the Securities and Exchange Commission on June 10, 1994, and to the
use of our name therein.
Very truly yours,
/s/Thompson, Hine and Flory
