<PAGE> 1
Filed Pursuant To Rule 424b(5)
Registration No. 33-58405
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 21, 1995)
LOGO
KeyCorp
$250,000,000
7.50% Subordinated Notes due June 15, 2006
Interest payable June 15 and December 15
ISSUE PRICE: 99.804%
The 7.50% Subordinated Notes due June 15, 2006 (the "Notes") are not subject to
redemption or repayment prior to maturity and will not be subject to any sinking
fund. The Notes will be unsecured debt obligations of KeyCorp (the
"Corporation") and will be subordinate and junior in right of payment to all
present 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). Payment of principal of the Notes may be
accelerated only in the case of bankruptcy, insolvency or reorganization of the
Corporation or receivership of a Major Bank (as defined herein). There will be
no right of acceleration in the case of a default in the payment of interest on
the Notes or a default in the performance of any other obligation of the
Corporation with respect to the Notes. See "Description of the
Notes -- Subordination -- Events of Default" herein.
THE NOTES ARE UNSECURED OBLIGATIONS OF THE CORPORATION AND WILL BE SUBORDINATED
TO THE CLAIMS OF GENERAL UNSECURED CREDITORS OF THE CORPORATION. THE NOTES ARE
NOT 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 OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
======================================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC (1) COMMISSIONS (2) CORPORATION (1)(3)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.804% .650% 99.154%
- ----------------------------------------------------------------------------------------------------------------------
Total $249,510,000 $1,625,000 $247,885,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from June 10, 1996.
(2) The Corporation has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933,
as amended (the "Securities Act").
(3) Before deduction of expenses payable by the Corporation estimated at
$250,000.
The Notes are offered by the several Underwriters when, as and if issued by the
Corporation, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Global Securities (as defined herein), in book-entry form, will be made through
the facilities of The Depository Trust Company on or about June 10, 1996,
against payment in immediately available funds. As June 10, 1996 is the fourth
business day following the date hereof, purchasers of the Notes should be aware
that trading of the Notes on the date hereof may be affected by such four-day
settlement.
J.P. MORGAN & CO.
CITICORP SECURITIES, INC.
CS FIRST BOSTON
SALOMON BROTHERS INC
June 4, 1996
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS 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.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
CORPORATION OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE CORPORATION SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Recent Developments.................................................................. S-3
The Corporation...................................................................... S-3
Use of Proceeds...................................................................... S-3
Capitalization....................................................................... S-5
Selected Consolidated Financial Data................................................. S-6
Consolidated Ratio of Earnings to Fixed Charges...................................... S-7
Description of the Notes............................................................. S-8
Underwriting......................................................................... S-12
Notice to Canadian Residents......................................................... S-12
Legal Opinions....................................................................... S-13
PROSPECTUS
Available Information................................................................ 2
Incorporation of Certain Documents by Reference...................................... 2
The Corporation...................................................................... 4
Consolidated Ratios of Earnings to Fixed Charges and Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends........................................ 7
Use of Proceeds...................................................................... 7
Description of Debt Securities....................................................... 8
Description of Preferred Stock....................................................... 22
Description of Depositary Shares..................................................... 26
Description of Common Shares......................................................... 31
Description of Capital Securities.................................................... 33
Description of Securities Warrants................................................... 34
Plan of Distribution................................................................. 36
Legal Opinions....................................................................... 37
Experts.............................................................................. 37
</TABLE>
S-2
<PAGE> 3
RECENT DEVELOPMENTS
On June 1, 1996, KeyCorp completed the sale of Society First Federal
Savings Bank, its Florida savings association subsidiary. KeyCorp will continue
to provide private banking services in Florida through its trust company located
in Naples, Florida.
On May 7, 1996, KeyCorp entered into a definitive agreement to acquire,
through Key Bank USA, National Association, Knight Insurance Agency, Inc., an
originator and servicer of education related loan and savings products. The
transaction is expected to close in the second quarter of 1996, pending
regulatory approval.
On May 6, 1996, KeyCorp entered into a definitive agreement to acquire
Carleton, McCreary, Holmes & Co. ("CMH & Co."), a Cleveland-based firm
specializing in merger and acquisition and other financial advisory services for
mid-sized and larger firms. Upon completion of the transaction, which is
expected to close in the third quarter of 1996, it is expected that CMH & Co.
will become a division of KeyCorp's finance and underwriting subsidiary, Key
Capital Markets, Inc.
THE CORPORATION
KeyCorp is an Ohio corporation and a bank holding company headquartered in
Cleveland, Ohio, engaged primarily in the business of commercial and retail
banking. It provides a wide range of banking, fiduciary and other financial
services to its corporate, individual and institutional customers through four
primary lines of business: Corporate Banking, National Consumer Finance,
Community Banking and Key PrivateBank. These services are provided across much
of the country through a network of banking subsidiaries operating 1,270
full-service banking centers, a 24-hour telephone banking call center services
group and 1,452 automated teller machines in 14 states as of March 31, 1996.
In addition to the customary banking services of accepting deposits and
making loans, KeyCorp's bank and certain nonbank subsidiaries provide
specialized services tailored to specific markets, including personal and
corporate trust services, customer access to mutual funds, cash management
services, investment banking services, international banking services and
investment management services.
The Corporation provides other financial services both in and outside of
its primary banking markets through its nonbank subsidiaries. These services
include 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 services,
securities underwriting and brokerage, automobile financing and other financial
services. The Corporation is also an equity participant in a joint venture with
a number of other unaffiliated bank holding companies in Electronic Payment
Services, Inc.
THE CORPORATION WILL PROVIDE UPON REQUEST AND WITHOUT CHARGE TO EACH PERSON
TO WHOM THIS PROSPECTUS SUPPLEMENT IS DELIVERED A COPY OF ANY OR ALL OF THE
DOCUMENTS INCORPORATED HEREIN OR IN THE PROSPECTUS BY REFERENCE (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE). WRITTEN REQUESTS SHOULD BE DIRECTED TO DANIEL R. STOLZER, SENIOR
VICE PRESIDENT AND SENIOR MANAGING COUNSEL, KEYCORP MANAGEMENT COMPANY, 127
PUBLIC SQUARE, CLEVELAND, OHIO 44114-1306 (TELEPHONE (216) 689-3000).
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of the Notes
for general corporate purposes, including investments in and advances to the
Corporation's existing and future banking and nonbanking subsidiaries, reduction
of existing borrowings, investments and financing possible future acquisitions
including, without limitation, the acquisition of banking and nonbanking
companies and financial assets and liabilities. The Corporation also intends to
use approximately $164,000,000 of the proceeds to redeem, on or after June 30,
1996, its 10% Cumulative Preferred Stock. On March 31, 1996, the Corporation had
1,280,000 shares of such 10% Cumulative Preferred Stock outstanding. Under the
terms of its issuance, the 10% Cumulative Preferred Stock is redeemable at $125
per share plus all accrued and unpaid dividends to the redemption date. See
"Description of Preferred Stock -- Preferred Stock Outstanding" in the
accompanying
S-3
<PAGE> 4
Prospectus. A portion of the net proceeds from the sale of the Notes may also be
used to finance, in whole or in part, the repurchase by the Corporation of
shares of its outstanding common stock pursuant to the Corporation's stock
repurchase program (see "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus), and additional share repurchases undertaken from time
to time in connection with the Corporation's acquisition of banking and
nonbanking companies. Pending use, the proceeds may be temporarily invested in
short-term obligations.
The precise amounts and timing of the application of proceeds used for such
corporate purposes will depend upon funding requirements and the availability of
other funds to the Corporation and its subsidiaries.
S-4
<PAGE> 5
CAPITALIZATION
The following table sets forth the consolidated capitalization of KeyCorp
and its subsidiaries at March 31, 1996, and as adjusted as of such date to give
effect to the issuance of the Notes offered hereby.
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
LONG-TERM DEBT
KeyCorp
Senior Medium-Term Notes due through 2005(1)......................... $ 941 $ 941
Subordinated Medium-Term Notes due through 2005(2)................... 183 183
7.50% Subordinated Notes due 2006.................................... -- 250
6.75% Subordinated Notes due 2006.................................... 200 200
8.125% Subordinated Notes due 2002................................... 199 199
8.00% Subordinated Notes due 2004.................................... 125 125
8.40% Subordinated Capital Notes due 1999............................ 75 75
8.875% Notes due 1996................................................ 75 75
8.404% Notes due 1997 through 2001................................... 49 49
8.255% Notes due 1996................................................ 23 23
All other long-term debt............................................. 16 16
------- -------
Total KeyCorp..................................................... 1,886 2,136
Subsidiaries
Senior Medium-Term Bank Notes due through 1997(3).................... 1,532 1,532
7.25% Subordinated Notes due 2005.................................... 200 200
7.85% Subordinated Notes due 2002.................................... 200 200
6.75% Subordinated Notes due 2003.................................... 199 199
Federal Home Loan Bank Advances...................................... 234 234
Industrial revenue bonds............................................. 10 10
All other long-term debt............................................. 5 5
------- -------
Total subsidiaries................................................ 2,380 2,380
------- -------
Total long-term debt.............................................. 4,266 4,516
SHAREHOLDERS' EQUITY
Preferred stock, $1 par value; authorized 25,000,000 shares, none
issued............................................................... -- --
10% Cumulative Preferred Stock Class A, $125 stated value;
authorized 1,400,000 shares, issued 1,280,000 shares................. 160 160(4)
Common Shares, $1 par value; authorized 900,000,000 shares; issued
245,944,390 shares................................................... 246 246
Capital surplus........................................................ 1,496 1,496
Retained earnings...................................................... 3,749 3,749
Loans to ESOP trustee.................................................. (49) (49)
Net unrealized losses on securities, net of taxes...................... (15) (15)
Treasury stock, at cost (14,274,479 shares)............................ (463) (463)
------- -------
Total shareholders' equity........................................ 5,124 5,124
------- -------
Total capitalization.............................................. $ 9,390 $ 9,640
======= =======
<FN>
- ---------------
(1) The weighted average rate on the Senior Medium-Term Notes due through 2005
was 6.54%.
(2) The weighted average rate on the Subordinated Medium-Term Notes due through
2005 was 6.78%.
(3) The weighted average rate on the Senior Medium-Term Notes due through 1997
was 6.61%.
(4) Does not reflect the anticipated redemption on or after June 30, 1996. See
"Use of Proceeds" herein.
</TABLE>
S-5
<PAGE> 6
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents summary consolidated historical financial data
which has been derived from, and should be read in conjunction with, the
consolidated financial statements of the Corporation and notes thereto and the
financial information with respect to the Corporation incorporated by reference
into the Prospectus. 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" in the
accompanying Prospectus. The data presented for the three-month periods ended
March 31, 1996 and March 31, 1995 are not necessarily indicative of the data for
the entire year and have been derived from unaudited consolidated financial
statements of the Corporation. The comparability of the data presented is
affected by certain acquisitions and divestitures that KeyCorp has completed in
the time periods presented. These financial statements include, in the opinion
of management, all adjustments of a normal recurring nature which are necessary
to present fairly the data for such interim periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Interest income.......................... $ 1,236 $ 1,245 $ 5,121 $ 4,490 $ 4,214 $ 4,199 $ 4,652
Interest expense......................... 567 602 2,485 1,797 1,535 1,750 2,519
Net interest income...................... 669 643 2,636 2,693 2,679 2,449 2,133
Provision for loan losses................ 44 18 100 125 212 338 466
Noninterest income....................... 249 171 933 883 1,002 925 849
Noninterest expense...................... 570 561 2,312 2,168 2,385 2,171 2,066
Income before income taxes and
extraordinary item..................... 304 235 1,157 1,283 1,084 865 450
Income before extraordinary item......... 208 174 789 853 710 592 314
Net income............................... 208 210 825 853 710 592 314
Net income applicable to Common Shares... 204 206 809 837 692 568 298
PER COMMON SHARE
Income before extraordinary item......... $ .88 $ .71 $ 3.30 $ 3.45 $ 2.89 $ 2.42 $ 1.31
Net income............................... .88 .86 3.45 3.45 2.89 2.42 1.31
Cash dividends........................... .38 .36 1.44 1.28 1.12 .98 .92
Book value at period-end................. 21.43 19.57 21.36 18.88 17.53 15.64 14.10
Weighted average Common Shares (000)..... 233,100 239,999 234,787 243,067 239,775 235,005 227,116
AT PERIOD-END
Loans.................................... $ 48,161 $ 48,021 $ 47,692 $ 46,225 $ 40,071 $ 36,022 $ 35,534
Earning assets........................... 57,941 61,167 58,762 60,047 54,353 49,381 48,208
Total assets............................. 65,052 67,709 66,339 66,801 59,634 55,068 53,601
Deposits................................. 45,401 48,812 47,282 48,564 46,499 43,433 42,835
Long-term debt........................... 4,266 3,725 4,003 3,570 1,764 1,790 1,225
Common shareholders' equity.............. 4,964 4,658 4,993 4,530 4,226 3,683 3,272
Total shareholders' equity............... 5,124 4,818 5,153 4,690 4,386 3,927 3,516
PERFORMANCE RATIOS(1)
Return on average total assets........... 1.28% 1.28% 1.24% 1.36% 1.24% 1.13% .60%
Return on average common equity.......... 16.42 18.26 17.35 18.87 17.27 16.33 9.29
Return on average total equity........... 16.22 17.99 17.10 18.56 16.95 15.91 9.31
Efficiency(2)............................ 61.22 64.12 63.03 59.39 60.50 60.96 65.27
Overhead(3).............................. 47.07 52.36 49.66 46.14 46.85 47.21 52.63
Net interest margin...................... 4.70 4.38 4.47 4.83 5.31 5.31 4.71
</TABLE>
- ---------------
See footnotes that follow the table.
S-6
<PAGE> 7
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL RATIOS AT PERIOD-END
Equity to assets......................... 7.88% 7.12% 7.77% 7.03% 7.37% 7.13% 6.56%
Tangible equity to tangible assets....... 6.38 6.02 6.25 6.19 6.51 6.11 5.45
Tier I risk-adjusted capital............. 7.71 7.96 7.53 8.48 8.73 8.56 7.67
Total risk-adjusted capital.............. 11.45 11.05 10.85 11.62 12.22 11.73 9.80
Leverage................................. 6.43 6.24 6.20 6.63 6.72 6.56 5.97
ASSET QUALITY
Nonperforming loans...................... $ 341 $ 304 $ 333 $ 256 $ 336 $ 553 $ 730
Nonperforming assets..................... 389 363 379 340 500 900 1,072
Allowance for loan losses................ 875 867 876 830 803 783 794
Net loan charge-offs..................... 43 17 99 109 213 361 392
Nonperforming loans to period-end
loans.................................. .71% .63% .70% .55% .84% 1.53% 2.05%
Nonperforming assets to period-end loans
plus other real estate owned and other
nonperforming assets................... .81 .75 .79 .73 1.24 2.47 2.99
Allowance for loan losses to
nonperforming loans.................... 256.60 285.51 263.15 324.27 238.69 141.54 108.79
Allowance for loan losses to period-end
loans.................................. 1.82 1.81 1.84 1.80 2.00 2.17 2.23
Net loan charge-offs to average loans.... .36 .15 .21 .26 .56 1.02 1.11
<FN>
- ---------------
(1) Annualized.
(2) Calculated as noninterest expense (excluding merger and integration charges
and certain other nonrecurring charges) divided by taxable equivalent net
interest income plus noninterest income (excluding net securities gains
(losses) and gains on certain asset sales).
(3) Calculated as noninterest expense (excluding merger and integration charges
and certain other nonrecurring charges) less noninterest income (excluding
net securities gains (losses) and gains on certain asset sales) divided by
taxable-equivalent net interest income.
</TABLE>
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The Corporation's ratio of earnings to fixed charges for the periods
indicated are set forth below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------- ------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits..... 2.59x 2.18x 2.42x 3.50x 4.15x 3.67x 2.07x
Including Interest on Deposits..... 1.53 1.38 1.46 1.70 1.69 1.48 1.18
</TABLE>
For purposes of computing the above ratios, earnings represent consolidated
income before income taxes and extraordinary item 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-7
<PAGE> 8
DESCRIPTION OF THE NOTES
The following is a brief summary of the terms of the Notes. The summary
below of the provisions of the Notes does not purport to be complete, should be
read in conjunction with the statements under "Description of Debt Securities"
in the accompanying Prospectus and is subject to and qualified in its entirety
by reference to the Subordinated Indenture dated as of June 10, 1994 (the
"Subordinated Indenture") between the Corporation and Bankers Trust Company, as
Trustee (the "Trustee"). The Subordinated Indenture is an exhibit to the
Registration Statement of which the accompanying Prospectus and this Prospectus
Supplement form a part. Any terms not defined herein are used herein as defined
in the Subordinated Indenture.
GENERAL
The Notes will be issued under the Subordinated Indenture and will be
represented by two permanent global securities (the "Global Securities")
registered in the name of a nominee of The Depository Trust Company as
depository (the "Depository"). The Notes will be available for purchase in
minimum denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000 in book-entry form only. Beneficial interests in the
Global Securities will be shown on, and transfers thereof will be effected only
through, records maintained by the Depository and its participants. See
"Book-Entry System" below. Except as described under "Description of Debt
Securities -- Book-Entry Procedures" in the accompanying Prospectus, owners of
beneficial interests in the Global Securities will not be entitled to receive
Notes in definitive form.
The Notes will be limited to $250,000,000 aggregate principal amount and
will mature on June 15, 2006 (the "Date of Maturity"). The Notes are not subject
to redemption prior to the Date of Maturity. The Notes will bear interest at the
rate per annum set forth on the cover page of this Prospectus Supplement from
June 10, 1996, until the principal of the Notes has been paid in full or a sum
sufficient to pay the principal of the Notes has been made available for
payment. Interest on the Notes will be payable semiannually in arrears on June
15 and December 15 of each year, commencing on December 15, 1996, and ending on
the Date of Maturity (each, an "Interest Payment Date") (or, if any such date is
not a Business Day, on the next succeeding Business Day) to the persons in whose
names the Notes are registered at the close of business of the Corporation on
June 1 and December 1, as the case may be, next preceding such Interest Payment
Date. Interest on the Notes will be calculated on the basis of a 360-day year of
twelve 30-day months. The term "Business Day" means any day that is not a
Saturday or Sunday or that is not a day on which banking institutions are
authorized or obligated by law or executive order to close in the City of New
York, New York or the City of Cleveland, Ohio.
The Notes will not be entitled to the benefit of a sinking fund or to the
defeasance and covenant defeasance provisions contained in the Subordinated
Indenture.
THE NOTES ARE NOT 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 OR ANY OTHER GOVERNMENT
AGENCY.
SUBORDINATED INDENTURE
In 1992 the Board of Governors of the Federal Reserve System (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 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. The
Corporation's Subordinated Indenture entered into as of June 10, 1994 permits
the Corporation to issue Subordinated Debt Securities (as defined below) that
qualify as Tier II capital, subject to certain limits, in accordance with the
Interpretation. Since the Federal Reserve Board issued the Interpretation, the
Corporation has issued $217.5 million principal amount of such Subordinated Debt
Securities, consisting of $200 million of 6 3/4% Subordinated Notes due
S-8
<PAGE> 9
March 15, 2006 and $17.5 million of Subordinated Medium-Term Notes, Series B,
due November 7, 2005. In addition to the Corporation's aforementioned
Subordinated Debt Securities, as of March 31, 1996, 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
(each as defined in the accompanying Prospectus), respectively, prior to the
issuance of the Interpretation, continued to constitute, and be treated by the
Corporation as, Tier II capital.
SUBORDINATION
The following is a discussion of the subordination provisions applicable to
the Notes to be issued hereunder. The Notes are Subordinated Debt Securities, as
that term is defined in the Subordinated Indenture.
The Notes will be direct unsecured subordinated obligations of the
Corporation and the indebtedness evidenced by the Notes and the payment of the
principal of, premium, if any, and interest, if any, on the Notes will be
subordinated in right of payment to the extent described below to the prior
payment in full of all Senior Indebtedness. In addition, no payments shall be
made by the Corporation on account of the Notes 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. In certain circumstances relating to an insolvency, bankruptcy,
reorganization or similar proceeding 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 and liabilities of the Corporation (an
"insolvency event"), the payment of the principal of, premium, if any, and
interest, if any, on the Notes 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).
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
(a) 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 and (b) any renewals, extensions, modifications and refundings of
any such indebtedness. As of March 31, 1996, the Corporation had outstanding
approximately $1.1 billion 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 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. As of March 31, 1996,
the Corporation had $150.8 million of Other Senior Obligations outstanding.
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<PAGE> 10
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 (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." As of March 31, 1996, the
Corporation had outstanding $565.0 million 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.
As of March 31, 1996, the Corporation also had outstanding $217.5 million
of Subordinated Debt Securities, consisting of $200 million of 6 3/4%
Subordinated Notes due March 15, 2006 and $17.5 million of Subordinated
Medium-Term Notes, Series B, due November 7, 2005 issued on November 7, 1995,
all of which constitute Subordinated Debt Securities under the Subordinated
Indenture and as described herein, and none of which constitute Existing
Subordinated Indebtedness under the Subordinated Indenture.
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 Notes 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 Notes 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 to
receive any payment on account of the principal of and interest on such Existing
Subordinated
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<PAGE> 11
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. "Entitled Persons" means persons who are entitled
to payment pursuant to the terms of Other Senior Obligations.
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.
EVENTS OF DEFAULT
The Subordinated Indenture defines an "Event of Default" (with respect to
any series of Subordinated Debt Securities) as (a) certain 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. The term "Major
Bank" is defined in the Subordinated Indenture as any directly or indirectly
owned banking subsidiary of the Corporation, the consolidated assets of which
constitute 75% or more of the consolidated assets of the Corporation. As of the
date of this Prospectus Supplement, no banking subsidiary of the Corporation
constitutes a Major Bank.
There is no right of acceleration in the case of a default in the payment
of principal or interest on the Notes or a default in the performance of any
other obligation of the Corporation with respect to the Notes. Payment of
principal on the Notes may be accelerated only in certain events involving the
bankruptcy of the Corporation or the receivership of a Major Bank. See
"Description of Debt Securities -- Events of Default" in the accompanying
Prospectus.
BOOK-ENTRY SYSTEM
Upon issuance, the Notes will be issued in the form of two Global
Securities. The Global Securities will be deposited with, or on behalf of, the
Depository, and registered in the name of the Depository or a nominee thereof.
Unless and until they are exchanged in whole or in part for Notes in definitive
form, the Global Securities may not 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.
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Depository's Same-Day Funds Settlement System until
maturity, and therefore the Depository will require secondary trading activity
in the Notes to be settled in immediately available funds.
S-11
<PAGE> 12
UNDERWRITING
Under the terms and subject to the conditions contained in a Terms
Agreement dated June 4, 1996 (the "Terms Agreement"), the Underwriters named
below (the "Underwriters") have severally but not jointly agreed to purchase
from the Corporation the following respective principal amounts of the Notes:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------
<S> <C>
J.P. Morgan Securities Inc..................................... $ 62,500,000
Citicorp Securities, Inc....................................... 62,500,000
CS First Boston Corporation.................................... 62,500,000
Salomon Brothers Inc........................................... 62,500,000
-----------
Total................................................ $ 250,000,000
===========
</TABLE>
The Terms Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the Notes if any are purchased. The Terms Agreement
provides that, in the event of a default by an Underwriter, in certain
circumstances the purchase commitments of non-defaulting Underwriters may be
increased or the Terms Agreement may be terminated.
The Underwriters have advised the Corporation that they propose to offer
the Notes to the public initially at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession of .40% of the principal amount, and the Underwriters and such
dealers may allow a discount of .25% of the principal amount of the Notes on
sales to certain other dealers. After the initial public offering, the public
offering price and concession and discount to dealers may be changed by the
Underwriters.
The Notes are a new issue of securities with no established trading market.
The Corporation has been advised by the Underwriters that they intend to make a
market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
The Corporation has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act or contribute
to payments which the Underwriters may be required to make in respect thereof.
In the ordinary course of their respective businesses, certain of the
Underwriters 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.
Because Key Capital Markets, Inc., an affiliate of the Corporation, may
participate in the distribution of the Notes, as agent for one or more of its
customers in connection with their purchases of the Notes, the offering is being
conducted in accordance with Schedule E to the By-Laws ("Schedule E") of the
National Association of Securities Dealers, Inc. ("NASD"). Section 3(c)(3) of
Schedule E allows an NASD member to participate in an offering with which it has
a conflict of interest if such offering is of a class of securities rated
investment grade by a nationally recognized rating agency. In addition, no NASD
member participating in the distribution will be permitted to confirm sales to
accounts over which it exercises discretionary authority without the prior
specific written consent of the customer.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Corporation prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of Notes are effected. Accordingly, any resale of the Notes in
Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
S-12
<PAGE> 13
discretionary exemption granted by the applicable Canada securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Corporation and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer, and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
civil liability provisions of the U.S. federal securities law.
All of the issuer's directors and officers as well as the experts named in
the accompanying Prospectus may be located outside of Canada and, as a result,
it may not be possible for Ontario purchasers to effect service of process
within Canada upon the issuer or such persons. All or a substantial portion of
the assets of the issuer and such persons may be located outside of Canada and,
as a result, it may not be possible to satisfy a judgment against the issuer or
such persons in Canada or to enforce a judgment obtained in Canadian courts
against such issuer or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within 10 days of the sale of any Notes acquired
by such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #88/5, a
copy of which may be obtained from the Corporation. Only one such report must be
filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Corporation by Daniel R. Stolzer, Senior Vice President and Senior Managing
Counsel of KeyCorp Management Company, an affiliate of the Corporation, 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 of Mr. Stolzer. Mr. Stolzer will rely as to all matters of New York law
on the opinion of Shearman & Sterling. As of March 31, 1996, Mr. Stolzer owned
approximately 5,300 Common Shares of the Corporation, including stock options
which were immediately exercisable.
S-13
<PAGE> 14
PROSPECTUS
DEBT SECURITIES DEBT WARRANTS
PREFERRED STOCK PREFERRED STOCK WARRANTS
DEPOSITARY SHARES KEYCORP 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 $850,000,000 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 APRIL 21, 1995.
<PAGE> 15
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, 1994;
2. The Corporation's Current Reports on Form 8-K, filed on January 20,
1995 and April 20, 1995;
3. 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
4. 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 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).
2
<PAGE> 16
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> 17
THE CORPORATION
OVERVIEW
On March 1, 1994, KeyCorp, a financial services holding company
headquartered in Albany, New York, with approximately $33 billion in assets at
December 31, 1993 ("old KeyCorp"), merged into and with Society Corporation, a
financial services holding company headquartered in Cleveland, Ohio, with
approximately $27 billion in assets at December 31, 1993 ("Society"), 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, an Ohio corporation, was the surviving
corporation, but changed its name to KeyCorp (also referred to herein as the
"Corporation"). The merger was accounted for as a pooling of interests.
Accordingly, all financial data of KeyCorp set forth herein (or incorporated by
reference) has been restated to give effect to the merger of old KeyCorp into
and with Society.
The merger of old KeyCorp into and with Society created a financial
services holding company which traces its roots back to 1825, when the first
predecessor of old KeyCorp was organized. At December 31, 1994, KeyCorp was one
of the nation's largest bank holding companies, based upon consolidated total
assets of approximately $66.8 billion.
KeyCorp is a legal entity separate and distinct from its banking and other
subsidiaries. Accordingly, the right of KeyCorp, its security holders 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 KeyCorp in its capacity as a creditor of such banking and
other subsidiaries may be recognized.
The executive offices of KeyCorp are located at 127 Public Square,
Cleveland, Ohio 44114-1306, and its telephone number is (216) 689-6300.
SUBSIDIARIES
KeyCorp provides banking and other financial services across much of the
country's northern tier and in Florida through a network of subsidiaries
operating 1,272 full-service banking offices in 13 states, giving KeyCorp the
nation's fifth largest domestic branch network as of December 31, 1994 (before
giving effect to KeyCorp's recent acquisitions of BANKVERMONT Corporation, Casco
Northern Bank, National Association and OMNIBANCORP as described in the "Recent
Mergers, Acquisitions and Divestitures" section below. KeyCorp's largest bank
subsidiaries include Society National Bank, headquartered in Cleveland, Ohio,
which is the largest bank in Ohio and one of the nation's major regional banks
with $24.6 billion in total assets and 289 full-service banking offices at
December 31, 1994; Key Bank of New York, headquartered in Albany, New York, with
$14.9 billion in total assets and 327 full-service banking offices at December
31, 1994 ("Key-NY"); Key Bank of Washington, headquartered in Tacoma,
Washington, with $7.6 billion in total assets and 186 full-service banking
offices at December 31, 1994 ("Key-Washington"); and Society National Bank,
Indiana, headquartered in South Bend, Indiana, with $3.3 billion in total assets
and 92 full-service banking offices at December 31, 1994 ("SNBI"). In addition,
KeyCorp operates bank subsidiaries in Alaska, Colorado, Idaho, Maine, Michigan,
Oregon, Utah, Vermont (its Vermont subsidiary was acquired on January 27, 1995)
and Wyoming, a savings association subsidiary in Florida, and either a trust
company subsidiary or an office of a trust company subsidiary in each of the
aforementioned states except Vermont. See "-- Recent Mergers, Acquisitions and
Divestitures," below.
Through its bank and trust company subsidiaries KeyCorp provides a wide
range of banking, fiduciary and other financial services to its corporate,
individual and institutional customers located throughout the country. In
addition to the customary banking services of accepting deposits and making
loans, KeyCorp's bank and trust company subsidiaries provide specialized
services tailored to specific markets, including personal and corporate trust
services, personal financial services, customer access to mutual funds, cash
management services, investment banking services and international banking
services. Through its subsidiary banks, trust companies and registered
investment adviser subsidiaries, KeyCorp 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. Several of KeyCorp's
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investment management and trust company subsidiaries also serve as investment
advisers to KeyCorp's proprietary mutual funds.
KeyCorp also provides other financial services both in and outside of its
primary banking markets through its nonbank subsidiaries. Services provided by
nonbank financial services subsidiaries include 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. KeyCorp is also a 20% equity participant in a joint venture with a
number of other unaffiliated bank holding companies in Electronic Payment
Services, Inc., which provides automated teller machine access to bank customers
throughout most of the United States through its subsidiary, Money Access
Service Inc. (more commonly known as the MAC(R) network).
RECENT MERGERS, ACQUISITIONS AND DIVESTITURES
PENDING
AutoFinance Group, Inc. On March 20, 1995, KeyCorp entered into a
definitive agreement to acquire AutoFinance Group, Inc. ("AFG"), a suburban
Chicago based national consumer finance company, in a tax-free exchange of
stock. Under the terms of the agreement, AFG Shareholders will receive KeyCorp
common shares valued at $16.50 per share, subject to a maximum of .6 and a
minimum of .5 KeyCorp common shares, for each AFG Share. Based upon the market
price of KeyCorp common shares on the date of execution of the definitive
agreement, this would result in the issuance of approximately 11 million KeyCorp
common shares with a value of approximately $325 million. In addition,
immediately prior to the closing, AFG will complete a spin-off to its
Shareholders of 95.01% of its common stock interest in Patlex Corporation, a
wholly owned subsidiary of AFG. Upon consummation of the acquisition, AFG will
merge into KeyCorp Finance Inc., a wholly owned subsidiary of KeyCorp. The
transaction, which is subject to approval by AFG's Shareholders and certain
regulatory approvals, is expected to close on or about October 1, 1995 and will
be accounted for as a purchase. AFG had total assets of $124.2 million at
December 31, 1994.
COMPLETED
KeyCorp Mortgage Inc. On March 31, 1995, KeyCorp sold the residential
mortgage loan servicing operations of KeyCorp Mortgage Inc. ("KMI"), an indirect
wholly owned subsidiary of KeyCorp, to NationsBanc Mortgage Corp., a subsidiary
of NationsBank Corp. KMI services approximately $28 billion of residential
mortgage loans. KeyCorp plans to continue to service commercial mortgages and to
originate residential mortgage loans through its banking franchise, and to
package and sell the rights to service all residential mortgage loans originated
after the KMI sale through a newly formed subsidiary.
Spears, Benzak, Salomon & Farrell, Inc. On April 5, 1995, KeyCorp Asset
Management Holdings, Inc., an indirect wholly owned subsidiary of KeyCorp,
acquired Spears, Benzak, Salomon & Farrell, Inc., a New York-based investment
management firm ("Spears, Benzak"). Spears, Benzak had aggregate assets under
management of approximately $3 billion as of December 31, 1994. The transaction
was accounted for as a purchase.
OMNIBANCORP. On February 28, 1995, KeyCorp acquired OMNIBANCORP, based in
Denver, Colorado, in a tax-free exchange of stock. Under the terms of the merger
agreement, 4,043,653 KeyCorp common shares were exchanged for all of the
outstanding shares of OMNIBANCORP common stock (based on an exchange ratio of
.2452 KeyCorp common shares for each share of OMNIBANCORP). OMNIBANCORP had five
Colorado-chartered banks ("Omnibanks") and had 19 branches and total assets of
$500.2 million at the date of acquisition. The Omnibanks will be merged with and
into Key Bank of Colorado, a wholly owned subsidiary of KeyCorp. The transaction
was accounted for as a purchase.
Casco Northern Bank, National Association. On February 16, 1995, KeyCorp
acquired Casco Northern Bank, National Association ("Casco Northern"),
headquartered in Portland, Maine, for cash consideration of $205.1 million. The
transaction was accounted for as a purchase. At the date of acquisition, Casco
Northern had total assets of $1.0 billion and 34 branches in Maine, but pursuant
to the terms of a letter dated December 16, 1994, from the United States
Department of Justice, KeyCorp will divest 11 of these branches. The
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<PAGE> 19
remaining 23 branches of Casco Northern were acquired by Key Bank of Maine, an
indirect wholly owned subsidiary of KeyCorp.
BANKVERMONT Corporation. On January 27, 1995, KeyCorp acquired BANKVERMONT
Corporation, headquartered in Burlington, Vermont, for cash consideration of
$90.3 million. The transaction was accounted for as a purchase. Upon
consummation of the acquisition, BANKVERMONT Corporation's only subsidiary, Bank
of Vermont, with 12 branches and total assets of $660.5 million, became an
indirect wholly owned subsidiary of KeyCorp and was renamed Key Bank of Vermont.
The Bank of Greeley. On December 30, 1994, KeyCorp acquired The Bank of
Greeley, a single location bank in Greeley, Colorado ("Greeley Bank"), through a
merger of Greeley Bank with and into Key Bank of Colorado, a wholly owned
subsidiary of KeyCorp, in a tax-free exchange of stock. Under the terms of the
merger agreement, 259,697 KeyCorp Common Shares were exchanged for all of the
outstanding shares of Greeley Bank common stock (based on an exchange ratio of
1.026 KeyCorp common shares for each share of Greeley Bank). The transaction was
accounted for as a pooling of interests; however, financial statements for
periods prior to the merger have not been restated to include the accounts and
results of operations of Greeley Bank because the transaction was not material
to KeyCorp. Greeley Bank had total assets of $60 million at the date of
acquisition.
First Citizens Bancorp of Indiana. On December 13, 1994, KeyCorp acquired
First Citizens Bancorp of Indiana ("First Citizens"), based in Anderson, Indiana
in a tax-free exchange of stock. Under terms of the merger agreement, 1,960,119
KeyCorp Common Shares were exchanged for all the outstanding shares of First
Citizens common stock (based on an exchange ratio of 1.4286 KeyCorp common
shares for each share of First Citizens). First Citizens' subsidiary, Citizens
Banking Company, an Indiana-chartered commercial bank with nine branches in
central Indiana, and total assets of $347 million at the date of acquisition,
merged with and into Society National Bank, Indiana, a wholly owned subsidiary
of KeyCorp, on March 10, 1995. The transaction was accounted for as a purchase.
State Home Savings Bank, FSB. On September 16, 1994, Society National
Bank, a wholly owned subsidiary of KeyCorp, acquired State Home Savings Bank,
FSB ("State Home Savings"), a closely held Federal stock savings bank based in
Bowling Green, Ohio, for cash consideration of $44.2 million. The transaction
was accounted for as a purchase. State Home Savings had 14 branches in five
Northwest Ohio counties and total assets of $321 million at the date of
acquisition.
Commercial Bancorporation of Colorado. On March 24, 1994, Commercial
Bancorporation of Colorado ("CBC"), a bank holding company with subsidiaries
operating in the Denver, Colorado Springs, Sterling and Fort Collins areas of
Colorado was acquired by KeyCorp in a tax-free exchange of stock and its
subsidiary banks merged into Key Bank of Colorado, a wholly owned subsidiary of
KeyCorp. Under the terms of the merger agreement, 2,900,389 KeyCorp common
shares were exchanged for all of the outstanding shares of CBC common stock
(based on an exchange ratio of .899 KeyCorp common shares for each share of
CBC). CBC had total assets of $409 million at the date of acquisition. The
merger qualified for accounting as a pooling of interests; however, financial
statements for periods prior to the merger have not been restated to include the
accounts and results of operations of CBC because the transaction was not
material to KeyCorp.
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<PAGE> 20
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>
YEAR ENDED DECEMBER 31,
----------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits........................ 3.50x 4.15x 3.67x 2.07x 1.57x
Including Interest on Deposits........................ 1.70 1.69 1.48 1.18 1.10
Earnings to Combined Fixed Charges and Preferred Stock
Dividends:
Excluding Interest on Deposits........................ 3.34x 3.84x 3.31x 1.96x 1.54x
Including Interest on Deposits........................ 1.68 1.66 1.45 1.17 1.10
</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.
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. All or a portion of the net proceeds from the
sale of the Securities may also be used to finance, in whole or in part, the
repurchase by the Corporation of shares of its outstanding common stock pursuant
to the Corporation's stock repurchase program announced on January 19, 1995 and
described in a Current Report on Form 8-K filed with the Commission on January
20, 1995, which is incorporated herein by reference (see "Incorporation of
Certain Documents by Reference"), and additional share repurchases undertaken
from time to time in connection with the Corporation's acquisition of banking
and nonbanking companies.
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<PAGE> 21
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 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.
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<PAGE> 22
(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.
(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 calculation agent, if any, 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) and/or interest, if any, on such Debt Securities may be determined
with reference to an index, formula, or other method 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
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<PAGE> 23
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.
(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
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<PAGE> 24
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.
Debt Securities may provide for an amount less than the entire principal
amount thereof to be due and 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 represented
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<PAGE> 25
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 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
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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.
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 December 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 1601) 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 and liabilities, 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
(a) 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 and (b) any renewals, extensions, modifications and refundings of
any such indebtedness. (Section 101) As of December 31, 1994, the Corporation
had outstanding approximately $902.2 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 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
December 31, 1994, the Corporation had $538.4 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
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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." As of December 31, 1994, the
Corporation had outstanding $565.0 million 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
(Section 1602) or before the holders of Existing Subordinated Indebtedness will
be entitled 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,
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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 any
directly or indirectly owned banking subsidiary of the Corporation the assets of
which constitute 10% or more of the consolidated assets of the Corporation
(currently Society National Bank, Key Bank of New York and Key Bank of
Washington.) (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
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) default in the deposit any sinking fund payment
when and as due; (d) failure to perform, or default in the performance or breach
of, any other covenant, warranty, or
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agreement of the Corporation in the Senior Indenture (other than a default in
the performance or breach of a covenant or warranty or agreement included in the
Senior Indenture solely for the benefit of a series of Senior Debt Securities
thereunder other than that series) and continuance of such default or breach 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 the holders of 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
calendar 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 then outstanding 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 and before a judgment or decree for payment of the money due has
been obtained, the holders of a majority in 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 directly or indirectly owned banking subsidiary of
the Corporation, the consolidated assets of which constitute 75% or more of the
consolidated assets of the Corporation. As of the date of 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 and before a judgment or decree for
payment of the money due 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)
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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 calendar 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 calendar 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 calendar 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)
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
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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 calendar 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; (3) change any
obligation of the Corporation to pay Additional Amounts in respect of any Debt
Security of such series; (4) reduce the portion of principal of an Original
Issue Discount Security or Indexed 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 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, in the case of redemption
or repayment, on or after any Redemption Date or Repayment Date, as the case may
be); (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 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
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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 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
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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 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
person, may convey, transfer, or lease its assets substantially as an entirety
to any person, or may permit any person to merge into or consolidate with the
Corporation or convey, transfer or lease its property and assets substantially
as an entirety to 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
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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. Bankers Trust Company also serves as
trustee under a senior indenture of old KeyCorp.
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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.
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.
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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 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.
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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 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
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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 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
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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.
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.
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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 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
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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 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
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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 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 calendar 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.
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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 December 31, 1994 consisted of
900,000,000 authorized shares, with a par value of $1 each, of which there were
240,362,117 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.
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
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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
calendar 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").
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.
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The Corporation's Board of Directors may redeem the Rights for 1/2(c) 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.
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).
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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.
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.
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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.
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
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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 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
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of Securities who later resell to investors. Such dealers may be deemed to be
"underwriters" within the meaning of the Securities Act.
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. The aggregate number of shares owned by
attorneys at Thompson, Hine and Flory or the General Counsel or Senior Managing
Counsel of the Corporation rendering the opinion referred to above on behalf of
the Corporation will be set forth in the Applicable Prospectus Supplement.
EXPERTS
The consolidated financial statements of KeyCorp and subsidiaries
incorporated by reference in KeyCorp's Annual Report (Form 10-K) for the year
ended December 31, 1994, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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