<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31, 1996
REGISTRATION NOS. 333- AND 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
KEYCORP
(Exact name of registrant as specified in its charter)
OHIO
(State or other jurisdiction of incorporation or organization)
6712
(Primary standard industrial classification code number)
34-6542451
(I.R.S. Employer Identification No.)
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1306
(216) 689-6300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
KEYCORP INSTITUTIONAL CAPITAL B
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
6719
(Primary standard industrial classification code number)
APPLIED FOR
(I.R.S. Employer Identification No.)
C/O KEYCORP
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1306
(216) 689-6300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
THOMAS C. STEVENS, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
KEYCORP
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1306
(216) 689-6300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
<TABLE>
<S> <C>
DANIEL R. STOLZER, ESQ. MITCHELL S. EITEL, ESQ.
SENIOR VICE PRESIDENT & SENIOR MANAGING COUNSEL SULLIVAN & CROMWELL
KEYCORP 125 BROAD STREET
127 PUBLIC SQUARE NEW YORK, NEW YORK 10004
CLEVELAND, OHIO 44114-1306 (212) 558-4000
(216) 689-6300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<S> <C> <C> <C> <C>
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TITLE OF PROPOSED MAXIMUM PROPOSED MAXIMUM
EACH CLASS OF SECURITIES AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED BE REGISTERED(1) UNIT(2) PRICE(2) REGISTRATION FEE
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8.25% Capital Securities of KeyCorp
Institutional Capital B.................. 150,000 $1,000 $150,000,000 $45,454.55
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8.25% Junior Subordinated Deferrable
Interest Debentures of KeyCorp(2)(3)..... N/A N/A $150,000,000 N/A
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KeyCorp Guarantee with respect to
Capital Securities (3)(4)................ N/A N/A N/A N/A
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Total...................................... 150,000 100% $150,000,000(5) $45,454.55
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures were purchased by
KeyCorp Institutional Capital B with the proceeds of the sale of the Capital
Securities.
(3) This Registration Statement is deemed to cover the 8.25% Junior Subordinated
Deferrable Interest Debentures of KeyCorp, the rights of holders of 8.25%
Junior Subordinated Deferrable Interest Debentures of KeyCorp under the
Indenture, the rights of holders of Capital Securities of KeyCorp
Institutional Capital B under the Trust Agreement, the rights of holders of
the Capital Securities under the Guarantee of KeyCorp, the Expense Agreement
entered into by KeyCorp and certain backup undertakings as described in this
Registration Statement. No separate consideration will be received from
purchasers of the Capital Securities for the Junior Subordinated Debentures.
(4) No separate consideration will be received for the KeyCorp Guarantee.
(5) Such amount represents the aggregate liquidation amount of the Capital
Securities to be issued and exchanged hereunder and the principal amount of
Junior Subordinated Debentures that may be distributed upon any liquidation
of KeyCorp Institutional Capital B.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
CROSS-REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE RESPONSES
TO THE ITEMS OF PART I OF FORM S-4.
<TABLE>
<CAPTION>
FORM S-4 ITEM LOCATION IN PROSPECTUS
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<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus........... Outside Front Cover Page; Facing Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Available Information; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.................... Risk Factors; Selected Consolidated
Financial Data of KeyCorp
4. Terms of the Transaction......................... Outside Front Cover Page; Summary;
KeyCorp; KeyCorp Institutional Capital
B; Use of Proceeds; Capitalization;
Accounting Treatment; The Exchange
Offer; Description of New Securities;
Description of Old Securities;
Relationship Among the Capital
Securities, the Junior Subordinated
Debentures, the Guarantee and the
Expense Agreement; Certain Federal
Income Tax Consequences; Certain ERISA
Considerations; Plan of Distribution
5. Pro Forma Financial Information.................. Incorporation of Certain Documents by
Reference; Capitalization
6. Material Contacts with the Company Being
Acquired......................................... *
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to Be Underwriters.... *
8. Interests of Named Experts and Counsel........... Validity of New Securities; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... *
10. Information with Respect to S-3 Registrants...... Incorporation of Certain Documents by
Reference; Summary; KeyCorp
11. Incorporation of Certain Information by
Reference........................................ Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants...................................... *
13. Incorporation of Certain Information by
Reference........................................ *
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants................ Available Information; KeyCorp
Institutional Capital B
15. Information with Respect to S-3 Companies........ *
16. Information with Respect to S-2 or S-3
Companies........................................ *
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies.................. *
18. Information if Proxies, Consents or
Authorizations are to be Solicited............... *
19. Information if Proxies, Consents or
Authorizations are not to be Solicited, or in an
Exchange Offer................................... Incorporation of Certain Documents by
Reference
</TABLE>
- ---------------
* Not applicable.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1997
PROSPECTUS
$150,000,000
KEYCORP INSTITUTIONAL CAPITAL B
OFFER TO EXCHANGE ITS 8.25% CAPITAL SECURITIES WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND
ALL OF ITS OUTSTANDING 8.25% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
KEYCORP
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1997, UNLESS EXTENDED.
KeyCorp Institutional Capital B, a business trust created under the laws of
the State of Delaware (the "Issuer"), hereby offers, upon the terms and subject
to the conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange up
to $150,000,000 aggregate Liquidation Amount of its 8.25% Capital Securities
(the "New Capital Securities") which have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement (as defined herein) of which this Prospectus constitutes a part, for a
like Liquidation Amount of its outstanding 8.25% Capital Securities (the "Old
Capital Securities"), of which $150,000,000 aggregate Liquidation Amount is
outstanding. Pursuant to the Exchange Offer, KeyCorp, an Ohio corporation (the
"Corporation"), is also exchanging its guarantee of the payment of Distributions
(as defined herein) and payments on liquidation or redemption of the Old Capital
Securities (the "Old Guarantee") for a like guarantee of the New Capital
Securities (the "New Guarantee") and all of its 8.25% Junior Subordinated
Deferrable Interest Debentures (the "Old Junior Subordinated Debentures"), of
which $154,640,000 aggregate principal amount is outstanding, for a like
aggregate principal amount of its 8.25% Junior Subordinated Deferrable Interest
Debentures (the "New Junior Subordinated Debentures"), which New Guarantee and
New Junior Subordinated Debentures also have been registered under the
Securities Act. The Old Capital Securities, the Old Guarantee and the Old Junior
Subordinated Debentures are collectively referred to herein as the "Old
Securities" and the New Capital Securities, the New Guarantee and the New Junior
Subordinated Debentures are collectively referred to herein as the "New
Securities."
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities
have been registered under the Securities Act and, therefore, will not be
subject to certain restrictions on transfer applicable to the Old Securities,
(ii) the New Capital Securities will not provide for any increase in the
Distribution rate thereon and (iii) the New Junior Subordinated Debentures will
not provide for any increase in the interest rate thereon. See "Description of
New Securities" and "Description of Old Securities." The New Capital Securities
are being offered for exchange in order to satisfy certain obligations of the
Corporation and the Issuer under the Registration Rights Agreement, dated as of
December 30, 1996 (the "Registration Rights Agreement"), among the Corporation,
the Issuer and the Initial Purchaser (as defined herein). In the event that the
Exchange Offer is consummated, any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer and the New Capital
Securities issued in the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Trust Agreement (as defined herein).
(continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE NEW SECURITIES.
------------------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
(cover page continued)
The New Capital Securities represent preferred undivided beneficial
interests in the assets of the Issuer. The Corporation is the owner of all of
the beneficial interests represented by the common securities of the Issuer
("Common Securities" and, collectively with the Capital Securities, the "Trust
Securities"). The Issuer exists for the sole purposes of (i) issuing and selling
the Trust Securities, (ii) investing the proceeds thereof in Junior Subordinated
Debentures and (iii) engaging in those activities necessary, convenient or
incidental thereto. The Junior Subordinated Debentures will mature on December
15, 2026 (the "Stated Maturity"). The Capital Securities will have a preference
under certain circumstances with respect to cash distributions and amounts
payable on liquidation, redemption or otherwise over the Common Securities. See
"Description of New Securities -- Description of Capital
Securities -- Subordination of Common Securities".
------------------------
As used herein, (i) the "Indenture" means the Indenture, as amended and
supplemented from time to time, between the Corporation and Bankers Trust
Company, as trustee (the "Debenture Trustee"), pursuant to which the Junior
Subordinated Debentures are to be issued, (ii) the "Trust Agreement" means the
Amended and Restated Trust Agreement relating to the Issuer among the
Corporation, as Depositor, Bankers Trust Company, as Property Trustee (the
"Property Trustee") and Bankers Trust (Delaware), as Delaware Trustee (the
"Delaware Trustee"; and, collectively with the Property Trustee, the "Issuer
Trustees"), (iii) the "Guarantee" means the Guarantee Agreement, as amended and
supplemented from time to time, between the Corporation and Bankers Trust
Company, as trustee (the "Guarantee Trustee"), for the benefit of holders of
Capital Securities and (iv) the "Expense Agreement" means the Agreement as to
Expenses and Liabilities, between the Corporation and the Issuer. In addition,
as the context may require, unless expressly stated otherwise, (i) "Capital
Securities" includes the Old Capital Securities and the New Capital Securities,
(ii) "Junior Subordinated Debentures" includes the Old Junior Subordinated
Debentures and the New Junior Subordinated Debentures and (iii) "Guarantee"
includes the Old Guarantee and the New Guarantee.
------------------------
Except as provided below, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian
for and registered in the name of a nominee of The Depository Trust Company
("DTC"). Beneficial interests in such Capital Securities will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. Beneficial interests in such Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity in
such interests will therefore settle in immediately available funds. The Capital
Securities will be issued, and may be transferred, only in blocks having a
Liquidation Amount of not less than $100,000 (100 Capital Securities). See
"Description of New Securities -- Description of Capital
Securities -- Book-Entry, Delivery and Form".
Holders of the Capital Securities will be entitled to receive preferential
cumulative cash distributions accruing from the date of original issuance and
payable semi-annually in arrears on June 15 and December 15 of each year,
commencing June 15, 1997, at the annual rate of 8.25% of the Liquidation Amount
of $1,000 per Capital Security ("Distributions"). The Corporation has the right
to defer payment of interest on the Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due, the Corporation may elect to
begin a new Extension Period subject to the requirements set forth herein. If
interest payments on the Junior Subordinated Debentures are so deferred,
Distributions on the Capital Securities will also be deferred and the
Corporation will not be permitted, subject to certain exceptions described
herein, to declare or pay any cash distributions with respect to the
Corporation's capital stock or debt securities of the Corporation that rank pari
passu with or junior to the Junior Subordinated Debentures. During an Extension
Period, interest on the Junior Subordinated Debentures will continue to accrue
(and the amount of Distributions to which holders of the Capital Securities are
entitled will accumulate) at the rate of 8.25% per annum, compounded semi-
annually, and holders of the Capital Securities will be required to accrue
interest income for United States
2
<PAGE> 5
(cover page continued)
federal income tax purposes. See "Description of New Securities -- Description
of Junior Subordinated Debentures -- Option to Extend Interest Payment Period"
and "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount".
The Corporation has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement (each as
defined herein), taken together, fully, irrevocably and unconditionally
guaranteed all of the Issuer's obligations under the Capital Securities. See
"Relationship Among the Capital Securities, the Junior Subordinated Debentures,
the Guarantee and the Expense Agreement -- Full and Unconditional Guarantee".
The Guarantee of the Corporation guarantees the payment of Distributions and
payments on liquidation or redemption of the Capital Securities, but only in
each case to the extent of funds held by the Issuer as described herein (the
"Guarantee"). See "Description of New Securities -- Description of Guarantee".
If the Corporation does not make interest payments on the Junior Subordinated
Debentures held by the Issuer, the Issuer will have insufficient funds to pay
Distributions on the Capital Securities. The Guarantee does not cover payment of
Distributions when the Issuer does not have sufficient funds to pay such
Distributions. In such event, a holder of the Capital Securities may institute a
legal proceeding directly against the Corporation to enforce payment of such
amounts under the Indenture (as defined herein). See "Description of New
Securities -- Description of Junior Subordinated Debentures -- Enforcement of
Certain Rights By Holders of Capital Securities". The obligations of the
Corporation under the Guarantee and the Capital Securities are subordinate and
junior in right of payment to all Senior Debt (as defined herein) of the
Corporation. See "Description of New Securities -- Description of Junior
Subordinated Debentures -- Subordination".
The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Junior Subordinated Debentures at maturity or their
earlier redemption. The Junior Subordinated Debentures are redeemable prior to
maturity at the option of the Corporation (i) on or after December 15, 2006, in
whole at any time or in part from time to time at the redemption prices set
forth herein, or (ii) at any time, in whole (but not in part) within 90 days
following the occurrence and continuation of a Tax Event or Capital Treatment
Event (each as defined herein), at the Redemption Price (as defined herein). See
"Description of New Securities -- Description of Capital
Securities -- Redemption". The Corporation has committed to the Federal Reserve
Bank of Cleveland (the "Reserve Bank") that the Corporation will not exercise
its right to cause redemption of the Junior Subordinated Debentures or the
Capital Securities (prior to the Stated Maturity) without having received the
prior approval of the Board of Governors of the Federal Reserve System (the
"Federal Reserve") to do so, if then required under applicable Federal Reserve
capital guidelines or policies. See "Description of New
Securities -- Description of Junior Subordinated Debentures -- Redemption."
The holder of the Common Securities will have the right at any time to
terminate the Issuer and, after satisfaction of liabilities to creditors of the
Issuer as required by applicable law, cause the Junior Subordinated Debentures
to be distributed to the holders of the Capital Securities in liquidation of the
Issuer. See "Description of New Securities -- Description of Capital
Securities -- Liquidation Distribution upon Termination."
In the event of the termination of the Issuer, after satisfaction of
liabilities to creditors of the Issuer as required by applicable law and the
Expense Agreement, the holders of the Capital Securities will be entitled to
receive as a preference a Liquidation Amount of $1,000 per Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of such amount in Junior Subordinated
Debentures, subject to certain exceptions. See "Description of New Securities --
Description of Capital Securities -- Liquidation Distribution upon Termination".
The Junior Subordinated Debentures are unsecured and are subordinated and junior
in right of payment to all Senior Debt of the Corporation.
The Issuer is making the Exchange Offer in reliance on the position taken
by the staff of the Division of Corporation Finance of the Securities and
Exchange Commission (the "Commission") in certain interpretive letters addressed
to third parties in other transactions. However, neither the Corporation nor the
Issuer has
3
<PAGE> 6
(cover page continued)
sought its own interpretive letter and there can be no assurance that the staff
of the Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer. Based on these
interpretations, and subject to the two immediately following sentences, the
Corporation and the Issuer believe that New Capital Securities issued pursuant
to the Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the Corporation or the
Issuer within the meaning of Rule 405 under the Securities Act (an "Affiliate")
or who intends to participate in the Exchange Offer for the purpose of
distributing New Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Issuer to resell pursuant to Rule 144A under the
Securities Act ("Rule 144A") or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the above-
mentioned interpretive letters, (b) will not be permitted or entitled to tender
such Old Capital Securities in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirements. In addition,
as described below, if any broker-dealer holds Old Capital Securities acquired
for its own account as a result of market-making or other trading activities and
exchanges such Old Capital Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such New Capital Securities.
See "Plan of Distribution" and "The Exchange Offer -- Resales of New Capital
Securities."
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently exists no market.
Although the Initial Purchasers have informed the Corporation and the Issuer
that they each currently intend to make a market in the New Capital Securities,
they are not obligated to do so, and any such market making may be discontinued
at any time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Capital Securities. The
Company currently does not intend to apply for listing of the New Capital
Securities on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on , 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation and the Issuer (in which case the term "Expiration Date"
shall mean the latest date and time to which the Exchange Offer is extended).
Tenders of Old Capital Securities may be withdrawn at any time on or prior to
the Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Issuer and to the terms and provisions
of the Registration Rights Agreement. Old Capital Securities may be tendered in
whole or in part having a Liquidation Amount of not less than $100,000 (100
Capital Securities) and or any integral multiple of $1,000 Liquidation Amount (1
Capital Security) in excess thereof. The Corporation has agreed to pay all
expenses of the Exchange Offer, except as otherwise specified herein. See "The
Exchange Offer--Fees and Expenses." Each New Capital Security will pay
cumulative Distributions from the most recent Distribution Date (as defined
herein) on the Old Capital Securities
4
<PAGE> 7
(cover page continued)
surrendered in exchange for such New Capital Securities or, if no Distributions
have been paid on such Old Capital Securities, from December 30, 1996. Holders
of the Old Capital Securities whose Old Capital Securities are accepted for
exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date on such Old
Capital Securities prior to the original issue date of the New Capital
Securities or, if no such Distributions have been paid, will not receive any
accumulated Distributions on such Old Capital Securities, and will be deemed to
have waived the right to receive any Distributions on such Old Capital
Securities accumulated from and after such Distribution Date or, if no such
interest has been paid or duly provided for, from and after December 30, 1996.
This Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders of Old Capital Securities as of , 199 .
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Trust Agreement
(except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Corporation nor the Issuer will have any
further obligation to such holders (other than under certain limited
circumstances) to provide for registration under the Securities Act of the Old
Capital Securities held by them. To the extent that Old Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected. See "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities."
Neither the Corporation nor the Issuer will receive any cash proceeds from
the issuance of the New Securities offered hereby. No dealer-manager is being
used in connection with this Exchange Offer. See "Use of Proceeds" and "Plan of
Distribution."
This Prospectus may be used by Key Capital Markets, Inc. In connection with
offers and sales related to market-making transactions in New Capital Securities
effected from time to time after the commencement of the offering to which this
Prospectus relates, Key Capital Markets, Inc. may act as principal or agent in
such transactions, including as agent for the counterparty when acting as
principal or as agent for both counterparties, and may receive compensation in
the form of discounts and commissions, including from both counterparties when
it acts as agent for both. Such sales will be made at prevailing market prices
at the time of sale, at prices related thereto or at negotiated prices.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE CORPORATION OR THE
ISSUER ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD CAPITAL SECURITIES IN
ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT
BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
------------------------
THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND MAY BE TRANSFERRED, ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. ANY TRANSFER, SALE
OR OTHER DISPOSITION OF CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH
CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF
DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES.
5
<PAGE> 8
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 Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov. In addition, such reports, proxy statements
and other information concerning the Corporation can be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005,
on which exchange securities of the Corporation are listed.
The Corporation and the Issuer have filed with the Commission a
Registration Statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Corporation and the securities
offered hereby, reference is made to the Registration Statement and the exhibits
and the financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as an
exhibit to the Registration Statement.
No separate financial statements of the Issuer have been included herein.
The Corporation and the Issuer do not consider that such financial statements
would be material to holders of the Capital Securities because the Issuer is a
newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Junior Subordinated Debentures of the
Corporation and issuing the Trust Securities. The Corporation has, through the
Guarantee, the Trust Agreement, the Junior Subordinated Debentures, the
Indenture and the Expense Agreement (each as defined herein), taken together,
fully and unconditionally guaranteed all of the Issuer's obligations under the
Capital Securities. See "KeyCorp Institutional Capital B" and "Description of
New Securities". In addition, the Corporation does not expect that the Issuer
will be filing reports under the Exchange Act with the Commission.
THE PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO ANY
PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF
SUCH PERSON, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY
REFERENCE HEREIN (OTHER THAN EXHIBITS NOT SPECIFICALLY INCORPORATED BY REFERENCE
INTO THE TEXTS OF SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHOULD BE
DIRECTED TO: THOMAS C. STEVENS, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY, KEYCORP, 127 PUBLIC SQUARE, CLEVELAND, OHIO 44114-1306, TELEPHONE
NUMBER (216) 689-6300. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY , 1997.
6
<PAGE> 9
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act are incorporated into
this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
2. The Corporation's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996; and
3. The Corporation's Current Reports on Form 8-K filed on January 19, 1996,
April 22, 1996, July 18, 1996, October 18, 1996 and November 25, 1996.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein or therein, shall be deemed to be
modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this Prospectus.
------------------------
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B IS
TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT
THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION,
IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
------------------------
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR
HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF
THAT IT EITHER (I) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING
SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN, OR (II) IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1
OR 84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING.
7
<PAGE> 10
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE CORPORATION OR THE ISSUER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO
ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE CORPORATION OR THE ISSUER SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................................. 6
Incorporation of Certain Documents by Reference....................................... 7
Summary............................................................................... 9
Risk Factors.......................................................................... 16
KeyCorp............................................................................... 22
Selected Consolidated Financial Data of KeyCorp....................................... 25
KeyCorp Institutional Capital B....................................................... 27
Use of Proceeds....................................................................... 27
Capitalization........................................................................ 28
Accounting Treatment.................................................................. 29
The Exchange Offer.................................................................... 30
Description of New Securities......................................................... 38
Description of Old Securities......................................................... 63
Relationship Among the Capital Securities, the Junior Subordinated Debentures,
the Guarantee and the Expense Agreement............................................. 63
Certain Federal Income Tax Consequences............................................... 65
Certain ERISA Considerations.......................................................... 68
Plan of Distribution.................................................................. 69
Validity of New Securities............................................................ 70
Experts............................................................................... 70
</TABLE>
8
<PAGE> 11
SUMMARY
The following summary is qualified in its entirety by, and is subject to,
the more detailed information and financial statements contained elsewhere and
incorporated by reference in this Prospectus.
KEYCORP
GENERAL
The Corporation was formed on March 1, 1994, when "old KeyCorp," a bank
holding company headquartered in Albany, New York, with approximately $33
billion in assets at December 31, 1993, merged into and with Society
Corporation, a bank holding company headquartered in Cleveland, Ohio
("Society"), with approximately $27 billion in assets at December 31, 1993. In
the merger, Society, an Ohio corporation, was the surviving corporation, but
changed its name to KeyCorp. The merger was accounted for as a pooling of
interests. Accordingly, all financial data of the Corporation set forth herein
(or incorporated by reference) has been restated to give effect to the merger of
old KeyCorp into and with Society. At September 30, 1996, KeyCorp was one of the
nation's largest bank holding companies, based upon consolidated total assets of
approximately $65.4 billion.
The Corporation 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 (Personal Financial Services). In
addition to the customary banking services of accepting deposits and making
loans, the Corporation'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, the Corporation provides investment management
services to institutional and individual clients, including large corporate and
public retirement plans, Taft-Hartley plans, foundations and endowments, and
high net worth individuals. Several of the Corporation's investment management
subsidiaries also serve as investment advisers to the Corporation's proprietary
mutual funds.
The Corporation also 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 community development financing, 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. See "KeyCorp."
RECENT DEVELOPMENTS
The Corporation announced on November 25, 1996 the following strategic
actions it has undertaken or will undertake in the next year as part of its
transformation to a nationwide, bank-based financial services company:
- Formation of a single nationwide bank from the Corporation's current
network of 12 banks in 14 states and four regions of the United States.
- Consolidation of nearly 140 of the branch offices of its subsidiaries,
known as "KeyCenters," into other KeyCenters.
- Reduction of approximately 2,700 positions, or 10% of its current
employment base.
As a consequence of these actions, the Corporation plans to take a fourth
quarter 1996 restructuring charge of $100 million.
The Corporation also announced: (a) its intention to sell slightly more
than 140 KeyCenters in primarily rural areas, and (b) that its Board of
Directors authorized a new share buyback program, effective immediately, whereby
up to 12 million shares may be repurchased by the end of 1997.
See "KeyCorp -- Recent Developments" for an analysis of the major
components of the planned fourth quarter charge.
9
<PAGE> 12
KEYCORP INSTITUTIONAL CAPITAL B
The Issuer is a statutory business trust created under Delaware law
pursuant to (i) a Trust Agreement executed by the Corporation, as Depositor, and
Bankers Trust (Delaware), as Delaware Trustee, and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on December 18, 1996.
The Issuer's business and affairs are conducted by its trustees: Bankers Trust
Company, as Property Trustee, and Bankers Trust (Delaware), as Delaware Trustee.
The Issuer exists for the exclusive purposes of (i) issuing and selling the
Trust Securities, (ii) using the proceeds from the sale of Trust Securities to
acquire the Old Junior Subordinated Debentures and (iii) engaging in only those
other activities necessary or incidental thereto (such as effecting the Exchange
Offer and registering the transfer of the Trust Securities). Accordingly, the
Junior Subordinated Debentures are the sole assets of the Issuer, and payments
under the Junior Subordinated Debentures and the Expense Agreement will be the
sole source of revenue of the Issuer. See "KeyCorp Institutional Capital B."
THE EXCHANGE OFFER
The Exchange Offer......... Up to $150,000,000 aggregate Liquidation Amount of
New Capital Securities are being offered in
exchange for a like aggregate Liquidation Amount
of Old Capital Securities. Old Capital Securities
may be tendered for exchange in whole or in part
in a Liquidation Amount of $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in
excess thereof. The Corporation and the Issuer
are making the Exchange Offer in order to satisfy
their obligations under the Registration Rights
Agreement relating to the Old Capital Securities.
For a description of the procedures for tendering
Old Capital Securities, see "The Exchange
Offer -- Procedures for Tendering Old Capital
Securities."
Expiration Date............ 5:00 p.m., New York City time, on , 1997
(such time on such date being hereinafter called
the "Expiration Date") unless the Exchange Offer
is extended by the Corporation and the Issuer (in
which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange
Offer is extended). See "The Exchange
Offer -- Expiration Date; Extensions;
Amendments."
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Issuer in their sole and
absolute discretion. The Exchange Offer is not
conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. See
"The Exchange Offer -- Conditions to the Exchange
Offer."
The Corporation and the Issuer reserve the right in
their sole and absolute discretion, subject to
applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old
Capital Securities for exchange, (ii) to
terminate the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to
extend the Expiration Date of the Exchange Offer
and retain all Old Capital Securities tendered
pursuant to the Exchange Offer, subject, however,
to the right of holders of Old Capital Securities
to withdraw their tendered Old Capital
Securities, or (iv) to waive any condition or
otherwise amend the terms of the Exchange Offer
in any respect. See "The Exchange
Offer -- Expiration Date; Extensions;
Amendments."
10
<PAGE> 13
Withdrawal Rights.......... Tenders of Old Capital Securities may be withdrawn
at any time on or prior to the Expiration Date by
delivering a written notice of such withdrawal to
Bankers Trust Company, as exchange agent (the
"Exchange Agent") in conformity with certain
procedures set forth below under "The Exchange
Offer -- Withdrawal Rights."
Procedures for Tendering
Old Capital Securities..... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained
therein and forward the same by mail, facsimile
or hand delivery, together with any other
required documents, to the Exchange Agent, either
with the Old Capital Securities to be tendered or
in compliance with the specified procedures for
guaranteed delivery of Old Capital Securities.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer. Holders of Old
Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See
"The Exchange Offer -- Procedures for Tendering
Old Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not be
sent to the Corporation or the Issuer. Such
documents should only be sent to the Exchange
Agent. Questions regarding how to tender and
requests for information should be directed to
the Exchange Agent. See "The Exchange
Offer -- Exchange Agent."
Resales of New Capital
Securities............... The Corporation and the Issuer believe that New
Capital Securities issued pursuant to this
Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other
than a holder who is a broker-dealer) without
further compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of
such holder's business and that such holder is
not participating, and has no arrangement or
understanding with any person to participate, in
a distribution (within the meaning of the
Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities who
is an "affiliate" of the Corporation or the
Issuer or who intends to participate in the
Exchange Offer for the purpose of distributing
the New Capital Securities, or any broker-dealer
who purchased the Old Capital Securities from the
Issuer to resell pursuant to Rule 144A or any
other available exemption under the Securities
Act, (a) will not be able to rely on the
interpretations of the staff of the Division of
Corporation Finance of the Commission set forth
in the above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender such
Old Capital Securities in the Exchange Offer and
(c) must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any sale or
other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption
from such requirements. In addition, if any
broker-dealer holds Old Capital Securities
acquired for its own ac-
11
<PAGE> 14
count as a result of market-making or other
trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in
connection with any resales of such New Capital
Securities. See "The Exchange Offer -- Resales of
New Capital Securities."
Exchange Agent............. The Exchange Agent with respect to the Exchange
Offer is Bankers Trust Company. The addresses,
and telephone and facsimile numbers of the
Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds............ Neither the Corporation nor the Issuer will receive
any cash proceeds from the issuance of the New
Capital Securities offered hereby. See "Use of
Proceeds."
Certain United States
Federal
Income Tax
Considerations;
ERISA Considerations..... Holders of Old Capital Securities should review the
information set forth under "Certain Federal
Income Tax Consequences" and "ERISA
Considerations" prior to tendering Old Capital
Securities in the Exchange Offer.
DESCRIPTION OF NEW CAPITAL SECURITIES
General.................... The Capital Securities represent preferred
undivided beneficial interests in the assets of
the Issuer and will have a preference under
certain circumstances with respect to
Distributions and amounts payable on liquidation,
redemption or otherwise over the Common
Securities. See "Description of New
Securities -- Subordination of Common
Securities". The sole assets of the Issuer are
the Junior Subordinated Debentures, and payments
under the Junior Subordinated Debentures will be
the sole revenue of the Issuer. The Junior
Subordinated Debentures are unsecured
subordinated debt securities issued under the
Indenture between the Corporation and Bankers
Trust Company, as trustee.
Securities Offered......... Up to $150,000,000 aggregate Liquidation Amount of
the Issuer's 8.25% Capital Securities, which have
been registered under the Securities Act
(Liquidation Amount $1,000 per Capital Security).
The New Capital Securities will be issued, and
the Old Capital Securities were issued, under the
Trust Agreement. The New Capital Securities and
any Old Capital Securities which remain
outstanding after consummation of the Exchange
Offer will constitute a single series of Capital
Securities under the Trust Agreement and,
accordingly, will vote together as a single class
for purposes of determining whether holders of
the requisite percentage in outstanding
Liquidation Amount thereof have taken certain
actions or exercised certain rights under the
Trust Agreement. See "Description of New
Securities -- Description of the Capital
Securities -- General." The terms of the New
Capital Securities are identical in all material
respects to the terms of the Old Capital
Securities, except that the New Capital
Securities have been registered under the
Securities Act and, therefore, are not subject to
certain restrictions on transfer applicable to
the Old Capital Securities and will not provide
for any increase in the Distribution rate
thereon.
12
<PAGE> 15
See "The Exchange Offer -- Purpose and Effect of
the Exchange Offer," "Description of New
Securities" and "Description of Old Securities."
Distributions.............. Holders of the Capital Securities will be entitled
to receive as a preference cumulative cash
Distributions accruing from the date of original
issuance and payable semi-annually in arrears on
June 15 and December 15 of each year, commencing
June 15, 1997, at a rate of 8.25% to the persons
in whose names the Capital Securities are
registered at the close of business on the
relevant record dates. See "Description of New
Securities -- Description of Capital
Securities -- Distributions".
The Junior Subordinated Debentures are unsecured
and rank subordinate and junior in right of
payment to all Senior Debt (as defined herein) of
the Corporation. The ability of the Issuer to pay
amounts due on the Capital Securities is solely
dependent upon the Corporation making payments on
the Junior Subordinated Debentures as and when
required. See "Risk Factors -- Ranking of
Subordinated Obligations Under the Guarantee and
the Junior Subordinated Debentures".
Option to Extend Interest
Payment Period........... So long as no Event of Default (as defined herein)
under the Indenture has occurred and is
continuing, the Corporation has the right to
defer payments of interest on the Junior
Subordinated Debentures at any time or from time
to time by extending the interest payment period
thereon for up to 10 consecutive semi-annual
periods (an "Extension Period"); provided,
however, that no Extension Period may extend
beyond the Stated Maturity of the Junior
Subordinated Debentures (December 15, 2026). If
interest payments on the Junior Subordinated
Debentures are deferred, Distributions on the
Capital Securities also will be deferred and the
Corporation will not be permitted, subject to
certain exceptions set forth herein, to declare
or pay any cash distributions with respect to the
Corporation's capital stock or debt securities of
the Corporation that rank pari passu with or
junior to the Junior Subordinated Debentures.
During an Extension Period, Distributions on the
Capital Securities will continue to accumulate
and Distributions that are in arrears will bear
interest on the amount thereof at a rate of
8.25%, compounded semi-annually, and holders of
the Capital Securities will be required to accrue
interest income for United States federal income
tax purposes in advance of receipt of cash
related to such income. Upon the termination of
any Extension Period and the payment of all
amounts then due, the Corporation may elect to
begin a new Extension Period, subject to the
requirements set forth herein.
The Corporation has no current plan to exercise its
right to defer payments of interest by extending
the interest payment period on the Junior
Subordinated Debentures. However, should the
Corporation elect to exercise such right in the
future, the market price of the Capital
Securities is likely to be affected. See "Risk
Factors -- Option to Extend Interest Payment
Period; Tax Consequences", "Description of New
Securities -- Description of Junior Subordinated
Debentures -- Option to Extend Interest Payment
Period" and "Certain
13
<PAGE> 16
Federal Income Tax Consequences -- Interest
Income and Original Issue Discount".
Redemption................. The Trust Securities are subject to mandatory
redemption, in whole or in part, upon repayment
of the Junior Subordinated Debentures at maturity
or upon their earlier redemption. The Junior
Subordinated Debentures are redeemable, at the
option of the Corporation, (i) upon the
occurrence and continuation of a Tax Event or
Capital Treatment Event, or (ii) at any time on
or after December 15, 2006, contemporaneously
with the optional redemption by the Corporation
of the Junior Subordinated Debentures, in each
case at the applicable Redemption Price. See
"Risk Factors -- Tax Event or Capital Treatment
Event Redemption" and "Description of New
Securities -- Description of Capital
Securities -- Redemption".
See "Risk Factors -- Possible Tax Law Changes
Affecting the Capital Securities" for a
discussion of certain legislative proposals that,
if adopted, could give rise to a Tax Event, which
may permit the Corporation to cause a redemption
of the Capital Securities prior to December 15,
2006.
No sinking fund will be established for the benefit
of the Capital Securities.
Exchange of Capital
Securities for Junior
Subordinated
Debentures............... The holder of the Common Securities (i.e., the
Corporation) has the right to terminate the
Issuer at any time and, after satisfaction of
liabilities to creditors of the Issuer as
required by applicable law, cause the Junior
Subordinated Debentures to be distributed to the
holders of the Capital Securities in liquidation
of the Issuer. See "Description of New
Securities -- Description of Capital
Securities -- Liquidation Distribution upon
Termination".
The Guarantee.............. The payment of Distributions and payments on the
liquidation of the Issuer or the redemption of
the Capital Securities are guaranteed by the
Corporation to the extent that the Issuer has
sufficient funds available therefor. Such
guarantee is subordinate and junior in right of
payment to all Senior Debt of the Corporation.
See "Risk Factors -- Rights Under the Guarantee"
and "Description of New Securities -- Description
of Guarantee".
Transfer................... The Capital Securities will be issued, and may be
transferred, only in blocks having a Liquidation
Amount of not less than $100,000 (100 Capital
Securities). Any transfer, sale or other
disposition of Capital Securities resulting in a
block having a Liquidation Amount of less than
$100,000 shall be deemed to be void and of no
legal effect whatsoever.
ERISA Considerations....... Prospective purchasers must carefully consider the
restrictions on purchase set forth under "Certain
ERISA Considerations".
14
<PAGE> 17
Absence of Market for the
New Capital Securities..... The New Capital Securities will be a new issue of
securities for which there currently is no
market. Although Credit Suisse First Boston
Corporation, the initial purchaser of the Old
Capital Securities (the "Initial Purchaser"), has
informed the Corporation and the Issuer that it
currently intends to make a market in the New
Capital Securities, it is not obligated to do so,
and any such market making may be discontinued at
any time without notice. Accordingly, there can
be no assurance as to the development or
liquidity of any market for the New Capital
Securities. The Issuer and the Corporation do not
intend to apply for listing of the New Capital
Securities on any securities exchange or for
quotation through the National Association of
Securities Dealers Automated Quotation System.
RISK FACTORS
Holders tendering Old Capital Securities in the Exchange Offer should
carefully consider the matters set forth under "Risk Factors."
For further information regarding the New Securities, see "Description of
New Securities."
15
<PAGE> 18
RISK FACTORS
Holders of Old Capital Securities should carefully review the information
contained elsewhere in this Prospectus and should particularly consider the
following matters before deciding whether to accept the Exchange Offer.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Corporation under the Junior Subordinated Debentures
and the Guarantee are unsecured and rank junior in right of payment to all
Senior Indebtedness of the Corporation. Substantially all of the Corporation's
existing indebtedness constitutes Senior Indebtedness. Because the Corporation
is a holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary, including its banking and nonbanking
subsidiaries, upon such subsidiary's dissolution, winding-up, liquidation or
reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary, except to the extent that the
Corporation may itself be a creditor of that subsidiary and its claims are
recognized. There are various legal limitations on the extent to which certain
of the Corporation's subsidiaries may extend credit, pay dividends or otherwise
supply funds to, or engage in transactions with, the Corporation or certain of
its other subsidiaries. Accordingly, the Junior Subordinated Debentures and
Guarantee will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Junior
Subordinated Debentures and the Guarantee should look only to the assets of the
Corporation for payments on the Junior Subordinated Debentures and the
Guarantee. See "KeyCorp." None of the Indenture, the Guarantee, the Trust
Agreement or the Expense Agreement places any limitation on the amount of
secured or unsecured debt, including Senior Indebtedness, that may be incurred
by the Corporation. See "Description of New Securities -- Description of
Guarantee -- Status of the Guarantee" and "-- Description of Junior Subordinated
Debentures -- Subordination."
The ability of the Issuer to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Junior Subordinated
Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Event of Default (as defined in the Indenture) has occurred
and is continuing with respect to the Junior Subordinated Debentures (a
"Debenture Event of Default"), the Corporation has the right under the Indenture
to defer the payment of interest on the Junior Subordinated Debentures at any
time or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity of the Junior Subordinated Debentures. See
"Description of New Securities -- Description of Junior Subordinated
Debentures -- Debenture Events of Default." As a consequence of any such
deferral, semi-annual Distributions on the Capital Securities by the Issuer will
be deferred (and the amount of Distributions to which holders of the Capital
Securities are entitled will accumulate additional Distributions thereon at the
rate of 8.25% per annum, compounded semi-annually from the relevant payment date
for such Distributions) during any such Extension Period. During any such
Extension Period, the Corporation may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock or (ii) make any payment
of principal of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Corporation (including other Junior
Subordinated Debentures) that rank pari passu in all respects with or junior in
interest to the Junior Subordinated Debentures (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Corporation
in connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
shareholder stock purchase plan or in connection with the issuance of capital
stock of the Corporation (or securities convertible into or exercisable for such
stock) as consideration in an acquisition transaction entered into prior to the
Extension Period, (b) as a result of an exchange or conversion of any class or
series of the Corporation's capital stock for any other class or series of the
Corporation's capital stock or of any class or series of the Corporation's
indebtedness for any class or series of the Corporation's capital stock,
16
<PAGE> 19
(c) the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with the implementation or amendment of the Corporation's
shareholders' rights plan (or any successor thereto), or the issuance of rights,
stock or other property under any such rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest, provided that no
Extension Period may exceed 10 consecutive semi-annual periods or extend beyond
the Stated Maturity of the Junior Subordinated Debentures. Upon the termination
of any Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the annual rate of 8.25%, compounded
semi-annually, to the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period subject to the above conditions. There is
no limitation on the number of times that the Corporation may elect to begin an
Extension Period. See "Description of New Securities -- Description of Capital
Securities -- Distributions" and " -- Description of Junior Subordinated
Debentures -- Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Capital Securities will
continue to accrue income (in the form of original issue discount) in respect of
its pro rata share of the Junior Subordinated Debentures held by the Issuer for
United States federal income tax purposes. As a result, a holder of Capital
Securities will include such income in gross income for United States federal
income tax purposes in advance of the receipt of cash, and will not receive the
cash related to such income from the Issuer if the holder disposes of the
Capital Securities prior to the record date for the payment of Distributions.
See "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount" and "-- Sales or Redemption of Capital Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Corporation elect to exercise such
right in the future, the market price of the Capital Securities is likely to be
affected. A holder that disposes of its Capital Securities during an Extension
Period, therefore, might not receive the same return on its investment as a
holder that continues to hold its Capital Securities. In addition, as a result
of the existence of the Corporation's right to defer interest payments, the
market price of the Capital Securities (which represent preferred undivided
beneficial interests in the assets of the Issuer) may be more volatile than the
market prices of other securities on which original issue discount accrues that
are not subject to such deferrals.
TAX EVENT OR CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and during the continuation of a Tax Event or Capital
Treatment Event, the Corporation has the right to redeem the Junior Subordinated
Debentures in whole (but not in part) at any time within 90 days following the
occurrence of such Tax Event or Capital Treatment Event and therefore cause a
mandatory redemption of the Capital Securities. Any such redemption shall be at
a price equal to the Make-Whole Amount (as defined in "Description of New
Securities -- Description of Capital Securities -- Redemption"), together with
accumulated Distributions to but excluding the date fixed for redemption. The
Corporation has committed to the Reserve Bank that the Corporation will not
exercise such right without having received prior approval of the Federal
Reserve to do so, if then required under applicable Federal Reserve capital
guidelines or policies.
A "Tax Event" means the receipt by the Issuer of an opinion of counsel to
the Corporation experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced proposed change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Issuer is, or will be within 90 days of the date
of delivery of such opinion, subject to United States federal income tax with
respect to income received or
17
<PAGE> 20
accrued on the Junior Subordinated Debentures, (ii) interest payable by the
Corporation on the Junior Subordinated Debentures is not, or within 90 days of
delivery of such opinion, will not be, deductible by the Corporation, in whole
or in part, for United States federal income tax purposes or (iii) the Issuer
is, or will be within 90 days of the date of the opinion, subject to more than a
de minimis amount of other taxes, duties or other governmental charges. See
"-- Possible Tax Law Changes Affecting the Capital Securities" for a discussion
of certain legislative proposals that, if adopted, could give rise to a Tax
Event, which may permit the Corporation to cause a redemption of the Capital
Securities prior to December 15, 2006.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the Capital
Securities under the Trust Agreement, there is more than an insubstantial risk
that the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Capital Securities as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of applicable Federal Reserve capital
guidelines, as then in effect. See "Capitalization."
EXCHANGE OF CAPITAL SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The holder of the outstanding Common Securities has the right at any time
to terminate the Issuer and, after satisfaction of liabilities to creditors of
the Issuer in accordance with applicable law and the Expense Agreement, cause
the Junior Subordinated Debentures to be distributed to the holders of the
Capital Securities and Common Securities in liquidation of the Issuer. The
Corporation has committed to the Reserve Bank that, so long as the Corporation
or any affiliate is a holder of Common Securities, the Corporation will not
exercise such right without having received the prior approval of the Federal
Reserve to do so, if then required under applicable Federal Reserve capital
guidelines or policies. See "Description of New Securities -- Description of
Capital Securities -- Liquidation Distribution upon Termination."
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
for Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a liquidation of the Issuer occurs. Accordingly, the
Capital Securities or the Junior Subordinated Debentures that a holder of
Capital Securities may receive on liquidation of the Issuer may trade at a
discount to the price that the investor paid to purchase the Capital Securities
offered hereby. Because holders of Capital Securities may receive Junior
Subordinated Debentures on termination of the Issuer, prospective purchasers of
Capital Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of New Securities -- Description of Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
Bankers Trust Company will act as the Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. Bankers
Trust Company will also act as Debenture Trustee for the Junior Subordinated
Debentures and as Property Trustee under the Trust Agreement. The Guarantee
guarantees to the holders of the Capital Securities the following payments, to
the extent not paid by the Issuer: (i) any accumulated and unpaid Distributions
required to be paid on the Capital Securities, to the extent that the Issuer has
funds on hand available therefor at such time; (ii) the Redemption Price with
respect to any Capital Securities called for redemption, to the extent that the
Issuer has funds on hand available therefor at such time; and (iii) upon a
voluntary or involuntary termination, winding-up or liquidation of the Issuer
(unless the Junior Subordinated Debentures are distributed to holders of the
Capital Securities), the lesser of (a) the aggregate of the Liquidation Amount
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Issuer has funds on hand available therefor at such time, and
(b) the amount of assets of the Issuer remaining available for distribution to
holders of the Capital Securities on liquidation of
18
<PAGE> 21
the Issuer. The Guarantee is subordinate as described under "--Ranking of
Subordinated Obligations under the Guarantee and the Junior Subordinated
Debentures." The holders of at least a majority in aggregate Liquidation Amount
of the outstanding Capital Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Guarantee. Any holder of the
Capital Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Guarantee without first instituting
a legal proceeding against the Issuer, the Guarantee Trustee or any other person
or entity. If the Corporation were to default on its obligation to pay amounts
payable under the Junior Subordinated Debentures, the Issuer may lack funds for
the payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Corporation to pay any amounts
payable in respect of the Junior Subordinated Debentures on the payment date on
which such payment is due, then a holder of Capital Securities may institute a
legal proceeding directly against the Corporation for enforcement of payment to
such holder of any amounts payable in respect of such Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Capital Securities of such holder (a "Direct Action"). In connection with
such Direct Action, the Corporation will have a right of set-off under the
Indenture to the extent of any payment made by the Corporation to such holder of
Capital Securities in the Direct Action. Except as described herein, holders of
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debentures or assert
directly any other rights in respect of the Junior Subordinated Debentures. See
"Description of New Securities -- Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Capital Securities,"
"-- Debenture Events of Default" and "-- Description of Guarantee." The Trust
Agreement provides that each holder of Capital Securities by acceptance thereof
agrees to the provisions of the Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights relating
generally to the modification of the Capital Securities and the Guarantee and
the exercise of the Issuer's rights as holder of Junior Subordinated Debentures.
Holders of Capital Securities will not be entitled to appoint, remove or replace
the Property Trustee or the Delaware Trustee except upon the occurrence of
certain events described herein. The Property Trustee and the holders of the
Common Securities may, subject to certain conditions, amend the Trust Agreement
without the consent of holders of Capital Securities to cure any ambiguity or to
make other provisions not inconsistent with existing provisions of the Trust
Agreement or to ensure that the Issuer will be classified for United States
federal income tax purposes as other than an association taxable as a
corporation or as a grantor trust. See "Description of New
Securities -- Description of Capital Securities -- Voting Rights; Amendment of
Trust Agreement" and "-- Removal of Issuer Trustees; Appointment of Successors."
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Corporation and the Issuer do not intend to register
under the Securities Act any Old Capital Securities which remain outstanding
after consummation of the Exchange Offer (subject to such limited exceptions, if
applicable). To the extent that Old Capital Securities are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Capital
Securities could be adversely affected.
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<PAGE> 22
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Trust Agreement and, accordingly, will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement. See
"Description of New Securities -- Description of the Capital Securities --
General."
The Old Capital Securities provide that, if the Exchange Offer is not
consummated within 30 days of the date hereof, the Distribution rate borne by
the Old Capital Securities will increase by 0.25% per annum commencing on the
31st day after the date hereof, until the Exchange Offer is consummated. See
"Description of Old Securities." Following consummation of the Exchange Offer,
the Old Capital Securities will not be entitled to any increase in the
Distribution rate thereon. The New Capital Securities will not be entitled to
any such increase in the interest rate thereon.
ABSENCE OF PUBLIC MARKET
The Old Capital Securities were issued to, and the Corporation believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Capital Securities. Although the New Capital Securities
will generally be permitted to be resold or otherwise transferred by the holders
(who are not affiliates of the Corporation or the Issuer) without compliance
with the registration requirements under the Securities Act, they will
constitute a new issue of securities with no established trading market. Capital
Securities may be transferred by the holders thereof only in blocks having a
Liquidation Amount of not less than $100,000 (100 Capital Securities). The
Corporation and the Issuer have been advised by the Initial Purchaser that the
Initial Purchaser presently intends to make a market in the New Capital
Securities. However, the Initial Purchaser is not obligated to do so and any
market-making activity with respect to the New Capital Securities may be
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer. Accordingly, no
assurance can be given that an active public or other market will develop for
the New Capital Securities or the Old Capital Securities or as to the liquidity
of or the trading market for the New Capital Securities or the Old Capital
Securities. If an active public market does not develop, the market price and
liquidity of the New Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Corporation, the New Capital Securities may trade at a discount.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Issuer of such Old Capital Securities, a properly
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<PAGE> 23
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of the Old Capital Securities desiring to tender
such Old Capital Securities in exchange for New Capital Securities should allow
sufficient time to ensure timely delivery. The Issuer is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Revenue
Reconciliation Bill"), the revenue portion of President Clinton's budget
proposal was introduced in the 104th Congress. The Revenue Reconciliation Bill
would have generally denied interest deductions for interest on an instrument,
issued by a corporation, that has a maximum term of more than 20 years and that
is not shown as indebtedness on the separate balance sheet of the issuer or,
where the instrument is issued to a related party (other than a corporation),
where the holder or some other related party issues a related instrument that is
not shown as indebtedness on the issuer's consolidated balance sheet. The
above-described provision was proposed to be effective as to instruments issued
on or after December 7, 1995. If this provision were to have applied to the
Junior Subordinated Debentures, the Corporation would have been unable to deduct
interest on the Junior Subordinated Debentures. However, on March 29, 1996, the
Chairmen of the Senate Finance and House Ways and Means Committees issued a
joint statement to the effect that it was their intention that the effective
date of the President's legislative proposals, presumably including the Revenue
Reconciliation Bill, if adopted, would be no earlier than the date of
appropriate Congressional action. Under current law, the Corporation will be
able to deduct interest on the Junior Subordinated Debentures. Although the
104th Congress adjourned without enacting the above-described provisions of the
Revenue Reconciliation Bill, there can be no assurance that the current or
future legislative proposals or final legislation will not adversely affect the
ability of the Corporation to deduct interest on the Junior Subordinated
Debentures. Accordingly, there can be no assurance that a Tax Event will not
occur. See "Description of New Securities -- Description of Junior Subordinated
Debentures -- Redemption" and "-- Description of Capital
Securities -- Redemption". See also "Certain Federal Income Tax
Consequences -- Possible Tax Law Changes".
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<PAGE> 24
KEYCORP
OVERVIEW
The Corporation was formed on March 1, 1994, when "old KeyCorp," a bank
holding company headquartered in Albany, New York, with approximately $33
billion in assets at December 31, 1993, merged into and with Society, a bank
holding company headquartered in Cleveland, Ohio, with approximately $27 billion
in assets at December 31, 1993. In the merger, Society, an Ohio corporation, was
the surviving corporation, but changed its name to KeyCorp. The merger was
accounted for as a pooling of interests. Accordingly, all financial data of the
Corporation set forth herein (or incorporated by reference) has been restated to
give effect to the merger of old KeyCorp into and with Society. At September 30,
1996, KeyCorp was one of the nation's largest bank holding companies, based upon
consolidated total assets of approximately $65.4 billion.
The Corporation is a legal entity separate and distinct from its banking
and other subsidiaries. Accordingly, the rights of the Corporation, 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 the Corporation in its capacity as a
creditor of such banking and other subsidiaries may be recognized.
SUBSIDIARIES
The Corporation 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 (which includes Key Bank USA, National Association), Community Banking
and Key PrivateBank (Personal Financial Services). These services are provided
across much of the country through a network of banking subsidiaries operating
1,218 full-service banking centers, a 24-hour telephone banking call center
services group and approximately 1,732 automated teller machines in 13 states as
of September 30, 1996. The Corporation's largest banking subsidiaries include
KeyBank National Association, headquartered in Cleveland, Ohio, which is one of
the nation's major regional banks with $26.8 billion in total assets and 385
full-service banking offices in Indiana, Michigan and Ohio at September 30,
1996; Key Bank of New York, headquartered in Albany, New York, with $15.1
billion in total assets and 317 full-service banking offices at September 30,
1996; and Key Bank of Washington, headquartered in Tacoma, Washington, with $7.8
billion in total assets and 165 full-service banking offices at September 30,
1996. In addition, the Corporation operates bank subsidiaries in Alaska,
Colorado, Idaho, Maine, New Hampshire, Oregon, Utah, Vermont and Wyoming, a
private bank in Florida, and either a trust company subsidiary or an office of a
trust company subsidiary in each of the aforementioned states except Vermont.
In addition to the customary banking services of accepting deposits and
making loans, the Corporation'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, the Corporation provides investment management
services to institutional and individual clients, including large corporate and
public retirement plans, Taft-Hartley plans, foundations and endowments, and
high net worth individuals. Several of the Corporation's investment management
subsidiaries also serve as investment advisers to the Corporation's proprietary
mutual funds.
The Corporation also 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 community development financing, 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.
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<PAGE> 25
RECENT DEVELOPMENTS
The Corporation announced on November 25, 1996 the following strategic
actions it has undertaken or will undertake in the next year to complete its
transformation to a nationwide, bank-based financial services company:
- Formation of a single nationwide bank from the Corporation's current
network of 12 banks in 14 states and four regions of the United
States. The new bank's business lines will emphasize community and
corporate banking products and services, and will complement the
delivery on a nationwide basis of consumer finance products through
Key Bank USA, National Association, which will remain as a separate
company.
- Consolidation of nearly 140 of its branch offices, known as
"KeyCenters," into other KeyCenters.
- Reduction of approximately 2,700 positions, or 10% of its employment
base.
As a consequence of these actions, the Corporation plans to take a fourth
quarter 1996 restructuring charge of $100 million. The major components of the
planned fourth quarter charge are expected to be as follows:
<TABLE>
<S> <C>
Branch Consolidation $ 20 million
Separation Assistance 52 million
Technology Write-offs 28 million
------------
Total $100 million
</TABLE>
The technology write-offs reflect the Corporation's accelerated plans for
organizing as a single nationwide bank, versus the current 12-bank, four region
banking group. Several minor systems are utilized exclusively to support a
multi-bank organization and would no longer be required.
The Corporation also announced: (a) its intention to sell slightly more
than 140 KeyCenters in primarily rural areas and (b) that its Board of Directors
authorized a new share buyback program, effective immediately, whereby up to 12
million shares may be repurchased by the end of 1997.
This section of this Prospectus contains forward looking statements. Actual
results could differ materially from such statements for a variety of factors
including: (1) delays in obtaining, or inability to obtain, necessary regulatory
approvals in connection with merging of banks or consolidation or sale of
branches or otherwise, (2) inability to enter into or delay in entering into
satisfactory sales transactions in connection with contemplated branch
divestitures, (3) significant customer losses in connection with branch
consolidations, (4) adverse revenue impact from employee reduction or
consolidation of branches, (5) unanticipated delays in implementing or inability
to achieve contemplated employee reduction, or (6) changes in laws, accounting,
tax or regulatory practice or requirements.
SUPERVISION AND REGULATION
GENERAL. As a bank holding company, the Corporation is subject to
regulation under the Bank Holding Company Act of 1956, as amended, and to its
examination and reporting requirements. For a discussion of certain of the
material elements of the regulatory framework applicable to bank holding
companies and their subsidiaries and certain specific information relevant to
the Corporation, reference is made to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1995. This regulatory framework is
intended primarily for the protection of depositors and the federal deposit
insurance funds and not for the protection of security holders. A change in
applicable statutes, regulations or regulatory policy may have a material effect
on the business of the Corporation.
The earnings of the Corporation also are affected by general economic
conditions, management policies and the legislative and governmental actions of
various regulatory authorities, including the Federal Reserve Board, the Office
of the Comptroller of the Currency, which is the principal regulator of the
Corporation's national bank subsidiaries, and the Federal Deposit Insurance
Corporation (the "FDIC"), which is the
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<PAGE> 26
principal regulator of the Corporation's state-chartered bank subsidiaries. In
addition, there are numerous governmental requirements and regulations which
affect the activities of the Corporation.
FDIC INSURANCE ASSESSMENTS; DIFA. The FDIC significantly reduced the
insurance premiums it charges on bank deposits insured by the Bank Insurance
Fund ("BIF") to the statutory minimum of $2,000.00 for "well capitalized" banks,
effective January 1, 1996. Premiums related to savings association deposits
acquired by banks continued to be assessed at the rate of 23 cents to 31 cents
per $100.00 of deposits. On September 30, 1996, the Deposit Insurance Funds Act
of 1996 ("DIFA") was enacted and signed into law. DIFA is expected to reduce the
amount of semi-annual FDIC insurance premiums for savings association deposits
acquired by banks to the same levels assessed for deposits insured by BIF. The
Corporation currently estimates such reductions in premiums may amount to
approximately $10 million pre-tax per year.
DIFA also provides for a special one-time assessment imposed on deposits
insured by the Savings Association Insurance Fund ("SAIF"), including such
deposits held by banks, to recapitalize the SAIF to bring the SAIF up to
statutory required levels. The Corporation accrued for the one-time assessment
in the third quarter of 1996 in the amount of $11 million after tax in
connection with the SAIF recapitalization.
DIFA further provides for assessments to be imposed on insured depository
institutions with respect to deposits insured by the BIF (in addition to
assessments currently imposed on depository institutions with respect to
SAIF-insured deposits) to pay for the cost of financing Corporation funding. The
Corporation currently estimates assessments may amount to up to $3 million
after-tax in 1997 with similar assessments per year through 1999 (or earlier if
no savings associations exist prior to December 31, 1999) in connection with
such funding.
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SELECTED CONSOLIDATED FINANCIAL DATA OF KEYCORP
The following table presents summary consolidated financial data which has
been derived from, and should be read in conjunction with, the consolidated
financial statements, notes thereto and other information of the Corporation
found in the Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1996. This summary is qualified in its entirety by the
detailed information and financial statements included in the KeyCorp documents
incorporated by reference herein, available as described under "Available
Information" and "Incorporation of Certain Documents by Reference". The data
presented for the nine-month periods ended September 30, 1996 and September 30,
1995 are not necessarily indicative of the data for the entire year and have
been derived from unaudited consolidated financial statements of the
Corporation. These financial statements include, in the opinion of management,
all adjustments of a normal recurring nature and disclosures which are necessary
to present fairly the data for such interim periods. The comparability of the
data presented is affected by certain acquisitions and divestitures that the
Corporation has completed in the time periods presented.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 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...................................... $ 3,708 $ 3,843 $ 5,121 $ 4,490 $ 4,214 $ 4,199 $ 4,652
Interest expense..................................... 1,674 1,867 2,485 1,797 1,535 1,750 2,519
Net interest income.................................. 2,034 1,976 2,636 2,693 2,679 2,449 2,133
Provision for loan losses............................ 140 66 100 125 212 338 466
Noninterest income................................... 802 629 933 883 1,002 925 849
Noninterest expense.................................. 1,764 1,190 2,312 2,168 2,385 2,171 2,066
Income before income taxes and extraordinary item.... 932 849 1,157 1,283 1,084 865 450
Income before extraordinary item..................... 632 582 789 853 710 593 314
Net income........................................... 632 618 825 853 710 593 314
Net income applicable to Common Shares............... 624 606 809 837 692 568 298
PER COMMON SHARE
Income before extraordinary item..................... $ 2.70 $ 2.44 $ 3.30 $ 3.45 $ 2.89 $ 2.42 $ 1.31
Net income........................................... 2.70 2.59 3.45 3.45 2.89 2.42 1.31
Cash dividends....................................... 1.14 1.08 1.44 1.28 1.12 .98 .92
Book value at period end............................. 21.91 20.74 21.36 18.88 17.53 15.64 14.10
Weighted average Common Shares (000)................. 231,363 234,462 234,787 243,067 239,775 235,005 227,116
AT PERIOD END
Loans................................................ $48,291 $48,410 $47,692 $46,225 $40,071 $36,022 $35,534
Earning assets....................................... 57,640 60,847 58,762 60,047 54,353 49,381 48,208
Total assets......................................... 65,356 67,967 66,339 66,801 59,634 55,068 53,601
Deposits............................................. 44,523 47,905 47,282 48,564 46,499 43,433 42,835
Long-term debt....................................... 4,664 4,048 4,003 3,570 1,764 1,790 1,225
Common shareholders' equity.......................... 4,976 4,923 4,993 4,530 4,226 3,683 3,272
Total shareholders' equity........................... 4,976 5,083 5,153 4,690 4,386 3,927 3,516
PERFORMANCE RATIOS
Return on average total assets(1).................... 1.30% 1.24% 1.24% 1.36% 1.24% 1.13% .60%
Return on average common equity(1)................... 16.76 17.72 17.35 18.87 17.27 16.33 9.29
Return on average total equity(1).................... 16.62 17.46 17.10 18.56 16.95 15.91 9.31
Efficiency(2)........................................ 60.81 62.79 63.03 59.39 60.50 60.96 65.27
Overhead(3).......................................... 45.66 50.43 49.66 46.14 46.85 47.21 52.63
Net interest margin(1)(TE)........................... 4.78 4.46 4.47 4.83 5.31 5.31 4.71
CAPITAL RATIOS AT PERIOD END
Equity to assets..................................... 7.61% 7.48% 7.77% 7.03% 7.37% 7.13% 6.56%
Tangible equity to tangible assets................... 6.20 5.98 6.25 6.19 6.51 6.11 5.45
Tier I risk-adjusted capital(4)...................... 7.49 7.55 7.53 8.48 8.73 8.56 7.67
Total risk-adjusted capital(5)....................... 12.50 10.84 10.85 11.62 12.22 11.73 9.80
Leverage(6).......................................... 6.38 6.19 6.20 6.63 6.72 6.56 5.97
</TABLE>
25
<PAGE> 28
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 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>
ASSET QUALITY DATA
Nonperforming loans.................................. $ 344 $ 313 $ 333 $ 256 $ 336 $ 553 $ 730
Nonperforming assets................................. 396 367 379 340 500 900 1,072
Allowance for loan losses............................ 870 879 876 830 803 783 794
Net loan charge-offs................................. 138 65 99 109 213 361 392
Nonperforming loans to period-end loans.............. .71% .65% .70% .55% .84% 1.53% 2.05%
Nonperforming assets to period-end loans plus OREO
and other nonperforming assets .................... .82 .76 .79 .73 1.24 2.47 2.99
Allowance for loan losses to nonperforming loans..... 252.91 280.53 263.15 324.27 238.69 141.54 108.79
Allowance for loan losses to period-end loans ....... 1.80 1.82 1.84 1.80 2.00 2.17 2.23
Net loan charge-offs to average loans(1)............. .38 .18 .21 .26 .56 1.02 1.11
RATIO OF EARNINGS TO FIXED CHARGES(7)
Excluding deposit interest........................... 2.58x 2.40x 2.42x 3.50x 4.15x 3.67x 2.07x
Including deposit interest........................... 1.55x 1.45x 1.46x 1.70x 1.69x 1.48x 1.18x
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS(7)
Excluding deposit interest........................... 2.53x 2.33x 2.35x 3.34x 3.84x 3.31x 1.96x
Including deposit interest........................... 1.54x 1.43x 1.45x 1.68x 1.66x 1.45x 1.17x
</TABLE>
- ---------------
(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.
(4) The Corporation's Tier I capital consists of common shareholders' equity
(excluding net unrealized gains or losses on securities, except for net
unrealized losses on marketable equity securities) and a limited amount of
qualifying perpetual preferred stock, less certain intangibles.
(5) The Corporation's total capital consists of Tier I capital and subordinated
debt, qualifying preferred stock and a limited amount of the loan loss
allowance. At least half of a bank holding company's total capital is to be
comprised of Tier I capital.
(6) The leverage ratio is defined as the ratio of Tier I capital to average
quarterly assets, less certain intangibles. Federal Reserve Board guidelines
provide for a minimum leverage ratio of 3% for bank holding companies that
meet certain specified criteria, including that they have the highest
regulatory rating. All other bank holding companies will be required to
maintain a leverage ratio of 3% plus an additional cushion of at least 100
to 200 basis points. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.
(7) 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.
TE = Taxable Equivalent
26
<PAGE> 29
KEYCORP INSTITUTIONAL CAPITAL B
The Issuer is a statutory business trust created under Delaware law
pursuant to (i) the Trust Agreement between the Corporation, as Depositor, and
Bankers Trust (Delaware), as Delaware Trustee, and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on December 18, 1996.
The Issuer's business and affairs are conducted by its trustees: initially
Bankers Trust Company, as Property Trustee, and Bankers Trust (Delaware), as
Delaware Trustee. In addition, two individuals who are employees or officers of
or affiliated with the holder of the Common Securities act as administrators
with respect to the Issuer (the "Administrators"). The Administrators are
selected by the holders of the Common Securities. See "Description of New
Securities -- Description of Capital Securities -- Miscellaneous." The Issuer
exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) using the proceeds from the sale of Trust Securities to acquire
the Junior Subordinated Debentures and (iii) engaging in those activities
necessary or incidental thereto (such as effecting the Exchange Offer and
registering the transfer of the Trust Securities). Accordingly, the New Junior
Subordinated Debentures will be the sole assets of the Issuer, and payments
under the New Junior Subordinated Debentures and the Expense Agreement will be
the sole sources of revenue of the Issuer.
All of the Common Securities will be initially owned by the Corporation.
The Common Securities will rank pari passu, and payments will be made thereon
pro rata, with the Capital Securities, except that upon the occurrence and
continuance of an event of default under the Trust Agreement arising as a result
of any failure by the Corporation to pay any amounts in respect of Junior
Subordinated Debentures when due, the rights of the holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of the
Capital Securities. See "Description of New Securities -- Description of Capital
Securities -- Subordination of Common Securities." The Corporation owns Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of the Issuer. The Issuer has a term of 31 years, but may terminate earlier as
provided in the Trust Agreement. The holder of the Common Securities of the
Issuer, or the holders of a majority in Liquidation Amount of the Capital
Securities, if an Event of Default under the Trust Agreement has occurred and is
continuing, will be entitled to appoint, remove or replace the Property Trustee
and/or the Delaware Trustee. In no event will the holders of the Capital
Securities have the right to vote to appoint, remove or replace the
Administrators. The duties and obligations of each Issuer Trustee are governed
by the Trust Agreement. Pursuant to the Expense Agreement and the Registration
Rights Agreement, the Corporation will pay all fees and expenses related to the
Issuer, the offering of the Capital Securities and the Exchange Offer and will
pay, directly or indirectly, all ongoing costs, expenses and liabilities of the
Issuer. The principal executive office of the Issuer is 127 Public Square,
Cleveland, Ohio 44144-1306, Attention: Office of the Secretary, and its
telephone number is (216) 689-6300.
USE OF PROCEEDS
Neither the Corporation nor the Issuer will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. In consideration for
issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Issuer will receive Old Capital Securities in
like Liquidation Amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities will be retired and cancelled.
The net proceeds to the Issuer from the offering of the Old Capital
Securities was approximately $150 million (before deducting expenses associated
with the offering). All of the proceeds from the sale of the Old Capital
Securities were invested by the Trust in the Old Junior Subordinated Debentures.
The Corporation intends that the net proceeds from the sale of the Old Junior
Subordinated Debentures will be added to its general corporate funds and will be
used for general corporate purposes. Pending such application by the
Corporation, such net proceeds may be temporarily invested in short-term
interest bearing securities. The Capital Securities are currently eligible to
qualify as Tier 1 capital under the capital guidelines of the Federal Reserve.
27
<PAGE> 30
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of September 30, 1996 and as adjusted to
give effect to the consummation of the offering of the Old Capital Securities.
The following data should be read in conjunction with the consolidated financial
statements of the Corporation and its subsidiaries, including the notes thereto,
which are incorporated herein by reference. See "Incorporation of Certain
Documents by Reference." The issuance of New Capital Securities in the Exchange
Offer will have no effect on the capitalization of KeyCorp.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
LONG-TERM DEBT
KeyCorp
Senior medium-term notes due through 2005(1)............................... $ 924 $ 924
Subordinated medium-term notes due through 2005(2)......................... 183 183
7.50% Subordinated notes due 2006.......................................... 250 250
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 notes due 1999.......................................... 75 75
8.404% Notes due 1997 through 2001......................................... 49 49
All other long-term debt................................................... 18 18
------ -------
Total KeyCorp....................................................... 2,023 2,023
Subsidiaries
Senior medium-term notes due through 1998(3)............................... 1,275 1,275
7.25% Subordinated notes due 2005.......................................... 200 200
7.85% Subordinated notes due 2002.......................................... 200 200
6.75% Subordinated notes due 2003.......................................... 199 199
7.50% Subordinated notes due 2008.......................................... 165 165
7.125% Subordinated notes due 2006......................................... 125 125
7.125% Subordinated notes due 2006......................................... 125 125
7.55% Subordinated notes due 2006.......................................... 75 75
7.375% Subordinated notes due 2008......................................... 70 70
Federal Home Loan Bank Advances............................................ 193 193
Industrial revenue bonds................................................... 10 10
All other long-term debt................................................... 4 4
------ -------
Total subsidiaries.................................................. 2,641 2,641
------ -------
Total long-term debt................................................ 4,664 4,664
CORPORATION-OBLIGATED MANADATORY REDEEMABLE CAPITAL SECURITIES OF TRUST
SUBSIDIARIES HOLDING SOLELY JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES OF THE CORPORATION
7.826% Capital securities due 2026(4)............................... -- 350
8.25% Capital securities due 2026(5)................................ -- 150
------ -------
Total capital securities............................................ -- 500
SHAREHOLDERS' EQUITY
Preferred stock, $1 par value; authorized 25,000,000 shares, none issued... -- --
Common Shares, $1 par value; authorized 900,000,000 shares; issued
245,944,390 shares....................................................... 246 246
Capital surplus............................................................ 1,488 1,488
Retained earnings.......................................................... 3,994 3,994
Loans to ESOP trustee...................................................... (49) (49)
Net unrealized losses on securities, net of taxes.......................... (37) (37)
Treasury stock, at cost (18,882,718 shares)................................ (666) (666)
------ -------
Total shareholders' equity.......................................... 4,976 4,976
------ -------
Total capitalization................................................ $ 9,640 $10,140
====== =======
</TABLE>
- ---------------
(1) The weighted average rate on the senior medium-term notes due through 2005
was 6.50%.
(2) The weighted average rate on the subordinated medium-term notes due through
2005 was 6.81%.
(3) The weighted average rate on the senior medium-term notes due through 1998
was 6.68%.
28
<PAGE> 31
(4) On December 4, 1996, a subsidiary trust of the Corporation issued
$350,000,000 of capital securities that mature on December 1, 2026. Such
capital securities have terms substantially identical to the Capital
Securities offered hereby and accumulate distributions at a per annum rate
of 7.826% of the liquidation amount of $1,000 per capital security.
(5) As described herein, the sole assets of the Issuer will be $350,000,000
aggregate principal amount of Junior Subordinated Debentures, issued by the
Corporation to the Issuer. The Junior Subordinated Debentures will mature on
December 1, 2026. The Corporation owns all of the Common Securities of the
Issuer. It is anticipated that the Issuer will not be subject to the
reporting requirements under the Securities Exchange Act of 1934.
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Issuer will
be included in the consolidated financial statements of the Corporation. The
Capital Securities will be presented as a separate line item in the consolidated
balance sheets of the Corporation, entitled "Corporation-obligated mandatory
redeemable capital securities of trust subsidiaries holding solely junior
subordinated deferrable interest debentures of the Corporation" and appropriate
disclosures about the Capital Securities, the Guarantee and the Junior
Subordinated Debentures will be included in the notes to the consolidated
financial statements. For financial reporting purposes, the Corporation will
record Distributions payable on the Capital Securities as an expense in the
consolidated statements of income.
29
<PAGE> 32
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Corporation
and the Issuer entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Corporation and the Issuer agreed to file and
to use their reasonable efforts to cause to become effective with the Commission
a registration statement with respect to the exchange of the Old Capital
Securities for capital securities with terms identical in all material respects
to the terms of the Old Capital Securities.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Issuer under the Registration Rights Agreement. The form
and terms of the New Capital Securities are the same as the form and terms of
the Old Capital Securities except that the New Capital Securities have been
registered under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Capital Securities and will not
provide for any increase in the Distribution rate thereon. Upon consummation of
the Exchange Offer, holders of Old Capital Securities will not be entitled to
any increase in the Distribution rate thereon or any further registration rights
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities"
and "Description of the Old Securities."
The Exchange Offer is not being made to, nor will the Issuer accept tenders
for exchange from, holders of Old Capital Securities in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Issuer or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by DTC who desires to deliver such Old
Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Old Guarantee for this New Guarantee and
all of the Old Junior Subordinated Debentures, of which $154,640,000 aggregate
principal amount is outstanding, for like aggregate principal of the New Junior
Subordinated Debentures. The New Guarantee and New Junior Subordinated
Debentures have been registered under the Securities Act.
TERMS OF THE EXCHANGE
The Issuer hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $150,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date (as defined below) and not
properly withdrawn in accordance with the procedures described below. The Issuer
will issue, promptly after the Expiration Date, an aggregate Liquidation Amount
of up to $150,000,000 of New Capital Securities in exchange for a like principal
amount of outstanding Old Capital Securities tendered and accepted in connection
with the Exchange Offer. Holders may tender their Old Capital Securities in
whole or in part in a Liquidation Amount of not less than $100,000 or any
integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$150,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Trust Agreement, but will not be entitled to any further registration rights
under the Registration Rights Agreement,
30
<PAGE> 33
except under limited circumstances. See "Risk Factors -- Consequences of a
Failure to Exchange Old Capital Securities" and "Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Corporation will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE CORPORATION NOR THE TRUSTEES OF THE
ISSUER MAKE ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1997 unless the Exchange Offer is extended by the Issuer
(in which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).
The Issuer expressly reserves the right in its sole and absolute
discretion, subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) if the Trust determines, in its sole and
absolute discretion, that any of the events or conditions referred to under
"-- Conditions to the Exchange Offer" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange Offer and retain
all Old Capital Securities tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Capital Securities to withdraw their
tendered Old Capital Securities as described under "-- Withdrawal Rights," and
(iv) to waive any condition or otherwise amend the terms of the Exchange Offer
in any respect. If the Exchange Offer is amended in a manner determined by the
Issuer to constitute a material change, or if the Issuer waives a material
condition of the Exchange Offer, the Issuer will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders of the Old Capital Securities, and the Issuer will extend the
Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Issuer may choose to make any public announcement and
subject to applicable law, the Issuer shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
31
<PAGE> 34
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Issuer will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC.
Subject to the terms and conditions of the Exchange Offer, the Issuer will
be deemed to have accepted for exchange, and thereby exchanged, Old Capital
Securities validly tendered and not withdrawn as, if and when the Issuer gives
oral or written notice to the Exchange Agent of the Issuer's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Issuer for the purpose of receiving tenders of
Old Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Issuer's acceptance for exchange
of Old Capital Securities) or the Issuer extends the Exchange Offer or is unable
to accept for exchange or exchange Old Capital Securities tendered pursuant to
the Exchange Offer, then, without prejudice to the Issuer's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Issuer and
subject to Rule 14e-l(c) under the Exchange Act, retain tendered Old Capital
Securities and such Old Capital Securities may not be withdrawn except to the
extent tendering holders are entitled to withdrawal rights as described under
"-- Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital Securities
will warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital Securities,
that the Issuer will acquire good, marketable and unencumbered title to the
tendered Old Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and the Old Capital Securities tendered for exchange
are not subject to any adverse claims or proxies. The holder also will warrant
and agree that it will, upon request, execute and deliver any additional
documents deemed by the Issuer or the Exchange Agent to be necessary or
desirable to complete the exchange, sale, assignment, and transfer of the Old
Capital Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or an
Agent's Message, with any required signature guarantees and any other required
documents, must be received by the Exchange Agent at one of its addresses set
forth under "-- Exchange Agent," and either (i) tendered Old Capital Securities
must be received by the Exchange Agent, or (ii) such Old Capital Securities must
be tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation must be received by the Exchange Agent, in each
case on or prior to the Expiration Date, or (iii) the guaranteed delivery
procedures set forth below must be complied with.
The term "Agent's Message" means a message, transmitted by the book-entry
transfer facility to, and received by, the Exchange Agent and forming a part of
a book-entry confirmation, which states that such book-entry transfer facility
has received an express acknowledgement from the participant in such book-entry
32
<PAGE> 35
transfer facility tendering Old Capital Securities which are the subject of such
book-entry confirmation and that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal, and the Corporation may enforce
such agreement against such participant.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), or an Agent's Message, properly completed and duly executed, with any
required signature guarantees and any other required documents, must in any case
be delivered to and received by the Exchange Agent at its address set forth
under "-- Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
or an Agent's Message, is received by the Exchange Agent, as provided
below, on or prior to Expiration Date; and
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<PAGE> 36
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), or an Agent's Message, with any required signature guarantees and
any other documents required by the Letter of Transmittal, are received by
the Exchange Agent within five New York Stock Exchange trading days after
the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
bookentry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), or an Agent's Message, together with any required signature guarantees
and any other documents required by the Letter of Transmittal. Accordingly, the
delivery of New Capital Securities might not be made to all tendering holders at
the same time, and will depend upon when Old Capital Securities, book-entry
confirmations with respect to Old Capital Securities and other required
documents are received by the Exchange Agent.
The Issuer's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Issuer upon the terms and subject
to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Issuer, in its
sole discretion, which determination shall be final and binding on all parties.
The Issuer reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by it not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the Issuer,
be unlawful. The Issuer also reserves the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer as set forth under
"-- Conditions to the Exchange Offer" or any condition or irregularity in any
tender of Old Capital Securities of any particular holder whether or not similar
conditions or irregularities are waived in the case of other holders.
The Issuer's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Capital Securities will be deemed to have
been validly made until all irregularities with respect to such tender have been
cured or waived. Neither the Issuer, any affiliates or assigns of the Issuer,
the Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Issuer
proper evidence satisfactory to the Issuer, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Issuer is making the Exchange Offer for the Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Corporation nor the Issuer
sought its own interpretive letter and there can be no assurance that the staff
of the Division of Corporation Finance of the
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<PAGE> 37
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and subject
to the two immediately following sentences, the Corporation and the Issuer
believe that New Capital Securities issued pursuant to this Exchange Offer in
exchange for Old Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder who is a broker-
dealer) without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of such New Capital Securities. However, any holder of Old Capital
Securities who is an "affiliate" of the Corporation or the Issuer or who intends
to participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from the
Issuer to resell pursuant to Rule 144A or any other available exemption under
the Securities Act, (a) will not be able to rely on the interpretations of the
staff of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (c) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital Securities
acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for New Capital Securities,
then such broker-dealer must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Corporation or the Issuer,
(ii) any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Corporation and the Issuer may require such holder,
as a condition to such holder's eligibility to participate in the Exchange
Offer, to furnish to the Corporation and the Issuer (or an agent thereof) in
writing information as to the number of "beneficial owners" (within the meaning
of Rule 13d-3 under the Exchange Act) on behalf of whom such holder holds the
Old Capital Securities to be exchanged in the Exchange Offer. Each broker-dealer
that receives New Capital Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Capital Securities for
its own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Capital Securities. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. Based on the
position taken by the staff of the Division of Corporation Finance of the
Commission in the interpretive letters referred to above, the Corporation and
the Issuer believe that broker-dealers who acquired Old Capital Securities for
their own accounts as a result of market-making activities or other trading
activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Issuer have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a
35
<PAGE> 38
Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 90 days after the Expiration Date or, if earlier,
when all such New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Corporation or the Issuer may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Corporation or the Issuer of the occurrence of any event or the discovery of any
fact which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreement, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the Guarantee
or the Junior Subordinated Debentures, as applicable) pursuant to this
Prospectus until the Corporation or the Issuer has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Corporation or the Issuer has given notice that the sale of the New Capital
Securities (or the Guarantee or the Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name of
the registered holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering Old
Capital Securities", the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described
above under "-- Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Issuer, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Issuer, any affiliates or assigns of the Issuer, the Exchange Agent
nor any other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Capital Securities which have been tendered
but which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
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<PAGE> 39
DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date with respect
to such Old Capital Securities prior to the original issue date of the New
Capital Securities or, if no such Distributions have been made, will not receive
any accumulated Distributions on such Old Capital Securities, and will be deemed
to have waived the right to receive any Distributions on such Old Capital
Securities accumulated from and after such Distribution Date or, if no such
Distributions have been made, from and after December , 1996.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Issuer will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if any of the
following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an "affiliate" of
the Corporation or the Issuer within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such New Capital
Securities are acquired in the ordinary course of such holders' business
and such holders have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities; or
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Issuer's judgment, would reasonably be
expected to impair the ability of the Issuer to proceed with the Exchange
Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Issuer's judgment, would reasonably be expected to
impair the ability of the Issuer to proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Ohio or New York State authorities which, in the Corporation's
judgment, would reasonably be expected to impair the ability of the
Corporation to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Issuer's
judgment, would reasonably be expected to impair the ability of the Issuer
to proceed with the Exchange Offer;
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Corporation or the Issuer, threatened for that purpose any governmental
approval has not been obtained, which approval the Issuer shall, in its
sole discretion, deem necessary for the consummation of the Exchange Offer
as contemplated hereby; or
(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Issuer or any of its subsidiaries
has occurred which, in the sole judgment of the Issuer, might materially
impair the ability of the Issuer to proceed with the Exchange Offer.
If the Issuer determines in its sole and absolute discretion that any of
the foregoing events or conditions has occurred or exists or has not been
satisfied, the Issuer may, subject to applicable law, terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) or may waive any such condition or otherwise amend the terms of
the Exchange Offer in any respect. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Issuer will promptly disclose such
waiver by means of a Prospectus Supplement that will be distributed to the
registered holders of the Old
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<PAGE> 40
Capital Securities, and the Issuer will extend the Exchange Offer to the extent
required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
Bankers Trust Company has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required documents,
questions, requests for assistance, and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent as follows:
By Mail:
BT Services Tennessee, Inc.
Reorganization Unit
P.O. Box 292737
Nashville, TN 37229-2737
By Hand:
Bankers Trust Company
Corporate Trust and Agency Group
Receipt & Delivery Window
123 Washington St., 1st Floor
New York, NY 10006
By Overnight Mail or Courier
BT Services Tennessee, Inc.
Corporate Trust and Agency Group
Reorganization Unit
648 Grassmere Park Road
Nashville, TN 37211
Telephone: (800) 735-7777
Facsimile: (615) 835-3701
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Corporation nor the Issuer will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Issuer Trustees have
issued the Old Capital Securities and the Common Securities and will issue the
New Capital Securities. The New Capital Securities will represent preferred
beneficial interests in the Issuer and the holders thereof will be entitled to a
preference in certain circumstances with respect to Distributions and amounts
payable on redemption of the Trust Securities or liquidation of the Issuer over
the Common Securities. See "-- Subordination of Common Securities." The Trust
Agreement has been qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). This summary of certain provisions of the Capital
Securities, the Common Securities and the Trust Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Trust Agreement, including the definitions therein of
certain terms.
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<PAGE> 41
General
The Capital Securities (including the Old Capital Securities and the New
Capital Securities) will be limited to $150,000,000 aggregate Liquidation Amount
at any one time outstanding. The Capital Securities will rank pari passu, and
payments will be made thereon pro rata, with the Common Securities except as
described under "-- Subordination of Common Securities." Legal title to the
Junior Subordinated Debentures will be held by the Property Trustee in trust for
the benefit of the holders of the Capital Securities and Common Securities. The
Guarantee executed by the Corporation for the benefit of the holders of the
Capital Securities will be a guarantee on a subordinated basis but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Capital Securities when the Issuer does not have funds on
hand available to make such payments. See "-- Description of Guarantee."
Distributions
The Capital Securities represent preferred undivided beneficial interests
in the assets of the Issuer, and each Capital Security is entitled to a
preference in Distributions payable at the annual rate of 8.25% of the stated
Liquidation Amount of $1,000, payable semi-annually in arrears on June 15 and
December 15 of each year (each a "Distribution Date"), to the holders of the
Capital Securities at the close of business on the June 1 or December 1, as the
case may be, next preceding the relevant Distribution Date. Distributions on the
Capital Securities will be cumulative. Distributions will accumulate from the
date of initial issuance. The first Distribution Date for the Capital Securities
will be June 15, 1997. The amount of Distributions payable for any period less
than a full Distribution period will be computed on the basis of a 360-day year
of twelve 30-day months and the actual days elapsed in a partial month in such
period. Distributions payable for each full Distribution period will be computed
by dividing the rate per annum by two. If any date on which Distributions are
payable on the Capital Securities is not a Business Day (as defined below), then
payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (without any additional Distributions or
other payment in respect of any such delay), with the same force and effect as
if made on the date such payment was originally payable.
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. As a consequence of any
such election, semi-annual Distributions on the Capital Securities will be
deferred by the Issuer during any such Extension Period. Distributions to which
holders of the Capital Securities are entitled will accumulate additional
Distributions thereon at the rate per annum of 8.25% thereof, compounded
semi-annually from the relevant payment date for such Distributions, computed on
the basis of a 360-day year of twelve 30-day months and the actual days elapsed
in a partial month in such period. Additional Distributions payable for each
full Distribution period will be computed by dividing the rate per annum by two.
The term "Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Corporation may not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Corporation's capital
stock or (ii) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Corporation
(including other Junior Subordinated Debentures) that rank pari passu in all
respects with or junior in interest to the Junior Subordinated Debentures (other
than (a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Corporation in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or shareholder stock purchase plan or in connection with the
issuance of capital stock of the Corporation (or securities convertible into or
exercisable for such stock) as consideration in an acquisition transaction
entered into prior to the Extension Period, (b) as a result of an exchange or
conversion of any class or series of the Corporation's capital stock for any
other class or series of the Corporation's capital stock or of any class or
series of the Corporation's indebtedness for any class or series of the
Corporation's capital stock, (c) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
39
<PAGE> 42
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with the implementation or
amendment of the Corporation's shareholders' rights plan (or any successor
thereto), or the issuance of rights, stock or other property under any such
rights plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Corporation may further defer the payment of
interest, provided that no Extension Period may exceed 10 consecutive
semi-annual periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Corporation may elect to begin a new
Extension Period. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period. See "-- Description of
Junior Subordinated Debentures -- Option To Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences -- Interest Income and Original Issue
Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Issuer will invest the proceeds from the issuance and
sale of the Capital Securities. See "-- Description of Junior Subordinated
Debentures." If the Corporation does not make interest payments on the Junior
Subordinated Debentures, the Issuer may not have funds available to pay
Distributions or other amounts owing in respect of the Capital Securities. The
payment of Distributions (if and to the extent the Issuer has funds legally
available for the payment of such Distributions and cash sufficient to make such
payments) is guaranteed by the Corporation on a limited basis as set forth
herein under "-- Description of Guarantee."
Redemption
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Indenture, the proceeds from such repayment or redemption shall
be applied by the Property Trustee to redeem a Like Amount (as defined below) of
the Capital Securities, upon not less than 30 nor more than 60 days' notice, at
a redemption price (the "Redemption Price") equal to the aggregate Liquidation
Amount of such Capital Securities plus accumulated but unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related amount
of the premium, if any, paid by the Corporation upon the concurrent redemption
of such Junior Subordinated Debentures. See "--Description of Junior
Subordinated Debentures--Redemption." If less than all of the Junior
Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then
the proceeds from such repayment or redemption shall be allocated to the
redemption pro rata of the Capital Securities and the Common Securities. The
amount of premium, if any, paid by the Corporation upon the redemption of all or
any part of the Junior Subordinated Debentures to be repaid or redeemed on a
Redemption Date shall be allocated to the redemption pro rata of the Capital
Securities and the Common Securities.
The Corporation has the right to redeem the Junior Subordinated Debentures,
(i) on or after December 15, 2006, in whole at any time or in part from time to
time, or (ii) in whole (but not in part) at any time within 90 days following
the occurrence and during the continuation of a Tax Event or Capital Treatment
Event (each as defined below). A redemption of the Junior Subordinated
Debentures would cause a mandatory redemption of a Like Amount of the Capital
Securities and Common Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed in percentages of the Liquidation Amount
(as defined below), together with accumulated
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<PAGE> 43
Distributions to but excluding the date fixed for redemption, if redeemed during
the 12-month period beginning December 1:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---------------------------------------- ----------
<S> <C>
2006.................................... 104.1250%
2007.................................... 103.7125
2008.................................... 103.3000
2009.................................... 102.8875
2010.................................... 102.4750
2011.................................... 102.0625
2012.................................... 101.6500
2013.................................... 101.2375
2014.................................... 100.8250
2015.................................... 100.4125
</TABLE>
and at 100% on or after December 15, 2016.
The Redemption Price following a Tax Event or Capital Treatment Event as
described under (ii) above, will equal for each Capital Security the Make-Whole
Amount for a corresponding $1,000 principal amount of Junior Subordinated
Debentures together with accumulated Distributions to but excluding the date
fixed for redemption. The "Make-Whole Amount" will be equal to the greater of
(i) 100% of the principal amount of such Junior Subordinated Debentures or (ii)
as determined by a Quotation Agent (as defined below), the sum of the present
values of the principal amount and premium payable as part of the Redemption
Price with respect to an optional redemption of such Junior Subordinated
Debentures on December 15, 2006, together with the present values of scheduled
payments of interest from the Redemption Date to December 15, 2006 (the
"Remaining Life"), in each case discounted to the Redemption Date on a
semi-annual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate.
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate plus (i) 1.25% if such Redemption Date occurs on or before
December 15, 1997 or (ii) 0.50% if such Redemption Date occurs after December
15, 1997.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in The City of New York are authorized or required
by law or executive order to remain closed, or (c) a day on which the Property
Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.
"Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the Capital
Securities under the Trust Agreement, there is more than an insubstantial risk
that the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Capital Securities as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of the applicable Federal Reserve capital
adequacy guidelines, as then in effect.
"Comparable Treasury Issue" means with respect to any Redemption Date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after December 15, 2006, the two
most closely corresponding United States Treasury securities shall be used as
the Comparable
41
<PAGE> 44
Treasury Issue, and the Treasury Rate shall be interpolated or extrapolated on a
straight-line basis, rounding to the nearest month using such securities.
"Comparable Treasury Price" means (A) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes and (ii) with respect to a distribution of
Junior Subordinated Debentures to holders of Trust Securities in connection with
a dissolution or liquidation of the Issuer, Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust Security.
"Quotation Agent" means Credit Suisse First Boston Corporation and its
successors; provided, however, that if the foregoing shall cease to be a primary
United States Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Corporation shall substitute therefor another Primary Treasury
Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Corporation.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Tax Event" means the receipt by the Issuer of an opinion of counsel to the
Corporation experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Issuer is, or will be within 90 days of the date
of delivery of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Corporation on the Junior Subordinated Debentures
is not, or within 90 days of the date of such opinion, will not be, deductible
by the Corporation, in whole or in part, for United States federal income tax
purposes or (iii) the Issuer is, or will be within 90 days of the date of
delivery of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the date of calculation, appearing in
the most recently published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does
42
<PAGE> 45
not contain such yields, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such Redemption Date. The
Treasury Rate shall be calculated on the third Business Day preceding the
Redemption Date.
Payment of Additional Sums. If a Tax Event described in clause (i) or (iii)
of the definition of Tax Event above has occurred and is continuing and the
Issuer is the holder of all of the Junior Subordinated Debentures, the
Corporation will pay Additional Sums, if any (as defined below), on the Junior
Subordinated Debentures. "Additional Sums" means the additional amounts as may
be necessary in order that the amount of Distributions then due and payable by
the Issuer on the outstanding Capital Securities and Common Securities of the
Issuer will not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer has become subject as a result of a Tax
Event.
Redemption Procedures
Capital Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Capital
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer has funds on hand available
for the payment of such Redemption Price. See also "--Subordination of Common
Securities."
If the Issuer gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, in the case of Capital Securities held in
book-entry form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Capital Securities. With respect to Capital Securities not held in book-entry
form, the Property Trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the Capital Securities funds sufficient to pay
the applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing the Capital Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Capital Securities called for redemption shall be
payable to the holders of the Capital Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of the holders of such Capital Securities so called for redemption will
cease, except the right of the holders of such Capital Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Capital Securities will cease to be outstanding. If any date fixed for
redemption of Capital Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Capital Securities
called for redemption is improperly withheld or refused and not paid either by
the Issuer or by the Corporation pursuant to the Guarantee as described under
"--Description of Guarantee," Distributions on such Capital Securities will
continue to accumulate at the then applicable rate, from the Redemption Date
originally established by the Issuer for such Capital Securities to the date
such Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the Redemption
Price.
Subject to applicable law (including, without limitation, the United States
federal securities laws), the Corporation or its subsidiaries may at any time
and from time to time purchase outstanding Capital Securities by tender, in the
open market or by private agreement, and may resell such securities as described
in "Plan of Distribution."
If less than all of the Capital Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Capital Securities and Common Securities to be redeemed shall be allocated pro
rata to the Capital Securities and the Common Securities based upon the
43
<PAGE> 46
relative Liquidation Amounts of such classes. The particular Capital Securities
to be redeemed shall be selected on a pro rata basis not more than 60 days prior
to the Redemption Date by the Property Trustee from the outstanding Capital
Securities not previously called for redemption, or if the Capital Securities
are then held in the form of a Global Capital Security (as defined below), in
accordance with DTC's customary procedures, provided, in each case, that each
holder of any Capital Securities has at least 100 Capital Securities remaining
after the redemption. The Property Trustee shall promptly notify the securities
registrar for the Trust Securities in writing of the Capital Securities selected
for redemption and, in the case of any Capital Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
the Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Capital Securities shall relate, in the case of
any Capital Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Capital Securities which has been or is
to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each registered holder of Capital
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Corporation defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Capital Securities is withheld or refused and not paid either by
the Issuer or the Corporation pursuant to the Guarantee, Distributions will
cease to accumulate on the Capital Securities or portions thereof) called for
redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of such Capital Securities and Common Securities.
However, if on any Distribution Date or Redemption Date a Debenture Event of
Default has occurred and is continuing as a result of any failure by the
Corporation to pay amounts in respect of Junior Subordinated Debentures when
due, no payment of any Distribution on, or Redemption Price of, any of the
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the outstanding Capital Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all of the outstanding Capital Securities
then called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Capital Securities
then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the Trust Agreement until the effect of all such Events of Default with respect
to such Capital Securities have been cured, waived or otherwise eliminated.
See"--Events of Default; Notice" and "-- Description of Junior Subordinated
Debentures--Debenture Events of Default." Until all such Events of Default under
the Trust Agreement with respect to the Capital Securities have been so cured,
waived or otherwise eliminated, the Property Trustee will act solely on behalf
of the holders of such Capital Securities and not on behalf of the holders of
the Common Securities, and only the holders of such Capital Securities will have
the right to direct the Property Trustee to act on their behalf.
Liquidation Distribution upon Termination
The holders of all of the outstanding Common Securities have the right at
any time to terminate the Issuer and, after satisfaction of liabilities to
creditors of the Issuer as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Capital
Securities and Common Securities in liquidation of the Issuer. The Corporation
has committed to the Reserve Bank that, so long as the Corporation (or an
affiliate) is a holder of Common Securities, the Corporation will not exercise
its right to
44
<PAGE> 47
terminate the Issuer without having the prior approval of the Federal Reserve to
do so, if then required under applicable Federal Reserve capital guidelines or
policies.
The amount payable on the Capital Securities in the event of any
liquidation of the Issuer is $1,000 per Capital Security plus accumulated and
unpaid Distributions, subject to certain exceptions, which may be in the form of
a distribution of such amount in Junior Subordinated Debentures.
Pursuant to the Trust Agreement, the Issuer will automatically terminate
upon expiration of its term or, if earlier, will terminate on the first to occur
of: (i) certain events of bankruptcy, dissolution or liquidation of the holder
of the Common Securities; (ii) the distribution of a Like Amount of the Junior
Subordinated Debentures to the holders of the Trust Securities, if the holders
of Common Securities have given written direction to the Property Trustee to
terminate the Issuer (which direction, subject to the foregoing restrictions, is
optional and wholly within the discretion of the holders of Common Securities);
(iii) redemption of all of the Capital Securities as described under
"--Redemption"; and (iv) the entry of an order for the dissolution of the Issuer
by a court of competent jurisdiction.
If termination of the Issuer occurs as described in clause (i), (ii) or
(iv) above, the Issuer will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by distributing,
after satisfaction of liabilities to creditors of the Issuer as provided by
applicable law, to the holders of such Trust Securities a Like Amount of the
Junior Subordinated Debentures, unless such distribution is determined by the
Property Trustee not to be practical, in which event such holders will be
entitled to receive out of the assets of the Issuer available for distribution
to holders, after satisfaction of liabilities to creditors of the Issuer as
provided by applicable law, an amount equal to, in the case of holders of
Capital Securities, the aggregate of the Liquidation Amount plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Issuer has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Issuer on its Capital Securities shall be paid on a pro rata basis. The
holder(s) of the Common Securities will be entitled to receive distributions
upon any such liquidation pro rata with the holders of the Capital Securities,
except that if a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Corporation to pay any amount in respect of Junior
Subordinated Debentures when due, the Capital Securities shall have a priority
over the Common Securities.
After the liquidation date fixed for any distribution of Junior
Subordinated Debentures (i) the Capital Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the registered holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Capital Securities held by DTC or its nominee and
(iii) any certificates representing the Capital Securities not held by DTC or
its nominee will be deemed to represent the Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the Capital
Securities and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on the Capital Securities until such
certificates are presented for transfer or reissuance to the securities
registrar for the Trust Securities.
If the Corporation does not redeem the Junior Subordinated Debentures prior
to maturity and the Issuer is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Capital Securities, the Capital
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Capital Securities.
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Capital Securities if a termination and liquidation of the Issuer
were to occur. Accordingly, the Capital Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Issuer, may trade at a discount to the price
that the investor paid to purchase the Capital Securities offered hereby.
45
<PAGE> 48
Events of Default; Notice
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Capital Securities
(whatever the reason for such Event of Default and whether it is voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "--Description of Junior Subordinated Debentures--Debenture Events of
Default"); or
(ii) default by the Issuer in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of
30 days; or
(iii) default by the Issuer in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees and
the Corporation by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Capital Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Corporation, as Depositor, and the Administrators are required to file annually
with the Property Trustee a certificate as to whether or not they are in
compliance with all the conditions and covenants applicable to them under the
Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Corporation to pay any amount in respect of Junior
Subordinated Debentures when due, the Capital Securities will have a preference
over the Common Securities with respect to payments of any amounts in respect of
Capital Securities. See " -- Subordination of Common Securities," "--
Liquidation Distribution upon Termination" and "--Description of Junior
Subordinated Debentures -- Debenture Events of Default."
The existence of an Event of Default does not entitle the holders of
Capital Securities to accelerate the maturity thereof.
Removal of Issuer Trustees; Appointment of Successors
The holders of at least a majority in aggregate Liquidation Amount of the
outstanding Capital Securities may remove an Issuer Trustee for cause or, if a
Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding Capital
Securities, the successor may be appointed by the holders of at least 25% in
Liquidation Amount of the outstanding Capital Securities. If an Issuer Trustee
resigns, such Trustee will appoint its successor. If the Issuer Trustee fails to
appoint a successor, the holders of at least 25% in Liquidation Amount of the
outstanding Capital Securities may appoint a successor. If a successor has not
been appointed by the holders, any holder of Capital Securities or Common
Securities or the other Issuer Trustee may petition a court in the State of
Delaware to appoint a successor. Any Delaware Trustee must meet the applicable
requirements of Delaware law. Any Property Trustee must be a national or
state-chartered bank, and have capital and surplus of at least $50,000,000. No
resignation or removal of an Issuer Trustee and no appointment of a successor
trustee shall be effective until
46
<PAGE> 49
the acceptance of appointment by the successor trustee in accordance with the
provisions of the Trust Agreement.
Merger or Consolidation of Issuer Trustees
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Trustee is
a party, or any entity succeeding to all or substantially all the corporate
trust business of such Trustee, will be the successor of such Trustee under the
Trust Agreement, provided such entity is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Issuer
The Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer may, at the request of
the holders of the Common Securities and with the consent of the holders of at
least a majority in Liquidation Amount of the outstanding Capital Securities,
merge with or into, consolidate, amalgamate, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to a
trust organized as such under the laws of any State, so long as (i) such
successor entity either (a) expressly assumes all of the obligations of the
Issuer with respect to the Capital Securities or (b) substitutes for the Capital
Securities other securities having substantially the same terms as the Capital
Securities (the "Successor Securities") so long as the Successor Securities have
the same priority as the Capital Securities with respect to distributions and
payments upon liquidation, redemption and otherwise; (ii) a trustee of such
successor entity, possessing the same powers and duties as the Property Trustee,
is appointed to hold the Junior Subordinated Debentures; (iii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization; (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect; (v) such successor entity has a purpose substantially
identical to that of the Issuer; (vi) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Issuer has
received an opinion from independent counsel experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer nor such successor entity will be required to register as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act") and (vii) the Corporation or any permitted successor
or assignee owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Issuer may not, except with the consent of holders of 100% in
Liquidation Amount of the Capital Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Issuer or the successor entity to be classified as an
association taxable as a corporation or as other than a grantor trust for United
States federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under "-- Description of Guarantee
- -- Amendments and Assignment" and as otherwise required by law and the Trust
Agreement, the holders of the Capital Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of a
majority of the Common Securities and the Property Trustee, without the consent
of the holders of the Capital Securities (i) to cure
47
<PAGE> 50
any ambiguity, correct or supplement any provisions in the Trust Agreement that
may be inconsistent with any other provision, or to make any other provisions
with respect to matters or questions arising under the Trust Agreement, which
are not inconsistent with the other provisions of the Trust Agreement, provided
that any such amendment shall not adversely affect the interests of holders of
Trust Securities in any material respect, or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as may be necessary to
ensure that the Issuer will not be classified for United States federal income
tax purposes as an association taxable as a corporation or will be classified as
a grantor trust at any time that any Trust Securities are outstanding or to
ensure that the Issuer will not be required to register as an "investment
company" under the Investment Company Act; provided, that any such action does
not adversely affect in any material respect the interests of any holder of
Trust Securities, and any amendments of the Trust Agreement will become
effective when notice of such amendments is given to the holders of Trust
Securities. The Trust Agreement may be amended by the holders of a majority of
the Common Securities and the Property Trustee with (i) the consent of holders
representing not less than a majority in aggregate Liquidation Amount of the
outstanding Capital Securities and (ii) receipt by the Issuerees of an opinion
of counsel to the effect that such amendment or the exercise of any power
granted to the Issuerees in accordance with such amendment will not affect the
Issuer's not being an association that is taxable as a corporation or being a
grantor trust for United States federal income tax purposes or the Issuer's
exemption from status as an "investment company" under the Investment Company
Act, except that without the consent of each holder of Trust Securities, the
Trust Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer, the
Property Trustee will not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or execute any
trust or power conferred on the Property Trustee with respect to the Junior
Subordinated Debentures, (ii) waive any past default that is waivable under
Section 513 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or the Junior Subordinated Debentures, where such consent shall
be required, without, in each case, obtaining the prior approval of the holders
of at least a majority in aggregate Liquidation Amount of the outstanding
Capital Securities, except that if a consent under the Indenture would require
the consent of each holder of Junior Subordinated Debentures affected thereby,
no such consent will be given by the Property Trustee without the prior consent
of each holder of the Capital Securities. The Issuer Trustees may not revoke any
action previously authorized or approved by a vote of the holders of the Capital
Securities except by subsequent vote of the holders of the Capital Securities.
The Property Trustee will notify each holder of Capital Securities of any notice
of default with respect to the Junior Subordinated Debentures. In addition to
obtaining the foregoing approvals of the holders of the Capital Securities,
before taking any of the foregoing actions, the Property Trustee will obtain an
opinion of counsel experienced in such matters to the effect that the Issuer
will not be classified as an association taxable as a corporation or as other
than a grantor trust for United States federal income tax purposes on account of
such action.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each registered holder of Capital Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Capital Securities will be required to
redeem and cancel Capital Securities in accordance with the Trust Agreement.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, will, for purposes of such
vote or consent, be treated as if they were not outstanding.
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Book Entry, Delivery and Form
The New Capital Securities will be issued in fully registered form in
minimum blocks of at least 100 (representing a minimum of $100,000 aggregate
Liquidation Amount) and the New Capital Securities must at all times be held in
blocks of at least 100. Any attempted transfer, sale or other disposition of the
New Capital Securities in a block having a Liquidation Amount of less than
$100,000 shall be deemed to be void and of no legal effect whatsoever.
The New Capital Securities initially will be evidenced by one or more
global Capital Securities (the "Global Capital Securities") which will be
deposited with, or on behalf of, DTC and registered in the name of Cede & Co.
("Cede") as DTC's nominee. Except as set forth below, record ownership of the
Global Capital Securities may be transferred, in whole or in part, only to
another nominee of DTC or to a successor of DTC or its nominee and only in
amounts that would not cause a holder to own less than 100 Capital Securities.
DTC has advised the Issuer and the Corporation that DTC is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer or ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Issuer and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants designated by the Initial
Purchasers with portions of the principal amount of the Global Capital
Securities and (ii) ownership of such interests in the Global Capital Securities
will be shown on, and the transfer or ownership thereof will be effected only
through, records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Capital Securities).
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL CAPITAL
SECURITIES WILL NOT HAVE CAPITAL SECURITIES REGISTERED IN THEIR NAMES, WILL NOT
RECEIVE PHYSICAL DELIVERY OF CAPITAL SECURITIES IN CERTIFICATED FORM AND WILL
NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE TRUST
AGREEMENT FOR ANY PURPOSE.
Payment of Distributions on, and the Redemption Price of, the Global
Capital Securities will be made to Cede, as the registered holder of the Global
Capital Securities, by wire transfer of immediately available funds on each
Distribution Date or Redemption Date. Neither the Corporation nor the Issuer
Trustees (or any Administrator, securities registrar, paying agent or exchange
agent under the Trust Agreement) will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Capital Security, for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests or for
the performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
The Corporation and the Issuer have been informed by DTC that, with respect
to any payment of Distributions on, or the Redemption Price of, the Global
Capital Security, DTC's practice is to credit Participants' accounts on the
payment date therefor with payments in amounts proportionate to their respective
beneficial interests in the Capital Securities represented by the Global Capital
Securities, as shown on the records of DTC (adjusted as necessary so that such
payments are made with respect to whole Capital Securities only), unless DTC has
reason to believe that it will not receive payment on such payment date.
Payments by Participants to owners of beneficial interests in Capital Securities
represented by the Global
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Capital Security held through such Participants will be the responsibility of
such Participants, as is the case with securities held for the accounts of
customers registered in "street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Capital Securities represented by the Global
Capital Securities to pledge such interest to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate evidencing such
interest. Furthermore, the laws of some states require that certain persons take
physical delivery of securities in definitive form. Consequently, the ability to
transfer beneficial interests in the Global Capital Securities to such persons
may be limited.
DTC has advised the Corporation and the Issuer that it will take any action
permitted to be taken by a holder of Capital Securities (including, without
limitation, the presentation of Capital Securities for exchange as described
below) only at the direction of one or more Participants to whose account with
DTC interests in the Global Capital Securities are credited and only in respect
of the aggregate Liquidation Amount of the Capital Securities represented by the
Global Capital Securities as to which such Participant or Participants has or
have given such direction.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Capital Securities among Participants of
DTC, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. The Global
Capital Security is exchangeable for definitive Capital Securities in registered
certificated form if (i) DTC advises the Corporation and the Property Trustee
that it is no longer willing or able to properly discharge its responsibilities
with respect to the Global Capital Securities, and the Property Trustee is
unable to locate a qualified successor, (ii) the Issuer at its option advises
DTC in writing that it elects to terminate the book-entry system through DTC or
(iii) after the occurrence of a Debenture Event of Default. In all cases,
certificated Capital Securities delivered in exchange for any Global Capital
Security or beneficial interests therein will be registered in the names, and
issued in any approved denominations, requested by or on behalf of DTC (in
accordance with its customary procedures) and will bear the restrictive legend
specified in the Trust Agreement, unless the Property Trustee (based upon an
opinion of counsel) determines otherwise in compliance with applicable law.
So long as DTC or its nominee is the registered holder of the Global
Capital Security, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Capital Securities represented by the Global
Capital Securities for all purposes under the Trust Agreement governing the
Capital Securities. Except as provided above, owners of beneficial interests in
the Global Capital Securities will not be entitled to have any of the individual
Capital Securities represented by the Global Capital Securities registered in
their names, will not receive or be entitled to receive physical delivery of any
such Capital Securities in definitive form and will not be considered the owners
or holders thereof under the Trust Agreement.
Payment and Paying Agency
Payments in respect of the Capital Securities will be made to DTC, which
will credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Issuer's Capital Securities are not held by DTC, such payments will
be made by check mailed to the address of the holder entitled thereto as such
address appears on the Register. The paying agent (the "Paying Agent") will
initially be the Property Trustee and any co-paying agent chosen by the Property
Trustee and acceptable to the Administrators. The Paying Agent will be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Administrators. If the Property Trustee is no longer the Paying Agent,
the Property Trustee will appoint a successor (which must be a bank or trust
company reasonably acceptable to the Administrators) to act as Paying Agent.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
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Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuer will not be required to register or cause to be registered
the transfer of its Capital Securities after such Capital Securities have been
called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is continuing
and the Property Trustee is required to decide between alternative courses of
action, or construe ambiguous provisions in the Trust Agreement, or is unsure of
the application of any provision of the Trust Agreement, and the matter is not
one on which holders of Capital Securities are entitled under the Trust
Agreement to vote, then the Property Trustee will take such action as it deems
advisable and in the best interests of the holders of the Trust Securities and
will have no liability except for its own bad faith, negligence or willful
misconduct.
For information concerning the relationships between Bankers Trust Company,
the Property Trustee, and the Corporation, see "--Description of Junior
Subordinated Debentures--Information Concerning the Debenture Trustee."
Miscellaneous
The Administrators and the Property Trustee are authorized and directed to
conduct the affairs of and to operate the Issuer in such a way that the Issuer
will not be deemed to be an "investment company" required to be registered under
the Investment Company Act and will not be taxable as a corporation or as other
than a grantor trust for United States federal income tax purposes and so that
the Junior Subordinated Debentures will be treated as indebtedness of the
Corporation for United States federal income tax purposes. In this connection,
the Property Trustee and the holders of Common Securities are authorized to take
any action, not inconsistent with applicable law, the certificate of trust of
the Issuer or the Trust Agreement, that the Property Trustee and the holders of
Common Securities determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not materially adversely affect the
interests of the holders of the Capital Securities.
Holders of Capital Securities have no preemptive or similar rights.
The Issuer may not borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures will be issued as separate series under the Indenture,
under which Bankers Trust Company is acting as Debenture Trustee. The Indenture
has been qualified under the Trust Indenture Act. This summary of certain terms
and provisions of the Junior Subordinated Debentures and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture, including the definitions
therein of certain terms. Whenever particular defined terms of the Indenture (as
amended or supplemented from time to time) are referred to herein, such defined
terms are incorporated herein by reference. A copy of the form of Indenture is
available from the Debenture Trustee upon request.
General
Concurrently with the issuance of the Capital Securities, the Issuer
invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in the Old Junior
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Subordinated Debentures issued by the Corporation. Pursuant to the Exchange
Offer, the Corporation will exchange the Old Junior Subordinated Debentures for
the New Junior Subordinated Debentures as soon as practicable after the date
hereof. No Old Junior Subordinated Debentures will remain outstanding after such
exchange. The following is a description of the New Junior Subordinated
Debentures (referred to in this subsection as the "Junior Subordinated
Debentures"). The Junior Subordinated Debentures will bear interest, accruing
from the date of initial issuance, at the annual rate of 8.25% of the principal
amount thereof, payable semi-annually in arrears on June 15, and December 15, of
each year (each, an "Interest Payment Date"), commencing June 15, 1997, to the
person in whose name each Junior Subordinated Debenture is registered at the
close of business on the June 1 and December 1 next preceding such Interest
Payment Date. It is anticipated that, until the liquidation, if any, of the
Issuer, each Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Trust
Securities. The amount of interest payable for any period less than a full
interest period will be computed on the basis of a 360-day year of twelve 30-day
months and the actual days elapsed in a partial month in such period. The amount
of interest payable for any full interest period will be computed by dividing
the rate per annum by two. If any date on which interest is payable on the
Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of 7.826%, compounded semi-annually and
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. The amount of additional
interest payable for any full interest period will be computed by dividing the
rate per annum by two. The term "interest" as used herein includes semiannual
interest payments, interest on semi-annual interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.
The Junior Subordinated Debentures will mature on the Stated Maturity date,
December 15, 2026.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Corporation. Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary,
including the Corporation's bank and nonbank subsidiaries upon such subsidiary's
dissolution, winding-up, liquidation or reorganization or otherwise (and thus
the ability of holders of the Junior Subordinated Debentures to benefit
indirectly from such distribution), is subject to the prior claims of creditors
of that subsidiary, except to the extent that the Corporation may itself be a
creditor of that subsidiary and its claims are recognized. There are various
legal limitations on the extent to which certain of the Corporation's
subsidiaries may extend credit, pay dividends or otherwise supply funds to the
Corporation or certain of its other subsidiaries. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of Junior
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Junior Subordinated Debentures. See "KeyCorp." The Indenture
does not limit the incurrence or issuance of other secured or unsecured debt by
the Corporation, including Senior Indebtedness, whether under the Indenture or
any existing or other indenture that the Corporation may enter into in the
future or otherwise. See "-- Subordination."
Option To Extend Interest Payment Period
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right at any time during the term of the Junior
Subordinated Debentures to defer the payment of interest at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity. At the end of such Extension Period, the Corporation
must pay all interest then accrued and unpaid (together with interest thereon at
the annual rate of 8.25%, compounded semi-annually and computed on the basis of
a 360-day year of twelve 30-day months and the actual days elapsed in a partial
month in a period, to the extent permitted by applicable law). The amount of
additional interest payable for any full interest period will be computed by
dividing the rate per annum by two. During an Extension Period, interest will
continue to accrue and holders
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of Junior Subordinated Debentures (or holders of Capital Securities while
outstanding) will be required to accrue interest income for United States
federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation that rank
pari passu in all respects with or junior in interest to the Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or shareholder stock purchase plan or in connection
with the issuance of capital stock of the Corporation (or securities convertible
into or exercisable for such stock) as consideration in an acquisition
transaction entered into prior to the Extension Period, (b) as a result of an
exchange or conversion of any class or series of the Corporation's capital stock
for any other class or series of the Corporation's capital stock or of any class
or series of the Corporation's indebtedness for any class or series of the
Corporation's capital stock, (c) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with the implementation or
amendment of the Corporation shareholders' rights plan (or any successor
thereto), or the issuance of rights, stock or other property under any such
rights plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Corporation may further defer the payment of
interest, provided that no Extension Period may exceed 10 consecutive
semi-annual periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Corporation may elect to begin a new
Extension Period subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Corporation
must give the Issuer Trustees notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Capital Securities would have been payable but for the election to begin
such Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the Capital Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date. The Property Trustee will give notice of the Corporation's
election to begin a new Extension Period to the holders of the Capital
Securities. There is no limitation on the number of times that the Corporation
may elect to begin an Extension Period.
Redemption
The Junior Subordinated Debentures are redeemable prior to the Stated
Maturity at the option of the Corporation (i) on or after December 15, 2006, in
whole at any time or in part from time to time, or (ii) in whole (but not in
part) at any time within 90 days following the occurrence and during the
continuation of a Tax Event or Capital Treatment Event (each as defined under
"-- Description of Capital Securities -- Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer to redeem the Capital Securities. The Corporation has
committed to the Reserve Bank that it will not cause any such redemption without
having the prior approval of the Federal Reserve to do so, if then required
under applicable Federal Reserve capital guidelines or policies.
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The Redemption Price for Junior Subordinated Debentures in the case of a
redemption under (i) above shall equal the following prices, expressed in
percentages of the principal amount, together with accrued interest to but
excluding the date fixed for redemption. If redeemed during the 12-month period
beginning December 1:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
------------------------------------------------------------ ----------
<S> <C>
2006........................................................ 104.1250%
2007........................................................ 103.7125
2008........................................................ 103.3000
2009........................................................ 102.8875
2010........................................................ 102.4750
2011........................................................ 102.0625
2012........................................................ 101.6500
2013........................................................ 101.2375
2014........................................................ 100.8250
2015........................................................ 100.4125
</TABLE>
and at 100% on or after December 15, 2016.
The Redemption Price for Junior Subordinated Debentures following a Tax
Event or Capital Treatment Event, as described under (ii) above, will equal the
Make-Whole Amount (as defined under "-- Description of Capital
Securities -- Redemption"), together with accrued interest to but excluding the
date fixed for redemption.
Additional Sums
The Corporation has covenanted in the Indenture that, if and for so long as
(i) the Issuer is the holder of all Junior Subordinated Debentures and (ii) the
Issuer is required to pay any additional taxes, duties or other governmental
charges as a result of a Tax Event, the Corporation will pay as additional sums
on the Junior Subordinated Debentures such amounts as may be required so that
the Distributions payable by the Issuer will not be reduced as a result of any
such additional taxes, duties or other governmental charges. See "Description of
Capital Securities -- Redemption."
Registration, Denomination and Transfer
The Junior Subordinated Debentures will initially be registered in the name
of the Property Trustee, as trustee of the Issuer. If the Junior Subordinated
Debentures are distributed to holders of Capital Securities, it is anticipated
that the depositary arrangements for the Junior Subordinated Debentures will be
substantially identical to those in effect for the Capital Securities. See
"Description of Capital Securities -- Book Entry, Delivery and Form."
Although DTC has agreed to the procedures described above, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Corporation within 90 days of receipt of notice from DTC to such effect, the
Corporation will cause the Junior Subordinated Debentures to be issued in
definitive form.
Payments on Junior Subordinated Debentures represented by a global security
will be made to Cede, the nominee for DTC, as the registered holder of the
Junior Subordinated Debentures, as described under "-- Description of the
Capital Securities -- Book Entry, Delivery and Form." If Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other authorized denominations of a like aggregate principal
amount, at the corporate trust office of the Debenture Trustee in The City of
New York or at the offices of any Paying
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Agent or transfer agent appointed by the Corporation, provided that payment of
interest may be made at the option of the Corporation by check mailed to the
address of the persons entitled thereto or by wire transfer.
The Junior Subordinated Debentures will be issuable only in registered form
without coupons in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof. Junior Subordinated Debentures will be exchangeable
for other Junior Subordinated Debentures of like tenor, of any authorized
denominations, and of a like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Indenture or at the office of any transfer agent designated by the Corporation
for such purpose without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. The Corporation will appoint
the Debenture Trustee as securities registrar under the Indenture. The
Corporation may at any time designate additional transfer agents with respect to
the Junior Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.
Restrictions on Certain Payments; Certain Covenants of the Corporation
The Corporation has covenanted that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation that rank
pari passu in all respects with or junior in interest to the Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or shareholder stock purchase plan or in connection
with the issuance of capital stock of the Corporation (or securities convertible
into or exercisable for such stock) as consideration in an acquisition
transaction theretofore entered into prior to the Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Corporation's
capital stock for any other class or series of the Corporation's capital stock
or of any class or series of the Corporation's indebtedness for any class or
series of the Corporation's capital stock, (c) the purchase of fractional
interest in shares of the Corporation's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with the
implementation or amendment of the Corporation's shareholder rights plan (or any
successor thereto), or the issuance of rights, stock or other property under any
such rights plan, or the redemption or repurchase of rights pursuant thereto, or
(e) any dividend in the form of stock, warrants, options or other rights where
the dividend stock or the stock issuable upon exercise of such warrants, options
or other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock), if at such time (i) there has
occurred any event of which the Corporation has actual knowledge that (a) with
the giving of notice or the lapse of time, or both, would constitute a
"Debenture Event of Default" and (b) that the Corporation has not taken
reasonable steps to cure, (ii) if such Junior Subordinated Debentures are held
by the Issuer, the Corporation
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is in default with respect to its payment of any obligations under the Guarantee
or (iii) the Corporation has given notice of its selection of an Extension
Period as provided in the Indenture with respect to the Junior Subordinated
Debentures and has not rescinded such notice, or such Extension Period, or any
extension thereof, is continuing.
The Corporation has covenanted in the Indenture (i) to continue to hold
directly or indirectly 100% of the Common Securities of the Issuer, provided
that certain successors that are permitted pursuant to the Indenture may succeed
to the Corporation's ownership of the Common Securities, (ii) as holder of the
Common Securities, not to voluntarily terminate or liquidate the Issuer, except
(a) in connection with a distribution of Junior Subordinated Debentures to the
holders of the Capital Securities in liquidation of the Issuer or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the Trust Agreement and (iii) to use its reasonable efforts, consistent with the
terms and provisions of the Trust Agreement, to cause the Issuer to remain
classified as not an association taxable as a corporation for United States
federal income tax purposes. In addition, the Corporation has committed to the
Reserve Bank that, so long as the Corporation is the holder of the Common
Securities, the Corporation will not voluntarily terminate or liquidate the
Issuer without having the prior approval of the Federal Reserve to do so, if
then required under applicable Federal Reserve capital guidelines or policies.
Modification; Waiver
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of the Junior Subordinated Debentures, amend, waive
or supplement the provisions of the Indenture for specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies (provided
that any such action does not materially adversely affect the interest of the
holders of the Junior Subordinated Debentures or the holders of the Capital
Securities so long as they remain outstanding) and qualifying, or maintaining
the qualification of, the Indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The Indenture contains provisions
permitting the Corporation and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of the Junior
Subordinated Debentures, to modify the Indenture in a manner affecting the
rights of the holders of the Junior Subordinated Debentures, except that no such
modification may, without the consent of the holder of each outstanding Junior
Subordinated Debenture so affected, (i) change the Stated Maturity of the Junior
Subordinated Debentures, or reduce the principal amount thereof, the rate of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the currency in which, any such amount is payable
or impair the right to institute suit for the enforcement of any Junior
Subordinated Debenture or (ii) reduce the percentage of principal amount of
Junior Subordinated Debentures the holders of which are required to consent to
any such modification of the Indenture. Furthermore, so long as any of the
Capital Securities remain outstanding, no such modification may be made that
adversely affects the holders of such Capital Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
Debenture Event of Default or compliance with any covenant under the Indenture
may be effective, without the prior consent of the holders of at least a
majority of the aggregate Liquidation Amount of the outstanding Capital
Securities unless and until the principal of the Junior Subordinated Debentures
and all accrued and unpaid interest thereon have been paid in full and certain
other conditions are satisfied.
Debenture Events of Default
As defined in the Indenture, any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes an "Event of Default" with respect to the Junior
Subordinated Debentures:
(i) failure for 30 days to pay any interest on such Junior
Subordinated Debentures, when due (subject to the deferral of any due date
in the case of an Extension Period); or
(ii) failure to pay any principal of or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration of acceleration or otherwise; or
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(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Corporation from the Debenture Trustee or the holders of at least
25% in aggregate outstanding principal amount of the outstanding Junior
Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Corporation.
For purposes of the Trust Agreement and this Prospectus, each such Event of
Default is referred to as a "Debenture Event of Default." As described in
"-- Description of Capital Securities -- Events of Default; Notice" the
occurrence of a Debenture Event of Default will also constitute an Event of
Default with respect to the Capital Securities.
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of outstanding Junior Subordinated
Debentures may declare the principal due immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Capital Securities shall
have such right. The holders of at least a majority in aggregate outstanding
principal amount of outstanding Junior Subordinated Debentures may annul such
declaration and waive the default if all defaults (other than the non-payment of
the principal of Junior Subordinated Debentures which has become due solely by
such acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate outstanding Liquidation Amount of the
Capital Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Junior Subordinated Debenture. See " -- Modification;
Waiver." Should the holders of such Junior Subordinated Debentures fail to annul
such declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Capital Securities shall have such right. The
Corporation is required to file annually with the Debenture Trustee a
certificate as to whether or not the Corporation is in compliance with all the
conditions and covenants applicable to it under the Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the
Indenture, to be forthwith due and to enforce its other rights as a creditor
with respect to the Junior Subordinated Debentures.
Enforcement of Certain Rights by Holders of Capital Securities
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Corporation to pay any amounts
payable in respect of the Junior Subordinated Debentures on the date such
amounts are otherwise payable, a registered holder of Capital Securities may
institute a legal proceeding directly against the Corporation for enforcement of
payment to such holder of an amount equal to the amount payable in respect of
such Junior Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Capital Securities held by such holder (a
"Direct Action"). The Corporation may not amend the Indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the Capital Securities. The Corporation will have the
right under the Indenture to set-off any payment made to such holder of Capital
Securities by the Corporation in connection with a Direct Action.
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The holders of the Capital Securities are not able to exercise directly any
remedies available to the holders of the Junior Subordinated Debentures except
under the circumstances described in the preceding paragraph. See "Description
of Capital Securities -- Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Corporation may not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person may consolidate
with or merge into the Corporation or convey, transfer or lease its properties
and assets substantially as an entirety to the Corporation, unless (i) if the
Corporation consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
the Corporation's obligations in respect of the Junior Subordinated Debentures
issued under the Indenture; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time or
both, would constitute a Debenture Event of Default, has occurred and is
continuing; and (iii) certain other conditions as prescribed in the Indenture
are satisfied.
The provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
Satisfaction and Discharge
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at the Stated Maturity within one year, and the Corporation deposits or causes
to be deposited with the Debenture Trustee funds, in trust, for the purpose and
in an amount sufficient to pay and discharge the entire indebtedness on the
Junior Subordinated Debentures not previously delivered to the Debenture Trustee
for cancellation, for the principal (and premium, if any) and interest and
Additional Sums to the date of the deposit or to the Stated Maturity, as the
case may be, then the Indenture will cease to be of further effect (except as to
the Corporation's obligations to pay all other sums due pursuant to the
Indenture and to provide the officers' certificates and opinions of counsel
described therein), and the Corporation will be deemed to have satisfied and
discharged the Indenture.
Subordination
The Junior Subordinated Debentures will be subordinate and junior in right
of payment, to the extent set forth in the Indenture, to all Senior Indebtedness
(as defined below) of the Corporation. If the Corporation defaults in the
payment of any principal, premium, if any, or interest, if any, or any other
amount payable on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or redemption or by
declaration of acceleration or otherwise, then, unless and until such default
has been cured or waived or has ceased to exist or all Senior Indebtedness has
been paid, no direct or indirect payment (in cash, property, securities, by
set-off or otherwise) may be made or agreed to be made on the Junior
Subordinated Debentures, or in respect of any redemption, repayment, retirement,
purchase or other acquisition of any of the Junior Subordinated Debentures.
As used herein, "Senior Debt" means any obligation of the Corporation to
its creditors, whether now outstanding or subsequently incurred, other than any
obligation as to which, in the instrument creating or evidencing the obligation
or pursuant to which the obligation is outstanding, it is provided that such
obligation is not Senior Debt. As used herein, "Senior Subordinated Debt" means
any obligation of the Corporation to its creditors, whether now outstanding or
subsequently incurred, where the instrument creating or evidencing the
obligation or pursuant to which the obligation is outstanding, provides that it
is subordinate and junior in right of payment to Senior Debt. Senior
Subordinated Debt includes the Corporation's outstanding subordinated debt
securities and any subordinated debt securities issued in the future with
substantially similar subordina-
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tion terms and does not include the Junior Subordinated Debentures or any
subordinated debt securities issued in the past or future with substantially
similar subordination terms. Senior Debt does not include Senior Subordinated
Debt or the Junior Subordinated Debentures.
As used herein, "Senior Indebtedness" shall include (i) Senior Debt (but
excluding trade accounts payable and accrued liabilities arising in the ordinary
course of business) and (ii) the Allocable Amounts of Senior Subordinated Debt.
As of September 30, 1996, the Corporation had approximately $2.5 billion of
Senior Indebtedness outstanding.
As used herein, "Allocable Amounts," when used with respect to any Senior
Subordinated Debt, means the amount necessary to pay all principal of (and
premium, if any) and interest, if any, on such Senior Subordinated Debt in full
less, if applicable, any portion of such amounts which would have been paid to,
and retained by, the holders of such Senior Subordinated Debt (whether as a
result of the receipt of payments by the holders of such Senior Subordinated
Debt from the Corporation or any other obligor thereon or from any holders of,
or trustee in respect of, other indebtedness that is subordinate and junior in
right of payment to such Senior Subordinated Debt pursuant to any provision of
such indebtedness for the payment over of amounts received on account of such
indebtedness to the holders of such Senior Subordinated Debt) but for the fact
that such Senior Subordinated Debt is subordinate or junior in right of payment
to trade accounts payable or accrued liabilities arising in the ordinary course
of business.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv) any
other marshalling of the assets of the Corporation, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will be
paid or delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Corporation
ranking on a parity with the Junior Subordinated Debentures, will be entitled to
be paid from the remaining assets of the Corporation the amounts at the time due
and owing on the Junior Subordinated Debentures and such other obligations
before any payment or other distribution, whether in cash, property or
otherwise, will be made on account of any capital stock or obligations of the
Corporation ranking junior to the Junior Subordinated Debentures and such other
obligations. If any payment or distribution on account of the principal of or
interest on the Junior Subordinated Debentures of any character or any security,
whether in cash, securities or other property, is received by any holder of any
Junior Subordinated Debentures in contravention of any of the terms hereof and
before all the Senior Indebtedness has been paid in full, such payment or
distribution or security will be received in trust for the benefit of, and must
be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full. By reason of such subordination, in the event of the
insolvency of the Corporation, holders of Senior Indebtedness may receive more,
ratably, and holders of the Junior Subordinated Debentures may receive less,
ratably, than the other creditors of the Corporation. Such subordination will
not prevent the occurrence of any Event of Default in respect of the Junior
Subordinated Debentures.
The Corporation is a non-operating holding company and almost all of the
operating assets of the Corporation are owned by the Corporation's subsidiaries.
The Corporation relies primarily on dividends from
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such subsidiaries to meet its obligations for payment of principal and interest
on its outstanding debt obligations and corporate expenses. The Corporation is a
legal entity separate and distinct from its banking and non-banking affiliates.
The principal sources of the Corporation's income are dividends, interest and
fees from its principal banking subsidiaries and its other banking and
non-banking affiliates. The bank subsidiaries of KeyCorp (the "Banks") are
subject to certain restrictions imposed by federal law on any extensions of
credit to, and certain other transactions with, KeyCorp and certain other
affiliates, and on investments in stock or other securities thereof. Such
restrictions prevent KeyCorp and such other affiliates from borrowing from the
Banks unless the loans are secured by various types of collateral. Further, such
secured loans, other transactions and investments by any of the Banks are
generally limited in amount as to KeyCorp and as to each of such other
affiliates to 10% of such Bank's capital and surplus and as to KeyCorp and all
of such other affiliates to an aggregate of 20% of such Bank's capital and
surplus. In addition, payment of dividends to KeyCorp by the Banks is subject to
ongoing review by banking regulators and is subject to various statutory
limitations and in certain circumstances requires approval by banking regulatory
authorities. Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of KeyCorp's subsidiaries.
Holders of Junior Subordinated Debentures should look only to the assets of
KeyCorp for payments of interest and principal and premium, if any.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The Corporation expects
from time to time to incur additional indebtedness constituting Senior
Indebtedness.
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
The Debenture Trustee, other than during the continuance of a default by
the Corporation in performance of its obligations under the Indenture, is under
no obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
that might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance by the Issuer of the Old Capital Securities for
the benefit of the holders from time to time of such Capital Securities. As soon
as practicable after the date hereof, the Old Guarantee will be exchanged by
KeyCorp for the New Guarantee. The Guarantee Agreement has been qualified under
the Trust Indenture Act. Bankers Trust Company will act as Guarantee Trustee.
This summary of certain provisions of the Guarantee Agreement does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee Agreement. A copy of the Guarantee
Agreement will be available upon request from the Guarantee Trustee.
General
The Corporation has irrevocably agreed (and under the New Guarantee will
irrevocably agree) to pay in full on a subordinated and junior basis, to the
extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Capital Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert other than
the defense of payment. The following payments with respect to the Capital
Securities, to the extent not paid by or on behalf of the Issuer (the "Guarantee
Payments"), will be subject to the Guarantee: (i) any accumulated and unpaid
Distributions required to be
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paid on such Capital Securities, to the extent that the Issuer has funds on hand
available therefor at such time; (ii) the Redemption Price with respect to any
Capital Securities called for redemption, to the extent that the Issuer has
funds on hand available therefor at such time; and (iii) upon a voluntary or
involuntary termination, or liquidation of the Issuer (unless the Junior
Subordinated Debentures are distributed to holders of the Capital Securities),
the lesser of (a) the Liquidation Distribution, to the extent that the Issuer
has funds on hand available therefor at such time, and (b) the amount of assets
of the Issuer remaining available for distribution to holders of the Capital
Securities on liquidation of the Issuer. The Corporation's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Corporation to the holders of the Capital Securities or by causing the
Issuer to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated and junior
basis of the Issuer's obligations under the Capital Securities, but will apply
only to the extent that the Issuer has funds sufficient to make such payments,
and is not a guarantee of collection.
If the Corporation does not make interest payments on the Junior
Subordinated Debentures held by the Issuer, the Issuer will not be able to pay
any amounts payable in respect of the Capital Securities and will not have funds
legally available therefor. The Guarantee will rank subordinate and junior in
right of payment to all Senior Indebtedness of the Corporation. See "--Status of
the Guarantee." Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's dissolution, winding-up, liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent that the Corporation may itself be a creditor of that
subsidiary and its claims are recognized. There are also various legal
limitations on the extent to which certain of the Corporation's subsidiaries may
extend credit, pay dividends or otherwise supply funds to the Corporation or
certain of its other subsidiaries. Accordingly, the Corporation's obligations
under the Guarantee will be effectively subordinated and junior in right of
payment to all existing and future liabilities of the Corporation's
subsidiaries, and claimants under the Guarantee should look only to the assets
of the Corporation for payments thereunder. See "KeyCorp." The Guarantee does
not limit the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Indebtedness, whether under the Indenture, any
other indenture that the Corporation may enter into in the future or otherwise.
The Corporation has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of the Issuer's
obligations under the Capital Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations in respect of the Capital Securities. See "Relationship
Among the Capital Securities, the Junior Subordinated Debentures, the Guarantee
and the Expense Agreement."
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Corporation in the same manner as the Junior Subordinated
Debentures.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Capital Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
or distribution to the holders of the Capital Securities of the Junior
Subordinated Debentures.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of at least a majority of the aggregate Liquidation Amount of the
outstanding
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Capital Securities. The manner of obtaining any such approval will be as set
forth under "-- Description of the Capital Securities--Voting Rights; Amendment
of Trust Agreement." All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Corporation and shall inure to the benefit of the holders of the outstanding
Capital Securities.
Events of Default
An event of default under the Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of at least a majority in aggregate
Liquidation Amount of the outstanding Capital Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee.
Any registered holder of Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer, the
Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after the occurrence of an event of default under the Guarantee, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
For information concerning the relationship between Bankers Trust Company,
the Guarantee Trustee, and the Corporation, see "Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Capital Securities, upon full
payment of the amounts payable in respect of Capital Securities upon liquidation
of the Issuer or upon distribution of Junior Subordinated Debentures to the
holders of the Capital Securities. The Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
the Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
THE EXPENSE AGREEMENT
Pursuant to an Agreement as to Expenses and Liabilities entered into by the
Corporation under the Trust Agreement (as amended or supplemented from time to
time, the "Expense Agreement"), the Corporation irrevocably and unconditionally
guaranteed to each person or entity to whom the Issuer becomes indebted or
liable, the full payment of any costs, expenses or liabilities of the Issuer,
other than obligations of the Issuer to pay to the holders of Trust Securities
of the amounts due such holders pursuant to the terms of the Trust Securities.
The Expense Agreement constitutes an unsecured obligation of the Corporation and
will rank
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subordinate and junior in right of payment to all Senior Indebtedness of the
Corporation in the same manner as the Guarantee and the Junior Subordinated
Debentures.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respect to
the New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the applicable Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange Offer,
except under limited circumstances); (ii) the New Capital Securities will not
provide for any increase in the Distribution rate thereon; and (iii) the New
Junior Subordinated Debentures will not provide for any increase in the interest
rate thereon. The Old Securities provide that, in the event that the Exchange
Offer is not consummated on or before the date 30 days after the effectiveness
of the registration statement relating to the New Securities, or, in certain
limited circumstances, in the event a shelf registration statement with respect
to the resale of the Old Capital Securities is not declared effective within a
specified time, then interest will accrue (in addition to the stated interest
rate on the Junior Subordinated Debentures) at the rate of 0.25% per annum on
the principal amount of the Junior Subordinated Debentures and Distributions
will accrue (in addition to the stated Distribution rate on the Capital
Securities) at the rate of 0.25% per annum on the Liquidation Amount of the
Capital Securities, for the period from the occurrence of such event until such
time as such required Exchange Offer is consummated or any required Shelf
Registration Statement is effective. The New Securities are not, and upon
consummation of the Exchange Offer the Old Securities will not be, entitled to
any such additional interest or Distributions. Accordingly, holders of Old
Capital Securities should review the information set forth under "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities" and
"Description of New Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES, THE GUARANTEE
AND THE EXPENSE AGREEMENT
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Issuer has funds available for such payment) are irrevocably
guaranteed by the Corporation as and to the extent set forth under "Description
of New Securities -- Description of Guarantee." Taken together, the
Corporation's obligations under the Junior Subordinated Debentures, the
Indenture, the Trust Agreement, the Expense Agreement and the Guarantee provide,
in the aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Capital Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer's obligations in respect of the Capital
Securities. If and to the extent that the Corporation does not make payments on
the Junior Subordinated Debentures, the Issuer will not pay Distributions or
other amounts due on the Capital Securities. The Guarantee does not cover
payment of amounts payable with respect to the Capital Securities when the
Issuer does not have sufficient funds to pay such amounts. In such event, the
remedy of a holder of Capital Securities is to institute a legal proceeding
directly against the Corporation for enforcement of payment of the Corporation's
obligations under the Junior Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Capital Securities held by such holder.
The obligations of the Corporation under the Junior Subordinated
Debentures, the Guarantee and the Expense Agreement are subordinate and junior
in right of payment to all Senior Indebtedness.
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SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable in respect of the Capital Securities, primarily because
(i) the aggregate principal amount of the Junior Subordinated Debentures will be
equal to the sum of the aggregate stated Liquidation Amount of the Capital
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on the Junior Subordinated Debentures will match the Distribution
rate, Distribution Dates and other payment dates for the Capital Securities;
(iii) the holder of the Common Securities will pay for all and any costs,
expenses and liabilities of the Issuer except the Issuer's obligations to
holders of the Trust Securities; and (iv) the Trust Agreement further provides
that the Issuer will not engage in any activity that is not consistent with the
limited purposes of the Issuer.
Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make thereunder
against and to the extent the Corporation has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer or any
other person or entity. See "Description of New Securities -- Description of
Guarantee."
A default or event of default under any Senior Indebtedness of the
Corporation would not constitute a default or Event of Default in respect of the
Capital Securities. However, in the event of payment defaults under, or
acceleration of, Senior Indebtedness of the Corporation, the subordination
provisions of the Indenture provide that no payments may be made in respect of
the Subordinated Debentures until such Senior Indebtedness has been paid in full
or any payment default thereunder has been cured or waived. See "Description of
New Securities -- Description of Junior Subordinated
Debentures -- Subordination."
LIMITED PURPOSE OF ISSUER
The Capital Securities represent a preferred undivided beneficial interest
in the assets of the Issuer, and the Issuer exists for the sole purpose of
issuing its Capital Securities and Common Securities and investing the proceeds
thereof in Junior Subordinated Debentures. A principal difference between the
rights of a holder of a Capital Security and a holder of a Junior Subordinated
Debenture is that a holder of a Junior Subordinated Debenture is entitled to
receive from the Corporation payments on Junior Subordinated Debentures held,
while a holder of Capital Securities is entitled to receive Distributions or
other amounts distributable with respect to the Capital Securities from the
Issuer (or from the Corporation under the Guarantee) only if and to the extent
the Issuer has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding up or liquidation of
the Issuer, other than any such termination, winding up or liquidation involving
the distribution of the Junior Subordinated Debentures, after satisfaction of
liabilities to creditors of the Issuer as required by applicable law, the
holders of the Capital Securities will be entitled to receive, out of assets
held by the Issuer, the Liquidation Distribution in cash. See "Description of
New Securities -- Description of Capital Securities -- Liquidation Distribution
upon Termination." Upon any voluntary or involuntary liquidation or bankruptcy
of the Corporation, the Property Trustee, as registered holder of the Junior
Subordinated Debentures, would be a subordinated creditor of the Corporation,
subordinated and junior in right of payment to all Senior Indebtedness as set
forth in the Indenture, but entitled to receive payment in full of all amounts
payable with respect to the Junior Subordinated Debentures before any
shareholders of the Corporation receive payments or distributions. Since the
Corporation is the guarantor under the Guarantee and has agreed to pay for all
costs, expenses and liabilities of the Issuer (other than the Issuer's
obligations to the holders of the Trust Securities) under the Expense Agreement,
the positions of a holder of the Capital Securities and a holder of such Junior
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Subordinated Debentures relative to other creditors and to stockholders of the
Corporation in the event of liquidation or bankruptcy of the Corporation are
expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Capital Securities.
This summary only addresses the tax consequences to a person that acquires
Capital Securities on their original issue at their original offering price and
that is (i) an individual citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any state thereof or the District of Columbia or (iii) an estate or trust the
income of which is subject to United States federal income tax regardless of
source (a "United States Person"). This summary does not address all tax
consequences that may be applicable to a United States Person that is a
beneficial owner of Capital Securities, nor does it address the tax consequences
to (i) persons that are not United States Persons, (ii) persons that may be
subject to special treatment under United States federal income tax law, such as
banks, insurance companies, thrift institutions, regulated investment companies,
real estate investment trusts, tax-exempt organizations and dealers in
securities or currencies, (iii) persons that will hold Capital Securities as
part of a position in a "straddle" or as part of a "hedging," "conversion" or
other integrated investment transaction for federal income tax purposes, (iv)
persons whose functional currency is not the United States dollar or (v) persons
that do not hold Capital Securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Sullivan & Cromwell, special tax counsel to the
Corporation and the Issuer. This summary is based upon the Code, Treasury
Regulations, Internal Revenue Service rulings and pronouncements and judicial
decisions now in effect, all of which are subject to change at any time. Such
changes may be applied retroactively in a manner that could cause the tax
consequences to vary substantially from the consequences described below,
possibly adversely affecting a beneficial owner of Capital Securities. In
particular, legislation has been proposed that could adversely affect the
Corporation's ability to deduct interest on the Junior Subordinated Debentures,
which may in turn permit the Corporation to cause a redemption of the Capital
Securities. See "-- Possible Tax Law Changes." The authorities on which this
summary is based are subject to various interpretations, and it is therefore
possible that the United States federal income tax treatment of the purchase,
ownership and disposition of Capital Securities may differ from the treatment
described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF ISSUER
In connection with the issuance of the Old Capital Securities, Sullivan &
Cromwell have rendered their opinion to the effect that, under then current law
and assuming compliance with the terms of the Trust Agreement and certain other
factual matters, the Issuer will not be classified as an association taxable as
a corporation for United States federal income tax purposes. As a result, each
beneficial owner of Capital Securities (a "Securityholder") will be required to
include in its gross income its pro rata share of the interest income, including
premium or original issue discount, paid or accrued with respect to the
Subordinated Debentures whether or not cash is actually distributed to such
Securityholder. See -- "Interest Income and Original Issue Discount".
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury Regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a contingency that
stated interest will be not be timely paid that is "remote" because of the terms
of the relevant debt instrument will be ignored in determining whether a debt
instruments is issued with original issue discount ("OID"). As a result of the
terms and conditions of the
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Junior Subordinated Debentures that prohibit certain payments with respect to
the Corporation's capital stock and indebtedness if the Corporation elects to
extend interest payment periods, the Corporation believes that the likelihood of
its exercising its option to defer payments is remote. Based on the foregoing,
the Corporation believes that the Junior Subordinated Debentures will not be
considered to be issued with OID at the time of their original issuance, and
accordingly, a Securityholder should include in gross income such holder's
allocable share of interest on the Junior Subordinated Debentures. The following
discussion will assume that unless and until the Corporation exercises its
option to defer any payment of interest, the Junior Subordinated Debentures will
not be treated as issued with OID.
Under the Regulations, if the Corporation exercised its option to defer any
payment of interest, the Junior Subordinated Debentures would at that time be
treated as issued with OID, and all stated interest on the Junior Subordinated
Debentures would thereafter to be treated as OID as long as the Junior
Subordinated Debentures remained outstanding. In such event, all of the
Securityholder's taxable interest income with respect to the Junior Subordinated
Debentures would be accounted for as OID on an economic accrual basis regardless
of such holder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income. Consequently, a Securityholder
would be required to include in gross income OID even though the Corporation
would not make any actual cash payments during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the Internal Revenue Service and it is possible that the
Internal Revenue Service could take a position contrary to the interpretation
herein.
Because income on the Capital Securities will constitute interest or OID,
corporation Securityholders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect tot he Capital
Securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF CAPITAL SECURITIES
Under current law, a distribution by the Issuer of the Junior Subordinated
Debentures as described herein under "Description of New
Securities -- Description of Capital Securities -- Liquidation Distribution upon
Termination" will be non-taxable and will result in the Securityholder receiving
directly his pro rata share of the Junior Subordinated Debentures previously
held indirectly through the Issuer, with a holding period and aggregate tax
basis equal to the holding period and aggregate tax basis such Securityholder
had in its Capital Securities before such distribution. If, however, the
liquidation of the Issuer were to occur because the Issuer is subject to United
States Federal income tax with respect to income accrued or received on the
Junior Subordinated Debentures, the distribution of Junior Subordinated
Debentures to Securityholders by the Issuer would be a taxable event to the
Issuer and each Securityholder, and each Securityholder would recognize gain or
loss as if the Securityholder had exchanged its Capital Securities for the
Junior Subordinated Debentures it received upon the liquidation of the Issuer. A
Securityholder will include interest in respect of Junior Subordinated
Debentures received from the Issuer in the manner described above under
"-- Interest Income and Original Issue Discount".
SALES OR REDEMPTION OF CAPITAL SECURITIES
A Securityholder that sells (including a redemption for cash) Capital
Securities will recognize gain or loss equal to the difference between its
adjusted tax basis in the Capital Securities and the amount realized on the sale
of such Capital Securities. Assuming that the Corporation does not exercise its
option to defer payment of interest on the Junior Subordinated Debentures, a
Securityholder's adjusted tax basis in the Capital Securities generally will be
its initial purchase price. If the Junior Subordinated Debentures are deemed to
be issued with OID as a result of the Corporation's deferral of any interest
payment, a Securityholder's adjusted tax basis in the Capital Securities
generally will be its initial purchase price, increased by OID previously
includible in such holder's gross income to the date of disposition and
decreased by distributions or other payments received on the Capital Securities
since and including the date of the first Extension Period. Such gain or loss
generally will be a capital gain or loss (except to the extent any amount
realized is treated as a payment of accrued interest with respect to such
Securityholder's pro rata share of the
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Junior Subordinated Debentures required to be included in income) and generally
will be a long-term capital gain or loss if the Capital Securities have been
held for more than one year.
Should the Corporation exercise its option to defer any payment of interest
on the Junior Subordinated Debentures, the Capital Securities may trade at a
price that does not accurately reflect the value of accrued but unpaid interest
with respect to the underlying Junior Subordinated Debentures. In the event of
such a deferral, a Securityholder who disposes of its Capital Securities between
record dates for payments of distributions thereon will be required to include
in income as ordinary income accrued but unpaid interest on the Junior
Subordinated Debentures to the date of disposition and to add such amount to its
adjusted tax basis in its pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
Securityholder's adjusted tax basis, such holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
Although the matter is not free from doubt, an exchange of Old Capital
Securities should not be taxable to Securityholders.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid and OID accrued on the Capital
Securities held of record by United States Persons (other than corporations and
other exempt Securityholders) will be reported to the Internal Revenue Service.
"Backup" withholding at a rate of 31 percent will apply to payments of interest
to non-exempt United States Persons unless the Securityholder furnishes its
taxpayer identification number in the manner prescribed in applicable Treasury
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Capital Securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the Internal Revenue Service.
It is anticipated that income on the Capital Securities will be reported to
holders on Form 1099 and mailed to holders of the Capital Securities by January
31 following each calendar year.
POSSIBLE TAX LAW CHANGES
As discussed above, the Revenue Reconciliation Bill would, among other
things, generally have denied interest deductions for interest on an instrument
issued by a corporation that has a maximum term of more than 20 years and that
is not shown as indebtedness on the separate balance sheet of the issuer or,
where the instrument is issued to a related party (other than a corporation),
where the holder or some other related party issues a related instrument that is
not shown as indebtedness on the issuer's consolidated balance sheet. The
above-described provision of the Revenue Reconciliation Bill was proposed to be
effective generally for instruments issued on or after December 7, 1995. If this
provision were to have applied to the Junior Subordinated Debentures, the
Corporation would have been unable to deduct interest on the Junior Subordinated
Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance and
House Ways and Means Committees issued a joint statement to the effect that it
was their intention that the effective date of the President's legislative
proposals, presumably including the Revenue Reconciliation Bill, if adopted,
would be no earlier than the date of appropriate Congressional action. Under
current law, the Corporation will be able to deduct interest on the Junior
Subordinated Debentures. Although the 104th Congress adjourned without enacting
the above-described provisions of the Revenue Reconciliation Bill, there can be
no assurance that current or future legislative proposals or final legislation
will not adversely affect the ability of the Corporation to deduct interest on
the Junior Subordinated Debentures. Accordingly, there can be no assurance that
a Tax Event will not occur. See "Description of Capital
Securities -- Redemption" and " -- Distribution of Subordinated Debentures to
Holders of Capital Securities".
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CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to ERISA (a "Plan"), should consider the fiduciary standards of ERISA in
the context of the Plan's particular circumstances before authorizing an
investment in the Capital Securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(5) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the United
States Department of Labor (the "DOL"), the assets of the Issuer would be deemed
to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code
if "plan assets" of the Plan were used to acquire an equity interest in the
Issuer and no exception were applicable under the Plan Assets Regulation. An
"equity interest" is defined under the Plan Assets Regulation as any interest in
an entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Issuer would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity interest in the
Issuer, less than 25% of the value of each class of equity interests in the
Issuer were held by Plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church and foreign plans), and
entities holding assets deemed to be "plan assets" of any Plan (collectively,
"Benefit Plan Investors"). No assurance can be given that the value of the
Capital Securities held by Benefit Plan Investors will be less than 25% of the
total value of such Capital Securities at the completion of the initial offering
or thereafter, and no monitoring or other measures will be taken with respect to
the satisfaction of the conditions to this exception. All of the Common
Securities will be purchased and held by the Corporation.
Certain transactions involving the Issuer could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities were acquired with "plan
assets" of such Plan and assets of the Issuer were deemed to be "plan assets" of
Plans investing in the Issuer. For example, if the Corporation is a Party in
Interest with respect to an investing Plan (either directly or by reason of its
ownership of its banking or other subsidiaries), extensions of credit between
the Corporation and the Issuer (as represented by the Junior Subordinated
Debentures and the Guarantee) would likely be prohibited by Section 406(a)(1)(B)
of ERISA and Section 4975(c)(1)(B) of the Code, unless exemptive relief were
available under an applicable administrative exemption (see below).
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the Capital Securities, assuming that
assets of the Issuer were deemed to be "plan assets" of Plans investing in the
Issuer (see above). Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company separate accounts), and PTCE
84-14 (for certain transactions determined by independent qualified asset
managers).
Because the Capital Securities may be deemed to be equity interests in the
Issuer for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any
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Plan, any entity whose underlying assets include "plan assets" by reason of any
Plan's investment in a Plan Asset Entity or any person investing "plan assets"
of any Plan, unless such purchaser or holder is eligible for the exemptive
relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another
applicable exemption. Any purchaser or holder of the Capital Securities or any
interest therein will be deemed to have represented by its purchase and holding
thereof that it either (a) is not a Plan or a Plan Asset Entity and is not
purchasing such securities on behalf of or with "plan assets" of any Plan or (b)
is eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38,
90-1 or 84-14 or another applicable exemption with respect to such purchase or
holding. If a purchaser or holder of the Capital Securities that is a Plan or a
Plan Asset Entity elects to rely on an exemption other than PTCE 96-23, 95-60,
91-38, 90-1 or 84-14, the Corporation and the Issuer may require a satisfactory
opinion of counsel or other evidence with respect to the availability of such
exemption for such purchase and holding.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Capital
Securities on behalf of or with "plan assets" of any Plan consult with their
counsel regarding the potential consequences if the assets of the Issuer were
deemed to be "plan assets" and the availability of exemptive relief under PTCE
96-23, 9560, 91-38, 90-1 or 84-14 or any other applicable exemption.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Issuer has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending days after the Expiration Date (subject to
extension under certain limited circumstances described herein) or, if earlier,
when all such New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "The Exchange Offer -- Resales of New Capital Securities."
The Issuer will not receive any cash proceeds from the issuance of the New
Capital Securities offered hereby. New Capital Securities received by
broker-dealers for their own accounts in connection with the Exchange Offer may
be sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the New
Capital Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Capital Securities. Any broker-dealer that resells
New Capital Securities that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participates in
a distribution of such New Capital Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of New Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
This Prospectus may be used by Key Capital Markets, Inc., an affiliate of
the Corporation, in connection with offers and sales related to market-making
transactions in New Securities effected from time to time after the commencement
of the offering to which this Prospectus relates. Key Capital Markets, Inc. may
act as principal or agent in such transactions, including as agent for the
counterparty when acting as principal or as agent for both counterparties, and
may receive compensation in the form of discounts and commissions,
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including from both counterparties when it acts as agent for both. Such sales
will be made at prevailing market prices at the time of sale, at prices related
thereto or at negotiated prices.
Key Capital Markets, Inc. is a wholly owned subsidiary of the Corporation
and an affiliate of the Issuer.
The Corporation has been advised by Key Capital Markets, Inc. that, subject
to applicable laws and regulations, Key Capital Markets, Inc. may make a market
in New Securities. However, they are not obligated to do so and any
market-making may be discounted at any time without notice. In addition, such
market-making activity is subject to the limits imposed by the Securities Act,
the Exchange Act and federal banking laws and regulations. There can be no
assurance that an active trading market will be sustained.
The Corporation may agree to indemnify Key Capital Markets, Inc. with
respect to certain liabilities in connection with this Prospectus, including
liabilities under the Securities Act.
VALIDITY OF NEW SECURITIES
Certain matters of Delaware law relating to the validity of the New Capital
Securities, the enforceability of the Trust Agreement and the formation of the
Issuer will be passed upon by Richards, Layton & Finger, special Delaware
counsel to the Corporation and the Issuer. The validity of the New Securities
will be passed upon for the Corporation by Sullivan & Cromwell, New York, New
York. Sullivan & Cromwell will rely upon the opinion of Richards, Layton &
Finger as to matters of Delaware law and the opinion of Corporation Counsel as
to matters of Ohio law. Sullivan & Cromwell regularly perform legal services for
the Corporation and its subsidiaries. As of the date hereof, the General Counsel
and the Senior Managing Counsel of the Corporation currently authorized to
render the aforementioned opinion on behalf of the Corporation each owned
approximately 5,300 shares of the Corporation's common stock, including shares
held under options that are immediately exercisable.
Certain matters relating to United States federal income tax considerations
will be passed upon for the Corporation by Sullivan & Cromwell, as special tax
counsel to the Corporation and the Issuer.
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, 1995, 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.
With respect to the unaudited condensed consolidated interim financial
information for the three-month periods ended March 31, 1996 and 1995, for the
three- and six-month periods ended June 30, 1996 and 1995 and for the three- and
nine-month periods ended September 30, 1996 and 1995 (incorporated herein by
reference), Ernst & Young LLP have reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate reports, included in the Corporation's
Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 1996,
June 30, 1996 and September 30, 1996 (and incorporated herein by reference),
state that they did not audit and they do not express an opinion on that interim
financial information. Accordingly, the degree of reliance on their report on
such information should be restricted considering the limited nature of the
review procedures applied. The independent auditors are not subject to the
liability provisions of Section 11 of the Securities Act for their report on the
unaudited interim financial information because that report is not a "report" or
a "part" of the Registration Statement prepared or certified by the auditors
within the meaning of Sections 7 and 11 of the Securities Act.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Ohio law, Ohio corporations are authorized to indemnify directors,
officers, employees, and agents within prescribed limits and must indemnify them
under certain circumstances. Ohio law does not provide statutory authorization
for a corporation to indemnify directors, officers, employees, and agents for
settlements, fines, or judgments in the context of derivative suits. However, it
provides that directors (but not officers, employees, and agents) are entitled
to mandatory advancement of expenses, including attorneys' fees, incurred in
defending any action, including derivative actions, brought against the
director, provided the director agrees to cooperate with the corporation
concerning the matter and to repay the amount advanced if it is proved by clear
and convincing evidence that his act or failure to act was done with deliberate
intent to cause injury to the corporation or with reckless disregard to the
corporation's best interests.
Ohio law does not authorize payment of judgments to a director, officer,
employee, or agent after a finding of negligence or misconduct in a derivative
suit absent a court order. Indemnification is required, however, to the extent
such person succeeds on the merits. In all other cases, if a director, officer,
employee, or agent acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, indemnification
is discretionary except as otherwise provided by a corporation's articles, code
of regulations, or by contract except with respect to the advancement of
expenses of directors.
Under Ohio law, a director is not liable for monetary damages unless it is
proved by clear and convincing evidence that his action or failure to act was
undertaken with deliberate intent to cause injury to the corporation or with
reckless disregard for the best interests of the corporation. There is, however,
no comparable provision limiting the liability of officers, employees, or agents
of a corporation. The statutory right to indemnification is not exclusive in
Ohio, and Ohio corporations may, among other things, procure insurance for such
persons.
The KeyCorp Regulations provide that KeyCorp shall indemnify to the fullest
extent permitted by law any person made or threatened to be made a party to any
action, suit, or proceeding by reason of the fact that he is or was a director,
officer, or employee of KeyCorp or of any other bank, corporation, partnership,
trust, or other enterprise for which he was serving as a director, officer, or
employee at the request of KeyCorp.
Under the terms of KeyCorp's directors' and officers' liability and company
reimbursement insurance policy, directors and officers of KeyCorp are insured
against certain liabilities, including liabilities arising under the Securities
Act.
KeyCorp is a party to agreements with, respectively, Robert W. Gillespie
and Roger Noall, and KeyCorp is party to Change of Control Agreements with
certain other executive officers (the provisions of which became effective as a
result of the merger of old KeyCorp with and into Society), pursuant to which
KeyCorp has agreed to indemnify the officer, to the full extent permitted or
authorized by Ohio law, if the officer is made or threatened to be made a party
to any action, suit, or proceeding by reason of the officer's serving as
employee, officer, or director of KeyCorp and/or any of its subsidiaries, and
KeyCorp has agreed to advance expenses incurred by the officer in defending any
such action, suit, or proceeding.
Under the Amended and Restated Trust Agreement, the Corporation has agreed
to indemnify each of the Trustees of the Issuer and any predecessor Trustees,
and to hold such Trustees harmless, against any loss, damage, claims, liability
or expense incurred without negligence or bad faith on their part, arising out
of or in connection with the acceptance of administration of such Trust
Agreement, including the costs and expenses of defense against any claim or
liability in connection with the exercise or performance of any of their powers
or duties under the Trust Agreement or the Amended and Restated Trust Agreement,
each of which is an exhibit to this Registration Statement.
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ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ---------------------------------------------------------------------------------
<C> <S>
4(a) Indenture, dated as of December 4, 1996, between KeyCorp and Bankers Trust
Company, as Trustee*
4(b) Certificate of Trust of KeyCorp Institutional Capital B
4(c) Trust Agreement of KeyCorp Institutional Capital B
4(d) Amended and Restated Trust Agreement of KeyCorp Institutional Capital B
(including the related form of Expense Agreement)*
4(e) Form of Capital Security Certificate (included in Exhibit 4(d))*
4(f) Form of Guarantee Agreement
4(g) All instruments defining the rights of holders of long-term debt of KeyCorp and
its subsidiaries (Not filed pursuant to clause 4(iii) of Item 601(b) of
Regulation S-K; to be furnished upon request of the Commission)
5(a) Opinion of Daniel Stolzer, Esq., as to validity of the New Junior Subordinated
Debentures and the New Guarantee to be issued by KeyCorp*
5(b) Opinion of Richards, Layton & Finger as to validity of the New Capital Securities
5(c) Opinion of Sullivan & Cromwell as to validity of the New Junior Subordinated
Debentures and the New Guarantee to be issued by KeyCorp*
8 Opinion of Sullivan & Cromwell as to certain federal income tax matters*
12(a) Computations of Consolidated Ratios of Earnings to Fixed Charges (included in
Part I of this Registration Statement)
21(a) Subsidiaries of KeyCorp
23(a) Consent of Ernst & Young LLP
23(b) Consent of Daniel Stolzer, Esq. (Included in Exhibit 5(a))*
23(c) Consent of Richards, Layton & Finger (Included in Exhibit 5(b))*
23(d) Consent of Sullivan & Cromwell (Included in Exhibit 5(c))*
23(e) Consent of Sullivan & Cromwell (Included in Exhibit 8)*
24 Powers of Attorney
25(a) Form T-1 Statement of Eligibility of Bankers Trust Company to act as trustee
under the Indenture*
25(b) Form T-1 Statement of Eligibility of Bankers Trust Company to act as trustee
under the Amended and Restated Trust Agreement
25(c) Form T-1 Statement of Eligibility of Bankers Trust Company under the Guarantee
for the benefit of the holders of Capital Securities
27 The Corporation's Financial Data Schedule (Incorporated by reference to Exhibit
(27) to KeyCorp's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996)
99(a) Form of Letter of Transmittal and instructions thereto*
99(b) Form of Letter of Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees*
99(c) Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees to their clients.*
99(d) Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS.
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to
II-2
<PAGE> 75
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a
registrant pursuant to the foregoing provisions, or otherwise each of the
undersigned registrants has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by a
registrant of expenses incurred by a director, officer or controlling person of
a registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each of the undersigned registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
Each of the undersigned registrants hereby undertake to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
KeyCorp Institutional Capital B certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-4 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio,
as of the 31st day of December, 1996.
KEYCORP INSTITUTIONAL CAPITAL B
By: THOMAS C. STEVENS
Thomas C. Stevens
Executive Vice President,
General Counsel & Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES INDICATED BELOW AND AS OF THE DATE INDICATED ABOVE.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ---------------------------------------- -----------------------------------
<S> <C> <C>
* ROBERT W. GILLESPIE Chairman of the Board, President,
Robert W. Gillespie Chief Executive Officer and
Director (Principal Executive
Officer)
* K. BRENT SOMERS Senior Executive Vice President and
K. Brent Somers Chief Financial Officer (Principal
Financial Officer)
* LEE G. IRVING Executive Vice President and Chief
Lee G. Irving Accounting Officer (Principal
Accounting Officer)
* CECIL D. ANDRUS Director
Cecil D. Andrus
* WILLIAM G. BARES Director
William G. Bares
* ALBERT C. BERSTICKER Director
Albert C. Bersticker
* THOMAS A. COMMES Director
Thomas A. Commes
* KENNETH M. CURTIS Director
Kenneth M. Curtis
* JOHN C. DIMMER Director
John C. Dimmer
___ Director
Lucie J. Fjeldstad
* STEPHEN R. HARDIS Director
Stephen R. Hardis
* HENRY S. HEMINGWAY Director
Henry S. Hemingway
</TABLE>
II-4
<PAGE> 77
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ---------------------------------------- -----------------------------------
<S> <C> <C>
* CHARLES R. HOGAN Director
Charles R. Hogan
* DOUGLAS J. MCGREGOR Director
Douglas J. McGregor
* HENRY L. HEYER III Director
Henry L. Heyer III
* STEVEN A. MINTER Director
Steven A. Minter
* M. THOMAS MOORE Director
*M. Thomas Moore
* RICHARD W. POGUE Director
Richard W. Pogue
* RONALD B. STAFFORD Director
Ronald B. Stafford
* DENNIS W. SULLIVAN Director
Dennis W. Sullivan
* PETER G. TEN EYCK, II Director
Peter G. Ten Eyck, II
* NANCY B. VEEDER Director
Nancy B. Veeder
</TABLE>
*By: THOMAS C. STEVENS
Thomas C. Stevens
Attorney-in-Fact
II-5
<PAGE> 78
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT LOCATION
- ----------- ------------------------------------------------------- ----------------------------------
<C> <S> <C>
4(a) Indenture, dated as of December 4, 1996, between *
KeyCorp and Bankers Trust Company, as Trustee
4(b) Certificate of Trust of KeyCorp Institutional Capital B
4(c) Trust Agreement of KeyCorp Institutional Capital B
4(d) Amended and Restated Trust Agreement of KeyCorp *
Institutional Capital B (including the related form of
Expense Agreement)
4(e) Form of Capital Security Certificate (included in *
Exhibit 4(d))
4(f) Form of Guarantee Agreement *
4(g) All instruments defining the rights of holders of Not filed pursuant to clause
long-term debt of KeyCorp and its subsidiaries 4(iii) of Item 601(b) of
Regulation S-K; to be furnished
upon request of the Commission
5(a) Opinion of Daniel Stolzer, Esq., as to validity of the *
New Junior Subordinated Debentures and the New
Guarantee to be issued by KeyCorp
5(b) Opinion of Richards, Layton & Finger as to validity of *
the New Capital Securities
5(c) Opinion of Sullivan & Cromwell as to validity of the *
New Junior Subordinated Debentures and the New
Guarantee to be issued by KeyCorp
8 Opinion of Sullivan & Cromwell as to certain federal *
income tax matters
12(a) Computations of Consolidated Ratios of Earnings to Filed herewith (included in
Fixed Charges Part I)
21(a) Subsidiaries of KeyCorp Filed herewith
23(a) Consent of Ernst & Young LLP Filed herewith
23(b) Consent of Daniel Stolzer, Esq. (Included in Exhibit *
5(a))
23(c) Consent of Richards, Layton & Finger (Included in *
Exhibit 5(b))
23(d) Consent of Sullivan & Cromwell (Included in Exhibit *
5(c))
23(e) Consent of Sullivan & Cromwell (Included in Exhibit 8) *
24 Powers of Attorney Filed herewith
25(a) Form T-1 Statement of Eligibility of Bankers Trust *
Company to act as trustee under the Indenture
---------------
* To be filed by amendment.
</TABLE>
<PAGE> 79
EXHIBIT INDEX -- (CONTINUED)
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT LOCATION
- ----------- ------------------------------------------------------- ----------------------------------
<C> <S> <C>
25(b) Form T-1 Statement of Eligibility of Bankers Trust *
Company to act as trustee under the Amended and
Restated Trust Agreement
25(c) Form T-1 Statement of Eligibility of Bankers Trust *
Company under the Guarantee for the benefit of the
holders of Capital Securities
27 The Corporation's Financial Data Schedule Incorporated by reference to
Exhibit (27) to the Corporation's
1996 Third Quarter Report on Form
10-Q
99(a) Form of Letter of Transmittal and instructions thereto* *
99(b) Form of Letter of Brokers, Dealers, Commercial Banks, *
Trust Companies and Other Nominees*
99(c) Form of Letter from Brokers, Dealers, Commercial Banks, *
Trust Companies and Other Nominees to their clients*
99(d) Form of Notice of Guaranteed Delivery *
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
Exhibit 21(a)
KEY CORP - LIST OF SUBSIDIARIES
-------------------------------
Corporation
- -----------
A.T. - Sentinel, Inc.
AFG Receivables Corporation
AT Acceptance Corporation
AI Management Co.
American Advisers, Inc.
Ameritrust Company
Applied Technology Investments, Inc.
AutoFinance Group, Inc.
Bar T Bar Fiduciary Holding Company
Beechnut Development Company
Black & Warr Insurance Agency, Inc.
Boris Development Corp.
Boulevard, Inc.
Bozat Development Corp.
CFS One, Inc.
CIBCO Realty, Inc.
Casco Northern Bank
Commercial Agency, Inc.
Gaillard Development Corp.
Gem State Properties Corporation
Goldome Mortgage Investment Corp.
INDORE Corp.
Interstate Financial Corporation
Investco
KBCO Leasing Corporation
KBID Leasing Corporation
KBM Foundation (non-profit)
KBNY Leasing Inc.
KBUT Leasing Inc.
KBVLIHTC, Corp.
KBWA Leasing Corporation
KBWA Services, Inc.
KIA (Ohio) Agency, Inc.
KIA Holding Co.
KIS (Ohio) Agency, Inc.
KIS Holding Co.
KLIHTC, Corp.
Key Agricultural Credit Corporation
Key Bancorp of New Hampshire Inc.
Key Bancshares of Alaska, Inc.
Key Bancshares of Maine Inc.
1
<PAGE> 2
KEYCORP - LIST OF SUBSIDIARIES
------------------------------
Key Bancshares of New York Inc.
Key Bancshares of Vermont Inc.
Key Bancshares of Washington, Inc.
Key Bank
Key Bank Life Insurance, Ltd.
Key Bank USA, National Association
Key Bank of Alaska
Key Bank of Colorado
Key Bank of Idaho
Key Bank of Maine
Key Bank of New York
Key Bank of Oregon
Key Bank of Utah
Key Bank of Vermont
Key Bank of Washington
Key Bank of Wyoming
Key Bank of the Rocky Mountains, Inc.
Key Capital Corporation
Key Capital Markets, Inc.
Key Clearing Corp.
Key Community Development Corporation
Key Consumer Acceptance Corporation
Key Equity Capital Corporation
Key Financial Services Inc.
Key Global Finance Ltd.
Key Insurance Services Inc.
Key Investments Inc.
Key Lease, Inc. of Ohio
Key Mortgage Services, Inc.
Key Savings Bank
Key Services Corporation
Key Trade Services Corporation
Key Trade Services, Limited
Key Trust Company
Key Trust Company of Alaska
Key Trust Company of Florida, National Association
Key Trust Company of Indiana, National Association
Key Trust Company of Maine
Key Trust Company of Ohio, National Association
Key Trust Company of the Northwest
Key Trust Company of the West
KeyBank National Association
KeyCorp (fka Key Venture Capital Corp.)
2
<PAGE> 3
KEYCORP-LIST OF SUBSIDIARIES
----------------------------
KeyCorp A & L Inc.
KeyCorp Asset Management Holdings, Inc.
KeyCorp Aviation Company
KeyCorp Electronic Services, Inc.
KeyCorp Finance, Inc.
KeyCorp Financial Services, Inc.
KeyCorp Insurance Agency (Idaho), Inc.
KeyCorp Insurance Agency (Maine), Inc.
KeyCorp Insurance Agency (Wyoming), Inc.
KeyCorp Insurance Agency, Inc.
KeyCorp Insurance Agency USA, Inc.
KeyCorp Insurance Company, Ltd.
KeyCorp Leasing Ltd.
KeyCorp Management Company
KeyCorp Mutual Fund Advisers, Inc.
KeyCorp Real Estate Capital Markets, Inc.
KeyCorp Shareholder Services, Inc.
KeyLease Plus, Inc.
Knight Insurance Agency, Inc.
Knight Insurance Agency, Inc. (New Hampshire)
Knight Tuition Payment Plans, Inc.
M.L.O., Inc.
Mansfield Development Corp.
Michigan Shared Properties Company
Midwest Power Company
Millenium Asset Holding Corp.
Money Station, Inc.
Mountain Ash Real Estate, Inc.
NCB Properties, Inc.
National Financial Services Corporation
Niagara Asset Corporation
Niagara Portfolio Management Corp.
OREO Corp.
P.B. Participation Corp.
P.S.M. Financial Management Corp.
POS Sales and Services, Inc.
PacWest Building Corp.
Puget Sound Mortgage Servicing Corporation
Puget Sound Plaza, Inc.
Royal Skies Development Company
SELCO Service Corporation
Second Street Community Urban Redevelopment Corporation
Security Capital Leasing, Inc.
3
<PAGE> 4
KEYCORP -- LIST OF SUBSIDIARIES
-------------------------------
Society Asset Management, Inc
Society Corporation
Society Equipment Leasing Corporation
Society Foundation (non-profit)
Society Funding Corporation
Society Trust Company of New York
Spears, Benzak, Solomon & Farrell, Inc.
St. Joseph Insurance Agency, Inc.
Summit Street Properties, Inc.
Summitt International Sales, Inc.
Swans Island Salmon, Ltd.
TCIS, Inc.
Trust Corp Financing Services, Inc.
Vermont Coconut Grove Corp.
Vermont Realty, Inc.
Virginia Stone Corporation
Washington Mortgage Corporation
4
<PAGE> 1
Exhibit 23(a)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of KeyCorp
Institutional Capital B and KeyCorp dated December 31, 1996, and to the
incorporation by reference therein of our report dated January 16, 1996, with
respect to the consolidated financial statements of KeyCorp incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31, 1995,
filed with the Securities and Exchange Commission.
Ernst & Young LLP
Cleveland, Ohio
December 23, 1996
<PAGE> 1
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ R.W. Gillespie
--------------------------------
<PAGE> 2
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Lee G. Irving
--------------------------------
<PAGE> 3
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Cecil D. Andrus
--------------------------------
<PAGE> 4
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ William G. Bares
--------------------------------
<PAGE> 5
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ A.C. Bersticker
--------------------------------
<PAGE> 6
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ T.A. Commes
--------------------------------
<PAGE> 7
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Kenneth M. Curtis
--------------------------------
<PAGE> 8
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ John C. Dimmer
--------------------------------
<PAGE> 9
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Stephen R. Hardis
--------------------------------
<PAGE> 10
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Henry S. Hemingway
--------------------------------
<PAGE> 11
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Charles R. Hogan
--------------------------------
<PAGE> 12
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Douglas J. McGregor
--------------------------------
<PAGE> 13
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Henry L. Meyer III
--------------------------------
<PAGE> 14
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Steven A. Minter
--------------------------------
<PAGE> 15
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ M. Thomas Moore
--------------------------------
<PAGE> 16
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Richard W. Pogue
--------------------------------
<PAGE> 17
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Ronald B. Stafford
--------------------------------
<PAGE> 18
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Dennis W. Sullivan
--------------------------------
<PAGE> 19
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Peter G. Ten Eyck, II
--------------------------------
<PAGE> 20
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ Nancy B. Veeder
--------------------------------
<PAGE> 21
EXHIBIT 24
KEYCORP
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and
director of KeyCorp, an Ohio corporation, which anticipates filing with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Act of 1933, as amended, such registration statements or
amendments to existing registration statements (on Form S-3 or such other form
or forms as are applicable) to effect the shelf registration pursuant to Rule
415 of the Securities and Exchange Commission of debt and equity, with an
aggregate issue price of up to $500,000,000 to be issued and sold from time to
time in one or more public or private offerings, hereby constitutes and
appoints K. Brent Somers, John A. Simonson, Thomas C. Stevens and Daniel R.
Stolzer, and each of them, as attorney for the undersigned, with full power of
substitution and resubstitution for and in the name, place and stead of the
undersigned, to sign and file the proposed registration statements and any and
all amendments, post-effective amendments, and exhibits thereto, and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to such securities or such registration with full
power and authority to do and perform any and all acts and things whatsoever
requisite and necessary to be done in the premises, hereby ratifying and
approving the acts of such attorney or any such substitute or substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand as
of November 21, 1996.
/s/ K. Brent Somers
--------------------------------
