<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1998
Registration Nos. 333-55959 and 333-55959-01
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------
<TABLE>
<CAPTION>
KEYCORP KEYCORP CAPITAL I
<S> <C>
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
OHIO DELAWARE
(State of other jurisdiction of incorporation or organization) (State of other jurisdiction of incorporation or organization)
34-6542451 34-1866860
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
C/O KEYCORP
127 PUBLIC SQUARE 127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1306 CLEVELAND, OHIO 44114-1306
(216) 689-6300 (216) 689-6300
(Address, including zip code, and telephone number, (Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices) including area code, of registrant's principal executive offices)
</TABLE>
----------------------
DANIEL R. STOLZER, ESQ.
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
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:
CAROLYN E. CHEVERINE, ESQ. MITCHELL S. EITEL, ESQ.
VICE PRESIDENT & SENIOR COUNSEL SULLIVAN & CROMWELL
KEYBANK NATIONAL ASSOCIATION 125 BROAD STREET
127 PUBLIC SQUARE NEW YORK, NEW YORK 10004
CLEVELAND, OHIO 44114-1306 (212) 558-4000
(216) 689-6300
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED OFFERING PRICE PER UNIT(1) AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Junior Subordinated Deferrable Interest
Debentures of KeyCorp (3) (4)........ $250,000,000 $1,000 $250,000,000 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Securities of KeyCorp Capital I.. 250,000 $1,000 $250,000,000 $73,750
- ------------------------------------------------------------------------------------------------------------------------------------
KeyCorp Guarantee with respect to
Capital Securities (5) .............. N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total.................................... $250,000,000 100% $250,000,000(4) $73,750
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457.
(2) A fee of $295 was previously paid in connection with the filing of this
Registration Statement on June 2, 1998. The remaining fee of $73,455 is
paid herewith.
(3) The Junior Subordinated Deferrable Interest Debentures will be purchased by
KeyCorp Capital I with the proceeds of the sale of the Capital Securities.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of KeyCorp, the rights of holders of Junior
Subordinated Deferrable Interest Debentures of KeyCorp under the Indenture,
the rights of holders of Capital Securities of KeyCorp Capital I under the
Trust Agreement, the rights of holders of the Capital Securities under the
Guarantee of KeyCorp and the Expense Agreement to be entered into by
KeyCorp, which taken together, fully irrevocably and unconditionally
guarantee all of the obligations of KeyCorp Capital I under the Capital
Securities. No separate consideration will be received for the KeyCorp
Guarantee.
(5) Such amount represents the principal amount of Junior Subordinated
Deferrable Interest Debentures issued at their principal amount and the
issue price rather than the principal amount of Junior Subordinated
Deferrable Interest Debentures issued at an original issue discount. Such
amount also represents the initial public offering price of the Capital
Securities.
- --------------------------------------------------------------------------------
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.
<PAGE> 2
$250,000,000
KeyCorp Capital I
Floating Rate Capital Securities
(Liquidation Amount $1,000 per Capital Security)
Fully and unconditionally guaranteed, as described herein, by
KeyCorp
The Floating Rate Capital Securities (the "Capital Securities") offered hereby
represent preferred undivided beneficial interests in the assets of KeyCorp
Capital I, a statutory business trust created under the laws of the State of
Delaware (the "Issuer Trust"). KeyCorp, an Ohio corporation ("KeyCorp" or the
"Corporation"), will be the holder of all the beneficial interests represented
by the common securities of the Issuer Trust (the "Common Securities" and
together with the Capital Securities, the "Trust Securities"). The Issuer Trust
exists for the sole purpose of issuing the Trust Securities and investing the
proceeds thereof in an equivalent amount of Floating Rate Junior Subordinated
Deferrable Interest Debentures (the "Junior Subordinated Debentures") to be
issued by KeyCorp. The Junior Subordinated Debentures will mature on June ___,
2028 (such date, the "Stated Maturity"). The Capital Securities will have a
preference over the Common Securities under certain circumstances with respect
to cash distributions and amounts payable on liquidation, redemption or
otherwise.
(continued on next page)
------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE CAPITAL SECURITIES.
------------------------------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED OR GUARANTEED 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
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------
<TABLE>
<CAPTION>
Proceeds to
Price to Underwriting Issuer Trust
Public (1) Commission (2) (1) (3) (4)
---------- -------------- -----------
<S> <C> <C> <C>
Per Capital Security $1,000 (3) $1,000
Total $250,000,000 (3) $250,000,000
------------------
<FN>
- --------------------------
(1) Plus accumulated Distributions, if any, from June ___, 1998.
(2) KeyCorp and the Issuer Trust have each agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting".
(3) In view of the fact that the proceeds of the sale of the Capital Securities
will be invested in the Junior Subordinated Debentures, KeyCorp has agreed
to pay to the Underwriters as compensation for their arranging the
investment therein of such proceeds $____ per Capital Security (or $______
in the aggregate). See "Underwriting".
(4) Expenses of the offering to be paid by KeyCorp are estimated to be
$306,750. See "Underwriting".
------------------------------------
</TABLE>
The Capital Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Capital Securities will be made in book-entry form only
through the facilities of The Depository Trust Company ("DTC") in New York, New
York on or about June ___, 1998, against payment therefor in immediately
available funds.
GOLDMAN, SACHS & CO.
KEY CAPITAL MARKETS, INC.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
--------------------
The date of this Prospectus is June ___, 1998.
(cover page continued)
<PAGE> 3
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CAPITAL
SECURITIES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING".
Holders of the Capital Securities will be entitled to receive preferential
cumulative cash distributions ("Distributions") accumulating from the date of
initial issuance of the Capital Securities, and payable semi-annually in arrears
on _______ and ___________ of each year, commencing _______, 1998, in respect of
the Liquidation Amount of $1,000 per Capital Security at a rate per annum equal
to 3-Month LIBOR (as defined herein) plus a margin of 0.__% (the "Distribution
Rate"). Subject to certain exceptions, as described herein, 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. 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 with respect to debt
securities of the Corporation that rank pari passu in all respects 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 Distribution Rate, compounded semi-annually, from the
relevant payment date and holders of Capital Securities will be required to
accrue interest income for United States federal income tax purposes. 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, 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 Trust'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
Trust, as described herein. See "Description of Guarantee". If the Corporation
does not make payments on the Junior Subordinated Debentures held by the Issuer
Trust, the Issuer Trust will have insufficient funds to pay Distributions on the
Capital Securities. The Guarantee does not cover payment of Distributions when
the Issuer Trust does not have sufficient funds to pay such Distributions. In
such event, a holder of Capital Securities may institute a legal proceeding
directly against the Corporation to enforce payment of such Distributions to
such holder. See "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 Indebtedness (as defined in
"Description of Junior Subordinated Debentures--Subordination") of the
Corporation.
The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Junior Subordinated Debentures at Stated Maturity or
their earlier redemption. The Junior Subordinated Debentures are redeemable
prior to maturity at the option of the Corporation (i) on or after ___________,
2008, 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
continuation of a Tax Event or Capital Treatment Event (each as defined herein),
in each case at a redemption price set forth herein which includes the accrued
and unpaid interest on the Junior Subordinated Debentures so redeemed to the
date fixed for redemption. The Corporation has committed to the Federal Reserve
Bank of Cleveland (the "Reserve Bank") that the Corporation will not exercise
its rights 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
2
<PAGE> 4
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 Junior Subordinated Debentures--Redemption".
The Corporation, as the holder of the outstanding Common Securities, has
the right at any time to dissolve the Issuer Trust and, after satisfaction of
liabilities to creditors of the Issuer Trust 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 Trust. The
Corporation has committed to the Reserve Bank that, so long as the Corporation
is a holder of Common Securities, the Corporation will not so dissolve the
Issuer Trust 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 "Risk Factors--Exchange of Capital Securities for Junior
Subordinated Debentures" and "Description of Capital Securities--Liquidation
Distribution upon Termination".
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness of the Corporation. As of March 31, 1998, the Corporation
had approximately $1.14 billion of aggregate principal amount of Senior
Indebtedness outstanding. See "Description of Junior Subordinated
Debentures--Subordination".
In the event of the dissolution of the Issuer Trust, after satisfaction of
liabilities to creditors of the Issuer Trust in accordance with applicable law
and subject to the Expense Agreement, the holders of the Capital Securities will
be entitled to receive a Liquidation Amount of $1,000 per Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, subject to
certain exceptions, which may be in the form of a distribution of such amount in
Junior Subordinated Debentures. See "Description of Capital
Securities--Liquidation Distribution upon Termination".
If the Junior Subordinated Debentures are distributed to the holders of
Capital Securities upon the liquidation of the Issuer Trust, the Corporation
will use its best efforts to include the Junior Subordinated Debentures on such
stock exchanges or other automated quotation systems, if any, on which the
Capital Securities are then listed or traded.
The Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the
Capital Securities will be shown on, and transfers thereof will be effected only
through, records maintained by participants in DTC. Except as described herein,
Capital Securities in certificated form will not be issued in exchange for the
global certificates. See "Description of the Capital Securities--Book Entry
Issuance".
Key Capital Markets, Inc. is a wholly owned subsidiary of the Corporation
and an affiliate of the Issuer Trust and may be participating in the
distribution of the Capital Securities. 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 the 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.
(cover page continued)
---------------------
3
<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents (the "Incorporated Documents"), which have been
filed with the Securities and Exchange Commission (the "Commission"), are
incorporated by reference in this Prospectus:
1. The Corporation's Annual Report on Form 10-K for the year ended December
31, 1997;
2. The Corporation's Quarterly Report on Form 10-Q for the period ended
March 31, 1998; and
3. The Corporation's Current Reports on Form 8-K filed on January 21, 1998,
March 6, 1998, April 17, 1998 and June 15, 1998.
All documents filed by the Corporation pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of this Prospectus and prior to the termination of the
offering made hereunder shall be deemed to be incorporated by reference into
this Prospectus and to be a part of this Prospectus from the respective dates of
the filing of such documents. The Corporation will provide without charge to
each person to whom this Prospectus is delivered, on the written or oral request
of such person, a copy of any or all of the documents incorporated by reference
herein (other than exhibits not specifically incorporated by reference into the
text of such documents). Requests should be directed to KeyCorp, 127 Public
Square, Cleveland, Ohio 44114-1306, Attention: Investor Relations, telephone
(216) 689-6300.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated herein by reference modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Prospectus (including information incorporated by reference herein)
contains forward-looking statements that are subject to numerous assumptions,
risks and uncertainties. Statements pertaining to future periods are subject to
uncertainty because of the possibility of changes in underlying factors and
assumptions. Actual results could differ materially from those contained in or
implied by such forward-looking statements for a variety of factors including:
sharp and/or rapid changes in interest rates; significant changes in the
economic scenario from the current anticipated scenario that could materially
change anticipated credit quality trends and the ability to generate loans;
significant delay in or inability to execute strategic initiatives designed to
grow revenues and/or manage expenses; consummation of significant business
combinations or divestitures; unforeseen business risks related to Year 2000
computer systems issues; and significant changes in accounting, tax or
regulatory practices or requirements.
4
<PAGE> 6
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements and
other information with the Commission. Such reports (including the Incorporated
Documents), 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 (including the
Incorporated Documents) 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 (including the Incorporated Documents) 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 (including the
Incorporated Documents), 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.
The Corporation and the Issuer Trust have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus omits, in accordance with the rules and regulations of the
Commission, certain of the information contained in the Registration Statement.
Reference is hereby 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 for further information with respect to the
Corporation, the Issuer Trust and the securities offered hereby. Statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, where a copy of such document has been filed as
an exhibit to the Registration Statement or otherwise has been filed with the
Commission, reference is made to the copy so filed. Each such statement is
qualified in its entirety by such reference.
No separate financial statements of the Issuer Trust have been included or
incorporated by reference herein. The Corporation and the Issuer Trust do not
consider that such financial statements would be material to holders of the
Capital Securities because the Issuer Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged in
and does not propose to engage in any activity other than holding as trust
assets the Junior Subordinated Debentures of the Corporation and issuing the
Trust Securities. See "KeyCorp Capital I," "Description of Capital Securities,"
"Description of Junior Subordinated Debentures" and "Description of Guarantee".
In addition, the Corporation does not expect that the Issuer Trust will be
filing reports under the Exchange Act with the Commission.
5
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus. 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 Trust among the Corporation, as Depositor,
Bankers Trust Company, as Property Trustee (the "Property Trustee"), Bankers
Trust (Delaware), as Delaware Trustee (the "Delaware Trustee"), and the
Administrative Trustees named therein (the "Administrative Trustees"); and,
collectively with the Property Trustee and the Delaware Trustee, the "Issuer
Trustees"), and the holders from time to time of undivided beneficial interests
in the assets of the Issuer Trust, and (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. See "Risk Factors" for a
discussion of certain information prospective investors should carefully review
in connection with an investment in the securities offered hereby.
KEYCORP
GENERAL
The Corporation, incorporated in 1958 under the laws of the State of Ohio
and registered under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), is headquartered in Cleveland, Ohio, and is engaged primarily in the
business of commercial and retail banking. At March 31, 1998, it was one of the
largest bank holding companies in the United States with consolidated total
assets of approximately $73.2 billion. The Corporation and its subsidiaries
(collectively, "Key") provide a wide range of banking, equipment leasing,
fiduciary and other financial services to their corporate, individual and
institutional customers through four lines of business: Key Corporate Capital,
Key Consumer Finance, Key Community Bank and Key Capital Partners. These
services are provided across much of the country through subsidiaries operating
more than 1,000 full-service banking offices in 13 states (Alaska, Colorado,
Idaho, Indiana, Maine, Michigan, New Hampshire, New York, Ohio, Oregon, Utah,
Vermont and Washington), a 24-hour telephone banking call center services group
and more than 2,200 automated teller machines ("ATMs") as of March 31, 1998. At
March 31, 1998, KeyCorp and its subsidiaries had approximately 24,650 full-time
equivalent employees.
In addition to the customary banking services of accepting deposits and
making loans, the bank and trust company subsidiaries provide specialized
services, including personal and corporate trust services, personal financial
services, customer access to mutual funds, cash management services, investment
banking and capital markets products 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 (i.e., multiemployer trust funds
established for providing pension, vacation, or other benefits to employees that
are established in accordance with applicable law), foundations and endowments,
and high net worth individuals. In addition, investment management subsidiaries
serve as investment advisers to the proprietary mutual funds offered by other
affiliates.
The Corporation provides other financial services both inside and outside
of its primary banking markets through its nonbank subsidiaries. These services
include accident and health insurance on loans made by subsidiary banks,
6
<PAGE> 8
venture capital, community development financing, securities underwriting and
brokerage, automobile financing and other financial services. Key is an equity
participant in joint ventures with a number of other unaffiliated companies in
Electronic Payment Services, Inc., which operates ATMs throughout the country,
Integrion Financial Network, L.L.C., which is building a platform for electronic
banking, and Key Merchant Services, L.L.C., which provides merchant services to
businesses. See "KeyCorp".
RECENT DEVELOPMENTS
On June 15, 1998, the Corporation announced that it had entered into a
merger agreement to acquire McDonald & Company Investments, Inc. ("McDonald"), a
full-service investment banking and securities brokerage firm based in
Cleveland, Ohio. Under the terms of the merger agreement, subject to adjustment
under certain circumstances, the Corporation will issue, in exchange for each
McDonald common share, the Corporation's common shares in a number equal to
$35.00 divided by the average closing price per common share of the Corporation
over a 10-day period ending shortly prior to the closing. Based on 18,665,000
shares of McDonald common stock outstanding as of June 15, 1998 and a $36.875
per share closing price of the Corporation's common shares on June 12, 1998, the
Corporation would be required to issue approximately 17,716,000 common shares as
consideration to McDonald shareholders. The transaction, which remains subject
to the approval of McDonald shareholders, as well as regulatory approval and
other conditions to closing, is currently expected to close during the fourth
quarter of 1998.
KEYCORP CAPITAL I
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to (i) a Trust Agreement executed by the Corporation, as Depositor,
Bankers Trust (Delaware), as Delaware Trustee, and the Administrative Trustee
named therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on June 2, 1998. The Issuer Trust's business and affairs are
conducted by its trustees: Bankers Trust Company, as Property Trustee, Bankers
Trust (Delaware), as Delaware Trustee and two individual Administrative Trustees
who are employees of or officers of or affiliated with the Corporation. The
Issuer Trust 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 only those
other activities necessary or incidental thereto (such as registering the
transfer of the Trust Securities). Accordingly, the Junior Subordinated
Debentures will be the sole assets of the Issuer Trust, and payments under the
Junior Subordinated Debentures will be the sole source of revenue of the Issuer
Trust.
See "KeyCorp Capital I".
THE OFFERING
Securities Offered $250,000,000 aggregate Liquidation
Amount of Floating Rate Capital
Securities (Liquidation Amount
$1,000 per Capital Security).
Offering Price $1,000 per Capital Security, plus
accumulated Distributions, if
any, from the date of initial
issuance.
Distribution Rate Floating rate per annum determined
by reference to the three-month
London interbank offered rate
("LIBOR") plus a margin of ___%.
See "Description of Capital
Securities--Distributions".
7
<PAGE> 9
Distribution Dates _______ and ___________ of each
year, commencing _______, 1998.
Extension Periods Distributions on Capital Securities
may be deferred for the duration of
any Extension Period elected by the
Corporation with respect to the
payment of interest on the Junior
Subordinated Debentures. No
Extension Period will exceed 10
consecutive semi-annual periods or
extend beyond the Stated Maturity
of the Junior Subordinated
Debentures June __, 2028. See
"Description of Junior Subordinated
Debentures--Option to Extend
Interest Payment Period" and
"Certain Federal Income Tax
Consequences--Interest Income and
Original Issue Discount".
Ranking The Capital Securities will rank
pari passu, and payments thereon
will be made pro rata, with the
Common Securities except as
described under "Description of
Capital Securities--Subordination
of Common Securities. " The Junior
Subordinated Debentures will be
unsecured and subordinate and
junior in right of payment to the
extent and in the manner set forth
in the Indenture to all Senior
Indebtedness (as defined herein).
See "Description of Junior
Subordinated Debentures. " The
Guarantee will constitute an
unsecured obligation of the
Corporation and will rank
subordinate and junior in right of
payment to the extent and in the
manner set forth in the Guarantee
to all Senior Indebtedness. See
"Description of Guarantee".
Redemption The Trust Securities are subject to
mandatory redemption in whole but
not in part (i) at the Stated
Maturity upon repayment of the
Junior Subordinated Debentures,
(ii) contemporaneously with the
optional redemption at any time by
the Corporation of the Junior
Subordinated Debentures upon the
occurrence and continuation of a
Tax Event or Capital Treatment
Event and (iii) at any time on or
after ___________, 2008,
contemporaneously with the optional
redemption by the Corporation of
the Junior Subordinated Debentures,
in each case at the applicable
Redemption Price. See "Description
of Capital Securities--
Redemption".
Use of Proceeds All the proceeds to the Issuer
Trust from the sale of the Capital
Securities will be invested by the
Issuer Trust in the Junior
Subordinated Debentures. The net
proceeds to the Corporation from
the sale of the Junior Subordinated
Debentures will be used by the
Corporation for general corporate
purposes, which may include
investments in, or extensions of
credit to, the Corporation's
subsidiaries, repurchases or
redemptions of capital stock of the
Corporation and financing possible
future acquisitions including,
without limitation, the acquisition
of banking and nonbanking companies
and financial assets and
liabilities. Specific allocations
of the proceeds to such purposes
have not been
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<PAGE> 10
made, although management has
determined that funds should be
borrowed at this time. The precise
amount and timing of such
investments in, or extensions of
credit to, subsidiaries will depend
on the subsidiaries' funding
requirements and the availability
of other funds. Pending such
applications, such net proceeds may
be temporarily invested or applied
to the reduction of short-term
indebtedness. See "Use of
Proceeds".
For additional information regarding the Capital Securities, see
"Description of Capital Securities," "Description of Junior Subordinated
Debentures," "Description of Guarantee," "The Expense Agreement," "Relationship
among the Capital Securities, the Junior Subordinated Debentures, the Guarantee
and the Expense Agreement," and "Certain Federal Income Tax Consequences".
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<PAGE> 11
RISK FACTORS
Prospective purchasers of the Capital Securities should carefully review
the information contained elsewhere in this Prospectus and should particularly
consider the following matters. In addition, because holders of the Capital
Securities may receive Junior Subordinated Debentures in exchange therefor upon
liquidation of the Issuer Trust, 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.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Corporation under the Guarantee issued by the
Corporation for the benefit of the holders of Capital Securities and under the
Junior Subordinated Debentures are unsecured and rank subordinate and junior in
right of payment to all Senior Indebtedness of the Corporation. Substantially
all of the Corporation's existing indebted ness 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". Substantially all of the Corporation's existing
indebtedness is Senior Indebtedness, other than $750 million aggregate principal
amount of the Corporation's 7.826% Junior Subordinated Deferrable Interest
Debentures issued to a subsidiary trust on December 4, 1996 (the "7.826% Junior
Subordinated Debentures"), the Corporation's 8.25% Junior Subordinated
Deferrable Interest Debentures issued to a subsidiary trust on December 30, 1996
(the 8.25% Junior Subordinated Debentures") and the Corporation's 6.625%
Debentures, Series A issued to a subsidiary trust on May 30, 1997 (the "CAPS
Debentures"). None of the Indenture, the Guarantee or the Trust 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
Guarantee--Status of the Guarantee" and "Description of Junior Subordinated
Debentures--Subordination".
The ability of the Issuer Trust to pay amounts due on the Capital
Securities is entirely dependent upon the Corporation's 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 Junior Subordinated
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<PAGE> 12
Debentures--Option to Extend Interest Payment Period". As a consequence of any
such deferral, semi-annual Distributions on the Capital Securities by the Issuer
Trust will also be deferred (and the amount of Distributions to which holders of
the Capital Securities are entitled will accumulate additional Distributions
thereon at the Distribution Rate 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, subject to certain
exceptions described herein.
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 Distribution Rate, 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 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
Trust 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 Trust 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 Redemptions 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.
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 thereby 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 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.
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<PAGE> 13
A "Tax Event" means the receipt by the Corporation and the Issuer
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of any amendment to or change (including any announced prospective
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 (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action")) or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Corporation or the Issuer Trust and whether or not
subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the Issue Date, there is more than an insubstantial risk that:
(i) the Issuer Trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the 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 Company, in whole or in
part, for United States federal income tax purposes; or (iii) the Issuer Trust
is, or will be within 90 days of the date of such opinion, subject to more than
a de minimis amount of other taxes, duties or other governmental charges. See
"--Possible Tax Law Changes Affecting the Capital Securities".
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 Corporation will have the right at any time to dissolve the Issuer
Trust and, after satisfaction of liabilities to creditors of the Issuer Trust 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 Trust. 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 Capital Securities--Liquidation
Distribution upon Termination" and "The Expense Agreement".
Under current United States federal income tax law and interpretations and
assuming, as expected, that the Issuer Trust will not be classified as an
association taxable as a corporation, a distribution of the Junior Subordinated
Debentures upon a liquidation of the Issuer Trust should not be a taxable event
to holders of the Capital Securities. However, if a Tax Event were to occur that
would cause the Issuer Trust to be subject to United States federal income tax
with respect to income received or accrued on the Junior Subordinated
Debentures, a distribution of the Junior Subordinated Debentures by the Issuer
Trust could be a taxable event to the Issuer Trust and the holders of the
Capital
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<PAGE> 14
Securities. See "Certain Federal Income Tax Consequences--Distribution of Junior
Subordinated Debentures to Securityholders".
SHORTENING OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES
Upon the occurrence of a Tax Event or a Capital Treatment Event, the
Corporation in certain circumstances will have the right to shorten the maturity
of the Junior Subordinated Debentures to a date not earlier than ____________
and thereby to cause the Capital Securities to be redeemed on such earlier date.
See "Description of Junior Subordinated Debentures--Conditional Right to Shorten
Maturity or Redeem upon a Tax Event or Capital Treatment Event".
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 Trust occurs. Accordingly, the
Capital Securities or the Junior Subordinated Debentures that a holder of
Capital Securities may receive on liquidation of the Issuer Trust may trade at a
discount to the price that the investor paid to purchase the Capital Securities
offered hereby. 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 Issuer Trust) may be more
volatile than the market prices of other securities on which original issue
discount accrues that are not subject to such optional deferrals.
See "Description of Junior Subordinated Debentures".
RIGHTS UNDER THE GUARANTEE; DIRECT ACTION
Bankers Trust Company will act as the Guarantee Trustee for purposes of
compliance with the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), 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 Trust: (i) any
accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Issuer Trust 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 Trust has funds
on hand available therefor at such time; and (iii) upon a voluntary or
involuntary termination, winding-up or liquidation of the Issuer Trust (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 Trust has funds on hand available therefor at such time, and (b) the
amount of assets of the Issuer Trust remaining available for distribution to
holders of the Capital Securities on liquidation of the Issuer Trust. The
Guarantee is subordinated as described under "--Ranking of Subordinated
Obligations under the Guarantee and the Junior Subordinated Debentures". The
Guarantee will be qualified as an indenture under the Trust Indenture Act.
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. Notwithstanding the
foregoing, any holder of the Capital Securities may institute a legal
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<PAGE> 15
proceeding directly against the Corporation to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer Trust,
the Guarantee Trustee or any other person or entity. If the Corporation were to
default on its obligation to pay amounts payable under the Junior Subordinated
Debentures, the Issuer Trust 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 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 Trust'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 all 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 Trust will not be
classified for United States federal income tax purposes as an association
subject to taxation as a corporation or will be classified as a grantor trust.
See "Description of Capital Securities--Voting Rights; Amendment of Trust
Agreement" and "--Removal of Issuer Trustees".
TRADING CHARACTERISTICS OF CAPITAL SECURITIES
The Capital Securities have not been listed on a national securities
exchange or the NASDAQ Stock Market. The absence of such a listing for the
Capital Securities could adversely affect the liquidity of the Capital
Securities.
The Capital Securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder of Capital Securities that disposes of its
Capital Securities between record dates for payments of Distributions (and
consequently does not receive a Distribution from the Issuer Trust for the
period prior to such disposition) will nevertheless be required to include
accrued but unpaid interest on the Junior Subordinated Debentures through the
date of disposition in income as ordinary income and to add such amount to its
adjusted tax basis in the Capital Securities disposed of. Such a holder will
recognize a capital loss to the extent the amount realized on the sale (less any
amount that is treated as a payment of accrued interest required to be included
in income) is less than its adjusted tax basis. Subject to certain limited
exceptions, capital losses cannot
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<PAGE> 16
be applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Sale or Redemption of
Capital Securities".
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
Prospective investors should be aware that Enron Corporation has filed a
petition with the United States Tax Court challenging the proposed disallowance
by the Internal Revenue Service of the deduction of interest expense on
securities issued by Enron Corporation in 1993 and 1994 that are similar to,
although different in a number of respects from, the Junior Subordinated
Debentures. It is possible that a decision in that case could give rise to a Tax
Event, which would permit the Corporation to cause a redemption of the Capital
Securities, as described more fully under "Description of Capital Securities --
Redemption". Prospective investors should also be aware that legislation has
been proposed by the Clinton Administration in the past that, if enacted, would
have denied an interest deduction to issuers of instruments such as the Junior
Subordinated Debentures. No such legislation is currently pending. There can be
no assurance, however, that similar legislation will not ultimately be enacted
into law, or that other developments will not occur on or after the date hereof
that would adversely affect the tax treatment of the Junior Subordinated
Debentures or the Corporation. Such changes could also give rise to a Tax Event,
which may permit the Corporation to cause a redemption of the Capital
Securities.
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<PAGE> 17
KEYCORP
OVERVIEW
The Corporation, incorporated in 1958 under the laws of the State of Ohio
and registered under the BHCA, is headquartered in Cleveland, Ohio, and is
engaged primarily in the business of commercial and retail banking. At March 31,
1998, it was one of the largest bank holding companies in the United States with
consolidated total assets of approximately $73.2 billion. Its subsidiaries
provide a wide range of banking, equipment leasing, fiduciary and other
financial services to its corporate, individual and institutional customers
through four lines of business: Key Corporate Capital, Key Consumer Finance, Key
Community Bank and Key Capital Partners. These services are provided across much
of the country through subsidiaries operating more than 1,000 full-service
banking offices in 13 states (Alaska, Colorado, Idaho, Indiana, Maine, Michigan,
New Hampshire, New York, Ohio, Oregon, Utah, Vermont and Washington), a 24-hour
telephone banking call center services group and more than 2,200 ATMs as of
March 31, 1998. At March 31, 1998, KeyCorp and its subsidiaries had
approximately 24,650 full-time equivalent employees.
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. The principal
executive office of the Corporation is 127 Public Square, Cleveland, Ohio
44114-1306, and its telephone number is (216) 689-6300.
SUBSIDIARIES
The Corporation's largest banking subsidiaries are KeyBank National
Association, headquartered in Cleveland, Ohio (the 14th largest bank in the
United States at December 31, 1997, based on asset size), with $69.2 billion in
total assets and 1,000 full-service banking offices in Alaska, Colorado, Idaho,
Indiana, Maine, Michigan, New York, Ohio, Oregon, Utah, Vermont and Washington
at March 31, 1998; and Key Bank USA, National Association, headquartered in
Cleveland, Ohio, with total assets of approximately $3.6 billion at March 31,
1998, which is involved in consumer loan activities. In addition, the
Corporation operates a bank subsidiary in New Hampshire.
In addition to the customary banking services of accepting deposits and
making loans, the Corporation's bank and trust company subsidiaries provide
specialized services, including personal and corporate trust services, personal
financial services, customer access to mutual funds, cash management services,
investment banking and capital markets products, 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 (i.e., multiemployer trust funds
providing pension, vacation, or other benefits to employees that are established
in accordance with applicable law), foundations and endowments, and high net
worth individuals. In addition, investment management subsidiaries serve as
investment advisers to the proprietary mutual funds offered by other affiliates.
A description of each of Key's major lines of business as of March 31,
1998, is as follows:
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<PAGE> 18
Key Corporate Capital. Key offers a complete range of financing,
transaction processing and financial advisory services to corporations
throughout the country through its Corporate Capital unit. It also operates one
of the largest bank-affiliated equipment leasing companies with operations
conducted both domestically and throughout Europe and Asia. Corporate Capital's
business units are organized around specialized industry client segments,
inclusive of healthcare, media/telecommunications, structured finance and
commercial real estate. In serving these targeted segments, Key Corporate
Capital provides a number of specialized services including international
banking, corporate finance advisory services, investment banking and capital
markets products, and 401(k) and trust custody products. Key is also one of the
leading cash management providers in the country.
Key Consumer Finance. Key Consumer Finance is responsible for Key's
indirect, non-branch-based consumer loan and deposit products. This line of
business specializes in credit cards, automobile loans and leases, marine and
recreational vehicle loans, education loans, home equity loans and branchless
deposit-generating activities. As of December 31, 1997, based on the volume of
loans generated, Key Consumer Finance was the third largest education lender in
the nation, was one of the leading providers of financing for consumer purchases
of marine and recreational vehicles and ranked in the top ten in retail
automobile financing.
Key Community Bank. Key Community Bank is responsible for delivering a
complete line of branch-based retail financial products and services to small
businesses and consumers, addressing the more complex, diverse needs of the
affluent client segment and maximizing relationship management in the commercial
banking and public sector businesses. The delivery of these products and
services is accomplished through 1,006 KeyCenters, a 24-hour telephone banking
call center services group, more than 2,200 ATMs that access 14 different
networks and comprise one of the largest ATM networks in the United States, and
a core team of relationship management professionals.
Key Capital Partners. Key Capital Partners was formed at the end of 1997
to provide clients with asset management, investment banking and capital
markets, insurance and brokerage expertise and is expected to play a major role
in developing fee income through its broad range of investment choices and
customized products. Leveraging Key's corporate and community banking
distribution channels and client relationships will be an essential factor in
ensuring Key Capital Partner's future growth and success.
The Corporation provides other financial services both inside 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. Key is also an equity
participant in joint ventures with a number of other unaffiliated companies in
Electronic Payment Services, Inc., which operates ATMs throughout the country,
Integrion Financial Network, L.L.C., which is building a platform for electronic
banking, and Key Merchant Services, L.L.C., which provides merchant services to
businesses.
RECENT DEVELOPMENTS
On June 15, 1998, the Corporation announced that it had entered into a
merger agreement to acquire McDonald, a full-service investment banking and
securities brokerage firm based in Cleveland, Ohio. Under the terms of the
merger agreement, subject to adjustment under certain circumstances, the
Corporation will issue, in exchange for each McDonald common share, the
Corporation's common shares in a number equal to $35.00 divided by the average
closing price per common share of the Corporation over a 10-day period ending
shortly prior to the closing. Based on 18,665,000
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<PAGE> 19
shares of McDonald common stock outstanding as of June 15, 1998 and a $36.875
per share closing price of the Corporation's common shares on June 12, 1998, the
Corporation would be required to issue approximately 17,716,000 common shares as
consideration to McDonald shareholders. The transaction, which remains subject
to the approval of McDonald shareholders, as well as regulatory approval and
other conditions to closing, is currently expected to close during the fourth
quarter of 1998.
YEAR 2000
The Year 2000 issue pertains to the potential problems that may arise by
having in place computer systems that were originally programmed to identify the
year using two digits rather than four digits. Accordingly, these systems will
not be able to distinguish the year 1900 from 2000. Unless hardware, system
software and applications are corrected to be Year 2000 compliant, computers and
the devices they control could generate miscalculations and create operational
problems. In addition, financial institutions may experience increases in
problem loans and credit losses in the event that borrowers fail to properly
respond to this issue. Various systems could be affected ranging from complex
computer systems to telephone systems, ATMs and elevators.
To address this issue, in 1995, Key developed a comprehensive plan,
including the formation of a team consisting of internal resources and
third-party experts. Key prioritized the various systems (including those
maintained by its business partners and suppliers) that could be affected by
the Year 2000 issue, and efforts to ensure compliance of core systems deemed
critical to Key have been accelerated. The cost of the project (currently
estimated to be $40 million) and timing of its implementation are based on
management's best estimates, which were derived using numerous assumptions
about future events, including the continued availability of certain resources
and other factors. Key is monitoring the efforts of its business partners and
suppliers involved in addressing the potential problem and expects to complete
substantially all of the necessary work by the end of 1998, allowing 1999 as a
year of final testing and refinement. As of March 31, 1998, compliance efforts
had been completed for approximately 29% of the core systems identified. Key
believes the efforts described above will ensure its systems are adequately
prepared for the Year 2000. See "Cautionary Statement Regarding Forward-Looking
Information".
SUPERVISION AND REGULATION
As a bank holding company, the Corporation is subject to regulation,
supervision and examination of the Federal Reserve under the BHCA. 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, 1997
incorporated by reference in the Registration Statement of which this Prospectus
forms a part. 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, the Office of the
Comptroller of the Currency, which is the principal regulator of the
Corporation's bank subsidiaries, and the Federal Deposit Insurance Corporation
(the "FDIC"), which insures (up to applicable limits) the deposits of all of the
Corporation's full-service banking subsidiaries. In addition, there are numerous
governmental requirements and regulations which affect the activities of the
Corporation.
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<PAGE> 20
Depository institutions such as the bank subsidiaries of the Corporation
are also affected by various federal laws, including those relating to consumer
protection and similar matters. The Corporation also has other financial
services subsidiaries that are subject to regulation, supervision and
examination by the Federal Reserve, as well as other applicable state and
federal regulatory agencies. For example, the Corporation's brokerage and asset
management subsidiaries are subject to supervision and regulation by the
Commission, the National Association of Securities Dealers, Inc. and state
securities regulators, and the Corporation's insurance subsidiaries are subject
to regulation by the insurance regulatory authorities of the various states.
Other nonbank subsidiaries of the Corporation are subject to other laws and
regulations of both the federal government and the various states in which they
are authorized to do business.
KEYCORP CAPITAL I
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to (i) the Trust Agreement between the Corporation, as Depositor,
Bankers Trust (Delaware), as Delaware Trustee, and the Administrative Trustee
named therein and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on June 2, 1998. The Issuer Trust'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 Corporation, as the holder
of a majority of the Common Securities, will act as the "Administrative
Trustees". The Administrative Trustees will be selected by the holders of the
Common Securities. See "Description of Capital Securities--Miscellaneous". The
Issuer Trust 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 only those
other activities necessary or incidental thereto (such as registering the
transfer of the Trust Securities). Accordingly, the Junior Subordinated
Debentures will be the sole assets of the Issuer Trust, and payments under the
Junior Subordinated Debentures will be the sole source of revenue of the Issuer
Trust.
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 Capital Securities--Subordination of
Common Securities". The Corporation will acquire Common Securities in an
aggregate liquidation amount equal to at least 3% of the total capital of the
Issuer Trust. The Issuer Trust has a term of 31 years, but may dissolve earlier
as provided in the Trust Agreement. The principal executive office of the Issuer
Trust is 127 Public Square, Cleveland, Ohio 44144-1306, Attention: Office of the
Secretary, and its telephone number is (216) 689-6300.
It is anticipated that the Issuer Trust will not be subject to the
reporting requirements of the Exchange Act.
SELECTED CONSOLIDATED KEYCORP FINANCIAL DATA
The following table presents summary consolidated financial data for each
of the years in the five-year period ended December 31, 1997, which has been
derived from, and should be read in conjunction with, the audited
19
<PAGE> 21
consolidated financial statements, notes thereto and other information
pertaining to the Corporation included in the Incorporated Documents
incorporated by reference in this Prospectus. This summary is qualified in its
entirety by the detailed information included therein. See "Incorporation of
Certain Documents by Reference". The data presented for the three-month periods
ended March 31, 1998 and March 31, 1997, 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 Key has completed in the time periods
presented. All relevant common share amounts and per common share data have been
adjusted for the two-for-one stock split announced on January 15, 1998, effected
by means of a 100% stock dividend payable March 6, 1998, to shareholders of
record as of February 18, 1998.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Interest income $1,327 $1,255 $ 5,262 $ 4,951 $ 5,121 $ 4,490 $ 4,214
Interest expense 663 566 2,468 2,234 2,485 1,797 1,535
Net interest income 664 689 2,794 2,717 2,636 2,693 2,679
Provision for loan losses 77 67 320 197 100 125 212
Noninterest income 356 259 1,306 1,087 933 883 1,002
Noninterest expense 600 575 2,435 2,464 2,312 2,168 2,385
Income before income taxes
and extraordinary item 343 306 1,345 1,143 1,157 1,283 1,084
Income before extraordinary item 235 212 919 783 789 853 710
Net income 235 212 919 783 825 853 710
Net income applicable to
Common Shares 235 212 919 775 809 837 692
PER COMMON SHARE
Income before extraordinary item $ .53 $ .48 $ 2.09 $ 1.69 $ 1.65 $ 1.72 $ 1.44
Net income .53 .48 2.09 1.69 1.73 1.72 1.44
Net income-assuming dilution .53 .47 2.07 1.67 1.71 1.70 1.43
Cash dividends .235 .21 .84 .76 .72 .64 .56
Book value at period end 12.15 10.64 11.83 10.92 10.68 9.44 8.76
Weighted average Common
Shares (000) 438,589 443,340 439,042 459,810 469,574 486,134 479,550
Weighted average Common
Shares and potential
Common Shares(000) 444,836 448,558 444,544 464,282 472,882 490,932 483,158
AT PERIOD END
Loans $54,900 $49,724 $53,380 $49,235 $48,332 $46,579 $41,396
</TABLE>
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<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Earning assets 64,368 59,825 64,246 59,260 58,762 60,047 54,353
Total assets 73,198 67,893 73,699 67,621 66,339 66,801 59,634
Deposits 41,661 44,239 45,073 45,317 47,282 48,564 46,499
Long-term debt 9,041 4,774 7,446 4,213 4,003 3,570 1,764
Common shareholders' equity 5,338 4,674 5,181 4,881 4,993 4,530 4,225
Total shareholders' equity 5,338 4,674 5,181 4,881 5,153 4,690 4,385
PERFORMANCE RATIOS
Return on average total assets 1.32% 1.30% 1.33% 1.21% 1.24% 1.36% 1.24%
Return on average common equity 18.25 18.07 18.89 15.73 17.35 18.87 17.27
Return on average total equity 18.25 18.07 18.89 15.64 17.10 18.56 16.95
Efficiency(1) 57.39 58.92 57.50 60.84 63.03 59.39 60.50
Overhead(2) 35.36 43.71 39.64 45.46 49.66 46.14 46.85
Net interest margin(TE) 4.23 4.75 4.62 4.78 4.47 4.83 5.31
CAPITAL RATIOS AT PERIOD END
Equity to assets(3) 7.98% 7.62% 7.71% 7.96% 7.77% 7.03% 7.37%
Tangible equity to tangible assets(3) 6.51 6.32 6.21 6.63 6.25 6.19 6.51
Tier 1 risk-adjusted capital(4) 6.81 7.47 6.65 7.98 7.53 8.48 8.73
Total risk-adjusted capital(5) 11.38 12.31 10.83 13.01 10.85 11.62 12.22
Leverage(6) 6.61 6.68 6.40 6.93 6.20 6.63 6.72
ASSET QUALITY DATA
Nonperforming loans $373 $371 $381 $349 $333 $256 $336
Nonperforming assets 421 425 431 400 379 340 500
Allowance for loan losses 900 870 900 870 876 830 803
Net loan charge-offs 77 67 293 195 99 109 213
Nonperforming loans to
period end loans .68% .75% .71% .71% .69% .55% .81%
Nonperforming assets to
period end loans plus OREO
and other nonperforming assets .77 .85 .81 .81 .78 .73 1.20
Allowance for loan losses
to nonperforming loans 241.29 234.50 236.22 249.28 263.15 324.27 238.69
Allowance for loan losses
to period end loans 1.64 1.75 1.69 1.77 1.81 1.78 1.94
Net loan charge-offs to
average loans .58 .55 .57 .40 .21 .25 .54
RATIO OF EARNINGS TO FIXED CHARGES(7)
Excluding deposit interest 2.02x 2.31x 2.24x 2.41x 2.42x 3.50x 4.15x
Including deposit interest 1.50x 1.52x 1.53x 1.50x 1.46x 1.70x 1.69x
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS(7)
Excluding deposit interest 2.02x 2.31x 2.24x 2.38x 2.35x 3.34x 3.83x
Including deposit interest 1.50x 1.52x 1.53x 1.49x 1.45x 1.68x 1.66x
</TABLE>
(1) Calculated as noninterest expense (excluding certain nonrecurring charges
and distributions on capital securities) divided by taxable-equivalent net
interest income plus noninterest income (excluding net securities
transactions and gains on bank and branch divestitures).
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<PAGE> 23
(2) Calculated as noninterest expense (excluding certain nonrecurring charges
and distributions on capital securities) less noninterest income
(excluding net securities transactions and gains on bank and branch
divestitures) divided by taxable-equivalent net interest income.
(3) Excluding certain capital securities receiving Tier 1 treatment, these
ratios at March 31, 1998, are 7.29% and 5.81%, respectively; at March 31,
1997, are 6.88% and 5.58%, respectively; at December 31, 1997, are 7.03%
and 5.52%, respectively; and at December 31, 1996, are 7.22% and 5.88%,
respectively. Capital Securities were not present prior to the fourth
quarter of 1996.
(4) Key's Tier 1 capital consists of common shareholders' equity (excluding
net unrealized gains or losses on securities, except for net unrealized
losses on marketable equity securities), perpetual preferred stock and
capital securities; less goodwill and other non-qualifying intangible
assets.
(5) Key's total capital consists of Tier 1 capital, subordinated debt,
qualifying preferred stock and the qualifying portion of the allowance for
loan losses. At least half of a bank holding company's total capital is to
be comprised of Tier 1 capital.
(6) The leverage ratio is defined as Tier 1 capital as a percentage of average
quarterly total assets, less goodwill and other non-qualifying intangible
assets. Guidelines of the Federal Reserve provide for a minimum leverage
ratio of 3% for bank holding companies that meet certain specified
criteria, including assignment of the highest regulatory rating. All other
bank holding companies are 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), distributions on capital securities and the proportion deemed
representative of the interest factor of rental expense, net of income
from subleases.
TE=Taxable Equivalent
USE OF PROCEEDS
All of the proceeds to the Issuer Trust from the sale of the Capital
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The net proceeds to the Corporation from the sale of the Junior
Subordinated Debentures will be used by the Corporation for general corporate
purposes, which may include investments in, or extensions of credit to, the
Corporation's subsidiaries, repurchases or redemptions of capital stock of the
Corporation and financing possible future acquisitions including, without
limitation, the acquisition of banking and nonbanking companies and financial
assets and liabilities. Specific allocations of the proceeds to such purposes
have not been made, although management has determined that funds should be
borrowed at this time. The precise amount and timing of such investments in, or
extensions of credit to, subsidiaries will depend on the subsidiaries' funding
requirements and the availability of other funds. Pending such applications,
such net proceeds may be temporarily invested or applied to the reduction of
short-term indebtedness.
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Issuer Trust
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
mandatorily redeemable preferred capital securities of subsidiary trusts holding
solely 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.
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<PAGE> 24
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation as of March 31, 1998, and as adjusted to give effect to the
consummation of the offering of the Capital Securities. The following data
should be read in conjunction with the consolidated financial statements of the
Corporation, including the notes thereto, incorporated herein by reference.
<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------
OUTSTANDING ADJUSTED
(DOLLARS IN MILLIONS)
<S> <C> <C>
LONG-TERM DEBT
KeyCorp
Senior medium-term notes due through 2005(1) $ 469 $ 469
Subordinated medium-term notes due through 2005(2) 182 182
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 42 42
All other long-term debt 14 14
------ ------
Total KeyCorp 1,556 1,556
Subsidiaries
Senior medium-term notes due through 2002(3) 4,369 4,369
Senior euro medium-term bank notes due through 2007(4) 864 864
6.95% Subordinated notes due 2028 300 300
7.25% Subordinated notes due 2005 200 200
7.85% Subordinated notes due 2002 200 200
6.75% Subordinated notes due 2003 200 200
7.50% Subordinated notes due 2008 165 165
7.125% Subordinated notes due 2006 250 250
7.55% Subordinated notes due 2006 75 75
7.375% Subordinated notes due 2008 70 70
Lease financing debt due through 2003(5) 496 496
Federal Home Loan Bank Advances due through 2014 264 264
All other long-term debt 32 32
------ ------
Total subsidiaries 7,485 7,485
------ ------
Total long-term debt 9,041 9,041
CORPORATION-OBLIGATED MANDATORILY REDEEMABLE
PREFERRED CAPITAL SECURITIES OF SUBSIDIARY TRUSTS
HOLDING SOLELY DEBENTURES OF THE CORPORATION
7.826% Capital securities due 2026(6) 350 350
8.25% Capital securities due 2026(6) 150 150
6.625% Capital securities due 2029(6) 250 250
Floating Rate Capital securities due 2028(7) -- 250
------ ------
Total capital securities 750 1,000
</TABLE>
23
<PAGE> 25
<TABLE>
<S> <C> <C>
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 491,888,780 shares 492 492
Capital surplus 1,284 1,284
Retained earnings 4,743 4,743
Loans to ESOP trustee (42) (42)
Accumulated other comprehensive income 8 8
Treasury stock, at cost (52,573,384 shares) (1,147) (1,147)
-------- --------
Total shareholders' equity 5,338 5,338
-------- --------
Total capitalization $ 15,129 $ 15,379
======== ========
</TABLE>
(1) The weighted average rate on the senior medium-term notes due through 2005
was 6.82%. These notes had a combination of both fixed and floating
interest rates.
(2) The weighted average rate on the subordinated medium-term notes due through
2005 was 6.95%. These notes had a combination of both fixed and floating
interest rates.
(3) The weighted average rate on the senior medium-term notes due through 2002
was 5.33%. These notes had a combination of both fixed and floating
interest rates.
(4) The weighted average rate on the senior euro medium-term bank notes due
through 2007 was 5.93%. These notes are obligations of KeyBank National
Association and had fixed and floating interest rates based on the
three-month London Interbank Offered Rate.
(5) The weighted average rate on the lease financing debt was 7.12% and
represented primarily nonrecourse debt collateralized by lease equipment
under operating, direct financing and sales type leases.
(6) On December 4, 1996, a subsidiary trust of the Corporation issued
$350,000,000 of capital securities that mature on December 1, 2026. On
December 30, 1996, a second subsidiary trust of the Corporation issued
$150,000,000 of capital securities that mature on December 15, 2026. On
May 30, 1997, a third subsidiary trust of the Corporation issued
$250,000,000 of Coupon Adjusted Pass-Through Securities, Series A, that
mature on June 1, 2029. Such capital securities have terms substantially
identical to the Capital Securities offered hereby and accumulate
distributions at a per annum rate of 7.826%, 8.25% and 6.625%,
respectively, of the liquidation amount of $1,000 per capital security.
(7) As described herein, the sole assets of the Issuer Trust will be
$___________ aggregate principal amount of Junior Subordinated Debentures,
issued by the Corporation to the Issuer Trust. The Junior Subordinated
Debentures will mature on June __, 2028. The Corporation owns all of the
Common Securities of the Issuer Trust. It is anticipated that the Issuer
Trust will not be subject to the reporting requirements under the Exchange
Act.
24
<PAGE> 26
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Issuer Trust will issue
the Capital Securities and the Common Securities. The Capital Securities will
represent preferred undivided beneficial interests in the assets of the Issuer
Trust and the holders thereof will be entitled to a preference in certain
circumstances with respect to Distributions and amounts payable on redemption or
liquidation over the Common Securities, as well as other rights and privileges
as described in the Trust Agreement. This summary of certain material provisions
of the Capital Securities and the Trust Agreement does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of the Trust Agreement, including the definitions therein of
certain terms, and the Trust Indenture Act. Wherever particular defined terms of
the Trust Agreement are referred to herein, such defined terms are incorporated
herein by reference. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
GENERAL
The Capital Securities will be limited to $250,000,000 aggregate
Liquidation Amount 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 Trust Securities. The Guarantee will be a
guarantee on a subordinated basis with respect to the Capital Securities but
will not guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Capital Securities when the Issuer Trust 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 Trust, and each Capital Security will be entitled to
a preference in Distributions payable at the Distribution Rate (as defined
below) applied to the Liquidation Amount of $1,000, payable semi-annually in
arrears on _______ and ___________ of each year (each a "Distribution Date"), to
the holders of the Capital Securities at the close of business on the ______ or
__________, 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 _______, 1998. 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. The period beginning
on, and including _______, 1998, and ending on, but excluding, the next
succeeding Distribution Date is herein called a "Distribution Period".
"Business Day" means any day on which (a) commercial banks and foreign
exchange markets are open for business (including dealings in foreign exchange
and foreign currency deposits) in New York and London and, for purposes of the
final paragraph of "--Payments and Paying Agency" only, in the relevant place of
payment, and (b) the Corporate Trust Offices of the Property Trustee, the
Debenture Trustee and the Guarantee Trustee a re open for business.
Distribution Rate. The Distribution Rate in respect of the Capital
Securities will be a floating rate per annum determined by reference to the
three-month LIBOR, determined as described below, plus a margin of 0.__%. All
results of the calculations set forth under this heading will be rounded upwards
to the nearest 0.00001%.
25
<PAGE> 27
(i) At approximately 11:00 a.m. (London time) on each "Determination
Date," which shall be the second day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency deposits)
in London (or, for purposes of paragraph (iii)(B) below, New York) prior to the
commencement of the Distribution Period for which such rate will apply, Goldman,
Sachs & Co. or its successor in this capacity (the "Calculation Agent") will
calculate the Distribution Rate for such Distribution Period as, subject to the
provisions described below, the rate per annum equal to 0.__% above the rate
appearing on the Dow Jones Telerate Page 3750 (or such other page as may replace
that page on the Dow Jones Telerate Service) for three-month U.S. dollar
deposits in the London interbank market on such Determination Date.
(ii) If on any Determination Date an appropriate rate cannot be determined
from the Dow Jones Telerate Service, the Distribution Rate for the next
Distribution Period will be, subject to the provisions described below, the rate
per annum that the Calculation Agent certifies to be 0.__% per annum above the
arithmetic mean of the offered quotations, as communicated to and at the request
of the Calculation Agent by not less than two major banks in London selected by
the Calculation Agent (the "Reference Banks," which expression will include any
successors nominated by the Calculation Agent), to leading banks in London by
the principal London offices of the Reference Banks for three-month U.S. dollar
deposits in the London interbank market as at 11:00 a.m. (London time) on such
Determination Date.
(iii)If on any Determination Date fewer than two of such offered rates are
available, the Distribution Rate for the next Distribution Period will be the
higher of:
(A) the Distribution Rate in effect for the last preceding
Distribution Period to which (i) or (ii) above applied; and
(B) the Reserve Distribution Rate. The "Reserve Distribution Rate"
will be the rate per annum which the Calculation Agent determines
to be 0.__% per annum above either (I) the arithmetic mean of the
U.S. dollar offered rates which New York City banks selected by
the Calculation Agent are or were quoting, on the relevant
Determination Date, for three-month deposits to the Reference
Banks or those of them (being at least two in number) to which
such quotations are or were, in the opinion of the Calculation
Agent, being so made, or (II) in the event that the Calculation
Agent can determine no such arithmetic mean, the arithmetic mean
of the U.S. dollar offered rates which New York City banks
selected by the Calculation Agent are or were quoting on such
Determination Date to leading European banks for a period of
three months; provided, however, that if the banks selected as
aforesaid by the Calculation Agent are not quoting as mentioned
above, the Distribution Rate will be the Distribution Rate
specified in (A) above.
Determination of Distribution Rate and Calculation of Distribution Amount.
The Calculation Agent shall, as soon as practicable after 11:00 a.m. (London
time) on each Determination Date, determine the Distribution Rate and calculate
the amount of Distributions payable in respect of the following Distribution
Period (the "Distribution Amount"). The Distribution Amount shall be calculated
by (1) applying the Distribution Rate to the Liquidation Amount of each Capital
Security outstanding at the commencement of the Distribution Period, multiplying
each such amount by the actual number of days in such Distribution Period (which
actual number of days shall include the first day but exclude the last day of
such Distribution Period) divided by 360 and (2) rounding such quotient upwards
to the nearest cent (half a cent being rounded upwards). The determination of
the Distribution Rate and the Distribution Amount by the Calculation Agent will
(absent manifest error) be final and binding on all parties.
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<PAGE> 28
Notification of Distribution Rate, Distribution Amount and Distribution
Date. The Calculation Agent will notify the Property Trustee, each Paying Agent
appointed by the Issuer Trust and the Holders of the Distribution Rate, the
Distribution Amount in respect of each Capital Security and the Distribution
Date for each Distribution Period, in each case as soon as possible after the
determination thereof but in no event later than the second Business Day of the
relevant Distribution Period. The Distribution Amount and Distribution Date may
subsequently be amended without notice in the event of an extension or
shortening of such Distribution Period.
Calculation Agent. So long as any of the Capital Securities remain
outstanding, there will at all times be a Calculation Agent. If the Calculation
Agent is unable or unwilling to continue to act as the Calculation Agent or the
Calculation Agent fails duly to establish the Distribution Rate for any
Distribution Period, the Issuer Trust will appoint the London office of some
other leading bank engaged in the London interbank market to act in its place.
The Calculation Agent may not resign its duties without a successor having so
been appointed.
Certificates to be Final. All certificates, communications, opinions,
determinations, calculations, quotations and decisions given, expressed, made or
obtained for the purposes of the provisions relating to the payment and
calculation of interest on the Capital Securities, whether by the Reference
Banks (or any of them) or the Calculation Agent, will (absent manifest error) be
binding on the Issuer Trust, the Corporation, the Calculation Agent and all of
the holders of the Capital Securities, and no liability will (absent manifest
error) attach to the Calculation Agent in connection with the performance by it
of its duties.
Deferral of Distributions. So long as no Debenture Event of Default has
occurred and is continuing, the Corpora tion 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 Trust during any such Extension
Period. Distributions to which holders of the Capital Securities are entitled
will accumulate additional Distributions thereon at the Distribution Rate,
compounded semi-annually from the relevant payment date for such Distributions,
computed as described above under "--Determination of Distribution Rate and
Calculation of Distribution Amount". 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 that rank pari passu in all
respects with or junior in interest to the Junior Subordinated Debentures,
including, without limitation, the Corporation's 7.826% Junior Subordinated
Debentures, the Corporation's 8.25% Junior Subordinated Debentures and the
Corporation's CAPS Debentures (other than (a) repur chases, 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's shareholders' rights plan (or
any successor thereto), or the issuance of rights, stock or other property under
any such rights plan, or the
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<PAGE> 29
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 Trust available for distribution to holders of
the Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Issuer Trust 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 Trust 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 Trust has funds
legally available for the payment of such Distributions and cash sufficient to
make such payments) is guaranteed by the Corporation on a limited basis 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 ___________, 2008, 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 Distributions to but excluding the
date fixed for redemption, if redeemed during the 12-month period beginning
___________:
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<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- -----
<S> <C> <C>
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
and at 100% on or after ___________, 2018.
</TABLE>
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 ___________, 200_, together with the present values of scheduled
payments of interest from the Redemption Date to ___________, 200_ (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
___________, 1998 or (ii) 0.50% if such Redemption Date occurs after
___________, 1998.
"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 ___________, 200_, the two
most closely corresponding United
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<PAGE> 31
States Treasury securities shall be used as the Comparable Treasury Issue, and
the Treasury Rate shall be interpolated or extrapolated on a straight-line
basis, rounding to the nearest month using such securities.
"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 Trust, 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 Goldman, Sachs & Co. 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 Corporation and the Issuer Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
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 (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action")) or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Corporation or the Issuer Trust and whether or not
subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the Issue Date, there is more than an insubstantial risk that:
(i) the Issuer Trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the 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
Trust is, or will be within 90 days of the date of such opinion, subject to more
than a de minimis amount of other taxes, duties or other
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<PAGE> 32
governmental charges (each of the circumstances referred to in clauses (i), (ii)
and (iii) being referred to herein as an "Adverse Tax Consequence"). See
"Certain Federal Income Tax Consequences--Possible Tax Law Changes".
"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 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 Trust 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 Trust on the outstanding Capital Securities and Common Securities of
the Issuer Trust will not be reduced as a result of any additional taxes, duties
and other governmental charges to which the Issuer Trust 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 Trust has funds on hand
available for the payment of such Redemption Price. See also "--Subordination of
Common Securities".
If the Property Trustee 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
beneficial interests in the Capital Securities. See "--Book Entry Issuance". If
the Capital Securities are no longer 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
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<PAGE> 33
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 Trust 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 Trust 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.
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 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, by such method as the Property
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of portions (equal to $_____ or an integral multiple of $_____ in
excess thereof) of the Liquidation Amount of Capital Securities of a
denomination larger than $_____. 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 registered address. 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 Trust 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;
provided, however, that 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
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<PAGE> 34
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 Corporation as holder of the Common Securities
will be deemed to have waived any right to act with respect to any such Event of
Default under the 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 any 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 amount payable on the Capital Securities in the event of any
liquidation of the Issuer Trust 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.
The Corporation, as Depositor, has the right at any time to dissolve the
Issuer Trust and, after satisfaction of liabilities to creditors of the Issuer
Trust 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 Trust. 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 dissolve the Issuer
Trust without having the prior approval of the Federal Reserve to do so, if then
required under applicable Federal Reserve capital guidelines or policies.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the first
to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Corporation as 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 Corporation, as Depositor, has given written direction to the
Property Trustee to dissolve the Issuer Trust (which direction, subject to the
foregoing restrictions, is optional and wholly within the discretion of the
Corporation); (iii) redemption of all of the Capital Securities as described
under "--Redemption"; or (iv) the entry of an order for the dissolution of the
Issuer Trust by a court of competent jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i), (ii)
or (iv) above, the Issuer Trust 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 Trust 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 Trust available for
distribution to holders, after satisfaction of liabilities to creditors of the
Issuer Trust as provided by applicable law, an amount equal to, in the case of
holders of Capital Securities, the aggregate of the Liquidation Amount plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Distribution can be
paid only in part because the Issuer Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Issuer Trust on its Capital Securities shall be paid on a pro
rata basis. Notwithstanding the foregoing sentence, the holder(s) of the
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<PAGE> 35
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 Trust 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 dissolution and liquidation of the Issuer
Trust 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 Trust, may trade at a discount to the
price that the investor paid to purchase the Capital Securities offered hereby.
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 Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in the 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
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<PAGE> 36
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
Administrative Trustees, unless such Event of Default has been cured or waived.
The Corporation, as Depositor, and the Administrative Trustees are required to
file annually with the Property Trustee a certificate as to whether or not they
are in compliance with all the conditions and covenants applicable to them under
the 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
Unless a Debenture Event of Default has occurred and is continuing, an
Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Corporation, as the holder of the
Common Securities, and the Administrative Trustees shall have the power to
appoint one or more persons either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such person or persons
in such capacity any property, title, right or power deemed necessary or
desirable, subject to the provisions of the applicable Trust Agreement. In case
a Debenture Event of Default has occurred and is continuing, the Property
Trustee alone shall have the power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
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Any entity into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Issuer Trustee is a party, or any
entity succeeding to all or substantially all the corporate trust business of
such Issuer Trustee, will be the successor of such Issuer Trustee under the
Trust Agreement, provided such entity is otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER TRUST
The Issuer Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust 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 Trust with respect to the Capital Securities or (b) substitutes for the
Capital Securities other securities having substantially the same terms as the
Capital Securities (the "Successor Securities") so long as the Successor
Securities 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 Trust; (vi) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Issuer Trust 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 Trust 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 Trust 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 Trust 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.
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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 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
Trust 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
Trust 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
such 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 Issuer Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the Issuer Trustees
in accordance with such amendment will not affect the Issuer Trust'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 Trust'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
Trust, the Issuer Trustees 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 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
Trust 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.
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<PAGE> 39
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.
BOOK ENTRY ISSUANCE
DTC will act as securities depositary for all of the Capital Securities.
The Capital Securities will be issued initially as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates will be issued for the Capital Securities,
representing in the aggregate the total number of Capital Securities, and will
be deposited with DTC.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain custodial relationships with Direct Participants, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of Capital Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
each Capital Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Capital Securities.
Transfers of ownership interests in the Capital Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Capital Securities, except in the event that use of
the book-entry system for the Capital Securities of the Trust is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Capital
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Capital Securities are credited, which may or may not be
the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
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<PAGE> 40
Redemption notices shall be sent to Cede & Co. as the registered holder of
the Capital Securities. If less than all of the Capital Securities are being
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Capital Securities is limited to the
holders of record of the Capital Securities, in those instances in which a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Capital Securities. Under its usual procedures, DTC would mail an omnibus
proxy (the "Omnibus Proxy") to the Property Trustee as soon as possible after
the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts such Capital Securities
are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Distribution payments on the Capital Securities will be made by the
Property Trustee to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records, unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC, the
Property Trustee, the Issuer Trust or the Corporation, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of
Distributions to DTC is the responsibility of the Property Trustee, disbursement
of such payments to Direct Participants is the responsibility of DTC, and
disbursements of such payments to the Beneficial Owners is the responsibility of
Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Capital Securities at any time by giving reasonable notice
to the Property Trustee and the Corporation. In the event that a successor
securities depositary is not obtained, definitive Capital Securities
certificates representing such Capital Securities are required to be printed and
delivered. The Corporation, at its option, may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary). After a
Debenture Event of Default, the holders of a majority in liquidation preference
of Capital Securities may determine to discontinue the system of book-entry
transfers through DTC. In any such event, definitive certificates for the
Capital Securities will be printed and delivered. Except as provided herein, a
Beneficial Owner of an interest in a global Capital Securities certificate will
not be entitled to receive physical delivery of Capital Securities. Accordingly,
each Beneficial Owner must rely on the procedures of DTC to exercise any rights
under the Capital Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuer Trust or the Corporation believe
to be accurate, but the Issuer Trust and the Corporation assume no
responsibility for the accuracy thereof. None of the Issuer Trustees, the Issuer
Trust or the Corporation has any responsibility for the performance by DTC or
its Participants of their respective obligations as described herein or under
the rules and procedures governing their respective operations.
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 Trust'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
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<PAGE> 41
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
Administrative Trustees. The Paying Agent will be permitted to resign as Paying
Agent upon 30 days' written notice to the Property Trustee and the
Administrative Trustees. 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 Administrative Trustees) to act as Paying
Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Issuer Trust, but only upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Issuer Trust 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".
GOVERNING LAW
The Trust Agreement and the Trust Securities will be governed by and
construed in accordance with the laws of the State of Delaware.
MISCELLANEOUS
The Administrative Trustees and the Property Trustee are authorized and
directed to conduct the affairs of and to operate the Issuer Trust in such a way
that the Issuer Trust will not be deemed to be an "investment company" required
to be registered under the Investment Company Act or taxable as a corporation
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
Trust or the Trust Agreement, that the Property Trustee and the holders of
Common Securities determine in their discretion to be necessary
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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 Trust may not borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Indenture,
under which Bankers Trust Company is acting as Debenture Trustee. This summary
of certain material 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 has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
GENERAL
Concurrently with the issuance of the Capital Securities, the Issuer Trust
will invest the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in the Junior Subordinated Debentures
issued by the Corporation. The Junior Subordinated Debentures will bear
interest, accruing from the date of initial issuance, at the Interest Rate (as
defined below) applied to the principal amount thereof, payable semi-annually in
arrears on ________ and ________ of each year (each, an "Interest Payment
Date"), commencing ________ , 1998, to the person in whose name each Junior
Subordinated Debenture is registered at the close of business on the ________
and ________ next preceding such Interest Payment Date. It is anticipated that,
until the liquidation, if any, of the Issuer Trust, 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 period beginning on, and
including, _______, 1998, and ending on, but excluding, the first Interest
Payment Date and each successive period beginning on, and including, an Interest
Payment Date and ending on, but excluding, the next succeeding Interest Payment
Date is herein called an "Interest Period". The Interest Rate and the amount of
interest payable in respect of each Interest Period will be calculated by
Goldman, Sachs & Co. or its successor in this capacity, in the same manner as
the Distribution Rate and Distribution Amount in respect of each Distribution
Period, as described under "Description of Capital Securities--Distributions".
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 Interest
Rate calculated as set forth above compounded semi-annually. 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
semi-annual 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, ________, 2028. Such maturity may be shortened by the Corporation in
certain circumstances upon the occurrence of a Tax Event or a Capital Treatment
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Event as described under "--Conditional Right to Shorten Maturity or Redeem upon
a Tax Event or Capital Treatment Event".
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".
Under certain circumstances involving the dissolution of the Issuer Trust
following the occurrence of a Tax Event or a Capital Treatment Event, Junior
Subordinated Debentures may be distributed to the holders of the Trust
Securities in liquidation of the Issuer Trust. See "Description of Capital
Securities--Redemption" and "--Distribution of Junior Subordinated Debentures".
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 Interest Rate, compounded semi-annually and calculated as described under
"--General" above, 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 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, including, without limitation, the 7.826% Junior Subordinated
Debentures, the 8.25% Junior Subordinated Debentures and the CAPS 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
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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'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 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 ________, 2008, 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 Trust 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.
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 15:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
<S> <C> <C>
2008 %
2009
2010
2011
2012
2013
2014
2015
2016
2017
and at 100% on or after ________, 2018.
</TABLE>
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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 Trust is the holder of all Junior Subordinated Debentures and
(ii) the Issuer Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional sums on the Junior Subordinated Debentures such amounts as may be
required so that the Distributions payable by the Issuer Trust will not be
reduced as a result of any such additional taxes, duties or other governmental
charges. See "Description of Capital Securities--Redemption".
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
As described under "Description of Capital Securities--Liquidation
Distribution upon Termination," under certain circumstances involving the
dissolution of the Issuer Trust, Junior Subordinated Debentures may be
distributed to the holders of the Capital Securities in exchange therefor upon
liquidation of the Issuer Trust after satisfaction of liabilities to creditors
of the Issuer Trust as provided by applicable law. If distributed to holders of
Capital Securities, the Junior Subordinated Debentures will initially be issued
in the form of one or more global securities and DTC, or any successor
depositary for the Capital Securities, will act as depositary for the Junior
Subordinated Debentures. It is anticipated that the depositary arrangements for
the Junior Subordinated Debentures would be substantially identical to those in
effect for the Capital Securities. If Junior Subordinated Debentures are
distributed to the holders of Capital Securities in exchange therefor upon
liquidation of the Issuer Trust, the Corporation will use its best efforts to
include the Junior Subordinated Debentures on such stock exchanges or automated
quotation system, if any, on which the Capital Securities are then listed or
quoted. There can be no assurance as to the market price of any Junior
Subordinated Debentures that may be distributed to the holders of Capital
Securities.
CONDITIONAL RIGHT TO SHORTEN MATURITY OR REDEEM UPON A TAX EVENT OR CAPITAL
TREATMENT EVENT
If a Tax Event or a Capital Treatment Event occurs and either (i) in the
opinion of counsel to the Corporation experienced in such matters, there would
in all cases, after effecting the termination of the Issuer Trust and the
distribution of the Junior Subordinated Debentures to the holders of the Capital
Securities in exchange therefor upon liquidation of the Issuer Trust, be more
than an insubstantial risk that an Adverse Tax Consequence (as defined in "Risk
Factors--Tax Event or Capital Treatment Event Redemption") would continue to
exist, (ii) in the reasonable determination of the Corporation, there would in
all cases, after effecting the termination of the Issuer Trust and distribution
of the Junior Subordinated Debentures to the holders of the Capital Securities
in exchange therefor upon liquidation of the Issuer Trust, be 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 equivalent thereof, if applicable) or (iii) the Junior Subordinated
Debentures are not held by the Issuer Trust, then the Corporation shall have
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the right (a) to shorten the Stated Maturity of the Junior Subordinated
Debentures to the minimum extent required, but in any event to a date not
earlier than June __, 2028 (the action referred to in this clause (a) being
referred to herein as a "Maturity Advancement"), such that, in the opinion of
counsel to the Corporation experienced in such matters, after advancing the
Stated Maturity, interest paid on the Junior Subordinated Debentures will be
deductible for United States federal income tax purposes, or (b) if either (x)
in the opinion of counsel to the Corporation experienced in such matters, there
would in all cases, after affecting a Maturity Advancement, be 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 equivalent thereof, if applicable) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation, to redeem the Junior Subordinated Debentures, in whole but not in
part, at any time within 90 days following the occurrence of the Tax Event or
Capital Treatment Event at a Redemption Price equal to the Make-Whole Amount.
See "Description of Capital Securities--Liquidation Distribution upon
Termination" and "--Redemption" and "Description of Junior Subordinated
Debentures--General" and "--Redemption". See also "Certain Federal Income Tax
Consequences--Possible Tax Law Changes".
Holders of Capital Securities should consult their own tax advisors
regarding the tax consequences to them of a Maturity Advancement.
REGISTRATION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures will be represented by global
certificates registered in the name of DTC or its nominee. Beneficial interests
in the Junior Subordinated Debentures will be shown on, and transfers thereof
will be effected only through, records maintained by Participants in DTC. Except
as contemplated in this Prospectus, Junior Subordinated Debentures in
certificated form will not be issued in exchange for the global certificates.
A global security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than DTC or its nominee only if (i) DTC
notifies the Corporation that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have been
appointed, or if at any time DTC ceases to be a clearing agency registered under
the Exchange Act, at a time when DTC is required to be so registered to act as
such depositary, (ii) the Corporation in its sole discretion determines that
such global security shall be so exchangeable, or (iii) there shall have
occurred and be continuing an event of default under the Indenture with respect
to the Junior Subordinated Debentures. Any global security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for definitive
certificates registered in such names as DTC shall direct. It is expected that
such instructions will be based upon directions received by DTC from its
Participants with respect to ownership of beneficial interests in such global
security. In the event that Junior Subordinated Debentures are issued in
definitive form, such Junior Subordinated Debentures will be in denominations of
$1,000 and integral multiples thereof and may be transferred or exchanged at the
offices described below.
Payments on Junior Subordinated Debentures represented by a global
security will be made to DTC, as the depositary for the Junior Subordinated
Debentures. In the event 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
denominations of a like aggregate principal amount, at the corporate office of
the Debenture Trustee in New York, New York, or at the offices of any paying
agent or transfer agent appointed by the Corporation, provided that payment of
interest may be made at the option of the Corporation by check mailed to the
address of the persons entitled thereto or by wire transfer. In addition, if the
Junior Subordinated Debentures are issued in certificated form, the record dates
for payment of interest will be the 15th day of the last month of each
semi-annual period. For a description of DTC and
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the terms of the depositary arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "Description of
Capital Securities--Book Entry Issuance".
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, including, without limitation, the 7.826% Junior Subordinated
Debentures, the 8.25% Junior Subordinated Debentures and the CAPS 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 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 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 an "Event
of Default" under the Indenture with respect to the Junior Subordinated
Debentures of such series and (b) that the Corporation has not taken reasonable
steps to cure, (ii) if such Junior Subordinated Debentures are held by the
Issuer Trust, the Corporation 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 Trust,
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 Trust, except (a) in connection with a distribution of Junior
Subordinated Debentures to the holders of the Capital Securities in liquidation
of the Issuer Trust 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 Trust to be classified as not an association taxable as a
corporation and as a grantor trust 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 Trust 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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MODIFICATION OF INDENTURE
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. 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
(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
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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 of
Indenture". 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 Direct Action 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. 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.
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
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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 subordination terms and does not include the Junior
Subordinated Debentures, the 7.826% Junior Subordinated Debentures, the 8.25%
Junior Subordinated Debentures, the CAPS Debentures or any
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subordinated debt securities issued in the 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 (as defined below) of Senior
Subordinated Debt. As of March 31, 1998, the Corporation had approximately $1.14
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
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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 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.
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.
Bankers Trust Company, the Debenture Trustee, may serve from time to time
as trustee under other indentures or trust agreements with the Corporation or
its subsidiaries relating to other issues of their securities. In addition, the
Corporation and certain of its affiliates may have other banking relationships
with Bankers Trust Company.
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.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Corporation
concurrently with the issuance by the Issuer Trust of its Capital Securities for
the benefit of the holders from time to time of such Capital Securities. Bankers
Trust Company will act as Guarantee Trustee. This summary of certain material
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the
Guarantee. A copy of the Guarantee has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
GENERAL
The Corporation 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
Trust may have or assert other than the defense of payment. The following
payments with respect to the Capital Securities, to the extent not paid by or on
behalf of the Issuer Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accumulated and unpaid Distributions required to be paid on
such Capital Securities, to the extent that the Issuer Trust 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 Trust
has funds on hand available therefor at such time; and (iii) upon a voluntary or
involuntary termination, or liquidation of the Issuer Trust (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
Trust has funds on hand available
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therefor at such time, and (b) the amount of assets of the Issuer Trust
remaining available for distribution to holders of the Capital Securities on
liquidation of the Issuer Trust. 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 Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated and
junior basis of the Issuer Trust's obligations under the Capital Securities, but
will apply only to the extent that the Issuer Trust has funds sufficient to make
such payments, and is not a guarantee of collection.
If the Corporation does not make interest payments on the Junior
Subordinated Debentures held by the Issuer Trust, the Issuer Trust 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
Trust's obligations under the Capital Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the Issuer Trust'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
Trust or distribution to the holders of the Capital Securities of the Junior
Subordinated Debentures.
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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 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 Trust,
the Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after 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 Trust 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.
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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 will irrevocably and
unconditionally guarantee to each person or entity to whom the Issuer Trust
becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Issuer Trust, other than obligations of the Issuer Trust 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 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 Guarantee and the Junior Subordinated Debentures.
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 Trust has funds available for such payment) are
irrevocably guaranteed by the Corporation as and to the extent set forth under
"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 Trust'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 Trust 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 Trust 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.
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 Corporation will pay for all and any costs, expenses and liabilities
of the Issuer Trust except the Issuer Trust's obligations to holders of the
Trust Securities; and (iv) the Trust Agreement
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<PAGE> 56
further provides that the Issuer Trust will not engage in any activity that is
not consistent with the limited purposes of the Issuer Trust.
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 Trust
or any other person or entity. See "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 Junior Subordinated Debentures until such Senior Indebtedness has been paid
in full or any payment default thereunder has been cured or waived. See
"Description of Junior Subordinated Debentures-- Subordination".
LIMITED PURPOSE OF ISSUER TRUST
The Capital Securities represent a preferred undivided beneficial interest
in the assets of the Issuer Trust, and the Issuer Trust 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 Trust (or from the Corporation under the Guarantee)
only if and to the extent the Issuer Trust has funds available for the payment
of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary dissolution, winding up or liquidation
of the Issuer Trust, other than any such dissolution, winding up or liquidation
involving the distribution of the Junior Subordinated Debentures, after
satisfaction of liabilities to creditors of the Issuer Trust as required by
applicable law, the holders of the Capital Securities will be entitled to
receive, out of assets held by the Issuer Trust, the Liquidation Distribution in
cash. See "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 Trust (other than the Issuer
Trust'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 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.
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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 organized under the laws of the United States or any State
thereof or the District of Columbia, (iii) an estate the income of which is
subject to United States federal income tax without regard to its source or (iv)
a trust if a court within the United States is able to exercise primary
supervision over the administration of such trust and one or more United States
persons have the authority to control all substantial decisions of such trust
(collectively, 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, dealers in securities
or currencies, and traders in securities that elect to mark to market, (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 Trust. This summary is based upon the Code, Treasury
Regula tions, 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, a decision by the Tax Court in the Enron Corporation case 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 UNITED STATES 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 THE ISSUER TRUST
Under current law and assuming compliance with the terms of the Trust
Agreement and the Indenture, the Issuer Trust will not be 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
original issue discount ("OID"), paid or accrued with respect to the Junior
Subordinated Debentures whether or not cash is actually distributed to the
Securityholders. See "--Interest Income and Original Issue Discount".
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INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under Treasury Regulations applicable to debt instruments issued on or
after August 13, 1996 (the "Regulations"), a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether a debt
instrument is issued with OID. 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. 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 be treated as OID as long as the Junior
Subordinated Debentures remained outstanding. In such event, all of a
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 Securityholder'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,
corporate Securityholders will not be entitled to a dividends-received deduction
with respect to any income recognized with respect to the Capital Securities.
Subsequent uses of the term "interest" in this summary shall include
income in the form of OID.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO SECURITYHOLDERS
Under current law, a distribution by the Issuer Trust of the Junior
Subordinated Debentures as described under the caption "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
Trust, 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 Trust were to
occur because the Issuer Trust 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 Trust would be a taxable event to the Issuer Trust
and each Securityholder, and the 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 Trust. A
Securityholder will include interest in respect of Junior Subordinated
Debentures received from the Issuer Trust in the manner described above under
"--Interest Income and Original Issue Discount".
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SALES OR REDEMPTIONS OF CAPITAL SECURITIES
A Securityholder that sells Capital Securities (including a redemption for
cash) 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 tax basis in the Capital Securities generally will
be its initial purchase price, increased by OID previously includible in such
Securityholder'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 such amount realized is
characterized as a payment in respect of accrued but unpaid interest with
respect to such Securityholder's pro rata share of the 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 Subordinate 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 as OID, but may
not receive the cash related thereto. However, such Securityholder will add such
amount to its adjusted tax basis in the Capital Securities. To the extent the
selling price is less than the Securityholder's adjusted tax basis, such
Securityholder 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.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid or 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% 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 Securityholder 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 Securityholders on Form 1099 and mailed to Securityholders by January 31
following each calendar year.
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POSSIBLE TAX LAW CHANGES
Prospective investors should be aware that Enron Corporation has filed a
petition with the United States Tax Court challenging the proposed disallowance
by the Internal Revenue Service of the deduction of interest expense on
securities issued by Enron Corporation in 1993 and 1994 that are similar to,
although different in a number of respects from, the Junior Subordinated
Debentures. It is possible that a decision in that case could give rise to a Tax
Event, which would permit the Corporation to cause a redemption of the Capital
Securities, as described more fully under "Description of Capital Securities --
Redemption". Prospective investors should also be aware that legislation has
been proposed by the Clinton Administration in the past that, if enacted, would
have denied an interest deduction to issuers of instruments such as the Junior
Subordinated Debentures. No such legislation is currently pending. There can be
no assurance, however, that similar legislation will not ultimately be enacted
into law, or that other developments will not occur on or after the date hereof
that would adversely affect the tax treatment of the Junior Subordinated
Debentures or the Corporation. Such changes could also give rise to a Tax Event,
which may permit the Corporation to cause a redemption of the Capital
Securities.
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act ("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 Internal Revenue Code (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 Trust would be
deemed to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of
the Code if "plan assets" of the Plan were used to acquire an equity interest in
the Issuer Trust and no exception were applicable under the Plan Assets
Regulation. An "equity interest" is defined under the Plan Assets Regulation as
any interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features and specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Issuer Trust 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 Trust, less than 25% of the value of each class of equity
interests in the Issuer Trust were held by Plans, other employee benefit plans
not subject to ERISA or Section 4975 of the Code (such as governmental, church
and foreign plans), and entities holding assets deemed to be "plan assets" of
any Plan (collectively, "Benefit Plan Investors"). No assurance can be given
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
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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 Trust could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Capital Securities were acquired
with "plan assets" of such Plan and assets of the Issuer Trust were deemed to be
"plan assets" of Plans investing in the Issuer Trust. For example, if the
Corporation is a Party in Interest with respect to an investing Plan (either
directly or by reason of its ownership of its banking or other subsidiaries),
extensions of credit between the Corporation and the Issuer Trust (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 Trust were deemed to be "plan assets" of Plans investing in
the Issuer Trust (see above). Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company 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 Trust for purposes of applying ERISA and Section 4975 of the Code, the
Capital Securities may not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in 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 Trust 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 TRUST
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.
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VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Capital
Securities, the enforceability of the Trust Agreement and the creation of the
Issuer Trust will be passed upon by Richards, Layton & Finger, P.A., special
Delaware counsel to the Corporation and the Issuer Trust. The validity of the
Guarantee and the Junior Subordinated Debentures will be passed upon for the
Corporation by the General Counsel or Associate General Counsel of the
Corporation authorized to render such opinions ("Corporation Counsel"), and for
the Underwriters by Sullivan & Cromwell, New York, New York. Corporation Counsel
will rely upon the opinion of Sullivan & Cromwell as to matters of New York law
and upon the opinion of Richards, Layton & Finger, P.A., as to matters of
Delaware law. Sullivan & Cromwell will rely upon the opinion of Corporation
Counsel as to matters of Ohio law and upon the opinion of Richards, Layton &
Finger, P.A., as to matters of Delaware law. Sullivan & Cromwell regularly
perform legal services for the Corporation and its subsidiaries. As of the date
hereof, the General Counsel and the Associate General Counsel of the Corporation
currently authorized to render the aforementioned opinion on behalf of the
Corporation each owned approximately 53,500 and 16,000 shares, respectively, 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 Trust.
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, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference therein
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
With respect to the unaudited consolidated interim financial information
for the three-month periods ended March 31, 1998 and 1997, incorporated by
reference in this Prospectus, 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 report, included in
KeyCorp's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
and incorporated herein by reference, states that they did not audit and they do
not express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be restricted
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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UNDERWRITING
Subject to the terms and conditions of an underwriting agreement between
the Underwriters, the Issuer Trust and the Corporation (the "Underwriting
Agreement"), the Corporation and the Issuer Trust have agreed that the Issuer
Trust will sell to each of the Underwriters named below, and each of such
Underwriters has severally agreed to purchase from the Issuer Trust, the
respective number of Capital Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF CAPITAL
UNDERWRITER SECURITIES
<S> <C>
Goldman, Sachs & Co...................................
Key Capital Markets, Inc..............................
J.P. Morgan Securities Inc............................
Morgan Stanley & Co. Incorporated.....................
Salomon Brothers Inc..................................
Total......................................
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Capital Securities
offered hereby, if any are taken.
The Underwriters propose to offer the Capital Securities in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus and in part to certain securities dealers at such price less
a concession of $____ per Capital Security. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $___ per Capital Security to
certain brokers and dealers. After the Capital Securities are released for sale
to the public, the offering price and other selling terms may from time to time
be varied by the Underwriters.
In view of the fact that the proceeds from the sale of the Capital
Securities will ultimately be used to purchase the Junior Subordinated
Debentures issued by the Corporation, the Underwriting Agreement provides that
the Corporation will pay as compensation (the "Underwriters' Compensation") to
the Underwriters arranging the investment therein of such proceeds, an amount of
$____ per Capital Security for the accounts of the several Underwriters.
The Corporation and the Issuer Trust have agreed that, during a period of
45 days from the date of the Prospectus, they will not offer, sell, contract to
sell or otherwise dispose of any Capital Securities, any other beneficial
interests in the Issuer Trust, or any preferred securities or any other
securities of the Issuer Trust or the Corporation that are substantially similar
to the Capital Securities, including any guarantee of such securities, or any
securities convertible into or exchangeable for or representing the right to
receive preferred securities or any such substantially similar securities of
either the Issuer Trust or the Corporation, without the prior written consent of
the Underwriters, except for the Capital Securities offered in connection with
this offering.
The Capital Securities are a new issue of securities with no established
trading market. Each of the Underwriters, except Key Capital Markets, Inc., have
advised the Corporation and the Issuer Trust that they intend to, and by Key
Capital Markets, Inc. that it may, make a market in the Capital Securities, but
are not obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Capital Securities.
U-1
<PAGE> 64
In connection with the offering, the Underwriters may purchase and sell
the Capital Securities in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created by the Underwriters in connection with the offering.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the Capital Securities;
and short positions created by the Underwriters involve the sale by the
Underwriters of a greater number of Capital Securities than they are required to
purchase from the Corporation in the offering. The Underwriters also may impose
a penalty bid, whereby selling concessions allowed to broker-dealers in respect
of the securities sold in the offering may be reclaimed by the Underwriters if
such Capital Securities are repurchased by the Underwriters in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Capital Securities, which may be higher than the
price that might otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
in the over-the-counter market or otherwise.
The Corporation and the Issuer Trust have agreed to indemnify the several
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities under
the Securities Act.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
The offering is being conducted in accordance with Rule 2810 of the
Conduct Rules of the National Association of Securities Dealers, Inc. (the
"NASD") . Offers and sales of Capital Securities will be made only to (i)
"qualified institutional buyers", as defined in Rule 144A under the Securities
Act; (ii) institutional "accredited investors", as defined in Rule 501(a)(1)-(3)
of Regulation D under the Securities Act or (iii) individual "accredited
investors", as defined in Rule 501(a)(4)-(6) under the Securities Act, for whom
an investment in non-convertible investment grade preferred securities is
appropriate. In addition, NASD members may not confirm sales of Capital
Securities to any accounts over which they exercise a discretionary authority
without the prior specific written approval by the customer.
Key Capital Markets, Inc. is a wholly owned subsidiary of the Corporation
and an affiliate of the Issuer Trust and may be participating in the
distribution of the Capital Securities. 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 the 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.
U-2
<PAGE> 65
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE
ISSUER TRUST OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR
THE ISSUER TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
---------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Incorporation of Certain Documents by Reference.....................4
Cautionary Statement Regarding Forward-Looking
Information...................................................4
Available Information...............................................5
Summary.............................................................6
Risk Factors.......................................................10
KeyCorp............................................................16
KeyCorp Capital I..................................................19
Selected Consolidated KeyCorp Financial Data......................19
Use of Proceeds....................................................22
Accounting Treatment...............................................22
Capitalization.....................................................23
Description of Capital Securities..................................25
Description of Junior Subordinated Debentures......................41
Description of Guarantee...........................................51
The Expense Agreement..............................................55
Relationship Among the Capital Securities, the Junior
Subordinated Debentures, the Guarantee and the
Expense Agreement............................................55
Certain Federal Income Tax Consequences............................57
Certain ERISA Considerations.......................................60
Validity of Securities.............................................62
Experts............................................................62
Underwriting......................................................U-1
</TABLE>
==============================================================================
$250,000,000
KEYCORP CAPITAL I
FLOATING RATE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
KEYCORP
GOLDMAN, SACHS & CO.
KEY CAPITAL MARKETS, INC.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
- -------------------------------------------------------------------------------
<PAGE> 66
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Registration fee under the Securities Act of 1933, as amended ..... $ 73,750
Blue Sky fees and expenses (including counsel fees) ............... 5,000
Fees of rating agencies ........................................... 100,000
Trustees' fees and expenses ....................................... 8,000
Printing fees and expenses ........................................ 50,000
Accounting fees and expenses ...................................... 20,000
Legal fees and expenses ........................................... 25,000
Miscellaneous ..................................................... 25,000
--------
Total ....................................................... $306,750
========
</TABLE>
- ----------------------------
* All the above amounts, except the Registration Fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Ohio law, Ohio corporations are authorized to indemnify directors,
officers, employees, and agents within prescribed limits and must indemnify them
under certain circumstances. Ohio law does not provide statutory authorization
for a corporation to indemnify directors, officers, employees, and agents for
settlements, fines, or judgments in the context of derivative suits. However, it
provides that directors (but not officers, employees, and agents) are entitled
to mandatory advancement of expenses, including attorneys' fees, incurred in
defending any action, including derivative actions, brought against the
director, provided the director agrees to cooperate with the corporation
concerning the matter and to repay the amount advanced if it is proved by clear
and convincing evidence that his act or failure to act was done with deliberate
intent to cause injury to the corporation or with reckless disregard 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
II-1
<PAGE> 67
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 Henry L. Meyer III, 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 will agree
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 or 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.
Reference is made to the indemnity provisions in the Underwriting
Agreement which is filed as Exhibit 1 to this Registration Statement.
ITEM 16. EXHIBITS.
Reference is made to the Exhibit Index filed herewith.
ITEM 17. UNDERTAKINGS.
Each of the undersigned Registrants hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended (the
"Securities Act"), each filing of a Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended, 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 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
II-3
<PAGE> 68
against such 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 also undertakes:
(1) to provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the underwriter to permit prompt delivery to each
purchaser.
(2) that, for the purposes of determining any liability under the
Securities Act:
(i) The information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(ii) Each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
KeyCorp certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to the 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
16th day of June, 1998.
KEYCORP
By: /s/ DANIEL R. STOLZER
-----------------------------
Daniel R. Stolzer
Vice President and
Associate General Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW.
Signature Capacity
--------- --------
*ROBERT W. GILLESPIE Chairman-of-the-Board,-President,
- -------------------------------------- Chief Executive Officer and Director
Robert W. Gillespie (Principal Executive Officer)
*K. BRENT SOMERS Senior-Executive-Vice-President-and
- -------------------------------------- Chief Financial Officer (Principal
K. Brent Somers Financial Officer)
*LEE G. IRVING Executive-Vice-President-and-Chief
- -------------------------------------- Accounting Officer (Principal
Lee G. Irving Accounting Officer)
*CECIL D. ANDRUS Director
- --------------------------------------
Cecil D. Andrus
*WILLIAM G. BARES Director
- --------------------------------------
William G. Bares
*ALBERT C. BERSTICKER Director
- --------------------------------------
Albert C. Bersticker
*CAROL A. CARTWRIGHT Director
- --------------------------------------
Carol A. Cartwright
*THOMAS A. COMMES Director
- --------------------------------------
Thomas A. Commes
II-5
<PAGE> 70
Signature Capacity
--------- --------
*KENNETH M. CURTIS Director
- ---------------------------------------
Kenneth M. Curtis
*JOHN C. DIMMER Director
- ---------------------------------------
John C. Dimmer
*STEPHEN R. HARDIS Director
- ---------------------------------------
Stephen R. Hardis
*HENRY S. HEMINGWAY Director
- ---------------------------------------
Henry S. Hemingway
*CHARLES R. HOGAN Director
- ---------------------------------------
Charles R. Hogan
*DOUGLAS J. MCGREGOR Director
- ---------------------------------------
Douglas J. McGregor
Director
- ---------------------------------------
Henry L. Meyer III
*STEVEN A. MINTER Director
- ---------------------------------------
Steven A. Minter
*M. THOMAS MOORE Director
- ---------------------------------------
M. Thomas Moore
*RICHARD W. POGUE Director
- ---------------------------------------
Richard W. Pogue
Director
- ---------------------------------------
Ronald B. Stafford
*DENNIS W. SULLIVAN Director
- ---------------------------------------
Dennis W. Sullivan
*PETER G. TEN EYCK, II Director
- ---------------------------------------
Peter G. Ten Eyck, II
*By: /s/ DANIEL R. STOLZER
------------------------
Daniel R. Stolzer
Attorney-in-Fact
II-6
<PAGE> 71
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
KeyCorp Capital I certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the 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 16th day of June, 1998.
KEYCORP CAPITAL I
BY: KEYCORP, AS DEPOSITOR
By: /s/ DANIEL R. STOLZER
--------------------------
Daniel R. Stolzer
Vice President and
Associate General Counsel
II-7
<PAGE> 72
EXHIBIT INDEX
Exhibit Description of Exhibit
- ------- ----------------------
1 Form of Underwriting Agreement
4(a) Junior Subordinated Indenture, dated as of December 4, 1996, between
KeyCorp and Bankers Trust Company, as Debenture Trustee (Incorporated
by reference to Exhibit 4(a) to Registration Statement on Form S-4,
Commission No. 333-19151 and 333-19151-01)
4(b) Certificate of Trust of KeyCorp Capital I, dated as of June 2, 1998*
4(c) Trust Agreement of KeyCorp Capital I, dated as of June 2, 1998*
4(d) Form of Amended and Restated Trust Agreement of KeyCorp Capital I
(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
5(a) Opinion of Daniel R. Stolzer, Esq., as to validity of the Junior
Subordinated Debentures and the Guarantee
5(b) Opinion of Richards, Layton & Finger, P.A., as to validity of the
Capital Securities
8 Opinion of Sullivan & Cromwell as to certain federal income tax matters
12(a) Computations of Consolidated Ratios of Earnings to Fixed Charges
15 Acknowledgment Letter of Independent Auditors
23(a) Consent of Ernst & Young LLP
23(b) Consent of Daniel R. Stolzer, Esq. (Included in Exhibit 5(a))
23(c) Consent of Richards, Layton & Finger, P.A. (Included in Exhibit 5(b))
23(d) Consent of Sullivan & Cromwell (Included in Exhibit 8)
24 Powers of Attorney **
25 Form T-1 Statement of Eligibility of Bankers Trust Company to act as
trustee under the Indenture, under the Amended and Restated Trust
Agreement, and under the Guarantee for the benefit of holders of
Capital Securities
- ---------------
* Previously filed.
** Certain Powers of Attorney have been previously filed and an additional Power
of Attorney is being filed herewith.
II-8
<PAGE> 1
Exhibit 1
$250,000,000
KeyCorp Capital I
Floating Rate Capital Securities
(Liquidation amount $1,000 per Capital Security)
guaranteed to the extent set forth in the Guarantee by
KeyCorp
Underwriting Agreement
----------------------
- -------------------------------------------------- June __, 1998
Goldman, Sachs & Co.,
Key Capital Markets, Inc.,
J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated,
Salomon Brothers Inc,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
KeyCorp Capital I (the "Trust"), a statutory business trust created
under the Business Trust Act of the State of Delaware (the "Delaware Business
Trust Act"), and KeyCorp, an Ohio corporation, as depositor of the Trust and as
guarantor (the "Guarantor"), propose, subject to the terms and conditions stated
herein, that the Trust issue and sell to the Underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of 250,000 Floating Rate Capital
Securities (liquidation amount $1,000 per Capital Security) (the "Securities")
representing undivided beneficial interests in the assets of the Trust,
guaranteed by the Guarantor as to the payment of distributions, and as to
payments on liquidation or redemption, to the extent set forth in a guarantee
agreement (the "Guarantee") between the Guarantor and Bankers Trust Company, as
trustee (the "Guarantee Trustee"). The proceeds of the sale of the Securities
and an aggregate of _______ of its Common Securities (liquidation amount $1,000
per common security) (the "Common Securities") by the Trust are to be invested
in Junior Subordinated Deferrable Interest Debentures (the "Subordinated
Debentures") of the Guarantor, to be issued pursuant to an Indenture, dated as
of December 4, 1996 (the "Indenture"), between the Guarantor and Bankers Trust
Company, as Trustee (the "Debenture Trustee").
<PAGE> 2
1. The Guarantor and the Trust jointly and severally represent and
warrant to, and agree with, each of the Underwriters that:
(a) The registration statement (File No. 333-55959 and
333-55959-01) (the "registration statement") on Form S-3 in respect of
the Securities, the Subordinated Debentures and the Guarantee,
including a prospectus, as from time to time amended or supplemented,
relating to the Securities, the Subordinated Debentures and the
Guarantee, has been filed with the Securities and Exchange Commission
(the "Commission"), in the form heretofore delivered to Goldman, Sachs
& Co. ("Goldman Sachs"). The registration statement, as it may have
been amended prior to the date of this Agreement, has become effective
under the Securities Act of 1933, as amended (the "Act"). The
registration statement, as amended to the date of this Agreement, and
any Rule 462(b) registration statement is hereinafter referred to as
the "Registration Statement"; such prospectus (which shall be in the
form in which it has been most recently filed, or transmitted for
filing, with the Commission on or before the date of this Agreement, as
the same is proposed to be added to or changed), filed or transmitted
for filing with the Commission pursuant to Rule 424 under the Act and
used in connection with the sale of the Securities, is hereinafter
referred to as the "Prospectus". Any reference herein to the
Registration Statement, a preliminary prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on or before the date of this Agreement, and any reference
herein to the terms "amend", "amendment" or "supplement" with respect
to the Registration Statement or the Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act
deemed to be incorporated therein by reference after the date of this
Agreement.
(b) The Registration Statement, at the time it became effective,
and any amendments thereof filed prior to the date hereof, as of their
respective effective dates, conformed in all material respects to the
requirements of the Act, the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the respective rules and regulations
of the Commission thereunder; the Registration Statement and the
Prospectus, as of the date hereof, and any amendments thereof and
supplements thereto, as of their respective effective or issue dates,
will conform in all material respects to the requirements of the Act,
the Trust Indenture Act and the respective rules and regulations of the
Commission thereunder, including, without limitation, compliance with
the safe harbor provisions of Rule 175 under the Act pertaining to
"forward looking statements", and no such document, as of such
respective dates and, in the case of the Prospectus and any amendments
thereof or supplements thereto, as of the Closing Date (as hereinafter
defined), included or will include any untrue statement of a material
fact or omitted or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that the Guarantor and the Trust make no
representations or warranties as to (i) the Statements of Eligibility
(Forms T-1) under the Trust Indenture Act of the Debenture Trustee, the
Property Trustee and the Guarantee Trustee (the "Form T-1s") or (ii)
the information contained in or omitted from the Prospectus or any
amendment thereof or supplement thereto in reliance upon and in
conformity with information
2
<PAGE> 3
furnished in writing to the Guarantor and the Trust by or on behalf of
any Underwriter specifically for use in connection with the preparation
of the Prospectus or the Registration Statement.
(c) Except as set forth in the Prospectus, there has been no
material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or otherwise),
business or results of operations of the Guarantor and its subsidiaries
considered as one enterprise, whether or not arising from transactions
in the ordinary course of business, since the date of the most recent
financial statements included or incorporated in the Prospectus, as
amended or supplemented as of the Closing Date (as defined below); and
to the knowledge of the Guarantor and except as set forth in the
Prospectus, there is no threatened action, suit or proceeding that
could reasonably be expected to result in any material adverse change
in the condition (financial or otherwise), business or results of
operations of the Guarantor and its subsidiaries considered as one
enterprise, or could reasonably be expected to materially and adversely
affect the properties or assets thereof.
(d) (i) The Guarantor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Ohio, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended, and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in
good standing, considering all such cases in the aggregate, does not
involve a material risk to the business, properties, financial position
or results of operations of the Guarantor and its subsidiaries; (ii)
each of the Guarantor's national bank subsidiaries is a duly organized
and validly existing national banking association under the laws of the
United States, continues to hold a valid certificate to do business as
such and has full power and authority to conduct its business as such;
each of the Guarantor's other bank subsidiaries is duly organized and
validly existing in good standing under the laws of its jurisdiction of
organization, continues to hold a valid certificate to do business as
such and has full power and authority to conduct its business as such;
each of its other significant subsidiaries, as defined in Regulation
S-X (the "Significant Subsidiaries"), is duly organized and validly
existing under the laws of the jurisdiction of its organization with
corporate power and authority under such laws to conduct its business;
and (iii) all of the outstanding shares of capital stock of each such
subsidiary have been duly authorized and validly issued, are fully paid
and non-assessable (except, with respect to any subsidiary that is a
national bank, as provided by Section 55 of Title 12 of the United
States Code; and with respect to any subsidiary that is a bank
incorporated under state law, except as provided by the laws of any
such states) and are owned beneficially by the Guarantor subject to no
security interest, pledge, lien, charge or other encumbrance or adverse
claim, except as otherwise stated in the Prospectus.
(e) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Delaware Business
Trust Act with the power and authority to own its properties and
conduct its business as described in the Prospectus, and the Trust has
conducted
3
<PAGE> 4
no business to date other than as contemplated by this Agreement, and
it will conduct no business in the future that would be inconsistent
with the Trust Agreement and the description of the Trust set forth in
the Prospectus; the Trust is not a party to or bound by any agreement
or instrument other than this Agreement, the Amended and Restated Trust
Agreement (the "Trust Agreement") among the Guarantor, the trustees
named therein (the "Trustees") and the holders of the Securities issued
thereunder, and the agreements and instruments contemplated by the
Trust Agreement; the Trust has no liabilities or obligations other than
those arising out of the transactions contemplated by this Agreement
and the Trust Agreement and described in the Prospectus; based on
expected operations and current law, the Trust is not and will not be
classified as an association taxable as a corporation for United States
federal income tax purposes; and the Trust is not a party to or subject
to any action, suit or proceeding of any nature;
(f) The Securities have been duly and validly authorized by the
Trust, and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable undivided beneficial interests in the assets of the
Trust and will conform to the description of the Securities contained
in the Prospectus; the issuance of the Securities is not subject to
preemptive or other similar rights; the Securities will have the rights
set forth in the Trust Agreement, and the terms of the Securities are
valid and binding on the Trust; the holders of the Securities (the
"Securityholders") will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware;
(g) The Common Securities of the Trust have been duly and
validly authorized by the Trust and, upon delivery by the Trust to the
Guarantor against payment therefor as described in the Prospectus, will
be duly and validly issued undivided beneficial interests in the assets
of the Trust and will conform to the description thereof contained in
the Prospectus; the issuance of the Common Securities is not subject to
preemptive or other similar rights; and at the Closing Date, all of the
issued and outstanding Common Securities of the Trust will be directly
owned by the Guarantor free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity;
(h) The Guarantee, the Subordinated Debentures, the Trust
Agreement, the Indenture and the Agreement as to Expenses and
Liabilities between the Guarantor and the Trust (the "Expense
Agreement") (the Guarantee, the Subordinated Debentures, the Trust
Agreement, the Indenture and the Expense Agreement being collectively
referred to as the "Guarantor Agreements"), when validly executed and
delivered by the Guarantor and, in the case of the Guarantee, by the
Guarantee Trustee, in the case of the Trust Agreement, by the Trustees
and, in the case of the Indenture, by the Debenture Trustee, will
constitute valid and legally binding obligations of the Guarantor,
enforceable in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles (regardless of whether enforcement is sought in a proceeding
at law or in equity); the Subordinated Debentures are entitled to the
benefits of the Indenture; the Guarantor Agreements
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<PAGE> 5
will conform to the descriptions thereof in the Prospectus; and the
Guarantee and the Indenture have been duly qualified under the Trust
Indenture Act;
(i) The execution and delivery of this Agreement and the
Guarantor Agreements and the consummation of the transactions
contemplated herein and therein, have been duly authorized by all
necessary corporate action and, when executed and delivered by the
Guarantor and the other parties thereto, will not result in any breach
of any of the terms, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of any security
interest, lien, charge or encumbrance upon any property or assets of
the Guarantor or its subsidiaries, pursuant to any indenture, loan
agreement, contract or other material agreement or instrument to which
the Guarantor or its subsidiaries is a party or by which the Guarantor
may be bound or to which any of the property or assets of the Guarantor
or its subsidiaries is subject, nor will such action result in any
violation of the provisions of the Amended and Restated Articles of
Incorporation or the Regulations of the Guarantor or its subsidiaries
or any applicable statute, rule or regulation or, to the best of its
knowledge, any order of any court or governmental agency or body having
jurisdiction over the Guarantor, its subsidiaries or any of their
respective properties;
(j) Prior to the date hereof, neither the Guarantor nor any of
its affiliates has taken or will take any action which is designed to
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Guarantor in connection with the offering of the Securities;
(k) The Trust is not, and after giving effect to the offering
and sale of the Securities will not be, an "investment company", or an
entity "controlled" by an "investment company", as such terms are
defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act") and;
(l) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in
connection with the issuance and the sale of the Securities by the
Trust, except such as may be required under the Blue Sky laws of any
jurisdiction or as have been duly made or obtained.
2. Subject to the terms and conditions herein set forth, the Trust and
the Guarantor agree that the Trust shall issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Trust, at a purchase price of $1,000 per Security, the number
of Securities set forth opposite the name of such Underwriter in Schedule I
hereto.
As compensation to the Underwriters for their commitments hereunder,
and in view of the fact that the proceeds of the sale of the Securities will be
issued by the Trust to purchase the Subordinated Debentures of the Guarantor,
the Guarantor hereby agrees to pay at the Closing Date to Goldman Sachs, for the
accounts of the several Underwriters, an amount equal to [$____] per Security
for the Securities to be delivered at the Closing Date. Alternatively, as a
matter of convenience, Goldman Sachs may deduct such amount from the purchase
price of the Securities and in such event the Guarantor shall be deemed to have
paid the same.
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<PAGE> 6
3. Upon the authorization by you of the release of the Securities, the
several Underwriters propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Prospectus.
4. (a) Except as set forth in the next paragraph, the Securities to be
purchased by each Underwriter hereunder will be represented by one or more
definitive global Securities in book-entry form which will be deposited by or on
behalf of the Trust with The Depository Trust Company ("DTC") or its designated
custodian. The Trust will deliver the Securities to Goldman Sachs, for the
account of each Underwriter, against payment by or on behalf of such Underwriter
of the purchase price therefor by wire transfer of Federal (same day) funds to
an account designated by the Trust, by causing DTC to credit the Securities to
the account of Goldman Sachs at DTC. The Trust will cause the certificates
representing the Securities to be issued in book-entry form to be made available
to Goldman Sachs for checking at least twenty-four hours prior to the Closing
Date (as defined below) at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment shall be
10:30 a.m., New York City time, on June ___, 1998 or such other time and date as
Goldman Sachs, the Guarantor and the Trust may agree upon in writing. Such time
and date are herein called the "Closing Date".
(b) The documents to be delivered at the Closing Date by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Underwriters
pursuant to Section 7(h) hereof, will be delivered at such time and date at the
offices of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004 (the
"Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Closing Date. A meeting will be held at the Closing Location
at 4:00 p.m., New York City time, on the New York Business Day next preceding
the Closing Date, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Guarantor and the Trust jointly and severally agree with each of
the several Underwriters:
(a) The Guarantor and the Trust will cause the Prospectus to be
filed, or transmitted for filing, with the Commission pursuant to Rule
424 under the Act and will promptly advise Goldman Sachs when the
Prospectus has been so filed or transmitted for filing, and prior to
the termination of the offering of the Securities to which such
Prospectus relates also will promptly advise Goldman Sachs (i) when any
amendment to the Registration Statement has become effective or any
further supplement to the Prospectus has been so filed or transmitted
for filing, (ii) of any request by the Commission for any amendment of
the Registration Statement or the Prospectus or for any additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose, and (iv)
of the receipt by the Guarantor or the Trust of any notification with
respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. Each of the
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<PAGE> 7
Guarantor and the Trust will use its reasonable best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as soon
as practicable the withdrawal thereof. The Guarantor and the Trust will
not file or transmit for filing any amendment to the Registration
Statement or supplement to the Prospectus unless they have furnished to
Goldman Sachs a copy for their review prior to filing or transmission
for filing;
(b) If, at any time when a prospectus relating to the
Securities, the Subordinated Debentures or the Guarantee is required to
be delivered under the Act, any event occurs as a result of which the
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
shall be necessary to amend or supplement the Prospectus to comply with
the Act or the rules and regulations of the Commission thereunder,
after receiving notice or becoming aware of the foregoing, the
Guarantor and the Trust promptly will prepare and file or transmit for
filing with the Commission, subject to paragraph (a) of this Section 5,
an amendment or supplement which will correct such statement or
omission or effect such compliance;
(c) The Guarantor will make generally available to its security
holders and to Goldman Sachs as soon as practicable, but not later than
45 days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Guarantor during which the filing, or
transmission for filing, of the Prospectus pursuant to Rule 424 under
the Act occurs (except not later than 90 days after the end of such
period if such quarter is the last fiscal quarter), an earnings
statement (which need not be audited) of the Guarantor and its
subsidiaries, covering such 12-month period, which will satisfy the
provisions of Section 11(a) of the Act;
(d) Each of the Guarantor and the Trust will use its reasonable
best efforts to furnish in New York City to each of the Underwriters
prior to 10:00 a.m., New York City time, on the second New York
Business Day next succeeding the date of this Agreement and from time
to time, as many copies of the Prospectus, each related preliminary
prospectus supplement and all amendments of and supplements to such
documents as may be reasonably requested;
(e) Each of the Guarantor and the Trust will use its reasonable
best efforts to arrange for the qualification of the Securities for
sale under the laws of such jurisdictions as Goldman Sachs may
designate, to maintain such qualifications in effect so long as
required for the distribution of the Securities and to arrange for the
determination of the legality of the Securities for purchase by
institutional investors; provided that in connection therewith neither
the Guarantor nor the Trust shall be required to qualify as a foreign
corporation to do business in any jurisdiction where it is not now
qualified or to take any action which would subject it to general or
unlimited service of process in any jurisdiction where it is not now so
subject;
(f) During the period beginning from the date of this Agreement
and continuing to and including the Closing Date, not to offer, sell,
contract to sell or otherwise dispose of any Securities (except for (x)
the Securities proposed to be sold to the Underwriters pursuant hereto,
any other beneficial interests in the assets of the Trust, or any
preferred securities or any other securities of the Trust or the
Guarantor, as the case may be, that are substantially similar to the
Securities
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<PAGE> 8
(including any guarantee of such securities) or any securities that are
convertible into or exchangeable for or that represent the right to
receive preferred securities or any such substantially similar
securities of either the Trust or the Guarantor without the prior
written consent of Goldman Sachs;
(g) Not to have the Trust be or become, at any time prior to the
expiration of three years after the Closing Date, an open-end
investment company, unit investment trust, closed-end investment
company or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act; and
(h) To issue the Guarantee and the Subordinated Debentures
concurrently with the issue and sale of the Securities as contemplated
herein.
6. The Guarantor and the Trust jointly and severally covenant and agree
with the several Underwriters that the Guarantor and the Trust will pay or cause
to be paid the following: (i) the fees, disbursements and expenses of the
Guarantor's or the Trust's counsel and accountants in connection with the issue
of the Securities and all other expenses in connection with the preparation,
printing and filing of the Prospectus and any amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) all expenses in connection with the qualification of the
Securities and the Subordinated Debentures issuable upon exchange of the
Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the reasonable fees and disbursements of counsel
for the Underwriters in connection with such qualification and in connection
with the Blue Sky and legal investment surveys; (iii) any fees charged by
securities rating services for rating the Securities; (iv) the cost of preparing
the Securities and the Subordinated Debentures; (v) the fees and expenses of the
Trustee, the Guarantee Trustee and the Debenture Trustee and any agent of the
Trustee, the Guarantee Trustee and the Debenture Trustee and the fees and
disbursements of counsel for the Trustees in connection with the Trust Agreement
and the Securities, counsel for the Guarantee Trustee in connection with the
Guarantee and counsel for the Debenture Trustee in connection with the Indenture
and the Subordinated Debentures; and (vi) all other costs and expenses incident
to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Securities by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters to purchase the Securities shall
be subject to the accuracy of the representations and warranties on the part of
the Guarantor and the Trust contained herein as of the date hereof and the
Closing Date, to the accuracy of the statements of the Guarantor and the Trust
made in any certificates pursuant to the provisions hereof, to the performance
by each of the Guarantor and the Trust of its obligations hereunder and to the
following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted and be pending or have been
threatened as of the Closing Date; and all requests for additional
information on the part of the Commission shall have been complied
with.
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<PAGE> 9
(b) You shall have received at the Closing Date the opinion of
counsel for the Guarantor and the Trust acceptable to you, dated the
Closing Date, to the effect that:
(i) The Guarantor has been duly incorporated and is an
existing corporation in good standing under the laws of Ohio and is
duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended; each of KeyBank National Association
and Key Bank USA, National Association (the "National Banks") is a duly
organized and validly existing national banking association under the
laws of the United States and continues to hold a valid certificate to
do business as such; each of the Guarantor and the National Banks has
full corporate power and authority to conduct its business as described
in the Prospectus and is duly qualified to do business in each
jurisdiction in which it owns or leases real property, except where the
failure to be so qualified, considering all such cases in the
aggregate, does not involve a material risk to the business,
properties, financial position or results of operations of the
Guarantor and its subsidaries taken as a whole; and all of the
outstanding shares of capital stock of each of the National Banks have
been duly authorized and validly issued, are fully paid and
non-assessable (exceptions to be specified) and (except as otherwise
stated in the Prospectus) are owned beneficially by the Guarantor
subject to no security interest, other encumbrance or adverse claim.
(ii) to the best knowledge of such counsel, (A) there is
no pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Guarantor or any of its subsidiaries of a character required to be
disclosed in the Prospectus which is not adequately disclosed in the
Prospectus, and (B) there is no franchise, contract or other document
which is known to such counsel of a character required to be described
in the Prospectus, which is not described as required;
(iii) this Agreement has been duly authorized, executed and
delivered by the Guarantor and the Trust;
(iv) the issuance by the Guarantor of the Guarantee and
the Subordinated Debentures, the compliance by the Guarantor with all
of the provisions of this Agreement, the execution, delivery and
performance by the Guarantor of the Guarantor Agreements and the
consummation of the transactions herein and therein contemplated will
not conflict with, result in a breach of, or constitute a default under
the certificate of incorporation or regulations of the Guarantor or, to
the best knowledge of such counsel, any indenture or other agreement or
instrument to which the Guarantor or its subsidiaries is a party or
bound, or any order or regulation of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Guarantor or its subsidiaries which in the case
of any indenture, agreement, instrument or order, would have a material
adverse effect on the holders of the Securities or the financial
condition, earnings, business or properties of the Guarantor and its
subsidiaries, taken as one enterprise;
(v) the Guarantor Agreements have each been duly
authorized, executed and delivered by the Guarantor and/or the Trust,
as the case may be, and constitute valid and legally binding
obligations of the Guarantor and/or the Trust, as the case may be,
enforceable in accordance with their respective terms, subject to
qualifications to be set forth in the opinion
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<PAGE> 10
delivered at the Closing Date which shall be acceptable to the
Underwriters; the Subordinated Debentures are entitled to the benefits
provided by the Indenture; and the Guarantee and the Indenture have
each been duly qualified under the Trust Indenture Act; provided that
such counsel need not express any opinion as to the effect of
applicable public policy on the enforceability of provisions relating
to indemnification or contribution contained in the Guarantee;
(vi) the Trust is not, and after giving effect to the
offering and sale of the Securities will not be, an "investment
company", or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act;
(vii) no consent, approval, authorization or order of any
court or governmental agency or body is required of the Guarantor for
the consummation of the transactions contemplated in this Agreement or
any of the Guarantor Agreements, except such as may be required under
the Blue Sky laws of any jurisdiction or as have been duly made or
obtained; and
(viii) The Registration Statement has become effective under
the Act, and, to the best of the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or
are pending or threatened under the Act, and each part of the
Registration Statement, when such part became effective, any amendments
thereof filed prior to the date of this Agreement, as of their
respective effective dates, and the Registration Statement and the
Prospectus, as of the date of the Prospectus, and each amendment
thereof or supplement thereto, as of their respective effective or
issue dates, appeared on their face to be appropriately responsive in
all material respects to the requirements of the Act, the Trust
Indenture Act and the respective rules and regulations of the
Commission thereunder; and that such counsel has no reason to believe
that any part of the Registration Statement, when such part became
effective, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus,
as of the date of the Prospectus, or any amendments thereof or
supplements thereto, as of their respective effective or issue dates,
contained any untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or that, as of the Closing Date, either the Prospectus or any further
amendment or supplement thereto made by the Company prior to the
Closing Date contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; it being understood that such counsel need express no
opinion as to the Form T-1s, as to the financial statements or other
financial data contained in any part of the Registration Statement or
the Prospectus, as to any information pertaining to the Internal
Revenue Code of 1986, as amended, or to the Employee Retirement Income
Security Act of 1974, as amended, or as to any statements or omissions
made in reliance upon or in conformity with information furnished in
writing to the Guarantor and the Trust by or on behalf of an
Underwriter for use therein.
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<PAGE> 11
Such opinion or opinions shall be limited to New York, Ohio and federal
law and, if applicable, the law of the State of incorporation of any other
Significant Subsidiary. In giving such opinion, such counsel may rely, as to all
matters governed by the laws of jurisdictions in which such counsel is not
qualified and the federal law of the United States, upon opinions of other
counsel, who shall be counsel satisfactory to counsel for the Underwriters, in
which case the opinion shall state that they believe you and they are entitled
to rely. In particular, as to paragraph (vi), such counsel may rely upon the
opinion of Sullivan & Cromwell. Such counsel may also state that, insofar as
such opinion involves factual matters, they have relied, to the extent that they
deem proper, upon certificates of officers of the Guarantor, the National Banks
and the Significant Subsidiaries and certificates of public officials.
(c) You shall have received at the Closing Date the opinion of
Sullivan & Cromwell, counsel for the Underwriters, dated the Closing
Date, with respect to such matters as you may reasonably require, and
the Guarantor and the Trust shall have furnished to such counsel such
documents as they request for the purposes of enabling them to pass
upon such matters.
(d) The Guarantor and the Trust shall have furnished to you
certificates of the Guarantor and the Trust, signed, in the case of the
Guarantor, by the Chairman of the Board, the President, an Executive
Vice President or Vice President of the Guarantor and by the principal
accounting or financial officer of the Guarantor, and in the case of
the Trust, by an Administrative Trustee, dated the Closing Date, to the
effect that, to the best of their knowledge upon reasonable
investigation:
(i) the representations and warranties of the Guarantor and
the Trust in this Agreement are true and correct on and as of
the Closing Date with the same effect as if made at the Closing
Date and each of the Guarantor and the Trust has complied with
all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to the Closing Date;
(ii) since the respective dates as of which information is
given in the Prospectus, there has been no material adverse
change, nor any presently known and existing development that
the Guarantor or the Trust, as the case may be, expects to
result in a material adverse change, in the financial condition,
earnings, business or properties of the Guarantor and its
subsidiaries considered as one enterprise or the Trust, as the
case may be, whether or not arising from transactions in the
ordinary course of business, except as set forth in or
contemplated in the Prospectus; and
(iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted and are pending or have been
threatened as of such date.
(e) You shall have received at the Closing Date a letter from
Ernst & Young LLP, independent public accountants (or other independent
public accountants acceptable to you), dated the Closing Date, in form
and substance satisfactory to you containing statements and information
of the type ordinarily included in accountants "comfort letters" to
underwriters with
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<PAGE> 12
respect to the financial statements and certain financial information
contained in or deemed to be part of the Prospectus.
(f) You shall have received at the Closing Date the opinion of
Richards, Layton & Finger, special Delaware Counsel for the Trust and
the Guarantor, dated the Closing Date, to the effect that:
(i) The Trust has been duly created and is validly existing
as a business trust in good standing under the Delaware Business
Trust Act and, under the Trust Agreement and the Delaware
Business Trust Act, has the trust power and authority to own its
properties and conduct its business, all as described in the
Prospectus, and all filings required under the laws of the State
of Delaware with respect to the creation and valid existence of
the Trust as a business trust have been made;
(ii) The Trust Agreement constitutes a valid and binding
obligation of the Guarantor and the Trustees, and is enforceable
against the Guarantor and the Trustees, in accordance with its
terms, and the terms of the Securities as set forth in the Trust
Agreement are valid and binding obligations of the Trust in
accordance with the terms of the Trust Agreement, all subject to
the effect upon the Trust Agreement of (A) bankruptcy,
insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance or transfer and other similar
laws relating to or affecting the rights and remedies of
creditors generally, (B) principles of equity, including
applicable law relating to fiduciary duties (regardless of
whether considered and applied in a proceeding in equity or at
law), and (C) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution;
(iii) Under the Trust Agreement and the Delaware Business
Trust Act, the Trust has the trust power and authority to (A)
execute and deliver this Agreement and to perform its
obligations under this Agreement, and (B) issue and perform its
obligations under the Securities and the Common Securities;
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<PAGE> 13
(iv) Under the Trust Agreement and the Delaware Business
Trust Act, the execution and delivery by the Trust of this
Agreement and the performance by the Trust of its obligations
thereunder have been duly authorized by all necessary trust
action on the part of the Trust;
(v) The Securities have been duly and validly authorized by
the Trust Agreement, and, when issued and delivered against
payment therefor as provided herein, will be duly and validly
issued and, subject to the qualifications set forth herein,
fully paid and non-assessable undivided beneficial interests in
the assets of the Trust; under the Trust Agreement and the
Delaware Business Trust Act, the issuance of the Securities is
not subject to preemptive or other similar rights; the
Securities will have the rights set forth in the Trust
Agreement; the Securityholders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State
of Delaware; provided that such counsel may note that the
Securityholders may be obligated, pursuant to the Trust
Agreement, to (A) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising
from transfers or exchanges of Capital Securities Certificates
(as defined in the Trust Agreement) and the issuance of
replacement Capital Securities Certificates and (B) provide
security and indemnity in connection with requests of or
directions to the Property Trustee (as defined in the Trust
Agreement) to exercise its rights and remedies under the Trust
Agreement;
(vi) The Common Securities of the Trust have been duly and
validly authorized by the Trust Agreement; under the Trust
Agreement and the Delaware Business Trust Act, the issuance of
the Common Securities is not subject to preemptive or other
similar rights;
(vii) The issue and sale of the Securities and the Common
Securities by the Trust, the execution and delivery of this
Agreement by the Trust, the compliance by the Trust with all of
the provisions of the Securities, the Trust Agreement and this
Agreement, the purchase by the Trust of the Subordinated
Debentures and the consummation of the transactions herein and
therein contemplated do not violate (A) the Trust Agreement or
the Certificate of Trust of the Trust, or (B) any applicable
Delaware law, rule or regulation;
(viii) No authorization, approval, consent or order of any
Delaware court or Delaware governmental authority or Delaware
agency is required to be obtained by the Trust in connection
with the issuance and sale of the Securities and the Common
Securities;
(ix) Assuming that the Trust derives no income from or
connected with services provided within the State of Delaware
and has no assets, activities (other than maintaining the
Delaware Trustee (as defined in the Trust Agreement) and the
filing of documents with the Secretary of State of the State of
Delaware) or employees in the State of Delaware, no
authorization, approval, consent or order of any Delaware court
or Delaware governmental authority or Delaware agency is
required to be obtained by the Trust solely in connection with
the issuance and sale of the Securities and the Common
Securities. In rendering the
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opinion expressed in this paragraph, such counsel need express
no opinion concerning the securities laws of the State of
Delaware; and
(x) Assuming that the Trust derives no income from or
connected with sources within the State of Delaware and has no
assets, activities (other than having a Delaware trustee as
required by the Delaware Business Trust Act and filing documents
with the Delaware Secretary of State) or employees in the State
of Delaware and that the Trust is not an association taxable as
a corporation for purposes of US Federal income tax, the
Securityholders (other than those holders of the Securities who
reside or are domiciled in the State of Delaware) will have no
liability for income taxes imposed by the State of Delaware
solely as a result of their participation in the Trust, and the
Trust will not be liable for any income tax imposed by the State
of Delaware.
(g) Sullivan & Cromwell, special tax counsel for the Guarantor
and the Trust, shall have furnished to you their written opinion, dated
the Closing Date, in form and substance satisfactory to you, to the
effect that such firm confirms its opinion set forth in the Prospectus
under the caption "Certain Federal Income Tax Consequences."
(h) Prior to the Closing Date, the Guarantor and the Trust
shall have furnished to you such further information, certificates and
documents as you may reasonably request.
(i) There shall not have occurred any of the following: (i)
any change or any development in or affecting particularly the business
or properties of the Guarantor or its subsidiaries which, in the
judgment of the Underwriters, materially impairs the investment quality
of the Securities; (ii) the suspension of trading in any securities of
the Guarantor by the Commission or a national securities exchange, or
the suspension of trading on the New York Stock Exchange or the
American Stock Exchange, or the fixing of minimum or maximum prices for
trading, or the requirement of maximum ranges for prices for
securities, on the New York Stock Exchange or the American Stock
Exchange, by such Exchange or by order of the Commission or any other
governmental authority having jurisdiction; (iii) any banking
moratorium declared by federal or New York authorities; (iv) any
downgrading in the rating accorded the Guarantor's senior debt
securities, subordinate debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act or any public announcement that any such organization has under
surveillance or review, with possible negative implications, its rating
of any of the Guarantor's senior debt securities, subordinate debt
securities or preferred stock; or (v) any outbreak or escalation of
hostilities in which the United States is involved, a declaration of
war by Congress, any other substantial national or international
calamity or any other event or occurrence of a similar character if, in
the judgment of the Underwriters, the effect of any such outbreak,
escalation, declaration, calamity or other event or occurrence makes it
impractical or inadvisable to proceed with the completion of the sale
of and payment for the Securities. Promptly after the determination by
the Underwriters that it is impractical or inadvisable to proceed with
the completion of the sale and payment for the Securities, the
Underwriters shall notify the Guarantor and the Trust of such
determination in writing; but the omission so to notify
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<PAGE> 15
the Guarantor and the Trust shall not act to modify the rights of the
Underwriters under this section.
8. (a) The Guarantor and the Trust jointly and severally agree to
indemnify and hold harmless each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities (or actions in respect thereof),
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; PROVIDED, HOWEVER, that
neither the Guarantor nor the Trust will be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Guarantor or the Trust by or on behalf of any
Underwriter through Goldman Sachs specifically for use in connection with the
preparation thereof or of the Form T-1s. This indemnity agreement will be in
addition to any liability which the Guarantor or the Trust may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Guarantor and the Trust, each of its directors or administrators,
as the case may be, and each person who controls the Guarantor or the Trust
within the meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Guarantor and the Trust to each Underwriter,
but only with reference to written information relating to such Underwriter
furnished to the Guarantor or the Trust by or on behalf of such Underwriter
through Goldman Sachs specifically for use in the preparation of the documents
referred to in the foregoing indemnity. This indemnity agreement will be in
addition to any liability which any Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party; PROVIDED, HOWEVER, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right
15
<PAGE> 16
to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Guarantor and the Trust on the one hand and the Underwriters on
the other from the offering of the Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Guarantor and the
Trust on the one hand and the Underwriters on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Guarantor and the Trust on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total proceeds from the offering of the Securities (before deducting
expenses) received by the Guarantor and the Trust bear to the total compensation
(before deducting expenses) received or realized by the Underwriters from the
purchase and resale, or underwriting, of the Securities. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Guarantor and
the Trust on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Guarantor, the Trust and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by such Underwriter hereunder. The Underwriters'
obligations in this subsection (d) to contribute shall be several in proportion
to their respective underwriting obligations and not joint. For purposes of this
Section 8, each person who controls an Underwriter within the meaning of the Act
shall have the same rights to contribution as such Underwriter, and each person
who controls the Guarantor or the Trust within the meaning of either the Act or
the Exchange Act, and each director of the Guarantor or each Administrator of
the Trust shall have the same rights to contribution as the Guarantor and the
Trust, subject in each case to the limitation described in the preceding
sentence.
16
<PAGE> 17
9. (a) If any Underwriter shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase such
Securities on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such
Securities, then the Guarantor and the Trust shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to you to purchase such Securities on such terms. In the
event that, within the respective prescribed periods, you notify the Guarantor
or the Trust that you have so arranged for the purchase of such Securities, or
the Guarantor and the Trust notify you that they have so arranged for the
purchase of such Securities, you or the Guarantor and the Trust shall have the
right to postpone the Closing Date for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Prospectus, or in any other documents or arrangements, and the Guarantor and the
Trust jointly and severally agree to prepare promptly any amendments to the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by you
and the Guarantor and the Trust as provided in subsection (a) above, the
aggregate number of such Securities which remains unpurchased does not exceed
one-tenth of the aggregate number of all the Securities, then the Guarantor and
the Trust shall have the right to require each non-defaulting Underwriter to
purchase the number of Securities which such Underwriter agreed to purchase
hereunder and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Securities which such
Underwriter agreed to purchase hereunder) of the Securities of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by you
and the Guarantor and the Trust as provided in subsection (a) above, the
aggregate number of Securities which remains unpurchased exceeds one-tenth of
the aggregate number of all the Securities, or if the Guarantor and the Trust
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Securities of a defaulting Underwriter
or Underwriters, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the Guarantor and the
Trust, except for the expenses to be borne by the Guarantor and the Trust and
the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Guarantor and the Trust and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Guarantor and the Trust, or any officer
17
<PAGE> 18
or director or controlling person of the Guarantor or the Trust, and shall
survive delivery of and payment for the Securities.
11. If the sale of the Securities provided for in this Agreement is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied or because of any refusal, inability
or failure on the part of the Guarantor or the Trust to perform any agreement in
this Agreement or comply with any provision in this Agreement other than by
reason of a default by any of the Underwriters, the Guarantor and the Trust will
jointly and severally reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been reasonably incurred by them in connection with the proposed
purchase and sale of the Securities and shall have no further obligations to the
Underwriters with respect thereto. In no event shall the Guarantor or the Trust
be liable to the Underwriters for loss of anticipated profits from the
transactions contemplated by this Agreement.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by Goldman Sachs as representative of the Underwriters.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Guarantor or the Trust shall be delivered or sent by
mail or facsimile transmission to the address of the Guarantor set forth in the
Prospectus, Attention: Secretary or Administrative Trustee, respectively;
provided, however, that any notice to a Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Guarantor and the Trust by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Guarantor and the Trust and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the
Guarantor, the administrative trustees of the Trust and each person who controls
the Guarantor or the Trust or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Underwriter shall be deemed a successor or assign
by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
18
<PAGE> 19
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Underwriters and the
Guarantor and the Trust. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is pursuant to the authority set forth in a
form of Agreement among Underwriters, the form of which shall be submitted to
the Guarantor for examination upon request, but without warranty on your part as
to the authority of the signers thereof.
Very truly yours,
KeyCorp Capital I
By: KeyCorp, as Depositor
By:
--------------------------------
Name:
Title:
KeyCorp
By:
--------------------------------
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
By:
--------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
set forth in Schedule I
19
<PAGE> 20
SCHEDULE I
LIQUIDATION
AMOUNT
OF
SECURITIES
TO BE
PURCHASED
---------
UNDERWRITER
-----------
[S]
Goldman, Sachs & Co........................................
Key Capital Markets, Inc...................................
J.P. Morgan Securities Inc.................................
Morgan Stanley & Co. Incorporated..........................
Salomon Brothers Inc.......................................
Total...........................................
20
<PAGE> 1
Exhibit 4(d)
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
among
KEYCORP,
as Depositor,
BANKERS TRUST COMPANY,
as Property Trustee,
BANKERS TRUST (DELAWARE),
as Delaware Trustee,
and
THE ADMINISTRATIVE TRUSTEES
NAMED HEREIN
Dated as of June __, 1998
KEYCORP CAPITAL I
================================================================================
<PAGE> 2
KeyCorp Capital I
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 318(a) which,
pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the
Trust Reform Act of 1990, are a part of and govern the Indenture whether or not
physically contained therein) and the Amended and Restated Trust Agreement,
dated as of June __, 1998.
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- --------------- ------------
<S> <C> <C>
310 (a)(1)................................................................. 8.7
(a)(2)................................................................. 8.7
(a)(3)................................................................. 8.9
(a)(4)................................................................. 2.7(a)(ii)(E)
(b).................................................................... 8.8, 10.10
(c).................................................................... Not Applicable
311 (a).................................................................... 8.13
(c).................................................................... Not Applicable
(b).................................................................... 8.13
312 (a).................................................................... 5.7, 10.10
(b).................................................................... 5.7, 10.10
(c).................................................................... 5.7, 10.10
313 (a).................................................................... 8.14(a)
(a)(4)................................................................. 8.14(b)
(b).................................................................... 8.14(b)
(c).................................................................... 10.8
(d).................................................................... 8.14(c)
314 (a).................................................................... 8.15
(b).................................................................... Not Applicable
(c)(1)................................................................. 8.16
(c)(2)................................................................. 8.16
(c)(3)................................................................. Not Applicable
(d).................................................................... Not Applicable
(e).................................................................... 1.1, 8.16
315 (a).................................................................... 8.1(a), 8.3(a)
(b).................................................................... 8.2, 10.8
(c).................................................................... 8.1(a), 8.1(d)(iii)
(d).................................................................... 8.1, 8.3
(e).................................................................... Not Applicable
316 (a)(1)(A).............................................................. Not Applicable
(a)(1)(B).............................................................. 5.13(b)
(a)(2)................................................................. Not Applicable
(b).................................................................... 5.13(c)
(c).................................................................... 6.7
317 (a)(1)................................................................. Not Applicable
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
(a)(2)................................................................. Not Applicable
(b).................................................................... 5.10
318 (a).................................................................... 10.10
<FN>
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to be a part of
the Trust Agreement.
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINED TERMS
<S> <C>
SECTION 1.1. Definitions...................................................................... 1
ARTICLE II.
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name............................................................................. 12
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business...................... 12
SECTION 2.3. Initial Contribution of Trust Property; Organizational
Expenses............................................................................. 12
SECTION 2.4. Issuance of the Capital Securities; Authentication............................... 12
SECTION 2.5. Issuance of the Common Securities; Subscription
and Purchase of Debentures................................................. 13
SECTION 2.6. Continuation of Trust............................................................ 13
SECTION 2.7. Authorization to Enter into Certain Transactions................................. 13
SECTION 2.8. Assets of Trust.................................................................. 18
SECTION 2.9. Title to Trust Property.......................................................... 18
ARTICLE III.
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.................................................................. 18
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 4.1 Distributions.................................................................... 18
SECTION 4.2. Redemption....................................................................... 20
SECTION 4.3. Subordination of Common Securities............................................... 22
SECTION 4.4. Payment Procedures............................................................... 23
SECTION 4.5. Tax Returns and Reports.......................................................... 23
SECTION 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust............................... 23
SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions........................... 24
SECTION 4.8. Liability of the Holder of Common Securities..................................... 24
</TABLE>
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<PAGE> 5
<TABLE>
Page
----
ARTICLE V.
TRUST SECURITIES CERTIFICATES
<S> <C>
SECTION 5.1. Initial Ownership................................................................ 24
SECTION 5.2. The Trust Securities Certificates................................................ 24
SECTION 5.3. Execution and Delivery of Trust Securities Certificates.......................... 25
SECTION 5.4. Book-Entry Capital Securities.................................................... 25
SECTION 5.5. Registration of Transfer and Exchange of Capital Securities
Certificates;.......................................................... 27
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates........................................................... 30
SECTION 5.7. Persons Deemed Holders........................................................... 30
SECTION 5.8. Access to List of Holders' Names and Addresses................................... 30
SECTION 5.9. Maintenance of Office or Agency.................................................. 31
SECTION 5.10. Appointment of Paying Agent..................................................... 31
SECTION 5.11. Ownership of Common Securities by Depositor..................................... 31
SECTION 5.12. Notices to Clearing Agency...................................................... 32
SECTION 5.13. Rights of Holders............................................................... 32
ARTICLE VI.
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights..................................................... 34
SECTION 6.2. Notice of Meetings............................................................... 36
SECTION 6.3. Meetings of Holders of Capital Securities........................................ 36
SECTION 6.4. Voting Rights.................................................................... 36
SECTION 6.5. Proxies, etc..................................................................... 36
SECTION 6.6. Holder Action by Written Consent................................................. 37
SECTION 6.7. Record Date for Voting and Other Purposes........................................ 37
SECTION 6.8. Acts of Holders.................................................................. 37
SECTION 6.9. Inspection of Records............................................................ 38
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the
Property Trustee and the Delaware Trustee.............................. 39
SECTION 7.2. Representations and Warranties of Depositor...................................... 40
</TABLE>
-iv-
<PAGE> 6
<TABLE>
Page
----
ARTICLE VIII.
THE ISSUER TRUSTEES
<S> <C>
SECTION 8.1. Certain Duties and Responsibilities.............................................. 40
SECTION 8.2. Certain Notices.................................................................. 42
SECTION 8.3. Certain Rights of Property Trustee............................................... 43
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities........................... 45
SECTION 8.5. May Hold Securities.............................................................. 45
SECTION 8.6. Compensation; Indemnity; Fees.................................................... 45
SECTION 8.7. Corporate Property Trustee Required; Eligibility
of Issuer Trustees .................................................... 47
SECTION 8.8. Conflicting Interests............................................................ 47
SECTION 8.9. Co-Trustees and Separate Trustee................................................. 47
SECTION 8.10. Resignation and Removal; Appointment of Successor............................... 49
SECTION 8.11. Acceptance of Appointment by Successor.......................................... 50
SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business............................................................... 51
SECTION 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust........................................................... 51
SECTION 8.14. Reports by Property Trustee..................................................... 52
SECTION 8.15. Reports to the Property Trustee................................................. 53
SECTION 8.16. Evidence of Compliance with Conditions Precedent................................ 53
SECTION 8.17. Number of Issuer Trustees....................................................... 53
SECTION 8.18. Delegation of Power............................................................. 53
SECTION 8.19. Appointment of Administrative Trustees.......................................... 54
ARTICLE IX.
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination Upon Expiration Date................................................. 55
SECTION 9.2. Early Termination................................................................ 55
SECTION 9.3. Termination...................................................................... 55
SECTION 9.4. Liquidation...................................................................... 56
SECTION 9.5. Mergers, Consolidations, Amalgamations or
Replacements of the Issuer Trust....................................... 57
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders................................................. 58
</TABLE>
-v-
<PAGE> 7
<TABLE>
Page
----
<S> <C>
SECTION 10.2. Amendment....................................................................... 59
SECTION 10.3. Separability.................................................................... 60
SECTION 10.4. Governing Law................................................................... 60
SECTION 10.5. Payments Due on Non-Business Day................................................ 60
SECTION 10.6. Successors...................................................................... 61
SECTION 10.7. Headings........................................................................ 61
SECTION 10.8. Reports, Notices and Demands.................................................... 61
SECTION 10.9. Agreement Not to Petition....................................................... 62
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act......................... 62
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture........................................... 63
SECTION 10.7. Counterparts.................................................................... 63
Exhibit A Certificate of Trust
Exhibit B Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Expense Agreement
Exhibit E Form of Capital Securities Certificate
</TABLE>
-vi-
<PAGE> 8
AMENDED AND RESTATED TRUST AGREEMENT, dated as of June __, 1998, among
(i) KEYCORP, an Ohio corporation (including any successors or assigns, the
"Depositor"), (ii) BANKERS TRUST COMPANY, a New York banking corporation, as
property trustee (in such capacity, the "Property Trustee" and, in its separate
corporate capacity and not in its capacity as Property Trustee, the "Bank"),
(iii) BANKERS TRUST (DELAWARE), a Delaware banking corporation, as Delaware
trustee (the "Delaware Trustee"), (iv) Louis D. Raffis, an individual, and
Daniel R. Stolzer, an individual, each of whose address is c/o KeyCorp, 127
Public Square, Cleveland, Ohio 44144 (each an "Administrative Trustee" and
collectively the "Administrative Trustees") (the Property Trustee, the Delaware
Trustee and the Administrative Trustees being referred to collectively as the
"Issuer Trustees") and (v) the several HOLDERS, as hereinafter defined.
WITNESSETH
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by entering into that certain Trust Agreement, dated as of June 2,
1998 (the "Original Trust Agreement"), and by the execution and filing by the
Delaware Trustee with the Secretary of State of the State of Delaware of the
Certificate of Trust, filed on June 2, 1998, attached as Exhibit A; and
WHEREAS, the Depositor and the Issuer Trustees desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (ii) the issuance and sale of the Capital
Securities by the Issuer Trust pursuant to the Underwriting Agreement, (iii) the
acquisition by the Issuer Trust from the Depositor of all of the right, title
and interest in the Debentures and (iv) the appointment of the Administrative
Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE> 9
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Trust Agreement;
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Trust Agreement as a whole and
not to any particular Article, Section or other subdivision; and
(e) unless the context otherwise requires, any reference to a
statute, rule or regulation refers to the same (including any successor
statute, rule or regulation thereto) as it may be amended from time to
time.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrative Trustees" means each Person appointed in accordance
with Section 8.19 solely in such Person's capacity as Administrative Trustee of
the Issuer Trust and not in such Person's individual capacity, or any successor
Administrative Trustee appointed as herein provided. The initial Administrative
Trustees are Louis D. Raffis and Daniel R. Stolzer.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that the Issuer Trust
shall not be deemed an Affiliate of the Depositor. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving Book-Entry Capital Securities, the rules and procedures of
the Clearing Agency for such
-2-
<PAGE> 10
Book-Entry Capital Securities, in each case to the extent applicable to such
transaction and as in effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the Issuer Trustees.
"Book-Entry Capital Securities" means a beneficial interest in a Global
Capital Securities Certificate, the ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in Section 5.4.
"Business Day" means any day on which (a) commercial banks and foreign
exchange markets are open for business (including dealings in foreign exchange
and foreign currency deposits) in the City of New York and London and, for
purposes of Section 10.5 only, in the relevant place of payment, and (b) the
Corporate Trust Office of the Property Trustee, the
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Corporate Trust Office (as defined in the Indenture) of the Debenture Trustee
and the Corporate Trust Office (as defined in the Guarantee Agreement) of the
Guarantee Trustee are open for business.
"Capital Securities Certificate" means a certificate evidencing Capital
Securities, substantially in the form attached as Exhibit E.
"Capital Security" means a preferred undivided beneficial interest in
the assets of the Issuer Trust, having a Liquidation Amount of $1,000 and having
the rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided herein.
"Certificate Depository Agreement" means the agreement among the Issuer
Trust, the Depositor and DTC, as the initial Clearing Agency, dated as of the
Closing Date, relating to the Trust Securities Certificates, substantially in
the form attached as Exhibit B, as the same may be amended and supplemented from
time to time.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" has the meaning given to such term in the Underwriting
Agreement, which date is also the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this Trust Agreement such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing Common
Securities, substantially in the form attached as Exhibit C.
"Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $1,000 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
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"Corporate Trust Office" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located in New
York, New York which on the date of this Trust Agreement is Four Albany Street,
New York, New York 10006 - Attention: Corporate Trust and Agency Group -
Corporate Market Services, and (ii) when used with respect to the Debenture
Trustee, its Corporate Trust Office as defined in the Indenture.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York banking
corporation and any successor thereto.
"Debentures" means the aggregate principal amount of the Depositor's
Floating Rate Junior Subordinated Deferrable Interest Debentures, issued
pursuant to the Indenture.
"Definitive Capital Securities Certificates" means either or both (as
the context requires) of (a) Capital Securities Certificates issued as
Book-Entry Capital Securities as provided in Section 5.2 or 5.4 and (b) Capital
Securities Certificates issued in certificated, fully registered form as
provided in Section 5.2, 5.4 or 5.5.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801, et seq., as it may be amended from time
to time.
"Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Issuer Trust and not in its individual capacity, or its
successor in interest in such capacity, or any successor trustee appointed as
herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Determination Date" means, in respect of each Distribution Period, the
second day on which commercial banks are open for business (including dealings
in foreign exchange and foreign currency deposits) in London prior to the
commencement of such Distribution Period.
"Distribution Amount" means, with respect to any Capital Security and
any Distribution Period, the amount of Distributions payable in respect of such
Distribution Period, which amount shall be calculated by (1) applying the
Distribution Rate to the Liquidation Amount of each Trust Security outstanding
at the commencement of the Distribution Period, by multiplying each such amount
by the actual number of days in such
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Distribution Period (which actual number of days shall include the first day but
exclude the last day of such Distribution Period) divided by 360 and (2)
rounding such quotient upwards to the nearest cent (half a cent being rounded
upwards). The determination of the Distribution Rate and the Distribution Amount
by or on behalf of the Issuer Trust shall (absent manifest error) be final and
binding on all parties.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distribution Period" means each period beginning on, and including,
____________, 1998, and ending on, but excluding, the first Distribution Date,
and each successive period beginning on, and including, a Distribution Date and
ending on, but excluding, the next succeeding Distribution Date.
"Distribution Rate" means, with respect to any Distribution Period, a
rate per annum equal to the Interest Rate (as defined in the Debentures) with
respect to the Interest Period under (and as defined in) the Debentures that
begins on the same date as such Distribution Period begins and ends on the same
date as such Distribution Period ends.
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"DTC" means The Depository Trust Company.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(c) default by the Issuer Trust in the payment of any
Redemption Price of any Trust Security when it becomes due and payable;
or
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in this
Trust Agreement (other than a covenant or warranty a default in the
performance or breach of which is described in clause (b) or (c) above)
and continuation of such default or breach for a period of 60
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days after there has been given, by registered or certified mail, to
the Issuer Trustees and the Depositor 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"
hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee and a successor Property Trustee not being appointed
within 90 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between KeyCorp, as Holder of the Common Securities, and the Issuer Trust, to be
dated the date hereof, substantially in the form attached as Exhibit D, as
amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Global Capital Securities Certificate" means a Capital Securities
Certificate that is registered in the Security Register in the name of a
Clearing Agency or a nominee thereof.
"Guarantee" means the Guarantee Agreement executed and delivered by the
Depositor and Bankers Trust Company, as trustee, for the benefit of the holders
of the Capital Securities, as amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities is or are registered in the Securities Register; any such Person
shall be a beneficial owner within the meaning of the Delaware Business Trust
Act; provided, however, that in determining whether the Holders of the requisite
amount of Capital Securities have voted on any matter provided for in this Trust
Agreement, then for the purpose of any such determination, so long as Definitive
Capital Securities Certificates have not been issued, the term Holders as used
herein shall refer to the Owners, notwithstanding the provisions of Section 5.7
of this Trust Agreement.
"Indenture" means the Indenture, dated as of December 4, 1996, between
the Depositor and the Debenture Trustee, as trustee, as amended or supplemented
from time to time.
"Issuer Trust" means the business trust created under the laws of the
State of Delaware and identified on the cover page to this Trust Agreement.
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"Issuer Trustees" means the parties identified as the "Issuer Trustees"
in the preamble to this Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture, the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, and (b) with respect to a distribution of Debentures to
Holders in connection with a dissolution or liquidation of the Issuer Trust,
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Trust Securities of the Holder to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust
Security.
"Liquidation Date" means the date of the dissolution, winding up or
termination of the Issuer Trust pursuant to Section 9.4(a).
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
"Officers' Certificate" means a certificate signed by the Chairman and
Chief Executive Officer, President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary, of
the Depositor, and delivered to the appropriate Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 8.16 shall be the
principal executive, financial or accounting officer of the Depositor. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
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(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Issuer Trust, the Property Trustee or the Depositor and who
shall be reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.
"Outstanding," when used with respect to Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore cancelled by the Securities
Registrar or delivered to the Securities Registrar for cancellation;
(b) Trust Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Trust Securities;
provided that, if such Trust Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Trust Agreement;
and
(c) Trust Securities which have been paid or in exchange for
or in lieu of which other Trust Securities have been executed and
delivered pursuant to Sections 5.4, 5.5, and 5.6;
provided, however, that in determining whether the Holders of the requisite
aggregate Liquidation Amount of the Outstanding Capital Securities have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Capital Securities owned by the Depositor, any Issuer Trustee, any
Administrative Trustee or any Affiliate of the Depositor, any Issuer Trustee or
any Administrative Trustee shall be disregarded and deemed not to be
Outstanding, except that (a) in determining whether any Issuer Trustee or any
Administrative Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Capital
Securities that a Responsible Officer of such Issuer Trustee or such
Administrative Trustee, as the case may be, knows to be so owned shall be so
disregarded, and (b) the foregoing shall not apply at any time when all of the
outstanding Capital Securities are owned by the Depositor, one or more of the
Issuer Trustees, one or more of the Administrative Trustees and/or any such
Affiliate. Capital Securities so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Administrative Trustees the pledgee's right so to act with respect to such
Capital Securities and that the pledgee is not the Depositor or any Affiliate of
the Depositor.
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"Owner" means each Person who is the beneficial owner of Book-Entry
Capital Securities as reflected in the records of the Clearing Agency or, if a
Clearing Agency Participant is not the Owner, then as reflected in the records
of a Person maintaining an account with such Clearing Agency (directly or
indirectly, in accordance with the rules of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Holders in which all amounts paid in respect
of the Debentures will be held and from which the Property Trustee, through the
Paying Agent, shall make payments to the Holders in accordance with Sections 4.1
and 4.2.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Property Trustee of the Issuer Trust and not in its individual capacity, or its
successor in interest in such capacity, or any successor property trustee
appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures, allocated on a pro rata basis (based on Liquidation Amounts) among
the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Responsible Officer" means, when used with respect to the Property
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Property Trustee
customarily performing functions similar to those performed by any of the above
designated officers, and also, with respect to a particular matter, any other
officer, to whom such matter is referred because of such officer's knowledge of
and
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familiarity with the particular subject and with respect to the Delaware
Trustee, any officer of the Delaware Trustee customarily performing functions
similar to those performed by any of the above designated officers, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5(a).
"Successor Capital Security" of any particular Capital Security means
every Capital Security issued after, and evidencing all or a portion of the same
beneficial interest in the Issuer Trust as that evidenced by, such particular
Capital Security; and, for the purposes of this definition, any Capital Security
executed and delivered under Section 5.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Capital Security shall be deemed to
evidence the same beneficial interest as the mutilated, destroyed, lost or
stolen Capital Securities Certificate.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including (i) all exhibits hereto and (ii) for all
purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this Trust Agreement is executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) the rights of the Issuer
Trust under the Expense Agreement, (c) any cash on deposit in, or owing to, the
Payment Account and (d) all proceeds and rights in respect of the foregoing and
any other property and assets for the time being held or deemed to be held by
the Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Capital Securities Certificates.
"Trust Security" means any one of the Common Securities or the Capital
Securities.
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"Underwriting Agreement" means the Underwriting Agreement, dated as of
June [18] , 1998, among the Issuer Trust, the Depositor and the Underwriters
named therein, as the same may be amended from time to time.
ARTICLE II.
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.
The Issuer Trust continued hereby shall be known as "KeyCorp Capital
I," as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
Issuer Trustees, in which name the Issuer Trustees may conduct the business of
the Issuer Trust, make and execute contracts and other instruments on behalf of
the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is E.A.
Delle Donne Corporate Center, Montgomery Bldg., 1011 Centre Road, Suite 200,
Wilmington, Delaware 19805-1266, or such other address in the State of Delaware
as the Delaware Trustee may designate by written notice to the Holders and the
Depositor. The principal executive office of the Issuer Trust is in care of
KeyCorp, 127 Public Square, Cleveland, Ohio 44114-1306,
Attn: Corporate Treasury.
SECTION 2.3. Initial Contribution of Trust Property; Organizational
Expenses.
The Property Trustee acknowledges receipt in trust from the Depositor
in connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Issuer Trust as they arise or shall, upon request of any
Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.4. Issuance of the Capital Securities; Authentication.
On June ___, 1998 the Depositor, both on its own behalf and on behalf
of the Issuer Trust and pursuant to the Original Trust Agreement, executed and
delivered the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrative Trustee, on behalf of the
Issuer Trust, shall execute in accordance with Sections 5.2, 5.3 and 8.9(a) and
deliver to the Underwriters, Capital Securities Certificates, registered in the
names requested by the Underwriters or a representative thereof, evidencing
250,000 Capital Securities having an aggregate Liquidation Amount of
$250,000,000, against
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receipt of the aggregate purchase price for such Capital Securities of
$250,000,000 by the Property Trustee.
SECTION 2.5. Issuance of the Common Securities; Subscription and
Purchase of Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Issuer Trust, shall
execute in accordance with Sections 5.2 and 5.3 and the Property Trustee shall
deliver to the Depositor Common Securities Certificates, registered in the name
of the Depositor, evidencing [ ] Common Securities having an aggregate
Liquidation Amount of $[ ] against payment by the Depositor of such amount to
the Property Trustee. Contemporaneously therewith, an Administrative Trustee, on
behalf of the Issuer Trust, shall subscribe for and purchase from the Depositor
the Debentures, registered in the name of the Property Trustee on behalf of the
Issuer Trust and having an aggregate principal amount equal to $[ ], and, in
satisfaction of the purchase price for such Debentures, the Property Trustee, on
behalf of the Issuer Trust, shall deliver to the Depositor the sum of $[ ]
(being the sum of the amounts delivered to the Property Trustee pursuant to (i)
Section 2.4 and (ii) this Section 2.5).
SECTION 2.6. Continuation of Trust.
The exclusive purposes and functions of the Issuer Trust are (a) to
issue and sell Trust Securities and to use the proceeds from such sale to
acquire the Debentures, and (b) to engage in only those activities necessary or
incidental thereto. The Depositor hereby appoints the Issuer Trustees as
trustees of the Issuer Trust, to have all the rights, powers and duties to the
extent set forth herein, and the Issuer Trustees hereby accept such appointment.
The Property Trustee hereby declares that it will hold the Trust Property in
trust upon and subject to the conditions set forth herein for the benefit of the
Issuer Trust and the Holders. The Administrative Trustees shall have only those
ministerial duties set forth herein with respect to accomplishing the purposes
of the Issuer Trust and, to the fullest extent permitted by law, shall not be
trustees or fiduciaries with respect to the Issuer Trust or the Holders. The
Property Trustee shall have the power to perform those duties assigned to the
Administrative Trustees. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Issuer Trustees of the
Issuer Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Delaware Business Trust Act and for taking such actions as
are required to be taken by a Delaware Trustee under the Delaware Business Trust
Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees shall conduct the affairs of the Issuer Trust
in accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this
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Section 2.7, and in accordance with the following provisions (i) and (ii), the
Issuer Trustees shall have the authority to enter into all transactions and
agreements determined by the Issuer Trustees to be appropriate in exercising the
authority, express or implied, otherwise granted to the Issuer Trustees, as the
case may be, under this Trust Agreement, and to perform all acts in furtherance
thereof, including without limitation, the following:
(i) Each Administrative Trustee shall have the power and
authority to act on behalf of the Issuer Trust with respect to the
following matters:
(A) the issuance and sale of the Trust
Securities;
(B) to cause the Issuer Trust to enter into,
and to execute and deliver on behalf of the Issuer Trust, the
Expense Agreement and the Certificate Depository Agreement and
such other agreements as may be necessary or desirable in
connection with the purposes and function of the Issuer Trust;
(C) assisting in the registration of the
Capital Securities under the Securities Act and under
applicable state securities or blue sky laws, and the
qualification of this Trust Agreement as a trust indenture
under the Trust Indenture Act;
(D) assisting in the listing of the Capital
Securities upon such securities exchange or exchanges as shall
be determined by the Depositor, with the registration of the
Capital Securities under the Exchange Act, and the preparation
and filing of all periodic and other reports and other
documents pursuant to the foregoing;
(E) the sending of notices (other than
notices of default) and other information regarding the Trust
Securities and the Debentures to the Holders in accordance
with this Trust Agreement;
(F) the consent to the appointment of a
Paying Agent and Securities Registrar in accordance with this
Trust Agreement (which consent shall not be unreasonably
withheld);
(G) the execution of the Trust Securities in
accordance with this Trust Agreement;
(H) the execution and delivery of closing
certificates pursuant to the Underwriting Agreement and the
application for a taxpayer identification number for the
Issuer Trust;
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(I) to the extent provided in this Trust
Agreement, the winding up of the affairs of and liquidation of
the Issuer Trust and the preparation of the certificate of
cancellation with the Secretary of State of the State of
Delaware;
(J) unless otherwise determined by the
Property Trustee or the holders of a majority of the
Outstanding Capital Securities or Common Securities or as
otherwise required by the Delaware Business Trust Act or the
Trust Indenture Act, to execute on behalf of the Issuer Trust
(either acting alone or together with any or all of the
Administrative Trustees) any documents that the Administrative
Trustees have the power to execute pursuant to this Trust
Agreement; and
(K) the taking of any action incidental to
the foregoing as the Issuer Trustees may from time to time
determine is necessary or advisable to give effect to the
terms of this Trust Agreement for the benefit of the Holders
(without consideration of the effect of any such action on any
particular Holder).
(ii) The Property Trustee shall have the power, duty and
authority to act on behalf of the Issuer Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and
any other payments made in respect of the Debentures and the
holding of such amounts in the Payment Account;
(D) the distribution through the Paying Agent
of amounts distributable to the Holders in respect of the
Trust Securities;
(E) the exercise of all of the rights, powers
and privileges of a holder of the Debentures;
(F) the sending of notices of default and
other information regarding the Trust Securities and the
Debentures to the Holders in accordance with this Trust
Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
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(H) to the extent provided in this Trust
Agreement, the winding up of the affairs of and liquidation of
the Issuer Trust and the execution and filing of the
certificate of cancellation with the Secretary of State of the
State of Delaware;
(I) after an Event of Default (other than
under paragraph (b), (c), (d) or (e) of the definition of such
term if such Event of Default is by or with respect to the
Property Trustee) the taking of any action incidental to the
foregoing as the Property Trustee may from time to time
determine is necessary or advisable to give effect to the
terms of this Trust Agreement and protect and conserve the
Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any
particular Holder); and
(J) any of the duties, liabilities, powers or
the authority of the Administrative Trustees set forth herein;
and in the event of a conflict between the action of the
Administrative Trustees and the action of the Property
Trustee, the action of the Property Trustee shall prevail.
(b) So long as this Trust Agreement remains in effect, the Issuer Trust
(or the Issuer Trustees or Administrative Trustees acting on behalf of the
Issuer Trust) shall not undertake any business, activities or transaction except
as expressly provided herein or contemplated hereby. In particular, neither the
Issuer Trustees nor the Administrative Trustees shall (i) acquire any
investments or engage in any activities not authorized by this Trust Agreement,
(ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise
dispose of any of the Trust Property or interests therein, including to Holders,
except as expressly provided herein, (iii) take any action that would reasonably
be expected to cause the Issuer Trust to be classified as an association taxable
as a corporation or as other than a grantor trust for United States federal
income tax purposes, (iv) incur any indebtedness for borrowed money or issue any
other debt or (v) take or consent to any action that would result in the
placement of a Lien on any of the Trust Property. The Property Trustee shall, at
the sole cost and expense of the Issuer Trust, defend all claims and demands of
all Persons at any time claiming any Lien on any of the Trust Property adverse
to the interest of the Issuer Trust or the Holders in their capacity as Holders.
(c) In connection with the issue and sale of the Capital Securities,
the Depositor shall have the right and responsibility to assist the Issuer Trust
with respect to, or effect on behalf of the Issuer Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Issuer Trust with the
Commission and the execution on behalf of the Issuer Trust of a
registration statement on the appropriate
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form in relation to the Capital Securities, including any amendments
thereto, and the taking of any action necessary or desirable to sell
the Capital Securities in a transaction or a series of transactions
pursuant thereto;
(ii) the determination of the States in which to take
appropriate action to qualify or register for sale all or part of the
Capital Securities and the determination of any and all such acts,
other than actions which must be taken by or on behalf of the Issuer
Trust, and the advice to the Issuer Trust of actions they must take on
behalf of the Issuer Trust, and the preparation for execution and
filing of any documents to be executed and filed by the Issuer Trust or
on behalf of the Issuer Trust, as the Depositor deems necessary or
advisable in order to comply with the applicable laws of any such
States in connection with the sale of the Capital Securities;
(iii) if the Depositor shall desire, the preparation for
filing by the Issuer Trust and execution on behalf of the Issuer Trust
of an application to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing, upon notice
of issuance, of any Capital Securities;
(iv) the preparation for filing by the Issuer Trust with the
Commission and the execution on behalf of the Issuer Trust of a
registration statement on Form 8-A relating to the registration of the
Capital Securities under Section 12(b) or 12(g) of the Exchange Act,
including any amendments thereto;
(v) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of the
Capital Securities; and
(vi) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Issuer
Trustees are authorized and directed to conduct the affairs of the Issuer Trust
and to operate the Issuer Trust so that the Issuer Trust will not be deemed to
be an "investment company" required to be registered under the 1940 Act, or to
be classified as an association taxable as a corporation or as other than a
grantor trust for United States federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, the Administrative Trustees,
the Property Trustee and the Holder of a majority of the Common Securities are
authorized to take any action, not inconsistent with applicable law, the
Certificate of Trust or this Trust Agreement, that each of any Administrative
Trustee, Property Trustee and the holders of a majority of Common Securities
determines in its discretion to be necessary or desirable for such purposes, as
long as such action does not adversely affect in any material respect the
interests of the Holders of the Capital Securities. In no event shall the Issuer
Trustees be liable to the
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Issuer Trust or the Holders for any failure to comply with this section that
results from a change in law or regulation or interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist of the Trust Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III.
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits in and
withdrawals from the Payment Account in accordance with this Trust Agreement.
All monies and other property deposited or held from time to time in the Payment
Account shall be held by the Property Trustee in the Payment Account for the
exclusive benefit of the Holders and for distribution as herein provided,
including (and subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 4.1 Distributions.
(a) The Trust Securities represent undivided beneficial interests in
the Trust Property, and Distributions (including Additional Amounts) will be
made on the Trust Securities at the
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rate and on the dates that payments of interest (including of Additional
Interest, as defined in the Indenture) are made on the Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative,
and will accumulate whether or not there are funds of the Issuer Trust
available for the payment of Distributions. Distributions shall accrue
from June __, 1998, and, except in the event (and to the extent) that
the Depositor exercises its right to defer the payment of interest on
the Debentures pursuant to the Indenture, shall be payable
semi-annually in arrears on [ ] and [ ] of each year, commencing on
[ ]. If any date on which a Distribution is otherwise payable on the
Trust Securities is not a Business Day, then the payment of such
Distribution shall be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next
succeeding calendar year, payment of such Distribution shall be made on
the immediately preceding Business Day, in each case with the same
force and effect as if made on the date such payment was originally
payable (each date on which Distributions are payable in accordance
with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to Distributions
payable at the Distribution Rate as in effect from time to time. The
amount of Distributions payable for any period shall include the
Additional Amounts, if any, in respect of such period.
(iii) Distributions on the Trust Securities shall be made by
the Property Trustee from the Payment Account and shall be payable on
each Distribution Date only to the extent that the Issuer Trust has
funds then on hand and available in the Payment Account for the payment
of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
relevant record date, which shall be ___________ or ___________ next preceding
the relevant Distribution Date.
(c) (i) The Issuer Trust shall cause the Distribution Rate, the
Distribution Amount in respect of each Trust Security and the Distribution Date
for each Distribution Period to be notified to the Property Trustee and each
Paying Agent appointed by the Issuer Trust and also to be notified to the
Holders of the Trust Securities in accordance with the provisions of Section
10.8, in each case as soon as possible after the determination thereof but in no
event later than the second Business Day after the Determination Date in respect
of such Distribution Period.
(ii) All calculations of the Distribution Rate and the Distribution
Amount by or on behalf of the Issuer Trust shall (absent manifest error) be
final and binding on all parties, and
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all certificates, communications, opinions, determinations, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
the provisions of this Section 4.1(c) or the provisions of the Indenture
relating to the calculation of the Interest Rate, whether by the reference banks
(or any of them) or the agent bank, shall (absent manifest error) be binding on
the Issuer Trust, the Depositor, such agent bank and all of the Holders of the
Trust Securities, and no liability shall (absent manifest error) attach to any
such agent bank in connection with the exercise or non-exercise by it of its
powers, duties and discretions.
SECTION 4.2. Redemption.
(a) On each Debenture Redemption Date and on the stated maturity of the
Debentures, the Issuer Trust will be required to redeem a Like Amount of Trust
Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or, if the Redemption Price cannot
be calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price provided pursuant to the Indenture
together with a statement that it is an estimate and that the actual
Redemption Price will be calculated on the third Business Day prior to
the Redemption Date (and if an estimate is provided, a further notice
shall be sent of the actual Redemption Price on the date that notice of
such actual Redemption Price is received pursuant to the Indenture);
(iii) the CUSIP number or CUSIP numbers of the Capital
Securities affected;
(iv) if less than all the Outstanding Trust Securities are to
be redeemed, the identification and the total Liquidation Amount of the
particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed and
that Distributions thereon will cease to accumulate on or after said
date, except as provided in Section 4.2(d) below; and
(vi) the place or places where the Trust Securities are to be
surrendered for the payment of the Redemption Price.
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The Issuer Trust in issuing the Trust Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall
indicate the "CUSIP" numbers of the Trust Securities in notices of redemption
and related materials as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Trust Securities or as contained in any notice of
redemption and related materials.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the extent
that the Issuer Trust has funds then on hand and available in the Payment
Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Capital Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to Book-Entry Capital Securities, irrevocably deposit with the Clearing
Agency for such Book-Entry Capital Securities, to the extent available therefor,
funds sufficient to pay the applicable Redemption Price and will give such
Clearing Agency irrevocable instructions and authority to pay the Redemption
Price to the Holders thereof. With respect to Capital Securities that are not
Book-Entry Capital Securities, the Property Trustee, subject to Section 4.2(c),
will irrevocably deposit with the Paying Agent, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
the Paying Agent irrevocable instructions and authority to pay the Redemption
Price to the Holders thereof upon surrender of their Capital Securities
Certificates. Notwithstanding the foregoing, Distributions payable on or prior
to the Redemption Date for any Trust Securities called for redemption shall be
payable to the Holders of such Trust Securities as they appear on the Securities
Register for the Trust 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 Holders
of Trust Securities so called for redemption will cease, except the right of
such Holders to receive the Redemption Price including any unpaid Distribution
payable on or prior to the Redemption Date, but without interest, and such Trust
Securities will cease to be Outstanding. In the event that any date on which any
Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on such date. In the event
that payment of the Redemption Price in respect of any Trust Securities called
for redemption is improperly withheld or refused and not paid either by the
Issuer Trust or by the Depositor pursuant to the Guarantee, Distributions on
such Trust Securities will continue to accumulate as set forth in Section 4.1,
from the Redemption Date originally established by the Issuer Trust for such
Trust Securities to the date such Redemption Price is actually paid, in which
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case the actual payment date will be the date fixed for redemption for purposes
of calculating the Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Capital Securities. The particular Capital Securities to be redeemed shall
be selected on a pro rata basis (based upon Liquidation Amounts) not more than
60 days prior to the Redemption Date by the Property Trustee from the
Outstanding Capital Securities not previously called for redemption, provided
that, so long as the Capital Securities are in book-entry-only form, such
selection shall be made in accordance with the customary procedures for the
Clearing Agency for the Capital Securities. The Property Trustee shall promptly
notify the Securities Registrar 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
this 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 Liquidation Amount of Capital Securities that has been or is to be
redeemed.
SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including any Additional Amounts) on, and
the Redemption Price of, the Trust Securities, as applicable, shall be made,
subject to Section 4.2(e), pro rata (based on Liquidation Amounts) among the
Common Securities and the Capital Securities; provided, however, that if on any
Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default shall have occurred and be continuing, no payment of
any Distribution (including any Additional Amounts) on, or Redemption Price of,
any Common Security, and no other payment on account of the redemption,
liquidation or other acquisition of Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions (including
any Additional Amounts) on all 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
Outstanding Capital Securities, shall have been made or provided for, and all
funds immediately available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions (including any Additional
Amounts) on, or the Redemption Price of, Capital Securities then due and
payable.
(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holder of Common Securities will be
deemed to have waived any right to act with respect to any such Event of Default
under this Trust Agreement until the effect of all such Events of Default with
respect to the Capital Securities have been cured, waived or otherwise
eliminated. Until any such Event of Default under this Trust
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Agreement with respect to the Capital Securities has been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
Holders of the Capital Securities and not on behalf of the Holder of the Common
Securities, and only the Holders of the Capital Securities will have the right
to direct the Property Trustee to act on their behalf.
SECTION 4.4. Payment Procedures.
Payments of Distributions (including Additional Amounts, if applicable)
in respect of the Capital Securities shall be made by check mailed to the
address of the Holder entitled thereto as such address shall appear on the
Securities Register or, if the Capital Securities are held by a Clearing Agency,
such Distributions shall be made to the Clearing Agency in immediately available
funds, which shall credit the relevant Holders' accounts at such Clearing Agency
on the applicable Distribution Dates. Payments in respect of the Common
Securities shall be made in such manner as shall be mutually agreed between the
Property Trustee and the Holder of the Common Securities.
SECTION 4.5. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States federal, state and local tax
and information returns and reports required to be filed by or in respect of the
Issuer Trust. In this regard, the Administrative Trustees shall (a) prepare and
file (or cause to be prepared and filed) the appropriate Internal Revenue
Service Form required to be filed in respect of the Issuer Trust in each taxable
year of the Issuer Trust and (b) prepare and furnish (or cause to be prepared
and furnished) to each Holder the appropriate Internal Revenue Service form
required to be provided by the Issuer Trust. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such returns
and reports promptly after such filing or furnishing. The Property Trustee shall
comply with United States federal withholding and backup withholding tax laws
and information reporting requirements with respect to any payments to Holders
under the Trust Securities.
SECTION 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust.
Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Issuer Trust by
the United States or any other taxing authority.
SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Capital Securities shall
be reduced by the amount of any corresponding payment such Holder (or an Owner
with respect to the
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Holder's Capital Securities) has directly received pursuant to Section 5.8 of
the Indenture or Section 5.13 of this Trust Agreement.
SECTION 4.8. Liability of the Holder of Common Securities.
Any Holder of the Common Securities shall be liable for the debts and
obligations of the Issuer Trust in the manner and to the extent set forth in the
Expense Agreement and agrees that it shall be subject to all liabilities to
which the Holder of the Common Securities may be subject, and shall make all
payments that the Holder of the Common Securities is required to make, under the
terms of the Expense Agreement.
ARTICLE V.
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the creation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Capital Securities Certificates shall be issued in minimum
denominations of $1,000 Liquidation Amount (and in blocks of at least 100
Capital Securities) and integral multiples of $1,000 in excess thereof, and the
Common Securities Certificates shall be issued in denominations of $1,000
Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be executed on behalf of the Issuer Trust by manual or
facsimile signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Issuer Trust, shall be validly issued and entitled to the benefits
of this Trust Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the delivery of such Trust
Securities Certificates or did not hold such offices at the date of delivery of
such Trust Securities Certificates. A transferee of a Trust Securities
Certificate shall become a Holder, and shall be entitled to the rights and
subject to the obligations of a Holder hereunder, upon due registration of such
Trust Securities Certificate in such transferee's name pursuant to Section 5.5.
(b) Upon their original issuance, Capital Securities Certificates shall
be issued in the form of one or more Global Capital Securities Certificates
registered in the name of DTC,
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as Clearing Agency, or its nominee and deposited with DTC or a custodian for DTC
for credit by DTC to the respective accounts of the Owners thereof (or such
other accounts as they may direct).
(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 5.3. Execution and Delivery of Trust Securities Certificates.
At the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust by manual or
facsimile signature and delivered to or upon the written order of the Depositor,
signed by its chairman of the board, its president, any executive vice president
or any vice president, treasurer or assistant treasurer or controller without
further corporate action by the Depositor, in authorized denominations.
SECTION 5.4. Book-Entry Capital Securities.
As provided in Section 5.2(b), Capital Securities, upon original
issuance, will be issued in the form of Global Capital Securities Certificates
representing Book-Entry Capital Securities, to be delivered to DTC or its
nominee by, or on behalf of, the Issuer Trust. Such Global Capital Securities
Certificates shall initially be registered on the Securities Register in the
name of Cede & Co., the nominee of DTC, and no Owner will receive a Definitive
Capital Securities Certificate representing such Owner's interest in such
Capital Securities, except as provided in this Section 5.4.
(a) Each Global Capital Securities Certificate issued under this Trust
Agreement shall be registered in the name of the Clearing Agency or a nominee
thereof designated by the Depositor for the related Book-Entry Capital
Securities and delivered to such Clearing Agency or a nominee thereof or
custodian therefor and each such Global Capital Securities Certificate shall
constitute a single Capital Securities Certificate for all purposes of this
Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, no
Global Capital Securities Certificate may be exchanged in whole or in part for
Capital Securities Certificates registered, and no transfer of a Global Capital
Securities Certificate in whole or in part may be registered, in the name of any
Person other than the Clearing Agency for such Global Capital Securities
Certificate or a nominee thereof unless (i) the Clearing Agency advises the
Depositor and the Property Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities with respect
to the Global Capital Securities Certificates, and the Depositor is unable to
locate a qualified successor, (ii) the Issuer Trust at its option advises the
Clearing Agency in writing that it elects to terminate the book-entry system
through the Clearing Agency, or (iii) a Debenture Event of Default has occurred
and
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is continuing. Upon the occurrence of any event specified in clause (i), (ii) or
(iii) above, the Administrative Trustees shall notify the Clearing Agency and
the Clearing Agency shall notify all Owners of Book-Entry Capital Securities,
the Property Trustee and the Administrative Trustees of the occurrence of such
event and of the availability of the Definitive Capital Securities Certificates
to Owners of such class or classes, as applicable, requesting the same.
(c) If any Global Capital Securities Certificate is to be exchanged for
other Capital Securities Certificates or cancelled in part, or if another
Capital Securities Certificate is to be exchanged in whole or in part for a
beneficial interest in any Global Capital Securities Certificate, then either
(i) such Global Capital Securities Certificate shall be so surrendered for
exchange or cancellation as provided in this Article Five or (ii) the aggregate
Liquidation Amount represented by such Global Capital Securities Certificate
shall be reduced, subject to Section 5.2, or increased by an amount equal to the
Liquidation Amount represented by that portion of the Global Capital Securities
Certificate to be so exchanged or cancelled, or equal to the Liquidation Amount
represented by such other Capital Securities Certificates to be so exchanged for
Global Capital Securities represented thereby, as the case may be, by means of
an appropriate adjustment made on the records of the Securities Registrar,
whereupon the Property Trustee, in accordance with the Applicable Procedures,
shall instruct the Clearing Agency or its authorized representative to make a
corresponding adjustment to its records. Upon surrender to the Administrative
Trustees or the Securities Registrar of the Global Capital Securities
Certificate or Certificates by the Clearing Agency, accompanied by registration
instructions, the Administrative Trustees, or any one of them, shall execute the
Definitive Capital Securities Certificates in accordance with the instructions
of the Clearing Agency. None of the Securities Registrar, the Issuer Trustees or
the Administrative Trustees shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Capital Securities
Certificates, the Issuer Trustees and Administrative Trustees shall recognize
the Holders of the Definitive Capital Securities Certificates as Holders. The
Definitive Capital Securities Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
(d) Every Capital Securities Certificate executed and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global Capital
Securities Certificate or any portion thereof, whether pursuant to this Article
Five or Article Four or otherwise, shall be executed and delivered in the form
of, and shall be, a Global Capital Securities Certificate, unless such Capital
Securities Certificate is registered in the name of a Person other than the
Clearing Agency for such Global Capital Securities Certificate or a nominee
thereof.
(e) The Clearing Agency or its nominee, as registered owner of a Global
Capital Securities Certificate, shall be the Holder of such Global Capital
Securities Certificate for all purposes under this Trust Agreement and the
Global Capital Securities Certificate, and
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Owners with respect to a Global Capital Securities Certificate shall hold such
interests pursuant to the Applicable Procedures. The Securities Registrar, the
Administrative Trustees and the Issuer Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Trust Agreement relating to the
Book-Entry Capital Securities (including the payment of the Liquidation Amount
of and Distributions on the Capital Securities evidenced by Book- Entry Capital
Securities and the giving of instructions or directions to Owners of Capital
Securities evidenced by Book-Entry Capital Securities) as the sole Holder of
Capital Securities evidenced by the Book-Entry Capital Securities and shall have
no obligations to the Owners thereof. Neither the Property Trustee nor the
Securities Registrar shall have any liability in respect of any transfers
effected by the Clearing Agency.
The rights of the Owners of the Book-Entry Capital Securities shall be
exercised only through the Clearing Agency and shall be limited to those
established by law, the Applicable Procedures and agreements between such Owners
and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive Capital Securities
Certificates are issued pursuant to Section 5.4(b), the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants and
receive and transmit payments on the Capital Securities to such Clearing Agency
Participants, and none of the Depositor, the Administrative Trustees or the
Issuer Trustees shall have any responsibility or obligation with respect
thereto.
SECTION 5.5. Registration of Transfer and Exchange of Capital
Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 5.9, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and exchanges
of Capital Securities Certificates (the "Securities Register") in which the
registrar designated by the Property Trustee (the "Securities Registrar") with
the reasonable consent of the Administrative Trustees, subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Capital Securities Certificates and Common Securities Certificates (subject
to Section 5.11 in the case of the Common Securities Certificates) and
registration of transfers and exchanges of Capital Securities Certificates as
herein provided. The Bank shall be the initial Securities Registrar.
Upon surrender for registration of transfer of any Capital Securities
Certificate at the office or agency maintained pursuant to Section 5.9, the
Administrative Trustees or any one of them shall execute by manual or facsimile
signature and deliver to the Property Trustee for further delivery, in the name
of the designated transferee or transferees, one or more new Capital Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
dated the date of execution by such Administrative Trustee.
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The Securities Registrar shall not be required to register the transfer
of any Capital Securities that have been called for redemption. At the option of
a Holder, Capital Securities Certificates may be exchanged for other Capital
Securities Certificates in authorized denominations of the same class and of a
like aggregate Liquidation Amount upon surrender of the Capital Securities
Certificates to be exchanged at the office or agency maintained pursuant to
Section 5.9.
Every Capital Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Securities Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each Capital
Securities Certificate surrendered for registration of transfer or exchange
shall be cancelled and subsequently disposed of by the Property Trustee or
Securities Registrar in accordance with such Person's customary practice.
No service charge shall be made for any registration of transfer or
exchange of Capital Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Capital Securities
Certificates.
The provisions of Sections 8.1, 8.3 and 8.6 herein shall apply to the
Bank also in its role as Securities Registrar, for so long as the Bank shall act
as Securities Registrar.
Whenever this Trust Agreement makes reference to the execution of Trust
Securities Certificates, such reference to execution shall mean manual execution
by an Administrative Trustee or, in the alternative, execution by facsimile
signature by an Administrative Trustee and authentication by the Property
Trustee.
Capital Securities Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper Administrative
Trustees of the Issuer Trust shall bind the Issuer Trust, notwithstanding that
such individuals or any of them have ceased to hold such office prior to the
authentication and delivery of such Capital Securities Certificates or did not
hold such offices at the date of such Capital Securities Certificates.
Each Capital Securities Certificate that is executed by facsimile and
authenticated by the Property Trustee shall be dated the date of its
authentication.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Trust Agreement, transfers and exchanges of Capital Securities
Certificates and beneficial interests in Book-Entry Capital Securities of the
kinds specified in this Section 5.5(b) shall be made only in accordance with
this Section 5.5(b).
(i) Non-Global Capital Securities Certificate to Global
Capital Securities Certificate. If the Holder of a Capital Securities
Certificate (other than a Global
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Capital Securities Certificate) wishes at any time to transfer all or
any portion of the Capital Securities represented thereby to a Person
who wishes to take delivery thereof in the form of Book-Entry Capital
Securities represented by a Global Capital Securities Certificate, such
transfer may be effected only in accordance with the provisions of this
Clause (b)(i) and subject to the Applicable Procedures. Upon receipt by
the Securities Registrar of such Capital Securities Certificate as
provided in Section 5.5(a) and instructions satisfactory to the
Securities Registrar directing that a specified number of Capital
Securities to be represented by the Global Capital Securities
Certificate not greater than the number of Capital Securities
represented by such Capital Securities Certificate be credited to a
specified Clearing Agency Participant's account and then the Securities
Registrar shall cancel such Capital Securities Certificate (and issue a
new Capital Securities Certificate in respect of any untransferred
portion thereof) as provided in Section 5.5(a) and increase the
aggregate Liquidation Amount of the Global Capital Securities
Certificate by the Liquidation Amount represented by such Capital
Securities so transferred as provided in Section 5.4(c).
(ii) Non-Global Capital Securities Certificate to Non-Global
Capital Securities Certificate. Capital Securities other than
Book-Entry Capital Securities may be transferred, in whole or in part,
to a Person who takes delivery in the form of a Capital Securities
Certificate that is not a Global Capital Securities Certificate as
provided in Section 5.5(a).
(iii) Global Capital Securities Certificate to Non-Global
Capital Securities Certificate. Capital Securities represented by a
Global Capital Securities Certificate may be exchanged for a Capital
Securities Certificate that is not a Global Capital Securities
Certificate as provided in Section 5.4.
Before registering for transfer or exchange any Capital Securities
Certificates issued in certificated fully registered form as provided in
Sections 5.2, 5.4 or 5.5 of the Trust Agreement, the Property Trustee as
Securities Registrar may require an Opinion of Counsel or other evidence
satisfactory to it (which may include a certificate from such purchaser or
Holder) that 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 or another applicable exemption
with respect to such purchase or holding and, in the case of any purchaser or
Holder relying on any exemption other than PTCE 96-23, 95-60, 91-38, 90-1 or
84-14, an Opinion of Counsel or other evidence satisfactory to the Property
Trustee with respect to the availability of such exemption. Any purchaser or
Holder of any 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 Capital 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 or another
applicable exemption with respect to such purchase or holding.
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(c) The Property Trustee shall not be required to insure or verify
compliance with securities laws, including the Securities Act, Exchange Act and
1940 Act, in connection with transfers and exchanges of Capital Securities
Certificates.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Issuer Trust shall execute and make available for delivery, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Trust Securities
Certificate, a new Trust Securities Certificate of like class, tenor and
denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section, the Administrative Trustees or the Securities
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Securities Certificate issued pursuant to this Section shall constitute
conclusive evidence of an undivided beneficial interest in the assets of the
Issuer Trust, as if originally issued, whether or not the lost, stolen or
destroyed Trust Securities Certificate shall be found at any time.
SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees, the Administrative Trustees or the Securities
Registrar shall treat the Person in whose name any Trust Securities Certificate
shall be registered in the Securities Register as the owner of such Trust
Securities Certificate for the purpose of receiving Distributions and for all
other purposes whatsoever, and neither the Issuer Trustees, the Administrative
Trustees nor the Securities Registrar shall be bound by any notice to the
contrary.
SECTION 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor, the Property Trustee, the Delaware Trustee or the Administrative
Trustees accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
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SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrative Trustees, which consent shall not be unreasonably withheld, an
office or offices or agency or agencies where Capital Securities Certificates
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Corporate Trust Office of the Property Trustee
is initially designated the office for such purpose. The Administrative Trustees
or the Property Trustee shall give prompt written notice to the Depositor and to
the Holders of any change in the location of the Securities Register or any such
office or agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrative Trustees. Any Paying Agent shall have the
revocable power to withdraw funds from the Payment Account for the purpose of
making the Distributions referred to above. The Property Trustee may revoke such
power and remove the Paying Agent in its sole discretion. The Paying Agents
shall initially be the Bank and ________________ (London), and any co-paying
agent chosen by the Bank, and reasonably acceptable to the Administrative
Trustees. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees and the
Property Trustee. In the event that the Bank shall no longer be the Paying Agent
or a successor Paying Agent shall resign or its authority to act be revoked, the
Property Trustee shall appoint a successor that is reasonably acceptable to the
Administrative Trustees to act as Paying Agent (which shall be a bank or trust
company). Such successor Paying Agent or any additional Paying Agent shall
execute and deliver to the Issuer Trustees an instrument in which such successor
Paying Agent or additional Paying Agent shall agree with the Issuer Trustees
that as Paying Agent, such successor Paying Agent or additional Paying Agent
will hold all sums, if any, held by it for payment to the Holders in trust for
the benefit of the Holders entitled thereto until such sums shall be paid to
such Holders. The Paying Agent shall return all unclaimed funds to the Property
Trustee and upon removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Property Trustee. The provisions of Sections
8.1, 8.3 and 8.6 herein shall apply to the Bank also in its role as Paying
Agent, for so long as the Bank shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Trust Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
At the Closing Date, the Depositor shall acquire and retain beneficial
and record ownership of the Common Securities. Neither the Depositor nor any
successor Holder of the Common Securities may transfer less than all the Common
Securities, and the Depositor and
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any successor Holder may transfer the Common Securities only (i) in connection
with a consolidation or merger of the Depositor into another Person, or any
conveyance, transfer or lease by the Depositor of its properties and assets
substantially as an entirety to any Person, pursuant to Section 8.1 of the
Indenture, or (ii) to the Depositor or an Affiliate of the Depositor in
compliance with applicable law (including the Securities Act and applicable
State securities and blue sky laws), and in either case only upon an effective
assignment and delegation by the Holder of all the Common Securities to its
transferee of all of its rights and obligations under the Expense Agreement. To
the fullest extent permitted by law, any attempted transfer of the Common
Securities other than as set forth in the next preceding sentence shall be void.
The Administrative Trustees shall cause each Common Securities Certificate
issued to the Depositor to contain a legend stating substantially "THIS
CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF THE
DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST
AGREEMENT AND ONLY IN CONNECTION WITH A SIMULTANEOUS DELEGATION AND ASSIGNMENT
OF THE EXPENSE AGREEMENT REFERRED TO THEREIN." .
SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Capital
Securities Certificates shall have been issued to all Owners pursuant to Section
5.4(b), the Issuer Trustees and Administrative Trustees shall give all such
notices and communications specified herein to be given to Owners to the
Clearing Agency, and shall have no obligations to the Owners.
SECTION 5.13. Rights of Holders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Issuer Trust except as described below. The
Trust Securities shall be personal property giving only the rights specifically
set forth therein and in this Trust Agreement. The Trust Securities shall have
no preemptive or similar rights and, except to the extent set forth in Section
4.8, when issued and delivered to Holders against payment of the purchase price
therefor will be fully paid and nonassessable undivided beneficial interests in
Trust Property. Except as set forth in Section 4.8, the Holders, in their
capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
(b) For so long as any Capital Securities remain Outstanding, if, upon
a Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in aggregate
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principal amount of the outstanding Debentures fail to declare the principal of
all of the Debentures to be immediately due and payable, the Holders of at least
25% in aggregate Liquidation Amount of the Capital Securities then Outstanding
shall have such right by a notice in writing to the Depositor and the Debenture
Trustee with a copy to the Property Trustee; and upon any such declaration such
principal amount of and the accrued interest on all of the Debentures shall
become immediately due and payable, provided that the payment of principal and
interest on such Debentures shall remain subordinated to the extent provided in
the Indenture.
At any time after such a declaration of acceleration with respect to
the Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as in the Indenture
provided, the Holders of at least a majority in aggregate Liquidation Amount of
the Capital Securities, by written notice to the Property Trustee, the Depositor
and the Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest
(including any Additional Interest (as defined in the
Indenture)) on all of the Debentures,
(B) the principal of (and premium, if any,
on) any Debentures which have become due otherwise than by
such declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Debentures, and
(C) all sums paid or advanced by the
Debenture Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the
Debenture Trustee and the Property Trustee, their agents and
counsel; and
(ii) all Events of Default with respect to the Debentures,
other than the non-payment of the principal of the Debentures which has
become due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture.
The Holders of at least a majority in aggregate Liquidation Amount of
the Capital Securities may, on behalf of the Holders of all the Capital
Securities, waive any past default under the Indenture, 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
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modified or amended without the consent of the holder of each outstanding
Debenture. No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of the Capital
Securities all or part of which is represented by Book-Entry Capital Securities,
a record date shall be established for determining Holders of Outstanding
Capital Securities entitled to join in such notice, which record date shall be
at the close of business on the day the Property Trustee receives such notice.
The Holders on such record date, or their duly designated proxies, and only such
Persons, shall be entitled to join in such notice, whether or not such Holders
remain Holders after such record date; provided, that, unless such declaration
of acceleration, or rescission and annulment, as the case may be, shall have
become effective by virtue of the requisite percentage having joined in such
notice prior to the day which is 90 days after such record date, such notice of
declaration of acceleration, or rescission and annulment, as the case may be,
shall automatically and without further action by any Holder be canceled and of
no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 5.13(b).
(c) For so long as any Capital Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Capital Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.8 of the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Debentures having a principal amount equal to
the Liquidation Amount of the Capital Securities of such Holder (a "Direct
Action"). Except as set forth in this Section 5.13, the Holders of Capital
Securities shall have no right to exercise directly any right or remedy
available to the holders of, or in respect of, the Debentures.
ARTICLE VI.
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights.
(a) Except as expressly provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Capital Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Issuer
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Trust or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Holders from time to time as partners or
members of an association.
(b) So long as any Debentures are held by the Issuer Trust, the
Property Trustee shall not (i) direct the time, method or place of conducting
any proceeding for any remedy available to the Debenture Trustee, or executing
any trust or power conferred on the Property Trustee with respect to such
Debentures, (ii) waive any past default which is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable or (iv) consent to
any amendment, modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the Holders of at least a majority in Liquidation Amount of all
Outstanding Capital Securities, provided, however, that where a consent under
the Indenture would require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior written consent of each Holder of Capital Securities. The Issuer Trustees
shall not revoke any action previously authorized or approved by a vote of the
Holders of Capital Securities, except by a subsequent vote of the Holders of
Capital Securities. The Property Trustee shall notify all Holders of the Capital
Securities of any notice of default received from the Debenture Trustee with
respect to the Debentures. In addition to obtaining the foregoing approvals of
the Holders of the Capital Securities, prior to taking any of the foregoing
actions, the Property Trustee shall, at the expense of the Depositor, obtain an
Opinion of Counsel experienced in such matters to the effect that such action
shall not cause the Issuer Trust to be classified as an association taxable as a
corporation or as other than a grantor trust for United States Federal income
tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Capital Securities, whether by way of amendment to this Trust
Agreement or otherwise, or (ii) the dissolution, winding-up or termination of
the Issuer Trust, other than pursuant to the terms of this Trust Agreement, then
the Holders of Outstanding Capital Securities as a class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a majority in
Liquidation Amount of the Outstanding Capital Securities. Notwithstanding any
other provision of this Trust Agreement, no amendment to this Trust Agreement
may be made if, as a result of such amendment, it would cause the Issuer Trust
to be classified as an association taxable as a corporation or as other than a
grantor trust for United States federal income tax purposes.
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SECTION 6.2. Notice of Meetings.
Notice of all meetings of Holders of Capital Securities, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 10.8 to each such Holder at such Holder's address as it
appears in the Securities Register as of the record date for such meeting. Such
notice shall be sent, first-class mail, at least 15 days and not more than 90
days before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further notice.
SECTION 6.3. Meetings of Holders of Capital Securities.
No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of Holders of Capital Securities to vote
on any matter upon the written request of the Holders of record of at least 25%
of the aggregate Liquidation Amount of Outstanding Capital Securities) and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of Holders of Capital Securities to vote on any
matters as to which Holders of Capital Securities are entitled to vote.
Holders of at least 50% of the aggregate Liquidation Amount of
Outstanding Capital Securities, present in person or by proxy, shall constitute
a quorum at any meeting of Holders of Capital Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders
of record present, in person or by proxy, holding at least a majority of the
Liquidation Amount of Outstanding Capital Securities held by the Holders of
record present, either in person or by proxy, at such meeting shall constitute
the action of the Holders of Capital Securities, unless this Issuer Trust
Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
In respect of any matter as to which a Holder is entitled to vote, such
Holder shall be entitled to one vote for each $1,000 in Liquidation Amount of
Trust Securities held of record by such Holder.
SECTION 6.5 Proxies, Etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote
by proxy, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Property Trustee, or with such other officer
or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more officers of the Property Trustee. Only Holders
of
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record shall be entitled to vote. When Trust Securities are held jointly by
several Persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
SECTION 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be taken
without a meeting if Holders holding more than a majority of the aggregate
Liquidation Amount of the Outstanding Trust Securities entitled to vote in
respect of such action (or such larger proportion thereof as shall be required
by any express provision of this Trust Agreement) shall consent to the action in
writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purpose of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
Distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees or Property Trustee may from time to time
fix a date, not more than 90 days prior to the date of any meeting of Holders or
the payment of a Distribution or other action, as the case may be, as a record
date for the determination of the identity of the Holders of record for such
purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Holders or Owners may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders or Owners in
person or by an agent duly appointed in writing; and, except as otherwise
expressly provided herein, such action shall become effective when such
instrument or instruments are delivered to the Property Trustee. Such instrument
or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders or Owners signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Trust Agreement and (subject to Section 8.1) conclusive in favor of the Issuer
Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness to such execution or by a
certificate of a notary
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public or other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing acknowledged
to him the execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which any Issuer
Trustee receiving the same deems sufficient.
The ownership of Capital Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Issuer
Trustees or the Issuer Trust in reliance thereon, whether or not notation of
such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Holders and the Administrative
Trustees or among such Holders or Issuer Trustees with respect to the
authenticity, validity or binding nature of any request, demand, authorization,
direction, consent, waiver or other Act of such Holder or Issuer Trustee under
this Article VI, then the determination of such matter by the Property Trustee
shall be conclusive with respect to such matter.
SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by Holders
during normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.
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ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and
the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf
of and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:
(a) the Property Trustee is a New York banking corporation, duly
organized, validly existing and in good standing under the laws of the State of
New York;
(b) the Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) the Delaware Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(d) the Delaware Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(e) this Trust Agreement has been duly authorized, executed and
delivered by the Property Trustee and the Delaware Trustee and constitutes the
valid and legally binding agreement of each of the Property Trustee and the
Delaware Trustee enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(f) the execution, delivery and performance of this Trust Agreement has
been duly authorized by all necessary corporate or other action on the part of
the Property Trustee and the Delaware Trustee and does not require any approval
of stockholders of the Property Trustee or the Delaware Trustee and such
execution, delivery and performance will not (i) violate the Charter or By-laws
of the Property Trustee or the Delaware Trustee, (ii) violate any provision of
any indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Property Trustee or the Delaware Trustee is a party or
by which it is bound, which violation would materially and adversely affect the
Issuer Trust, the Holders or the ability of the Property Trustee or the Delaware
Trustee to enter into or perform their obligations under the Trust Agreement, or
result in the creation, or imposition of any Lien on any properties included in
the Trust Property, or (iii) violate any law, governmental rule
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or regulation of the United States, the State of New York or the State of
Delaware, as the case may be, governing the banking, trust or general powers of
the Property Trustee or the Delaware Trustee (as appropriate in context) or any
order, judgment or decree applicable to the Property Trustee or the Delaware
Trustee;
(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein requires the consent or approval of,
the giving of notice to, the registration with or the taking of any other action
with respect to any governmental authority or agency under any existing federal
law governing the banking, trust or general powers of the Property Trustee or
the Delaware Trustee, as the case may be, under the laws of the United States,
the State of New York or the State of Delaware;
(h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal which, in
the good faith judgment of the Property Trustee or the Delaware Trustee, as the
case may be, as amended individually or in the aggregate, would materially and
adversely affect the Issuer Trust or the right, power and authority of the
Property Trustee or the Delaware Trustee, as the case may be, to enter into or
perform its obligations as one of the Issuer Trustees under this Trust
Agreement.
SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that the Trust Securities Certificates issued on the Closing Date on
behalf of the Issuer Trust have been duly authorized and will have been, duly
and validly executed, issued and delivered by the Issuer Trustees pursuant to
the terms and provisions of, and in accordance with the requirements of, this
Trust Agreement and the Holders will be, as of each such date, entitled to the
benefits of this Trust Agreement.
ARTICLE VIII.
THE ISSUER TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee, by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Trust Agreement shall require any of the Issuer Trustees to expend or risk their
own funds or otherwise incur any financial liability
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in the performance of any of their duties hereunder, or in the exercise of any
of their rights or powers, if they shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity reasonably satisfactory to it
against such risk or liability is not reasonably assured to it. Whether or not
therein expressly so provided, every provision of this Trust Agreement relating
to the conduct or affecting the liability of or affording protection to the
Issuer Trustees shall be subject to the provisions of this Article. Nothing in
this Trust Agreement shall be construed to release an Administrative Trustee
from liability for its own gross negligent action, its own gross negligent
failure to act, or its own willful misconduct. To the extent that, at law or in
equity, an Issuer Trustee has duties and liabilities relating thereto to the
Issuer Trust or to the Holders, such Issuer Trustee shall not be liable to the
Issuer Trust or to any Holder for such Issuer Trustee's good faith reliance on
the provisions of this Trust Agreement. The provisions of this Trust Agreement,
to the extent that they restrict the duties and liabilities of the Issuer
Trustees otherwise existing at law or in equity, are agreed by the Depositor and
the Holders to replace such other duties and liabilities of the Issuer Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by its acceptance of a Trust Security, agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Issuer Trustees are not
personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Issuer Trustees expressly set
forth elsewhere in this Trust Agreement or, in the case of the Property Trustee,
in the Trust Indenture Act.
(c) If an Event of Default has occurred and is continuing, the Property
Trustee shall enforce this Trust Agreement for the benefit of the Holders.
(d) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee or the Delaware Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
majority in Liquidation Amount of the Trust Securities relating to the
time, method and place of conducting any proceeding for any remedy
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available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Payment Account shall be to deal with such property in a similar
manner as the Property Trustee deals with similar property for its own
account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the
Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to Section
3.1 and except to the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the default or misconduct of
the Administrative Trustees or the Depositor.
(e) The Administrative Trustees shall not be responsible for monitoring
the compliance by the other Issuer Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall either Administrative
Trustee be liable for the default or misconduct of any other Administrative
Trustee, the other Issuer Trustees or the Depositor.
SECTION 8.2. Certain Notices.
Within five Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit, in the manner and to the extent provided in Section
10.8, notice of such Event of Default to the Holders, the Administrative
Trustees and the Depositor, unless such Event of Default shall have been cured
or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such exercise
to the Holders, unless such exercise shall have been revoked.
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SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may conclusively rely and shall be protected
in acting or refraining from acting in good faith upon any resolution, Opinion
of Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action or
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to which
the Holder of Capital Securities is entitled to vote under the terms of this
Trust Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting the Depositor's direction as to the course of action to be taken and,
if not so directed, the Property Trustee shall take such action, or refrain from
taking such action, as the Property Trustee shall deem advisable and in the best
interests of the Holders, in which event the Property Trustee shall have no
liability except for its own bad faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by
an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an Officers' Certificate as to
factual matters (other than the interpretation of this Agreement) which, upon
receipt of such request, shall be promptly delivered by the Depositor or the
Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel (which counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon and in
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accordance with such advice; the Property Trustee shall have the right at any
time to seek instructions concerning the administration of this Trust Agreement
from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; provided
that, nothing contained in this Section 8.3(g) shall be taken to relieve the
Property Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Trust Agreement;
(h) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys and the Property Trustee shall not be responsible for any
misconduct or negligence on the part of, or for the supervision of, any such
agent or attorney appointed with due care by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be fully protected in acting in accordance with such instructions;
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement;
(l) when the Property Trustee incurs expenses or renders services in
connection with a Bankruptcy Event, such expenses (including the fees and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally; and
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(m) the Property Trustee shall not be charged with knowledge of an
Event of Default unless a Responsible Officer of the Property Trustee obtains
actual knowledge of such event or the Property Trustee receives written notice
of such event from Holders holding more than a majority of Capital Securities
(based upon Liquidation Amount).
No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on any Issuer Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which any Issuer Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to any Issuer Trustee shall be construed
to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust, and the Issuer Trustees do
not assume any responsibility for their correctness. The Issuer Trustees shall
not be accountable for the use or application by the Depositor of the proceeds
of the Debentures.
SECTION 8.5. May Hold Securities.
Any Issuer Trustee or any other agent of any Issuer Trustee or the
Issuer Trust, in its individual or any other capacity, may become the owner or
pledgee of Trust Securities and, subject to Sections 8.8 and 8.13 and except as
provided in the definition of the term "Outstanding" in Article I, may otherwise
deal with the Issuer Trust with the same rights it would have if it were not an
Issuer Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Issuer Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Issuer Trustees in accordance with any
provision of this Trust Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith or
willful misconduct; and
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(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Paying Agent, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee or
agent of the Issuer Trust or its Affiliates (referred to herein as an
"Indemnified Person") from and against any loss, damage, liability, tax,
penalty, expense or claim of any kind or nature whatsoever incurred by such
Indemnified Person by reason of the creation, operation or termination of the
Issuer Trust or any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Issuer Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Trust Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of negligence, bad
faith or willful misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement or the earlier resignation or removal of any Issuer
Trustee.
No Issuer Trustee may claim any Lien on any Trust Property as a result
of any amount due pursuant to this Section 8.6.
The Depositor and any Issuer Trustee (in the case of the Property
Trustee, subject to Section 8.8 hereof) may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Issuer Trust, and the
Issuer Trust and the Holders of Trust Securities shall have no rights by virtue
of this Trust Agreement in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Issuer Trust, shall not be deemed wrongful
or improper. None of the Depositor or any Issuer Trustee, shall be obligated to
present any particular investment or other opportunity to the Issuer Trust even
if such opportunity is of a character that, if presented to the Issuer Trust,
could be taken by the Issuer Trust, and the Depositor or any Issuer Trustee
shall have the right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Issuer Trustee may engage or be interested in any financial or
other transaction with the Depositor or any Affiliate of the Depositor, or may
act as depository for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Issuer
Trustees.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national or state chartered bank and eligible pursuant to the Trust Indenture
Act to act as such, and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
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annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section and the Trust
Indenture Act, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. At the time of appointment, the Property
Trustee must have securities rated in one of the three highest rating categories
by a nationally recognized statistical rating organization.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Property Trustee shall have power to
appoint, and upon the written request of the Property Trustee, the Depositor and
the Administrative Trustees shall for such purpose join in the execution,
delivery, and performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Property Trustee either to act
as co-trustee, jointly with the Property Trustee, of all or any part of such
Trust Property, or to the extent required by law to act as separate trustee of
any such property, in either case with such powers as may
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be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. Any
co-trustee or separate trustee appointed pursuant to this Section shall either
be (i) a natural person who is at least 21 years of age and a resident of the
United States or (ii) a legal entity with its principal place of business in the
United States that shall act through one or more persons authorized to bind such
entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed by at least one
Administrative Trustee and the Trust Securities shall be delivered by the
Property Trustee and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Issuer Trustees specified
hereunder shall be exercised solely by such Issuer Trustees and not by such
co-trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under this
Section, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigning or removed may be appointed in the manner provided in this Section.
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(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any other
trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
Article shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.
Subject to the immediately preceding paragraph, a Relevant Trustee may
resign at any time by giving written notice thereof to the Holders and by
appointing a successor Relevant Trustee. The Property Trustee shall appoint a
successor by requesting from at least three Persons meeting the eligibility
requirements, its expenses and charges to serve as the Property Trustee on a
form provided by the Administrative Trustees, and selecting the Person who
agrees to the lowest expenses and charges. If the instrument of acceptance by
the successor Issuer Trustee required by Section 8.11 shall not have been
delivered to the Relevant Trustee within 60 days after the giving of such notice
of resignation, the Relevant Trustee may petition, at the expense of the Issuer
Trust, any court in the State of Delaware for the appointment of a successor
Relevant Trustee. Subject to the provisions of Section 8.1(d)(i), the Property
Trustee shall not be liable for its selection of any successor pursuant to this
Section 8.10.
The Property Trustee or the Delaware Trustee, or both of them, may be
removed by Act of the Holders of at least a majority in aggregate Liquidation
Amount of the Outstanding Capital Securities, delivered to the Relevant Trustee
(in its individual capacity and on behalf of the Issuer Trust) (i) upon the
occurrence of an Event of Default described in subparagraph (d) of the
definition thereof with respect to the Relevant Trustee, (ii) if a Debenture
Event of Default shall have occurred and be continuing at any time, with or
without cause or (iii) for cause.
If an Issuer Trustee shall resign, such Issuer Trustee shall appoint
its successor Relevant Trustee, and such successor Issuer Trustee shall comply
with the applicable requirements of Section 8.11. If the retiring Issuer Trustee
fails to appoint a successor Relevant Trustee, the Holders of at least 25% in
Liquidation Amount of the Outstanding Capital Securities may appoint a successor
Relevant Trustee, and such successor Issuer Trustee shall comply with the
applicable requirements of Section 8.11.
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If any Issuer Trustee shall be removed or become incapable of acting as
Issuer Trustee, or if a vacancy shall occur in the office of any Issuer Trustee
for any cause, the Holders of the Capital Securities, by Act of the Holders of
at least 25% in Liquidation Amount of the Capital Securities then Outstanding
delivered to the retiring Relevant Trustee, shall promptly appoint a successor
Relevant Trustee or Trustees, and such successor Issuer Trustee shall comply
with the applicable requirements of Section 8.11. If no successor Relevant
Trustee shall have been so appointed by the Holders of the Capital Securities
and accepted appointment in the manner required by Section 8.11, any Holder may,
on behalf of himself and all others similarly situated, or the remaining Issuer
Trustee(s), may petition a court in the State of Delaware for the appointment of
a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each
removal of an Issuer Trustee and each appointment of a successor Issuer Trustee
to all Holders in the manner provided in Section 10.8 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee who is a natural person dies
or becomes, in the opinion of the Holder of Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity may
be filled by appointment by the remaining Administrative Trustees.
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee with respect
to the Trust Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which (a)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Issuer Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Issuer Trust by more than one Relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Relevant Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Relevant Trustee; but, on request of the Issuer Trust or any successor Relevant
Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver
to such successor Relevant Trustee all Trust Property, all proceeds thereof and
money held by such retiring Relevant Trustee hereunder with respect to the Trust
Securities and the Issuer Trust.
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Upon request of any such successor Relevant Trustee, the Issuer Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided such Person shall be otherwise
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
SECTION 8.13. Preferential Collection of Claims Against Depositor or
the Issuer Trust.
If and when the Property Trustee shall be or become a creditor
of the Depositor or the Issuer Trust (or any other obligor upon the Capital
Securities), the Property Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Depositor or
the Issuer Trust (or any such other obligor).
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other similar judicial proceeding relative to the Issuer Trust or any other
obligor upon the Trust Securities or the property of the Issuer Trust or of such
other obligor or their creditors, the Property Trustee (irrespective of whether
any Distributions on the Trust Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Property Trustee shall have made any demand on the Issuer Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the fullest
extent permitted by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Property Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Property Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
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(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 8.14. Reports by Property Trustee.
(a) Not later than May 31 of each year commencing with May 31, 1999,
the Property Trustee shall transmit to all Holders in accordance with Section
10.8, and to the Depositor, a brief report dated as of the immediately preceding
March 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if
to the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect;
(ii) its knowledge of such Property Trustee's compliance with
all conditions and covenants under this Agreement; and
(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with each national stock exchange,
the Nasdaq National Market or such other interdealer quotation system or
self-regulatory organization upon which the Trust Securities are listed or
traded, with the Commission and with the Depositor.
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SECTION 8.15. Reports to the Property Trustee.
The Depositor and the Administrative Trustees on behalf of the Issuer
Trust shall provide to the Property Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 8.16. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement that
relate to any of the matters set forth in Section 314 (c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) or Section 314(e) of the Trust Indenture Act shall be given in
the form of an Officers' Certificate.
SECTION 8.17. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be four. The Property Trustee
and the Delaware Trustee may be the same Person.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to dissolve, terminate or annul the Issuer Trust.
SECTION 8.18. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
2.7(a), including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Issuer Trust or the
names of the Administrative Trustees or otherwise as the Administrative Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of this Trust Agreement, as set
forth herein.
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SECTION 8.19. Appointment of Administrative Trustees.
(a) The Administrative Trustees shall initially be Daniel R. Stolzer,
an individual, and Louis D. Raffis, an individual, and their successors shall be
appointed by the Holder of the Common Securities and may be removed by the
Holder of the Common Securities at any time. Each Administrative Trustee shall
sign an agreement agreeing to comply with the terms of this Trust Agreement. If
at any time there is no Administrative Trustee, the Property Trustee or any
Holder who has been a Holder of Trust Securities for at least six months may
petition any court of competent jurisdiction for the appointment of one or more
Administrative Trustee.
(b) Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with this Section 8.19, the Administrative Trustees in
office, regardless of their number (and notwithstanding any other provision of
this Agreement), shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Trust Agreement.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee who is a natural person dies
or becomes, in the opinion of the Holder of Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity may
be filled by the unanimous act of the remaining Administrative Trustees if there
were at least two of them prior to such vacancy (with the successor in each case
being a Person who satisfies the eligibility requirement for Administrative
Trustees set forth in Section 8.7).
ARTICLE IX.
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination Upon Expiration Date.
Unless earlier terminated, the Issuer Trust shall automatically
terminate on _____________, 202_ (the "Expiration Date"), following the
distribution of the Trust Property in accordance with Section 9.4.
SECTION 9.2. Early Termination.
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Holder of the Common Securities;
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(b) the written direction to the Property Trustee from the
Holder of the Common Securities at any time to terminate the Issuer
Trust and, after satisfaction of liabilities to creditors of the Issuer
Trust as provided by applicable law, distribute Debentures to Holders
in exchange for the Capital Securities;
(c) the redemption of all of the Capital Securities in
connection with the redemption of all the Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust
by a court of competent jurisdiction.
SECTION 9.3. Termination.
The respective obligations and responsibilities of the Issuer Trustees
and the Issuer Trust created and continued hereby shall terminate upon the
latest to occur of the following: (a) the distribution by the Property Trustee
to Holders upon the liquidation of the Issuer Trust pursuant to Section 9.4, or
upon the redemption of all of the Trust Securities pursuant to Section 4.2, of
all amounts required to be distributed hereunder upon the final payment of the
Trust Securities; (b) the payment of any expenses owed by the Issuer Trust; and
(c) the discharge of all administrative duties of the Administrative Trustees,
including the performance of any tax reporting obligations with respect to the
Issuer Trust or the Holders.
SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d)
of Section 9.2 occurs, or upon the Expiration Date, the Issuer Trust shall 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 Trust as provided by applicable law, to each Holder a
Like Amount of Debentures, subject to Section 9.4(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage prepaid
mailed not later than 30 nor more than 60 days prior to the Liquidation Date to
each Holder of Trust Securities at such Holder's address appearing in the
Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for
Debentures, or if Section 9.4(d)
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applies receive a Liquidation Distribution, as the Property Trustee
(after consultation with the Administrative Trustees) shall deem
appropriate.
(b) Unless Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Issuer Trust and the distribution of Debentures to Holders,
the Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date) and, either itself
acting as exchange agent or through the appointment of a separate exchange
agent, shall establish such procedures as it shall deem appropriate to effect
the distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Unless Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
certificates representing a Like Amount of Debentures will be issued to Holders
of Trust Securities Certificates, upon surrender of such certificates to the
exchange agent for exchange, (iii) the Depositor shall use its best efforts to
have the Debentures listed on the New York Stock Exchange or on such other
exchange, interdealer quotation system or self-regulatory organization as the
Capital Securities are then listed, (iv) any Trust Securities Certificates not
so surrendered for exchange will be deemed to represent a Like Amount of
Debentures, accruing interest at the rate provided for in the Debentures from
the last Distribution Date on which a Distribution was made on such Trust
Securities Certificates until such certificates are so surrendered (and until
such certificates are so surrendered, no payments of interest or principal will
be made to Holders of Trust Securities Certificates with respect to such
Debentures) and (v) all rights of Holders holding Trust Securities will cease,
except the right of such Holders to receive Debentures upon surrender of Trust
Securities Certificates.
(d) If, notwithstanding the other provisions of this Section 9.4,
whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Debentures in the manner provided
herein is determined by the Property Trustee not to be practical, then the Trust
Property shall be liquidated, and the Issuer Trust shall be dissolved, wound-up
or terminated, by the Property Trustee in such manner as the Property Trustee
determines. In such event, on the date of the dissolution, winding-up or other
termination of the Issuer Trust, Holders will be entitled to receive out of the
assets of the Issuer Trust available for distribution to Holders, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, an amount equal to the Liquidation Amount per Trust Security
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If, upon any such dissolution,
winding up or termination, the Liquidation Distribution can be paid only in part
because the Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Issuer Trust on the Trust Securities shall
be paid on a pro rata basis (based upon Liquidation Amounts). The Holders of the
Common Securities will be entitled to receive Liquidation Distributions upon any
such dissolution, winding-up or termination pro rata (determined as
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aforesaid) with Holders of Capital Securities, except that, if a Debenture Event
of Default specified in Section 5.1(1) or 5.1(2) of the Indenture has occurred
and is continuing, the Capital Securities shall have a priority over the Common
Securities as provided in Section 4.3.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
the Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any entity, except pursuant to this Article
Nine. At the request of the Holder of the Common Securities and with the consent
of the Holders of a majority (based on Liquidation Amounts) of the Capital
Securities, the Issuer Trust may merge with or into, consolidate, amalgamate, or
be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (a) expressly assumes all
of the obligations of the Issuer Trust with respect to the Capital Securities or
(b) substitutes for the Capital Securities other securities having substantially
the same terms as the Capital Securities ("Successor Securities") so long as the
Successor Securities rank the same as the Capital Securities rank in priority
with respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) a trustee of such successor entity possessing the same powers
and duties as the Property Trustee is appointed as the holder of the 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 Holder 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 Trust, (vi) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Issuer Trust has received an Opinion of Counsel 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 Trust nor such
successor entity will be required to register as an investment company under the
1940 Act and (vii) the Depositor 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 Trust shall not, except with the
consent of Holders of all Outstanding 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 Person or
permit any other Person to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement, conveyance,
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transfer or lease would cause the Issuer Trust or the successor Person to be
classified as an association taxable as a corporation or as other than a grantor
trust for United States federal income tax purposes.
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
The death or incapacity, or the dissolution, liquidation, termination,
or the bankruptcy of any Person having an interest, beneficial or otherwise, in
Trust Securities shall not operate to terminate this Trust Agreement, nor
entitle the legal representatives, successors or heirs of such person or any
Holder for such person, to claim an accounting, take any action or bring any
proceeding in any court for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Delaware Trustee and the Holder of the Common Securities
without the consent of any Holder of the Capital Securities, (i) to cure any
ambiguity, correct or supplement any provision herein which may be inconsistent
with any other provision herein, or to make any other provisions with respect to
matters or questions arising under this Trust Agreement, which shall not be
inconsistent with the other provisions of this Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of this Trust Agreement to such
extent as shall be necessary to ensure that the Issuer Trust will not be
classified for United States federal income tax purposes as an association
taxable as a corporation or as other than a grantor trust at any times that any
Trust Securities are outstanding or to ensure that the Issuer Trust will not be
required to register as an investment company under the 1940 Act; provided,
however, that such action shall not adversely affect in any material respect the
interests of any Holder, and any amendments of this Trust Agreement shall become
effective when notice thereof is given to the Holders.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Issuer Trustees and the Holder of the
Common Securities and with (i) the consent of Holders of at least a majority in
aggregate Liquidation Amount of the Outstanding Trust Securities and (ii)
receipt by the Issuer Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not affect the Issuer Trust's status as a
grantor trust or cause the Issuer Trust to be an association taxable as a
corporation for United
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States federal income tax purposes or the Issuer Trust's exemption from status
of an investment company under the 1940 Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each Holder (such consent being obtained
in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution or otherwise
adversely affect the amount of any Distribution required to be made as of a
specified date or (ii) restrict the right of a Holder to institute suit for the
enforcement of any such payment on or after such date; notwithstanding any other
provision herein, without the unanimous consent of the Holders (such consent
being obtained in accordance with Section 6.3 or 6.6 hereof), this paragraph (c)
of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Issuer Trust to be classified as an association
taxable as a corporation or not to be a grantor trust for United States federal
income tax purposes or to fail or cease to qualify for the exemption from status
of an investment company under the 1940 Act.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation or liability on the Depositor.
(f) If any amendment to this Trust Agreement is made, the
Administrative Trustees or the Property Trustee shall promptly provide to the
Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement or would otherwise
expose the Property Trustee to any liability or be contrary to applicable law.
The Property Trustee shall be entitled to receive an Opinion of Counsel and an
Officers' Certificate stating that any amendment to this Trust Agreement is in
compliance with this Trust Agreement.
SECTION 10.3. Separability.
If any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
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SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST AND THE ISSUER TRUSTEES WITH RESPECT TO THIS TRUST
AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
THE PROVISIONS OF SECTION 3540 AND SECTION 3561 OF TITLE 12 OF THE
DELAWARE CODE SHALL NOT APPLY TO THIS ISSUER TRUST.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.1(a) and 4.2(d)), with the same force and
effect as though made on the date fixed for such payment, and no interest shall
accrue thereon for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust or the Relevant
Trustee, including any successor by operation of law. Except in connection with
a consolidation, merger or sale involving the Depositor that is permitted under
Article Eight of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Holder or the Depositor may be given or served in writing by
deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case of
a Holder of Capital Securities, to such Holder as such Holder's name and address
may appear on the Securities Register; and (b) in the case of the Holder of the
Common Securities or the Depositor, to KeyCorp, 127 Public Square, Cleveland,
Ohio 44114, Attention: General Counsel, facsimile no.: (216) 689-4121. Such
notice, demand or
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other communication to or upon a Holder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Issuer Trust, the Property Trustee, the Delaware Trustee or the
Administrative Trustees shall be given in writing addressed (until another
address is published by the Issuer Trust) as follows: (a) with respect to the
Property Trustee to Bankers Trust Company, Four Albany Street, 4th Floor, New
York, NY 10006, Attention: Corporate Trust Administration, Corporate Market
Services; (b) with respect to the Delaware Trustee, to Bankers Trust (Delaware),
E.A. Delle Donne Corporate Center, Montgomery Bldg., 1011 Centre Road, Suite
200, Wilmington, Delaware 19805-1266, and (c) with respect to the Administrative
Trustees, to them at the address above for notices to the Depositor, marked
"Attention Administrative Trustees of KeyCorp Capital I." Such notice, demand or
other communication to or upon the Issuer Trust or the Property Trustee shall be
deemed to have been sufficiently given or made only upon actual receipt of the
writing by the Issuer Trust or the Property Trustee.
SECTION 10.9 Agreement Not to Petition.
Each of the Issuer Trustees and the Depositor agree for the benefit of
the Holders that, until at least one year and one day after the Issuer Trust has
been terminated in accordance with Article Nine, they shall not file, or join in
the filing of, a petition against the Issuer Trust under any bankruptcy,
insolvency, reorganization or other similar law (including, without limitation,
the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or
otherwise join in the commencement of any proceeding against the Issuer Trust
under any Bankruptcy Law. In the event the Depositor takes action in violation
of this Section 10.9, the Property Trustee agrees, for the benefit of Holders,
that at the expense of the Depositor, it shall file an answer with the
bankruptcy court or otherwise properly contest the filing of such petition by
the Depositor against the Issuer Trust or the commencement of such action and
raise the defense that the Depositor has agreed in writing not to take such
action and should be stopped and precluded therefrom and such other defenses, if
any, as counsel for the Issuer Trustees or the Issuer Trust may assert. The
provisions of this Section 10.9 shall survive the termination of this Trust
Agreement.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Issuer Trustee which is
deemed a trustee for the purposes of the Trust Indenture Act.
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(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Issuer Trust.
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE
SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE AND
TO THE TERMS AND PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, AND SHALL
CONSTITUTE THE AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT
THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE ISSUER TRUST
AND SUCH HOLDER AND SUCH OTHERS.
SECTION 10.12. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Amended and
Restated Trust Agreement as of the date first above written.
KEYCORP
By:
----------------------------
Name: Daniel R. Stolzer
Title: Vice President
BANKERS TRUST COMPANY,
as Property Trustee
By:
----------------------------
Name: Kevin Weeks
Title: Assistant Treasurer
BANKERS TRUST (DELAWARE),
as Delaware Trustee
By:
----------------------------
Name: James H. Stallcamp
Title: President
By:
----------------------------
Name: Louis D. Raffis
as Administrative Trustee
By:
----------------------------
Name: Daniel R. Stolzer
as Administrative Trustee
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EXHIBIT A
CERTIFICATE OF TRUST
OF
KEYCORP CAPITAL I
THIS CERTIFICATE OF TRUST of KeyCorp Capital I (the "Trust"),
dated June 2, 1998, is being duly executed and filed by the undersigned, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
C. Section 3801 et seq.).
1. Name. The name of the business trust being formed hereby is
KeyCorp Capital I.
2. Delaware Trustee. The name and business address of the
trustee of the Trust, with a principal place of business in the State of
Delaware, are Bankers Trust (Delaware), E.A. Delle Donne Corporate Center,
Montgomery Bldg., 1011 Centre Road, Suite 200, Wilmington, Delaware 19805-1266.
3. Effective Date. This Certificate of Trust shall be
effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the trustee of the
Trust, have executed this Certificate of Trust as of the date first above
written.
BANKERS TRUST (DELAWARE),
not in its individual capacity, but solely
as Trustee
By: /s/ M. Lisa Wilkins
-------------------------
Name: M. Lisa Wilkins
Title: Assistant Secretary
<PAGE> 72
EXHIBIT B
LETTER OF REPRESENTATIONS
June 30, 1998
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099
Attention: General Counsel's Office
------------------------
Re: KeyCorp Capital I
Floating Rate Capital Securities
CUSIP [ ]
-------------------------
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters
relating to the issuance and deposit with The Depository Trust Company ("DTC")
of the Floating Rate Capital Securities (the "Capital Securities"), of KeyCorp
Capital I, a Delaware statutory business trust (the "Issuer"), created and
continued pursuant to an Amended and Restated Trust Agreement between KeyCorp
("KeyCorp"), Bankers Trust Company, as Property Trustee, and Bankers Trust
(Delaware), as Delaware Trustee. The payment of distributions on the Capital
Securities, and payments due upon liquidation of the Issuer or redemption of the
Capital Securities, to the extent the Issuer has funds available for the payment
thereof are guaranteed by KeyCorp to the extent set forth in a Guarantee
Agreement dated June __, 1998 by KeyCorp with respect to the Capital Securities.
KeyCorp and the Issuer propose to sell the Capital Securities to the
Underwriters (the "Underwriters") pursuant to an Underwriting Agreement dated
June __, 1998 by and among the Underwriters, the Issuer and KeyCorp, and the
Underwriters wish to take delivery of the Capital Securities through DTC.
Bankers Trust Company is acting as transfer agent and registrar with respect to
the Capital Securities (the "Transfer Agent and Registrar").
To induce DTC to accept the Capital Securities as eligible for
deposit at DTC, and to act in accordance with DTC's Rules with respect to the
Capital Securities, the Issuer, the Transfer Agent and Registrar and DTC agree
among each other as follows:
1. Prior to the closing of the sale of the Capital Securities
to the Underwriters, which is expected to occur on June __, 1998 there shall be
deposited with DTC one or more global certificates (individually and
collectively, the "Global Certificate") registered in the
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name of DTC's Capital Securities nominee, Cede & Co., representing an aggregate
of two hundred fifty thousand Capital Securities and bearing the following
legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Issuer or its agent for registration
of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as
is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
The Issuer understands that DTC has no obligation to, and will
not, communicate to its Participants or to any person having an interest in the
Capital Securities any information contained in the Global Certificate; and
acknowledges that neither DTC's Participants nor any person having an interest
in the Capital Securities shall be deemed to have notice of the provisions of
the Global Certificate by virtue of submission of such Global Certificate to
DTC.
2. The Amended and Restated Trust Agreement of the Issuer
provides for the voting by holders of the Capital Securities under certain
limited circumstances (with no provision for revocation of consents or votes by
subsequent holders). The Issuer shall establish a record date for such purposes
and shall, to the extent possible, give DTC notice of such record date not less
than 15 calendar days in advance of such record date.
3. In the event of a stock split, conversion,
recapitalization, reorganization or any other similar transaction resulting in
the cancellation of all or any part of the Capital Securities outstanding, the
Issuer or the Transfer Agent and Registrar shall send DTC a notice of such event
at least 5 business days prior to the effective date of such event.
4. In the event of distribution on, or an offering or issuance
of rights with respect to, the Capital Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the amount
of and conditions, if any, applicable to the payment of any such distribution or
any such offering or issuance of rights; (b) any applicable expiration or
deadline date, or any date by which any action on the part of the holders of
Capital Securities is required; and (c) the date any required notice is to be
mailed by or on behalf of the Issuer to holders of Capital Securities or
published by or on behalf of the Issuer (whether by mail or publication, the
"Publication Date"). Such notice shall be sent to DTC by a secure means (e.g.,
legible telecopy, registered or certified mail, overnight delivery) in a timely
manner designed to assure that such notice is in DTC's possession no later than
the close of business on the business day before the Publication Date. The
Issuer
B-2
<PAGE> 74
or the Transfer Agent and Registrar will forward such notice either in a
separate secure transmission for each CUSIP number or in a secure transmission
of multiple CUSIP numbers (if applicable) that includes a manifest or list of
each CUSIP number submitted in that transmission. (The party sending such notice
shall have a method to verify subsequently the use of such means and the
timeliness of such notice.) The Publication Date shall be not less than 30
calendar days nor more than 60 calendar days prior to the payment of any such
distribution or any such offering or issuance of rights with respect to the
Capital Securities. After establishing the amount of payment to be made on the
Capital Securities, the Issuer or the Transfer Agent and Registrar will notify
DTC's Dividend Department of such payment 5 business days prior to payment date.
Notices to DTC's Dividend Department by telecopy shall be sent to (212)
709-1723. Such notices by mail or by any other means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22d Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm
DTC's receipt of such telecopy by telephoning the Dividend Department at (212)
709-1270.
5. In the event of a redemption by the Issuer of the Capital
Securities, notice specifying the terms of the redemption and the Publication
Date of such notice shall be sent by the Issuer or the Transfer Agent and
Registrar to DTC not less than 30 calendar days prior to such event by a secure
means in the manner set forth in paragraph 4. Such redemption notice shall be
sent to DTC's Call Notification Department at (516) 227-4164 or (516) 227- 4190,
and receipt of such notice shall be confirmed by telephoning (516) 227-4070.
Notice by mail or by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Capital
Securities, notice specifying the terms of the tender and the Publication Date
of such notice shall be sent by the Issuer or the Transfer Agent and Registrar
to DTC by a secure means and in a timely manner as described in paragraph 4.
Notices to DTC pursuant to this paragraph and notices of other corporate actions
(including mandatory tenders, exchanges and capital changes) shall be sent,
unless notification to another department is expressly provided for herein, by
telecopy to
B-3
<PAGE> 75
DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094 and receipt
of such notice shall be confirmed by telephoning (212) 709-6884, or by mail or
any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. The Transfer Agent and Registrar must provide DTC, no later
than noon (Eastern Time) on the payment date, CUSIP numbers for the Capital
Securities for which payment is being sent, as well as the dollar amount of the
payment. Notification of payment details should be sent using automated
communications.
8. Distribution payments or other cash payments that are part
of periodic payments with respect to the Capital Securities evidenced by the
Global Certificate shall be received by Cede & Co., as nominee of DTC, or its
registered assigns in same-day funds no later than 2:30 p.m. (Eastern Time) on
each payment date (or in accordance with existing arrangements between the
Issuer or the Transfer Agent and Registrar and DTC). Absent any other
arrangements between the Issuer or the Transfer Agent and Registrar and DTC,
such funds shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
The Issuer or the Transfer Agent and Registrar shall provide payment information
to a standard announcement service subscribed to by DTC. In the unlikely event
that no such service exists, the Issuer agrees that it or the Transfer Agent and
Registrar shall provide this information directly to DTC in advance of the
record date as soon as the information is available. This information should be
conveyed directly to DTC electronically. If electronic transmission is not
available, absent any other arrangements between the Transfer Agent and DTC,
such information should be sent by telecopy to DTC's Dividend Department at
(212) 709-1723 or (212) 709-1686, and receipt of such notices shall be confirmed
by telephoning (212) 709-1270. Notices to DTC pursuant to the above by mail or
by any other means shall be sent to:
B-4
<PAGE> 76
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
9. DTC shall receive maturity and redemption payments with
respect to the Capital Securities evidenced by the Global Certificate allocated
with respect to each CUSIP number on the payable date in same-day funds by 2:30
p.m. (Eastern Time). Absent any other arrangements between the Transfer Agent
and Registrar and DTC, such payments shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in the manner set forth in
DTC's SDFS Paying Agent Operating Procedures, a copy of which has previously
been furnished to the Transfer Agent and Registrar.
10. DTC shall receive all reorganization payments and
CUSIP-level detail resulting from corporate actions (such as tender offers,
remarketings, or mergers) on the first payable date in same-day funds by 2:30
p.m. (Eastern Time). Absent any other arrangements between the Transfer Agent
and Registrar and DTC, such payments shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
B-5
<PAGE> 77
Reorganization Account 066-027608
11. DTC may by prior written notice direct the Issuer and the
Transfer Agent and Registrar to use any other telecopy number or address of DTC
as the number or address to which notices or payments may be sent.
12. In the event of a conversion, redemption, or any other
similar transaction (e.g., tender made and accepted in response to the Issuer's
or the Transfer Agent and Registrar's invitation) necessitating a reduction in
the aggregate number of Capital Securities outstanding evidenced by Global
Certificates, DTC, in its discretion: (a) may request the Issuer or the Transfer
Agent and Registrar to issue and countersign a new Global Certificate; or (b)
may make an appropriate notation on the Global Certificate indicating the date
and amount of such reduction.
13. DTC may discontinue its services as a securities
depositary with respect to the Capital Securities at any time by giving
reasonable notice to the Issuer and the Transfer Agent and Registrar (at which
time DTC will confirm with the Issuer or the Transfer Agent and Registrar the
aggregate number of Capital Securities deposited with it) and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Issuer may determine to make alternative arrangements for
book-entry settlement for the Capital Securities, make available one or more
separate global certificates evidencing Capital Securities to any Participant
having Capital Securities credited to its DTC account, or issue definitive
Capital Securities to the beneficial holders thereof, and in any such case, DTC
agrees to cooperate fully with the Issuer and the Transfer Agent and Registrar,
and to return the Global Certificate, duly endorsed for transfer as directed by
the Issuer or the Transfer Agent and Registrar, together with any other
documents of transfer reasonably requested by the Issuer or the Transfer Agent
and Registrar.
14. In the event that the Issuer determines that beneficial
owners of Capital Securities shall be able to obtain definitive Capital
Securities, the Issuer or the Transfer Agent and Registrar shall notify DTC of
the availability of certificates. In such event, the Issuer or the Transfer
Agent and Registrar shall issue, transfer and exchange certificates in
appropriate amounts, as required by DTC and others, and DTC agrees to cooperate
fully with the Issuer and the Transfer Agent and Registrar and to return the
Global Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
15. This letter may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
B-6
<PAGE> 78
Nothing herein shall be deemed to require the Transfer Agent
and Registrar to advance funds on behalf of KeyCorp Capital I.
Very truly yours,
KEYCORP CAPITAL I
By KEYCORP, as Depositor
By:
----------------------------
Name: Daniel R. Stolzer
Title:
BANKERS TRUST COMPANY
as Property Trustee, Transfer Agent and
Registrar
By:
----------------------------
Name:
Title: Assistant Treasurer
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By:
-------------------------
Authorized Officer
B-7
<PAGE> 79
SCHEDULE A
----------
KEYCORP CAPITAL I
$250,000,000 Floating Rate Capital Securities
CUSIP Number:
Liquidation Amount: $1,000 per Capital Security
Distribution Rate: The Distribution Rate will be a
floating rate per annum determined by reference
to 3- month LIBOR plus a margin of 0.__%.
B-8
<PAGE> 80
EXHIBIT C
[FORM OF COMMON SECURITIES CERTIFICATE]
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE
DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE
WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT
AND ONLY IN CONNECTION WITH A SIMULTANEOUS DELEGATION AND
ASSIGNMENT OF THE EXPENSE AGREEMENT REFERRED TO THEREIN
CERTIFICATE NUMBER NUMBER OF COMMON SECURITIES
C-
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
KEYCORP CAPITAL I
FLOATING RATE COMMON SECURITIES
(LIQUIDATION AMOUNT $1,000 PER COMMON SECURITY)
KeyCorp Capital I, a business trust created under the laws of the State
of Delaware (the "Issuer Trust"), hereby certifies that KeyCorp, an Ohio
corporation (the "Holder"), is the registered holder of floating rate common
securities of the Issuer Trust, representing undivided beneficial interests in
the assets of the Issuer Trust and designated the Floating Rate Common
Securities (Liquidation Amount $1,000 per Common Security) (the "Common
Securities"). Except as provided in Section 5.11 of the Trust Agreement (as
defined below) the Common Securities are not transferable and any attempted
transfer hereof shall be null and void. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Issuer Trust,
dated as of June __, 1998, as the same may be amended from time to time (the
"Trust Agreement"), including the designation of the terms of the Common
Securities as set forth therein. The Issuer Trust will furnish a copy of the
Trust Agreement to the Holder without charge upon written request to the Issuer
Trust at its principal place of business or registered office.
BY RECEIPT AND ACCEPTANCE OF THIS CERTIFICATE, THE HOLDER AGREES TO BE
BOUND BY THE TRUST AGREEMENT AND IS ENTITLED TO THE BENEFITS THEREUNDER.
Terms used but not defined herein have the meanings set forth in the
Trust Agreement.
<PAGE> 81
IN WITNESS WHEREOF, the undersigned Administrative Trustee of the
Issuer Trust has executed this certificate as of the day of June, 1998.
KEYCORP CAPITAL I
By:
-----------------------
Name:
Administrative Trustee
C-2
<PAGE> 82
EXHIBIT D
[FORM OF EXPENSE AGREEMENT]
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES, dated as of June __, 1998,
between KeyCorp, an Ohio corporation, in its capacity as Holder (as defined in
the Trust Agreement referred to below) of the Common Securities referred to
below (in such capacity, and together with its successors in such capacity, the
"Common Securityholder"), and KeyCorp Capital I, a Delaware business trust (the
"Issuer Trust").
W I T N E S S E T H :
WHEREAS, the Issuer Trust intends to issue its Common Securities (the
"Common Securities") to and receive junior subordinated debentures from KeyCorp
and to issue and sell Floating Rate Capital Securities (the "Capital
Securities") with such powers, preferences and special rights and restrictions
as are set forth in the Amended and Restated Trust Agreement of the Issuer
Trust, dated as of June __, 1998, as the same may be amended from time to time
(the "Trust Agreement"); and
WHEREAS, the Common Securityholder will own all of the Common
Securities of the Issuer Trust;
WHEREAS, terms used but not defined herein have the meanings set forth
in the Trust Agreement;
NOW, THEREFORE, for good and valid consideration, the receipt and
sufficiency of which are hereby acknowledged:
ARTICLE I.
SECTION 1.1 Guarantee by the Common Securityholder.
Subject to the terms and conditions hereof, the Common Securityholder
hereby irrevocably and unconditionally guarantees to each person or entity to
whom the Issuer Trust is now or hereafter becomes indebted or liable (the
"Beneficiaries") the full payment, when and as due, of any and all Obligations
(as hereinafter defined) to such Beneficiaries. As used herein, "Obligations"
means any costs, expenses or liabilities of the Issuer Trust, other than
obligations of the Issuer Trust to pay to holders of any Trust
D-1
<PAGE> 83
Securities the amounts due such holders pursuant to the terms of the Trust
Securities. This Agreement is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.
SECTION 1.2 Subordination of Guarantee. The guarantee and other
liabilities and obligations of the Common Securityholder under this Agreement
shall constitute unsecured obligations of the Common Securityholder and shall
rank subordinate and junior in right of payment to all Senior Indebtedness (as
defined in the Indenture) of the Common Securityholder to the extent and in the
manner set forth in the Indenture with respect to the Debentures, and the
provisions of Article XIII of the Indenture will apply, mutatis mutandis, to the
obligations of the Common Securityholder hereunder. The obligations of the
Common Securityholder hereunder do not constitute Senior Indebtedness (as
defined in the Indenture) of the Common Securityholder.
SECTION 1.3 Term of Agreement.
This Agreement shall terminate and be of no further force or effect
upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Capital Securities (whether upon
redemption, liquidation, exchange or otherwise) and (b) the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Capital Securities or any Beneficiary must restore payment of
any sums paid in respect of the Capital Securities, under any Obligation, under
the Guarantee Agreement dated the date hereof by the Common Securityholder and
Bankers Trust Company, as guarantee trustee, or under this Agreement for any
reason whatsoever.
This Agreement shall be continuing, irrevocable, unconditional and
absolute.
SECTION 1.4 Waiver of Notice.
The Common Securityholder hereby waives notice of acceptance of this
Agreement and of any Obligation to which it applies or may apply, and the Common
Securityholder hereby waives presentment, demand for payment, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 1.5 No Impairment.
The obligations, covenants, agreements and duties of the Common
Securityholder under this Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
D-2
<PAGE> 84
1. the extension of time for the payment by the Issuer Trust
of all or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
2. any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Issuer Trust granting indulgence or extension
of any kind; or
3. the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer Trust or any of
the assets of the Issuer Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Common Securityholder with respect to the happening of any
of the foregoing.
SECTION 1.6 Enforcement.
A Beneficiary may enforce this Agreement directly against the Common
Securityholder and the Common Securityholder waives any right or remedy to
require that any action be brought against the Issuer Trust or any other person
or entity before proceeding against the Common Securityholder.
SECTION 1.7 Subrogation.
The Common Securityholder shall be subrogated to all (if any) rights of
the Issuer Trust in respect of any amounts paid to the Beneficiaries by the
Common Securityholder under this Agreement; provided, however, that the Common
Securityholder shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Agreement.
D-3
<PAGE> 85
ARTICLE II.
SECTION 2.1 Binding Effect.
This Agreement shall bind the successors, receivers, trustees and
representatives of the Common Securityholder and shall inure to the benefit of
the Beneficiaries.
SECTION 2.2 Amendment.
So long as there shall remain any Beneficiary or any Capital Securities
of any series shall be outstanding, this Agreement may not be modified or
amended in any manner adverse to such Beneficiary or to the holders of the
Capital Securities, as the case may be.
SECTION 2.3 Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or by registered
or certified mail, addressed as follows (and if so given, shall be deemed given
when mailed or upon receipt of an answer-back, if sent by telex):
KeyCorp Capital I
c/o KeyCorp
127 Public Square
Cleveland, Ohio 44114
Facsimile No.: (216) 689-4121
Attention: General Counsel
KeyCorp
127 Public Square
Cleveland, Ohio 44114
Facsimile No.: (216) 689-4121
Attention: General Counsel
SECTION 2.4 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
D-4
<PAGE> 86
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
KEYCORP
By:
-----------------------
Name:
Title:
KEYCORP CAPITAL I
By:
-----------------------
Name: Daniel R. Stolzer
Administrative Trustee
D-5
<PAGE> 87
EXHIBIT E
[FORM OF CAPITAL SECURITIES CERTIFICATE]
[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 THIS SECURITY 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 THIS SECURITY 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 THIS SECURITY ON BEHALF OF OR
WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH
PURCHASE OR HOLDING.]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITIES CERTIFICATE,
THEN INSERT--This Capital Security is a Global Capital Securities Certificate
within the meaning of the Trust Agreement hereinafter referred to and is
registered in the name of a clearing agency or a nominee thereof. This Capital
Security may not be exchanged in whole or in part for a Capital Security
registered, and no transfer of this Capital Security in whole or in part may be
registered, in the name of any person other than such clearing agency or a
nominee thereof, except in the limited circumstances described in the Trust
Agreement.]
[IF THE SECURITY IS A GLOBAL CAPITAL SECURITY AND THE DEPOSITORY TRUST
COMPANY IS TO BE THE CLEARING AGENCY THEREFOR, THEN INSERT--Unless this Capital
Security is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York) to KeyCorp Capital I or its agent for
registration of transfer, exchange or payment, and any Capital Security issued
is registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment hereon
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
& Co., has an interest herein.]
<PAGE> 88
CERTIFICATE NUMBER NUMBER OF CAPITAL SECURITIES
P- [___________]
CUSIP NO. ____________
CERTIFICATE EVIDENCING CAPITAL SECURITIES
OF
KEYCORP CAPITAL I
FLOATING RATE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
KeyCorp Capital I, a business trust created under the laws of the State
of Delaware (the "Issuer Trust"), hereby certifies that (the "Holder")
is the registered owner of ( ) capital securities of the Issuer
Trust representing an undivided preferred beneficial interest in the assets of
the Issuer Trust and designated the KeyCorp Capital I Floating Rate Capital
Securities (Liquidation Amount $1,000 per Capital Security) (the "Capital
Securities"). The Capital Securities are transferable on the books and records
of the Issuer Trust, in person or by a duly authorized attorney, upon surrender
of this certificate duly endorsed and in proper form for transfer as provided
in Section 5.5 of the Trust Agreement (as defined below). The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities are set forth in, and this certificate and the Capital
Securities represented hereby are issued and shall in all respects be subject
to the terms and provisions of, the Amended and Restated Trust Agreement of
the Issuer Trust, dated as of June __, 1998, as the same may be amended from
time to time (the "Trust Agreement"), including the designation of the terms of
Capital Securities as set forth therein. The Holder is entitled to the benefits
of the Guarantee Agreement entered into by KeyCorp, an Ohio corporation, and
Bankers Trust Company, as guarantee trustee, dated as of June __, 1998, (the
"Guarantee"), to the extent provided therein. The Issuer Trust will furnish a
copy of the Trust Agreement and the Guarantee to the Holder without charge upon
written request to the Issuer Trust at its principal place of business or
registered office.
BY RECEIPT AND ACCEPTANCE OF THIS CERTIFICATE, THE HOLDER AGREES TO BE
BOUND BY THE TRUST AGREEMENT AND IS ENTITLED TO THE BENEFITS THEREUNDER.
E-2
<PAGE> 89
IN WITNESS WHEREOF, the undersigned Administrative Trustee of the
Issuer Trust has executed this certificate as of the day of , .
KEYCORP CAPITAL I
By:
--------------------
Name:
Administrative Trustee
E-3
<PAGE> 90
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Capital Securities Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date: ________________
Signature:
- --------------------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Capital
Security Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE> 1
Exhibit 4(f)
================================================================================
GUARANTEE AGREEMENT
between
KEYCORP,
as Guarantor,
and
BANKERS TRUST COMPANY,
as Guarantee Trustee
-------------------------------------
KEYCORP CAPITAL I
-------------------------------------
Dated as of June____, 1998
================================================================================
<PAGE> 2
KEYCORP CAPITAL I
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Section of Section of
Trust Indenture Act Guarantee Agreement
- ------------------- -------------------
310(a)............................................................ 4.1(a)
(b)............................................................ 4.1(c), 2.8
(c)............................................................ Inapplicable
311(a)............................................................ 2.2(b)
(b)............................................................ 2.2(b)
(c)............................................................ Inapplicable
312(a)............................................................ 2.2(a)
(b)............................................................ 2.2(b)
313............................................................... 2.3
314(a)............................................................ 2.4
(b)............................................................ Inapplicable
(c)............................................................ 2.5
(d)............................................................ Inapplicable
(e)............................................................ 1.1, 2.5, 3.2
(f)............................................................ 2.1, 3.2
315(a)............................................................ 3.1(d)
(b)............................................................ 2.7
(c)............................................................ 3.1(c)
(d)............................................................ 3.1(d)
316(a)............................................................ 1.1, 2.6, 5.4
(b)............................................................ 5.3, 5.7
(c)............................................................ 8.2
317(a)............................................................ Inapplicable
(b)............................................................ Inapplicable
318(a)............................................................ 2.1(b)
(b)............................................................ 2.1
(c)............................................................ 2.1(a)
- ----------
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to
be a part of the Guarantee Agreement and shall not affect the interpretation of
any of its terms or provisions.
i
<PAGE> 3
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1. Interpretation.................................................. 2
SECTION 1.2. Definitions..................................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application................................ 6
SECTION 2.2. List of Holders................................................. 6
SECTION 2.3. Reports by the Guarantee Trustee................................ 6
SECTION 2.4. Periodic Reports to Guarantee Trustee........................... 7
SECTION 2.5. Evidence of Compliance with Conditions Precedent................ 7
SECTION 2.6. Events of Default; Waiver....................................... 7
SECTION 2.7. Event of Default; Notice........................................ 7
SECTION 2.8. Conflicting Interests........................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee...................... 8
SECTION 3.2. Certain Rights of Guarantee Trustee............................. 9
SECTION 3.3. Compensation; Indemnity; Fees................................... 11
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.................................. 12
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trust..... 12
ii
<PAGE> 4
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee....................................................... 13
SECTION 5.2. Waiver of Notice and Demand..................................... 13
SECTION 5.3. Obligations Not Affected........................................ 13
SECTION 5.4. Rights of Holders............................................... 14
SECTION 5.5. Guarantee of Payment............................................ 15
SECTION 5.6. Subrogation..................................................... 15
SECTION 5.7. Independent Obligations......................................... 15
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination................................................... 15
SECTION 6.2. Pari Passu Guarantees........................................... 16
ARTICLE VII
TERMINATION
SECTION 7.1. Termination..................................................... 16
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.......................................... 16
SECTION 8.2. Amendments...................................................... 16
SECTION 8.3. Notices......................................................... 17
SECTION 8.4. Benefit......................................................... 18
SECTION 8.5. Governing Law................................................... 18
SECTION 8.6. Counterparts.................................................... 18
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GUARANTEE AGREEMENT, dated as of June __, 1998 is executed and delivered by
KEYCORP, an Ohio corporation (the "Guarantor") having its principal office at
127 Public Square, Cleveland, Ohio 44114-1306, and BANKERS TRUST COMPANY, a
banking corporation organized under the laws of the State of New York, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of
KEYCORP CAPITAL I, a Delaware statutory business trust (the "Issuer Trust").
W I T N E S S E T H :
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as June
__, 1998 (the "Trust Agreement"), among the Guarantor, as Depositor, the
Property Trustee, the Delaware Trustee and the Administrative Trustees named
therein and the Holders from time to time of undivided beneficial interests in
the assets of the Issuer Trust, the Issuer Trust is issuing $250,000,000
aggregate Liquidation Amount (as defined in the Trust Agreement) of its Floating
Rate Capital Securities, Liquidation Amount $1,000 per Capital Security (the
"Capital Securities"), representing preferred undivided beneficial interests in
the assets of the Issuer Trust and having the terms set forth in the Trust
Agreement;
WHEREAS, the Capital Securities will be issued by the Issuer Trust and the
proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust's Common Securities (as defined below), will be used to purchase the
Junior Subordinated Debentures (as defined in the Trust Agreement) of the
Guarantor which will be deposited with Bankers Trust Company, as Property
Trustee under the Trust Agreement, as trust assets;
WHEREAS, as an incentive for the Holders to purchase the Capital
Securities, the Guarantor irrevocably and unconditionally agrees, to the extent
set forth herein, to pay to the Holders of the Capital Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Capital
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement to
provide as follows for the benefit of the Holders from time to time of the
Capital Securities:
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in
Section 1.2;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice-versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 1.2. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings:
"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 Guarantor 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
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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.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that the Issuer
Trust shall not be deemed to be an Affiliate of the Guarantor. For the
purposes of this definition, "control", when used with respect to any
specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Board of Directors" means either the board of directors of the
Guarantor or any committee of that board duly authorized to act hereunder.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided,
however, that, except with respect to a default in payment of any Guarantee
Payments, the Guarantor shall have received notice of default and shall not
have cured such default within 30 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent
not paid or made by or on behalf of the Issuer Trust: (i) any accumulated
and unpaid Distributions (as defined in the Trust Agreement) required to be
paid on the Capital Securities, to the extent the Issuer Trust shall have
funds on hand available therefor at such time, (ii) the redemption price,
including all accumulated and unpaid Distributions to the date of
redemption (the "Redemption Price"), with respect to any Capital Securities
called for redemption by the Issuer Trust, to the extent the Issuer Trust
shall have funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary termination, winding up or liquidation of the
Issuer Trust, unless Junior Subordinated Debentures are distributed to the
Holders, the lesser of (a) the aggregate of the Liquidation Amount of
$1,000 per Capital Security plus accumulated and unpaid Distributions on
the Capital Securities to the date of payment to the extent that the Issuer
Trust shall have funds available therefor at such time and (b) the amount
of assets of the Issuer Trust remaining available for distribution to
Holders in liquidation of the Issuer Trust (in either case, the
"Liquidation Distribution").
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"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement, and thereafter means
each such Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of
the Issuer Trust, of any Capital Securities; provided, however, that in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor, the Guarantee Trustee, or any
Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Indenture dated as of December 4, 1996, as
supplemented and amended between the Guarantor and Bankers Trust Company,
as trustee.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, a vote by the Holder(s),
voting separately as a class, of more than 50% of the Liquidation Amount of
all then outstanding Capital Securities issued by the Issuer Trust.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman or a Vice Chairman of the Board of
Directors of such Person or the President or a Vice President of such
Person, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of such Person, and delivered to the Guarantee Trustee.
Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Guarantee Agreement shall
include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company,
limited liability
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company, trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any Senior Vice President, any Vice President, any Assistant Vice
President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer, any Trust Officer or Assistant Trust Officer or any
other officer of the Corporate Trust Department of the Guarantee Trustee
and also means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Senior Debt" means any obligation of the Guarantor 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. Senior Debt does not include Senior
Subordinated Debt or the Junior Subordinated Debentures.
"Senior Indebtedness" means (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.
"Senior Subordinated Debt" means any obligation of the Guarantor 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
Guarantor's outstanding subordinated debt securities and any subordinated
debt securities issued in the future with substantially similar
subordination terms and does not include the Junior Subordinated Debentures
or any subordinated debt securities issued in the future or the past with
substantially similar subordination terms.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
Capitalized or otherwise defined terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust Agreement as in
effect on the date hereof.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act through the operation of Section 318(c)
thereof, such imposed duties shall control. If any provision of this Guarantee
Agreement modifies or excludes an provision of the Trust Indenture Act which may
be so modified or excluded, the latter provision shall be deemed to apply to
this Guarantee Agreement as so modified or to be excluded, as the case may be.
SECTION 2.2. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (a) semiannually, on or before June 30 and December 31 of each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders (the "List of Holders") as of a date not more than
15 days prior to the delivery thereof, and (b) at such other times as the
Guarantee Trustee may request in writing, within 30 days after the receipt by
the Guarantor of any such request, a List of Holders as of a date not more than
15 days prior to the time such list is furnished, in each case to the extent
such information is in the possession or control of the Guarantor and is not
identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than May 31 of each year, commencing May 31, 1999, the Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply
with the requirements of Section 313(d) of the Trust Indenture Act. The
Guarantor will notify the Guarantee Trustee if and when any Capital Securities
are listed on any stock exchange.
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SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act, in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer of the Guarantor pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Capital Securities
may, by vote, on behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default known to the Guarantee Trustee, unless such
defaults have been cured before the giving of such notice, provided, that,
except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the Board of Directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of this
Guarantee Agreement shall have obtained written notice, of such Event of
Default.
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SECTION 2.8. Conflicting Interests.
The Trust Agreement and the Indenture shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by
such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
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(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions that
by any provision hereof or of the Trust Indenture Act are specifically
required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Amount of the Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other
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evidence of indebtedness or other paper or document reasonably believed by
it to be genuine and to have been signed, sent or presented by the proper
party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and the
written advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or opinion. Such legal
counsel may be legal counsel to the Guarantor or any of its Affiliates and
may be one of its employees. The Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Guarantee Agreement from any court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
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(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (C) shall be
protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3. Compensation; Indemnity; Fees.
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation
shall not be limited by any provisions of law in regard to the compensation
of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements
and advances incurred or made by the Guarantee Trustee in accordance with
any provision of this Guarantee Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Guarantee Trustee and its directors, officers,
agents and employees for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part
of the Guarantee Trustee, arising out of or in connection with the
acceptance or administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or charge
on any Guarantee Payments as a result of any amount due to it under this
Guarantee Agreement.
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The provisions of this Section 3.3. shall survive the termination of this
Guarantee Agreement or the earlier resignation or removal of the Guarantee
Trustee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section
310(a) of the Trust Indenture Act. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority, then, for the purposes of this Section
4.1 and to the extent permitted by the Trust Indenture Act, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting)
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by an instrument in writing executed by the Guarantee Trustee and delivered to
the Guarantor, which resignation shall not take effect until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Guarantee Trustee and delivered
to the Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by or on behalf of the Issuer Trust), as and when due, regardless of any
defense, right of set-off or counterclaim which the Issuer Trust may have or
assert, except the defense of payment. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer Trust to pay such amounts
to the Holders.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer Trust of any express or implied
agreement, covenant,
13
<PAGE> 18
term or condition relating to the Capital Securities to be performed or
observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer Trust of all
or any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Junior Subordinated Debentures as provided in the
Indenture), Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Capital Securities or the extension of time
for the performance of any other obligation under, arising out of, or in
connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer Trust granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
Trust or any of the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying obligation), it being the intent of this Section
5.3 that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee Agreement;
and
14
<PAGE> 19
(iv) any Holder may institute a legal proceeding directly against the Guarantor
to enforce its rights under this Guarantee Agreement, without first instituting
a legal proceeding against the Guarantee Trustee, the Issuer Trust or any other
Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer Trust) or upon distribution of Junior Subordinated Debentures to
Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer Trust pursuant to Section 5.1; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer Trust with respect to the Capital Securities
and that the Guarantor shall be liable as principal and as debtor hereunder to
make Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Indebtedness of the Guarantor. The
obligations of the Guarantor under
15
<PAGE> 20
this Guarantee Agreement do not constitute Senior Indebtedness, Senior Debt or
Senior Subordinated Debt.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall rank
pari passu with the obligations of the Guarantor under any similar guarantee
agreements issued by the Guarantor on behalf of the holders of preferred or
capital securities issued by any KeyCorp Trust (as defined in the Indenture).
ARTICLE VII
TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Capital Securities,
(ii) the distribution of Junior Subordinated Debentures to the Holders in
exchange for all of the Capital Securities or (iii) full payment of the amounts
payable in accordance with the Trust Agreement upon liquidation of the Issuer
Trust. Notwithstanding the foregoing, this Guarantee Agreement will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid with respect to Capital Securities
or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its obligations hereunder.
16
<PAGE> 21
SECTION 8.2. Amendments.
Except with respect to any changes which do not adversely affect the rights
of the Holders in any material respect (in which case no consent of the Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of the
Capital Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address, facsimile number or to the attention of such other Person as
the Guarantor may give notice to the Holders:
KeyCorp
127 Public Square
Cleveland, Ohio 44114-1306
Facsimile No.: (216) 689-4121
Attention: General Counsel
(b) if given to the Issuer Trust, in care of the Guarantee Trustee, at
the Issuer Trust's (and the Guarantee Trustee's) address set forth below or
such other address as the Guarantee Trustee on behalf of the Issuer Trust
may give notice to the Holders:
KeyCorp Capital I
c/o KeyCorp
127 Public Square
Cleveland, Ohio 44114-1306
Facsimile No.: (216) 689-4121
Attention: General Counsel
17
<PAGE> 22
with a copy to:
Bankers Trust Company
Four Albany Street
Mail Stop 5041
New York, New York 10006
Facsimile No.: (212) 250-6395
Attention: Kevin Weeks
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Capital Securities.
SECTION 8.5. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.6. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
18
<PAGE> 23
IN WITNESS WHEREOF, the undersigned have executed this Guarantee Agreement
as of the date first above written.
KEYCORP
By:_____________________________________
Name: Daniel R. Stolzer
Title:
BANKERS TRUST COMPANY
as Guarantee Trustee
By:_____________________________________
Name:
Title:
19
<PAGE> 1
[KeyCorp. Letterhead]
Exhibit 5(a)
June 16, 1998
KeyCorp
127 Public Square
Cleveland, Ohio 44114
RE: Registration Statement on Form S-3
Ladies and Gentlemen:
I am Vice President and Associate General Counsel of KeyCorp, an Ohio
corporation (the "Corporation"), and I have acted as counsel to the Corporation
in connection with the Registration Statement on Form S-3 filed on June 3, 1998
(and all amendments thereto) with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Act of 1933, as amended (the "Act")
(the "Registration Statement"). The Registration Statement covers the
registration of Junior Subordinated Deferrable Interest Debentures (the "Debt
Securities") of the Corporation, $250,000,000 aggregate liquidation amount of
Capital Securities (the "Capital Securities") of KeyCorp Capital I, a business
trust created under the laws of the State of Delaware (the "Issuer"), and the
Guarantee with respect to the Capital Securities (the "Guarantee") to be
executed and delivered by the Corporation for the benefit of the holders from
time to time of the Capital Securities.
I am familiar with the corporate proceedings of the Corporation and the
Issuer to date with respect to the proposed issuance of the Debt Securities, the
Capital Securities and the Guarantee, and I have examined such corporate
records, certificates and other documents as I have considered necessary or
appropriate for the purposes of this opinion.
In rendering this opinion, I have assumed, without any independent
investigation, that (i) all documents that have been submitted to me as
originals are authentic, and that all documents that have been submitted to me
as copies conform to authentic, original documents; and (ii) all persons
executing agreements, instruments or documents examined or relied upon by me had
the capacity to sign such agreements, instruments or documents, and all such
signatures are genuine.
<PAGE> 2
KeyCorp
Page 2
I have assumed that each of the documents have been duly authorized,
executed and delivered by each of the parties thereto other than the
Corporation and the Issuer and constitute valid and legally binding obligations
of such parties enforceable in accordance with their respective terms, except
as limited by Title II of the United States Code (Bankruptcy) and other
applicable bankruptcy, insolvency, reorganization, arrangement, fraudulent
transfer, moratorium or other laws relating to or affecting creditors' rights
generally and general principles of equity, constitutional rights and public
policy, regardless of whether enforceability is considered in a proceeding at
law or in equity and except that the provisions requiring payment of attorneys'
fees may not be enforced by courts applying Ohio law.
Upon the basis of such examination, I advise you that, in my opinion,
when the Registration Statement relating to the Debt Securities, the Capital
Securities and the Guarantee has become effective under the Act, the Debt
Securities have been duly executed and authenticated in accordance with the
Indenture and issued and delivered as contemplated in the Registration
Statement, the Guarantee Agreement relating to the Guarantee with respect to the
Capital Securities of the Issuer has been duly executed and delivered, the
Capital Securities have been duly executed in accordance with the Amended and
Restated Trust Agreement of the Issuer and issued and delivered as contemplated
in the Registration Statement, the terms of the Debt Securities and the
Guarantee and of their issuance and delivery have been duly established in
conformity with the Indenture and the Guarantee Agreement, respectively, so as
not to violate any applicable law or result in a default under or breach of any
agreement or instrument binding upon the Corporation and so as to comply with
any requirement or restriction imposed by any court or governmental body having
jurisdiction over the Corporation, and the terms of the Capital Securities of
the Issuer and of their issuance and delivery have been duly established in
conformity with the Amended and Restated Trust Agreement of the Issuer so as not
to violate any applicable law or result in a default under or breach of any
agreement or instrument binding upon the Issuer and so as to comply with any
requirement or restriction imposed by any court or governmental body having
jurisdiction over the Issuer, the Debt Securities and the Guarantee relating to
the Capital Securities of the Issuer will constitute valid and legally binding
obligations of the Corporation, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
<PAGE> 3
KeyCorp
Page 3
The foregoing opinion is limited to the federal laws of the United
States, the laws of the State of New York and the laws of the State of Ohio, and
I am expressing no opinion as to the effect of the laws of any other
jurisdiction.
I understand that you have received an opinion regarding the Capital
Securities from Richards, Layton & Finger, LLP, special Delaware counsel for the
Corporation and the Issuer. I am expressing no opinion with respect to the
matters contained in such opinion.
This opinion is intended solely for your use in connection with the
Corporation's and Issuer's Registration Statement and may not be reproduced,
filed publicly or relied upon by you for any other purpose or by any other
person for any purpose without my prior written consent.
I hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the use of my name therein.
Very truly yours,
/s/ Daniel R. Stolzer
Daniel R. Stolzer
Vice President and
Associate General Counsel
<PAGE> 1
Exhibit 5(b)
[Letterhead of Richards, Layton & Finger, P.A.]
June 16, 1998
KeyCorp Capital I
c/o KeyCorp
127 Public Square
Cleveland, Ohio 44114-1306
RE: KEYCORP CAPITAL I
-----------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for KeyCorp, an Ohio
corporation (the "Company"), and KeyCorp Capital I, a Delaware business trust
(the "Trust"), in connection with the matters set forth herein. At your request,
this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of June 2,
1998 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on June 2, 1998;
(b) The Trust Agreement of the Trust, dated as of June 2,
1998, among the Company and the trustees of the Trust named therein;
(c) Amendment No. 1 to the Registration Statement (the
"Registration Statement") on Form S-3, including a preliminary prospectus (the
"Prospectus"), relating to the Floating Rate Capital Securities of the Trust
representing preferred undivided beneficial interests in the assets of the Trust
(each, a "Capital Security" and collectively, the "Capital Securities"), as
proposed to be filed by the Company and the Trust with the Securities and
Exchange Commission on or about June 16, 1998;
(d) A form of Amended and Restated Trust Agreement of the
Trust, to be entered into among the Company, as depositor, the trustees of the
Trust named therein, and the
<PAGE> 2
KeyCorp Capital I
June 16, 1998
Page 2
holders, from time to time, of undivided beneficial interests in the assets of
the Trust (including Exhibits A, C and E thereto) (the "Trust Agreement"),
attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated June
16, 1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (e) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (e) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Trust Agreement and the Certificate are in full force and effect and have not
been amended, (ii) except to the extent provided in paragraph 1 below, the due
creation or due organization or due formation, as the case may be, and valid
existence in good standing of each party to the documents examined by us under
the laws of the jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Capital Security is to be issued by the Trust
(collectively, the "Capital Security Holders") of a Capital Securities
Certificate for such Capital Security and the payment for the Capital Security
acquired by it, in accordance with the Trust Agreement and the Registration
Statement, and (vii) that the Capital Securities are issued and sold to the
Capital Security Holders in accordance with the Trust Agreement and the
Registration Statement. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its contents.
<PAGE> 3
KeyCorp Capital I
June 16, 1998
Page 3
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act.
2. The Capital Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Capital Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Capital Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. In
addition, we hereby consent to the use of our name under the heading "Validity
of Securities" in the Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
BJK/BJ
<PAGE> 1
[LETTERHEAD OF SULLIVAN & CROMWELL]
Exhibit 8
June 16, 1998
KeyCorp Capital I,
c/o KeyCorp,
127 Public Square,
Cleveland, Ohio 44114.
Ladies and Gentlemen:
As special tax counsel to KeyCorp Capital I (the "Trust") and KeyCorp
in connection with the issuance of $250,000,000 aggregate liquidation amount of
the Floating Rate Capital Securities of the Trust, we hereby confirm to you our
opinion as set forth under the heading "Certain Federal Income Tax Consequences"
in the Prospectus which forms a part of the Registration Statement of the Trust
to which this opinion is filed as an exhibit, subject to the limitations set
forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the headings "Certain
Federal Income Tax Consequences" and "Validity of Securities" in the Prospectus.
In giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Sullivan & Cromwell
SULLIVAN & CROMWELL
<PAGE> 1
Exhibit 12(a)
KEYCORP
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
COMPUTATION OF EARNINGS
Net income $ 235 $ 212 $ 919 $ 783 $ 825
Add: Provision for income taxes 108 94 426 360 368
Less: Cumulative effect of accounting change - - - - -
Extraordinary net gain - - - - 36
---------- ---------- ---------- ---------- ----------
Income before income taxes and
extraordinary net gain 343 306 1,345 1,143 1,157
Fixed charges, excluding interest on deposits 338 233 1,085 810 819
---------- ---------- ---------- ---------- ----------
Total earnings for computation,
excluding interest on deposits 681 539 2,430 1,953 1,976
Interest on deposits 347 353 1,462 1,469 1,705
---------- ---------- ---------- ---------- ----------
Total earnings for computation
including interest on deposits $ 1,028 $ 892 $ 3,892 $ 3,422 $ 3,681
========== ========== ========== ========== ==========
COMPUTATION OF FIXED CHARGES
Net rental expense $ 32 $ 30 $ 123 $ 126 $ 117
========== ========== ========== ========== ==========
Portion of net rental expense deemed
representative of interest $ 8 $ 10 $ 30 $ 42 $ 39
Interest on short-term borrowed funds 191 145 642 492 519
Interest on long-term debt 125 68 364 273 261
Distributions on capital securities 14 10 49 3 --
---------- ---------- ---------- ---------- ----------
Total fixed charges, excluding interest
on deposits 338 233 1,085 810 819
Interest on deposits 347 353 1,462 1,469 1,705
---------- ---------- ---------- ---------- ----------
Total fixed charges, including interest
on deposits $ 685 $ 586 $ 2,547 $ 2,279 $ 2,524
========== ========== ========== ========== ==========
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Preferred stock dividend requirement on
a pre-tax basis $ -- $ -- $ -- $ 12 $ 23
Total fixed charges, excluding interest on deposits 338 233 1,085 810 819
---------- ---------- ---------- ---------- ----------
Combined fixed charges and preferred stock
dividends, excluding interest on deposits 338 233 1,085 822 842
Interest on deposits 347 353 1,462 1,469 1,705
---------- ---------- ---------- ---------- ----------
Combined fixed charges and preferred stock
dividends, including interest on deposits $ 685 $ 586 $ 2,547 $ 2,291 $ 2,547
========== ========== ========== ========== ==========
RATIO OF EARNINGS TO FIXED CHARGES
Excluding deposit interest 2.02 x 2.31 x 2.24 x 2.41 x 2.42 x
Including deposit interest 1.50 x 1.52 x 1.53 x 1.50 x 1.46 x
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
Excluding deposit interest 2.02 x 2.31 x 2.24 x 2.38 x 2.35 x
Including deposit interest 1.50 x 1.52 x 1.53 x 1.49 x 1.45 x
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1993
---------- ----------
<S> <C> <C>
COMPUTATION OF EARNINGS
Net income $ 853 $ 710
Add: Provision for income taxes 430 374
Less: Cumulative effect of accounting change - -
Extraordinary net gain - -
---------- ----------
Income before income taxes and
extraordinary net gain 1,283 1,084
Fixed charges, excluding interest on deposits 513 345
---------- ----------
Total earnings for computation,
excluding interest on deposits 1,796 1,429
Interest on deposits 1,325 1,233
---------- ----------
Total earnings for computation
including interest on deposits $ 3,121 $ 2,662
========== ==========
COMPUTATION OF FIXED CHARGES
Net rental expense $ 124 $130
========== ==========
Portion of net rental expense deemed
representative of interest $ 41 $ 43
Interest on short-term borrowed funds 334 175
Interest on long-term debt 138 127
Distributions on capital securities -- --
---------- ----------
Total fixed charges, excluding interest
on deposits 513 345
Interest on deposits 1,325 1,233
---------- ----------
Total fixed charges, including interest
on deposits $ 1,838 $ 1,578
========== ==========
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Preferred stock dividend requirement on
a pre-tax basis $ 24 $ 28
Total fixed charges, excluding interest on deposits 513 345
---------- ----------
Combined fixed charges and preferred stock
dividends, excluding interest on deposits 537 373
Interest on deposits 1,325 1,233
---------- ----------
Combined fixed charges and preferred stock
dividends, including interest on deposits $ 1,862 $ 1,606
========== ==========
RATIO OF EARNINGS TO FIXED CHARGES
Excluding deposit interest 3.50 x 4.15 x
Including deposit interest 1.70 x 1.69 x
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
Excluding deposit interest 3.34 x 3.83 x
Including deposit interest 1.68 x 1.66 x
</TABLE>
<PAGE> 1
Exhibit 15
ACKNOWLEDGMENT LETTER OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
KeyCorp
We are aware of the incorporation by reference in Amendment No. 1 to the
Registration Statement (Form S-3 No. 333-55959) and related Prospectus of
KeyCorp Capital I and KeyCorp of our report dated April 14, 1998, relating to
the unaudited condensed consolidated interim financial statements of KeyCorp,
included in the Quarterly Report on Form 10-Q for the quarter ended March 31,
1998.
Pursuant to Rule 436(c) of the Securities Act of 1933, our reports are not a
part of the Registration Statements prepared or certified by accountants within
the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 10, 1998
<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
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-55959) and
related Prospectus of KeyCorp Capital I and KeyCorp, and to the incorporation
by reference therein of our report dated January 13, 1998, 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, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 10, 1998
<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, Form S-4 or such other form or forms as
applicable) to effect the registration of capital securities, debentures and a
related guarantee or a shelf registration pursuant to Rule 415 (or other
applicable rules) of the Securities and Exchange Commission of capital
securities, debentures and a related guarantee, with an aggregate issue price of
up to $500,000,000, hereby constitutes and appoints K. Brent Somers, Thomas C.
Stevens, Lee G. Irving 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
June 4, 1998.
By: /s/ Charles R. Hogan
------------------------------------
<PAGE> 1
Exhibit 25
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
<TABLE>
<S> <C>
KEYCORP KEYCORP CAPITAL I
(Exact name of obligor as specified in its charter) (Exact name of Co-Registrant as specified in its charter)
OHIO 34-6542451 DELAWARE 34-1866860
(State or other jurisdiction of (I.R.S. employer (State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.) Incorporation or organization) Identification no.)
</TABLE>
C/O KEYCORP
127 PUBLIC SQUARE 127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1306 CLEVELAND, OHIO 44114-1306
(Address, including zip code (Address, including zip code
of principal executive offices) of principal executive offices)
CAPITAL SECURITIES OF KEYCORP CAPITAL I
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES OF KEYCORP
KEYCORP GUARANTEE WITH RESPECT TO CAPITAL SECURITIES
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
</TABLE>
(b) Whether it is authorized to exercise corporate trust
powers. Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
ITEM 3. -15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers
Trust Company dated August 7, 1990, Certificate
of Amendment of the Organization Certificate of
Bankers Trust Company dated June 21, 1995 -
Incorporated herein by reference to Exhibit 1
filed with Form T-1 Statement, Registration No.
33-65171, Certificate of Amendment of the
Organization Certificate of Bankers Trust Company
dated March 20, 1996, incorporate by referenced
to Exhibit 1 filed with Form T-1 Statement,
Registration No. 333-25843 and Certificate of
Amendment of the Organization Certificate of
Bankers Trust Company dated June 19, 1997, copy
attached.
EXHIBIT 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration No.
33-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise
corporate trust powers Incorporated herein by
reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 33-21047.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as
amended on November 18, 1997. Copy attached.
-2-
<PAGE> 3
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by
Section 321(b) of the Act. Incorporated herein by
reference to Exhibit 4 filed with Form T-1
Statement, Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust
Company dated as of March 31, 1998. Copy
attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 12th day
of June, 1998.
BANKERS TRUST COMPANY
By: /s/ Marc Parilla
-------------------------------
Marc Parilla
Assistant Treasurer
-4-
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 12th day
of June, 1998.
BANKERS TRUST COMPANY
By: Marc Parilla
------------
Marc Parilla
Assistant Treasurer
-5-
<PAGE> 6
STATE OF NEW YORK,
BANKING DEPARTMENT
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City of New
York,
this 27TH day of June in the Year of our Lord one
thousand nine hundred and NINETY-SEVEN.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into
One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 600 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE> 8
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
James T. Byrne, Jr.
---------------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
---------------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
---------------------------------
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
Sandra L. West
- ---------------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
<PAGE> 9
BY-LAWS
NOVEMBER 18, 1997
BANKERS TRUST COMPANY
NEW YORK
<PAGE> 10
BY-LAWS
OF
BANKERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
<PAGE> 11
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE> 12
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
<PAGE> 13
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records
<PAGE> 14
and premises of the Company and shall delegate such authority to his
subordinates. He shall have the duty to report to the Audit Committee on all
matters concerning the internal audit program and the adequacy of the system of
internal controls of the Company which he deems advisable or which the Audit
Committee may request. Additionally, the General Auditor shall have the duty of
reporting independently of all officers of the Company to the Audit Committee at
least quarterly on any matters concerning the internal audit program and the
adequacy of the system of internal controls of the Company that should be
brought to the attention of the directors except those matters responsibility
for which has been vested in the General Credit Auditor. Should the General
Auditor deem any matter to be of special immediate importance, he shall report
thereon forthwith to the Audit Committee. The General Auditor shall report to
the Chief Financial Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE> 15
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company,
<PAGE> 16
evidenced by a written communication signed by the Chairman of the Board, the
Chief Executive Officer or the President, and (ii) only if and to the extent
that, after making such efforts as the Chairman of the Board, the Chief
Executive Officer or the President shall deem adequate in the circumstances,
such person shall be unable to obtain indemnification from such other enterprise
or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
<PAGE> 17
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE> 18
I, Marc Parilla, Assistant Secretary of Bankers Trust Company, New York, New
York, hereby certify that the foregoing is a complete, true and correct copy of
the By-Laws of Bankers Trust Company, and that the same are in full force and
effect at this date.
/s/ Marc Parilla
--------------------------
ASSISTANT SECRETARY
DATED: June 9, 1998
<PAGE> 19
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<S> <C> <C> <C> <C>
---------------
| C400 |
----------------
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin (1) ................ | 0081 1,458,000 | 1.a.
b. Interest-bearing balances (2) ......................................... | 0071 2,253,000 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) ............ | 1754 0 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)........... | 1773 6,444,000 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell......... | 1350 30,836,000 | 3.
4. Loans and lease financing receivables: | ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 19,993,000 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses........................RCFD 3123 647,000 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve ...........................RCFD 3128 0 | ////////////////// | 4.c.
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) .................... | 2125 19,346,000 | 4.d.
5. Trading Assets (from schedule RC-D) ......................................... | 3545 45,690,000 | 5.
6. Premises and fixed assets (including capitalized leases) ..................... | 2145 791,000 | 6.
7. Other real estate owned (from Schedule RC-M) ................................. | 2150 184,000 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) | 2130 104,000 | 8.
9. Customers' liability to this bank on acceptances outstanding ................. | 2155 542,000 | 9.
10. Intangible assets (from Schedule RC-M) ........................................ | 2143 81,000 |10.
11. Other assets (from Schedule RC-F) ............................................. | 2160 5,339,000 |11.
12. Total assets (sum of items 1 through 11) ...................................... | 2170 113,068,000 |12.
------------------------
- --------------------------
<FN>
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
<S> <C> <C> <C> <C>
SCHEDULE RC--CONTINUED
-------------------------
Dollar Amounts in Thousands |//////// Bil Mil Thou |
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES |////////////////////////|
13. Deposits: |////////////////////////|
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) | RCON 2200 26,465,000 |13.a.
(1) Noninterest-bearing(1) ....................RCON 6631 3,005,000......... |////////////////////////|13.a.(1)
(2) Interest-bearing ...........................RCON 6636 23,460,000........ |////////////////////////|13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E |////////////////////////|
part II) | RCFN 2200 21,993,000 |13.b.
(1) Noninterest-bearing .......................RCFN 6631 1,712,000 |////////////////////////|13.b.(1)
(2) Interest-bearing ................RCFN 6636 20,281,000 |////////////////////////|13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase | RCFD 2800 12,125,000 |14.
15. a. Demand notes issued to the U.S. Treasury .......................................... | RCON 2840 0 |15.a.
b. Trading liabilities (from Schedule RC-D)........................................... | RCFD 3548 25,701,000 |15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized
leases): |////////////////////////|
a. With a remaining maturity of one year or less ..................................... | RCFD 2332 6,773,000 |16.a.
b. With a remaining maturity of more than one year through three years................ | A547 3,754,000 |16.b.
c. With a remaining maturity of more than three years................................. | A548 2,212,000 | 16.c
17. Not Applicable. |////////////////////////|17.
18. Bank's liability on acceptances executed and outstanding .............................. | RCFD 2920 542,000 |18.
19. Subordinated notes and debentures (2).................................................. | RCFD 3200 1,308,000 |19.
20. Other liabilities (from Schedule RC-G) ................................................ | RCFD 2930 6,135,000 |20.
21. Total liabilities (sum of items 13 through 20) ........................................ | RCFD 2948 107,008,000 |21.
22. Not Applicable |////////////////////////|
|////////////////////////|22.
EQUITY CAPITAL |////////////////////////|
23. Perpetual preferred stock and related surplus ......................................... | RCFD 3838 1,000,000 |23.
24. Common stock .......................................................................... | RCFD 3230 1,352,000 |24.
25. Surplus (exclude all surplus related to preferred stock) .............................. | RCFD 3839 544,000 |25.
26. a. Undivided profits and capital reserves ........................................... | RCFD 3632 3,583,000 |26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ........... | RCFD 8434 ( 41,000) |26.b.
27. Cumulative foreign currency translation adjustments ................................... | RCFD 3284 ( 378,000) |27.
28. Total equity capital (sum of items 23 through 27) ..................................... | RCFD 3210 6,060,000 |28.
29. Total liabilities and equity capital (sum of items 21 and 28).......................... | RCFD 3300 113,068,000 |29
| |
-------------------------
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best Number
describes the most comprehensive level of auditing work performed for the -------------
bank by independent external auditors as of any date during 1997 .................| RCFD 6724 1 | M.1
-----------------------------
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards by
a certified public accounting firm (may be required by
state chartering authority)
- ----------------------
<FN>
(1) Including total demand deposits and noninterest-bearing time and savings deposits.
(2) Includes limited-life preferred stock and related surplus.
</TABLE>
