<PAGE>
FILED PURSUANT RULE NO. 424(b)(5)
REGISTRATION NO. 333-70187
P R O S P E C T U S S U P P L E M E N T
- -----------------------------------------
(To prospectus dated February 4, 1999)
$300,000,000
The Bank of New York Company, Inc.
7.30% Senior Subordinated Notes due 2009
---------------
We will pay interest on the notes on June 1 and December 1 of each year,
beginning June 1, 2000. The notes will mature on December 1, 2009. We may not
redeem the notes before maturity.
The notes will be unsecured obligations and will be subordinated to our
senior indebtedness as described in the accompanying prospectus. The amount of
senior indebtedness totaled approximately $2.0 billion at October 31, 1999. Our
senior subordinated indenture does not limit or prohibit us from incurring
additional senior indebtedness.
Payment of principal of the notes may be accelerated only in the case of
our bankruptcy, insolvency or reorganization, and there is no right of
acceleration of this payment upon a default in the payment of principal of or
interest on the notes or in the performance of any of our other covenants in
our indenture. The notes will be issued only in registered form in
denominations of $1,000.
---------------
<TABLE>
<CAPTION>
Per Note Total
-------- -----
<S> <C> <C>
Public offering price (1)........................... 99.883% $299,649,000
Underwriting discount............................... .65% $1,950,000
Proceeds, before expenses, to us.................... 99.233% $297,699,000
</TABLE>
(1) Plus accrued interest from December 6, 1999, if settlement
occurs after that date
The notes are not deposits or other obligations of a bank and are not
insured by the Federal Deposit Insurance Corporation or any other government
agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about December 6, 1999.
---------------
Merrill Lynch & Co. BNY Capital Markets, Inc.
---------------
The date of this prospectus supplement is November 30, 1999.
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Description of the Notes................................................... S-3
Underwriting............................................................... S-4
Consolidated Ratios of Earnings to Fixed Charges........................... S-6
Legal Matters.............................................................. S-6
Experts.................................................................... S-6
</TABLE>
Prospectus
<TABLE>
<S> <C>
Summary................................................................... 1
Where You Can Find More Information about the Company and the BNY Trusts.. 2
The Company............................................................... 4
The BNY Trusts............................................................ 4
Certain Regulatory Considerations......................................... 6
Use of Proceeds........................................................... 9
Consolidated Ratios of Earnings to Fixed Charges and Combined Fixed
Charges and Preferred Stock Dividend Requirements........................ 10
Description of Senior Debt Securities and Senior Subordinated Debt
Securities............................................................... 11
Description of Junior Subordinated Debt Securities........................ 24
Description of Trust Preferred Securities................................. 37
Description of Guarantees................................................. 48
Relationship Among the Trust Preferred Securities, the Corresponding
Junior Subordinated Debentures,
the Expense Agreement and the Guarantees................................. 50
Description of Preferred Stock............................................ 52
Description of Depositary Shares.......................................... 56
Description of Common Stock............................................... 59
Description of Preferred Stock Purchase Rights............................ 60
Book-Entry Issuance....................................................... 61
Validity of Securities.................................................... 65
Experts................................................................... 65
Plan of Distribution...................................................... 65
</TABLE>
---------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the accompanying
prospectus is accurate only as of the date on the front cover of this
prospectus supplement. Our business, financial condition, results of operations
and prospects may have changed since that date.
S-2
<PAGE>
DESCRIPTION OF THE NOTES
We will issue the notes under our senior subordinated indenture, dated as
of October 1, 1993, with Chase Manhattan Trust Company, National Association,
the trustee. The accompanying prospectus outlines some of the provisions of
this indenture. If you would like more information about this indenture, you
should review it as filed with the SEC. See "Where You Can Find More
Information About the Company and the BNY Trusts" in the accompanying
prospectus for directions on how you can get a copy of the indenture. This
prospectus supplement includes brief summaries of the notes and our indenture.
See "Description of Senior Debt Securities and Senior Subordinated Debt
Securities" in the accompanying prospectus for more information.
The notes will be a series of unsecured, senior subordinated debt
securities under our senior subordinated indenture. The notes will be limited
to $300,000,000 aggregate principal amount and will mature on December 1, 2009.
The notes will bear interest at the rate of 7.30% per annum from December 6,
1999, or from the most recent interest payment date to which interest has been
paid or provided for, payable semi-annually on June 1 and December 1 of each
year, commencing June 1, 2000, to the persons in whose names the notes (or any
predecessor notes) are registered at the close of business on the 15th calendar
day (whether or not a business day) before the interest payment date. Interest
on the notes will be computed on the basis of a 360-day year of twelve 30-day
months. The notes will be issued only in book-entry registered form in
denominations of $1,000. We may not redeem the notes before maturity. There
will be no sinking fund in respect of the notes.
The defeasance provisions of our senior subordinated indenture described
under "Description of Senior Debt Securities and Senior Subordinated Debt
Securities--Defeasance and Covenant Defeasance" in the accompanying prospectus
will apply to the notes.
The payment of the principal of and interest on the notes will, to the
extent set forth in our senior subordinated indenture, be subordinated in right
of payment to the prior payment in full of all senior indebtedness (as defined
in our senior subordinated indenture). Our obligations under the notes will
rank equally in right of payment with other senior subordinated debt securities
and with "Existing Subordinated Indebtedness," subject to the obligations of
the holders of notes to pay over any "Excess Proceeds" to "Entitled Persons" in
respect of "Other Financial Obligations" as provided in our senior subordinated
indenture. The amount of senior indebtedness totaled approximately $2.0 billion
at October 31, 1999. Our senior subordinated indenture does not limit or
prohibit us from incurring additional senior indebtedness.
Payment of principal of the notes may be accelerated only in the case of
our bankruptcy, insolvency or reorganization, and there is no right of
acceleration of this payment upon a default in the payment of principal of or
interest on the notes or in the performance of any of our other covenants in
our indenture. See "Description of Senior Debt Securities and Senior
Subordinated Debt Securities--Subordination of Senior Subordinated Debt
Securities" in the accompanying prospectus.
S-3
<PAGE>
UNDERWRITING
We intend to offer the notes through the underwriters named below.
Subject to the terms and conditions in an underwriting agreement between us and
the underwriters, we have agreed to sell to the underwriters, and the
underwriters severally have agreed to purchase from us, the principal amount of
the notes listed opposite their names below.
<TABLE>
<CAPTION>
Principal
Underwriter Amount
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................... $270,000,000
BNY Capital Markets, Inc. .................................... 30,000,000
------------
Total.................................................... $300,000,000
============
</TABLE>
The underwriters have agreed to purchase all of the notes sold pursuant
to the underwriting agreement if any of the notes are purchased. If an
underwriter defaults, the underwriting agreement provides that the purchase
commitments of the nondefaulting underwriter may be increased or the
underwriting agreement may be terminated.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make in respect of those
liabilities.
The underwriters are offering the notes, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the notes and other conditions
contained in the underwriting agreement, such as the receipt by the
underwriters of officer's certificates and legal opinions. The underwriters
reserve the right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.
Commissions and Discounts
The underwriters have advised us that they propose initially to offer the
notes to the public at the public offering price on the cover page of this
prospectus supplement, and to dealers at that price less a concession not in
excess of .4% of the principal amount of the notes. The underwriters may allow,
and the dealers may reallow, a discount not in excess of .25% of the principal
amount of the notes to other dealers. After this offering, the public offering
price and discount may be changed.
The expenses of the offering, not including the underwriting discount,
are estimated at $115,000 and are payable by us.
New Issue of Notes
The notes are a new issue of securities with no established trading
market. We do not intend to apply for listing of the notes on any national
securities exchange or for quotation of the notes on any automated dealer
quotation system. We have been advised by the underwriters that they presently
intend to make a market in the notes after completion of the offering. However,
they are under no obligation to do so and may discontinue any market-making
activities at any time without any notice. We cannot assure the liquidity of
the trading market for the notes or that an active public market for the notes
will develop. If an active public trading market for the notes does not
develop, the market price and liquidity of the notes may be adversely affected.
S-4
<PAGE>
NASD Regulations
BNY Capital Markets, Inc., one of the underwriters, is a wholly-owned
subsidiary of ours. Accordingly, the offering will be conducted in accordance
with Conduct Rule 2720 of the National Association of Securities Dealers, Inc.
The underwriters will not confirm sales of the notes to any account over which
they exercise discretionary authority without the prior written specific
approval of the customer.
Price Stabilization and Short Positions
In connection with the offering, the underwriters are permitted to engage
in transactions that stabilize the market price of the notes. Such transactions
consist of bids or purchases to peg, fix or maintain the price of the notes. If
the underwriters create a short position in the notes in connection with the
offering, i.e., if they sell more notes than are on the cover page of this
prospectus supplement, the underwriters may reduce that short position by
purchasing notes in the open market. Purchases of a security to stabilize the
price or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither we nor
any of the underwriters makes any representation that the underwriters will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.
T+4 Settlement
It is expected that delivery of the notes will be made, against payment
for the notes, on or about December 6, 1999, which will be the fourth business
day following the date of pricing of the notes. Under Rule 15c6-1 under the
Securities Exchange Act of 1934, purchases or sales of securities in the
secondary market generally are required to settle within three business days
(T+3), unless the parties to any such transactions expressly agree otherwise.
Accordingly, prospective purchasers of the notes who wish to trade the notes on
the date of this prospectus supplement will be required, because the notes
initially will settle within four business days (T+4), to specify an alternate
settlement cycle at the time of any such trade to prevent a failed settlement.
Prospective purchasers of the notes who wish to trade on the date of this
prospectus supplement should consult their own legal advisors.
Other Relationships
Some of the underwriters and their affiliates have engaged in, and may in
the future engage in, investment banking and other commercial dealings in the
ordinary course of business with us. They have received customary fees and
commissions for these transactions. Also, as described above, BNY Capital
Markets, Inc. is a wholly-owned subsidiary of ours.
S-5
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges for the nine months ended
September 30, 1999 were 8.24, excluding interest on deposits, and 2.86
including interest on deposits. For our ratios of earnings to fixed charges for
each of the five years ended December 31, 1998, see "Consolidated Ratios of
Earnings to Fixed Charges and Combined Fixed Charges and Preferred Stock
Dividend Requirements" in the accompanying prospectus.
LEGAL MATTERS
The validity of the notes is being passed upon for us by Paul A.
Immerman, Esq., our Senior Counsel, and on behalf of the underwriters by
Winthrop, Stimson, Putnam & Roberts, New York, New York. Mr. Immerman owns
shares of our common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1998, as set forth in their report, which is incorporated in
the accompanying prospectus by reference. Our financial statements are
incorporated by reference in reliance on Ernst & Young LLP's report given on
their authority as experts in accounting and auditing.
S-6
<PAGE>
PROSPECTUS
$1,300,000,000
The Bank of New York Company, Inc.
Senior Debt Securities
Senior Subordinated Debt Securities
Junior Subordinated Debt Securities
Preferred Stock
Common Stock
BNY Capital V
BNY Capital VI
BNY Capital VII
BNY Capital VIII
Trust Preferred Securities
(fully and unconditionally guaranteed on a subordinated basis, as described
herein, by The Bank of New York Company, Inc.)
THIS PROSPECTUS CONTAINS A GENERAL DESCRIPTION OF THE SECURITIES WHICH THE
BANK OF NEW YORK COMPANY, INC. MAY OFFER FOR SALE. THE SPECIFIC TERMS OF THE
SECURITIES WILL BE CONTAINED IN ONE OR MORE SUPPLEMENTS TO THIS PROSPECTUS.
READ THE PROSPECTUS AND ANY SUPPLEMENT CAREFULLY BEFORE YOU INVEST.
THE SECURITIES WILL BE EQUITY SECURITIES IN OR UNSECURED OBLIGATIONS OF THE
BANK OF NEW YORK COMPANY, INC. AND WILL NOT BE SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF THE COMPANY AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND
OR ANY OTHER GOVERNMENT AGENCY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is February 4, 1999.
<PAGE>
SUMMARY
This document is called a prospectus. This summary highlights selected
information from this prospectus and may not contain all of the information
that is important to you. To understand the terms of the securities, you should
carefully read this prospectus with the attached prospectus supplement. This
prospectus and the prospectus supplement together give the specific terms of
the securities being offered. You should also read the documents referred to
under the heading "Where You Can Find More Information About the Company and
the BNY Trusts" for information on The Bank of New York Company, Inc. and its
financial statements. The Company has its principal offices at One Wall Street,
New York, New York 10286 (telephone: 212-495-1784). Certain capitalized terms
used in this summary are defined elsewhere in this prospectus.
The Bank of New York Company, Inc., a New York corporation (also referred to
as the "Company" or "we"), and BNY Capital V, BNY Capital VI, BNY Capital VII
and BNY Capital VIII, each a statutory business trust formed under the laws of
the State of Delaware (separately each trust is also referred to as a "BNY
Trust" and together as the "BNY Trusts") have filed a registration statement
with the Securities and Exchange Commission (the "SEC") under a "shelf"
registration procedure. Under this procedure the Company and each BNY Trust may
offer and sell from time to time, in one or more series, up to $1,300,000,000
or the equivalent in one or more foreign currencies, including composite
currencies such as the EURO, of any of the following securities:
(i) unsecured senior debt securities,
(ii) unsecured senior subordinated debt securities,
(iii) unsecured junior subordinated debt securities,
(iv) shares of Preferred Stock, no par value,
(v) shares of Class A Preferred Stock, par value $2.00 per share,
(vi) depositary shares representing Preferred Stock or Class A Preferred
Stock,
(vii) shares of Common Stock, par value $7.50 per share,
(viii) Trust Preferred Securities of a BNY Trust, and
(ix) Guarantees, described below, relating to the Trust Preferred
Securities.
The securities may be sold for U.S. dollars, foreign denominated currency or
currency units; amounts payable with respect to any such securities may be
payable in U.S. dollars or foreign denominated currency or currency units.
This prospectus provides you with a general description of the securities we
may offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add, update or
change information contained in this prospectus.
The prospectus supplement may also contain information about certain United
States federal income tax considerations relating to the securities covered by
the prospectus supplement.
The Company and each BNY Trust may sell securities to underwriters who will
sell the securities to the public on terms fixed at the time of sale. In
addition, the securities may be sold by the Company and each BNY Trust directly
or through dealers or agents designated from time to time, which agents may be
affiliates of the Company and each BNY Trust. If the Company, directly or
through agents, solicits offers to purchase the securities, the Company
reserves the sole right to accept and, together with its agents, to reject, in
whole or in part, any such offer.
<PAGE>
The prospectus supplement will also contain, with respect to the securities
being sold, the names of the underwriters, dealers or agents, if any, together
with the terms of offering, the compensation of such underwriters and the net
proceeds to the Company and each BNY Trust.
Any underwriters, dealers or agents participating in the offering may be
deemed "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS
For the five years ended December 31, 1998, the consolidated ratios of
earnings to fixed charges and earnings to combined fixed charges and preferred
stock dividend requirements of the Company, computed as set forth below, were
as follows:
<TABLE>
<CAPTION>
Year ended December 31
----------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits................ 4.83x 5.12x 4.30x 3.61x 3.75x
Including Interest on Deposits................ 2.05 2.06 2.00 1.81 1.94
Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements:
Excluding Interest on Deposits................ 4.08x 4.35x 4.15x 3.51x 3.58x
Including Interest on Deposits................ 1.95 1.97 1.98 1.79 1.91
</TABLE>
For purposes of computing both the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income (loss) before extraordinary items plus applicable
income taxes and fixed charges. Fixed charges, excluding interest on deposits,
include interest expense (other than on deposits) and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases. Fixed charges, including interest on deposits, include all interest
expense and the proportion deemed representative of the interest factor of rent
expense, net of income from subleases. Pretax earnings required for preferred
stock dividends were computed using tax rates for the applicable year.
WHERE YOU CAN FIND MORE INFORMATION ABOUT THE COMPANY AND THE BNY TRUSTS
The Company and each BNY Trust have filed a registration statement with the
SEC. This prospectus is part of the registration statement but the registration
statement also contains additional information and exhibits. The Company also
files proxy statements, annual, quarterly and special reports, and other
information with the SEC. You may read and copy the registration statement and
any reports, proxy statements and other information at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 and the SEC's Regional Offices in New York, New York and Chicago,
Illinois. You can call the SEC for further information about their public
reference rooms at 1-800-732-0330. Such material is also available at the SEC's
website at "http://www.sec.gov".
The Company's Common Stock ($7.50 Par Value) is listed on the New York Stock
Exchange. Reports and other information concerning the Company can be inspected
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
The SEC allows the Company to incorporate documents by reference in this
prospectus. This means that by listing or referring to a document which the
Company has filed with the SEC in this prospectus, that document is considered
to be a part of this prospectus and should be read with the same care. When the
2
<PAGE>
Company updates the information contained in documents which have been
incorporated by reference, by making future filings with the SEC, the
information incorporated by reference in this prospectus is considered to be
automatically updated.
The documents listed below are incorporated by reference into this
prospectus:
. The Company's Annual Report on Form 10-K for the year ended December 31,
1997;
. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998;
. The Company's Current Reports on Form 8-K, dated January 20, 1998,
February 27, 1998, March 30, 1998, April 20, 1998, April 22, 1998, April
23, 1998, May 20, 1998, July 20, 1998, October 19, 1998, January 19,
1999 and January 29, 1999;
. The description of the Company's Common Stock and Preferred Stock
Purchase Rights contained in the Company's Registration Statements on
Form 8-A filed pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including any amendment or report
filed for the purpose of updating such description; and
. Any documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this prospectus and
before the termination of the offering of the securities.
You may request a free copy of any or all of these filings by writing or
telephoning us at the following address:
The Bank of New York Company, Inc.
One Wall Street
New York, New York 10286
Attention: Corporate Secretary
Telephone number (212) 635-1700.
YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT OR INCORPORATED BY REFERENCE. THE COMPANY HAS NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
No separate financial statements of any BNY Trust are included in this
prospectus. The Company and the BNY Trusts do not consider that such financial
statements would be material to holders of the Trust Preferred Securities
because each BNY 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
Corresponding Junior Subordinated Debt Securities (as defined below under the
heading "The BNY Trusts") of the Company and issuing the Trust Securities.
Furthermore, taken together, the Company's obligations under each series of
Corresponding Junior Subordinated Debt Securities, the Junior Indenture
pursuant to which the Corresponding Junior Subordinated Debt Securities will be
issued, the related Trust Agreement, the related Expense Agreement and the
related Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of Distributions and other amounts due on
the related Trust Preferred Securities of a BNY Trust. For a more detailed
discussion see "The BNY Trusts", "Description of Trust Preferred Securities",
"Description of Junior Subordinated Debt Securities--Corresponding Junior
Subordinated Debentures" and "Description of Guarantees". In addition, the
Company does not expect that any of the BNY Trusts will be filing reports under
the Exchange Act with the SEC.
The Company is not making an offer of its securities in any state or country
where the offer is not permitted. You should not assume that the information in
this prospectus or any prospectus supplement is accurate as of a later date
than the date of this prospectus or any prospectus supplement.
3
<PAGE>
THE COMPANY
General
The Bank of New York Company, Inc., a New York corporation, is a bank
holding company subject to the Bank Holding Company Act of 1956, as amended
(the "BHC Act"). Our principal wholly-owned banking subsidiary is The Bank of
New York (the "Bank"). We provide a complete range of banking and other
financial services to corporations and individuals worldwide through our core
business: Corporate Banking, Retail Banking, Securities and Other Processing,
Trust, Investment Management and Private Banking and Financial Market Services.
The Bank, which was founded in 1784, was New York's first bank and is the
oldest bank in the country still operating under its original name. The Bank is
a state-chartered New York banking corporation and a member of the Federal
Reserve System (the "Federal Reserve"). The Bank conducts a national and
international wholesale banking business and a retail banking business in the
New York City, New Jersey and Connecticut areas, and provides a comprehensive
range of corporate and personal trust, securities processing and investment
services.
The Company's principal asset and source of income is its investment in the
Bank and it is a legal entity separate and distinct from the Bank and its other
subsidiaries. There are various legal limitations on the extent to which the
Bank and the other subsidiaries can finance or otherwise supply funds to the
Company and certain of its affiliates. See "Certain Regulatory Considerations"
below.
The Company is a non-operating holding company and almost all of the
operating assets of the Company and its consolidated subsidiaries are owned by
such subsidiaries. The Company relies primarily on dividends from such
subsidiaries to meet its obligations. See "Certain Regulatory Considerations--
Dividends".
Because the Company is a holding company, its rights and the rights of its
creditors, including the holders of any Debt Securities, to a share of the
assets of any subsidiary upon the liquidation or recapitalization of the
subsidiary will be subject to the prior claims of the subsidiary's creditors
(including, in the case of the Bank, and The Bank of New York (Delaware), their
depositors), except to the extent that the Company may itself be a creditor
with recognized claims against the subsidiary.
Accordingly, the Debt Securities will be effectively subordinated to all
existing and future liabilities of the Company's subsidiaries, and holders of
Debt Securities should look only to the assets of the Company for payments on
the Debt Securities.
THE BNY TRUSTS
Each BNY Trust is a statutory business trust created under Delaware law
pursuant to:
(i) a trust agreement executed by the Company, as Depositor of the BNY
Trust, and the Delaware Trustee (as defined below) of such BNY Trust, and
(ii) a certificate of trust filed with the Delaware Secretary of State.
Each Trust Agreement will be amended and restated in its entirety (each, as
so amended and restated, a "Trust Agreement") substantially in the form filed
as an exhibit to the registration statement of which this prospectus forms a
part.
Each Trust Agreement will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
Each BNY Trust may offer to the public, from time to time, preferred
securities (the "Trust Preferred Securities") representing preferred beneficial
interests in the applicable BNY Trust.
4
<PAGE>
Each BNY Trust exists for the exclusive purposes of:
(i) issuing and selling its Trust Securities,
(ii) using the proceeds from the sale of such Trust Securities to acquire
a series of Corresponding Junior Subordinated Debt Securities issued by the
Company, and
(iii) engaging in only those other activities necessary or incidental
thereto (such as registering the transfer of the Trust Securities).
Each BNY Trust will sell common securities representing common ownership
interests in such BNY Trust to the Company (the "Trust Common Securities") and
Trust Preferred Securities to the public. The Trust Common Securities and the
Trust Preferred Securities together are also referred to as the "Trust
Securities."
When any BNY Trust sells its Trust Preferred Securities to the public it
will use the money it receives together with the money it receives from the
sale of its Trust Common Securities to buy a series of the Company's Junior
Subordinated Debt Securities (the "Corresponding Junior Subordinated Debt
Securities"). The payment terms of the Corresponding Junior Subordinated Debt
Securities will be virtually the same as the terms of that BNY Trust's Trust
Preferred Securities (the "Related Trust Preferred Securities").
Each BNY Trust will own only the applicable series of Corresponding Junior
Subordinated Debt Securities. The only source of funds for each BNY Trust will
be the payments it receives from the Company on the Corresponding Junior
Subordinated Debt Securities. The BNY Trust will use such funds to make cash
payments to holders of the Trust Preferred Securities.
Each BNY Trust will also be a party to an Expense Agreement with the
Company. Under the terms of the Expense Agreement the BNY Trust will have the
right to be reimbursed by the Company for certain expenses.
All of the Trust Common Securities of each BNY Trust will be owned by the
Company. The Trust Common Securities of a BNY Trust will rank equally, and
payments will be made thereon pro rata, with the Trust Preferred Securities of
such BNY Trust, except that upon the occurrence and continuance of an event of
default under a Trust Agreement resulting from an event of default under the
Junior Indenture, the rights of the Company, as holder of the Trust Common
Securities, to payment in respect of Distributions and payments upon
liquidation or redemption will be subordinated to the rights of the holders of
the Trust Preferred Securities of such BNY Trust. See "Description of Trust
Preferred Securities--Subordination of Trust Common Securities". The Company
will acquire Trust Common Securities in an aggregate Liquidation Amount equal
to not less than 3% of the total capital of each BNY Trust.
The prospectus supplement relating to any Trust Preferred Securities will
contain the details of the cumulative preferential cash distributions
("Distributions") to be made periodically to the holders of the Trust Preferred
Securities.
Under certain circumstances the Company may redeem the Corresponding Junior
Subordinated Debt Securities which it sold to a BNY Trust. If it does this, the
BNY Trust will redeem a like amount of the Trust Preferred Securities which it
sold to the public and the Trust Common Securities which it sold to the
Company.
Under certain circumstances the Company may terminate each BNY Trust and
cause the Corresponding Junior Subordinated Debt Securities to be distributed
to the holders of the Related Trust Preferred Securities. If this happens
owners of the Related Trust Preferred Securities will no longer have any
interest in such BNY Trust and will only own the Corresponding Junior
Subordinated Debt Securities.
Generally the Company needs the approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") to redeem the
Corresponding Junior Subordinated Debt Securities or to terminate one or more
BNY Trusts. A more detailed description is provided under the heading
"Description of Trust Preferred Securities--Liquidation Distribution Upon
Termination".
5
<PAGE>
Unless otherwise specified in the applicable prospectus supplement:
. Each BNY Trust will have a term of approximately 55 years from the date
it issues its Trust Securities, but may terminate earlier as provided in
the applicable Trust Agreement.
. Each BNY Trust's business and affairs will be conducted by its trustees.
. The trustees will be appointed by the Company as holder of the Trust
Common Securities.
. The trustees will be The First National Bank of Chicago, as the Property
Trustee (the "Property Trustee"), First Chicago Delaware Inc., as the
Delaware Trustee (the "Delaware Trustee"), and two individual trustees
(the "Administrative Trustees") who are employees or officers of or
affiliated with the Company (collectively, the "BNY Trust Trustees").
The First National Bank of Chicago, as Property Trustee, will act as
sole indenture trustee under each Trust Agreement for purposes of
compliance with the Trust Indenture Act. The First National Bank of
Chicago will also act as trustee under the Guarantees and the Junior
Indenture. See "Description of Guarantees" and "Description of Junior
Subordinated Debt Securities".
. If an event of default under the Trust Agreement for a BNY Trust has
occurred and is continuing, the holder of the Trust Common Securities of
that BNY Trust, or the holders of a majority in Liquidation Amount of
the Related Trust Preferred Securities, will be entitled to appoint,
remove or replace the Property Trustee or the Delaware Trustee for such
BNY Trust.
. Under all circumstances, only the holder of the Trust Common Securities
has the right to vote to appoint, remove or replace the Administrative
Trustees.
. The duties and obligations of each BNY Trust Trustee are governed by the
applicable Trust Agreement.
. The Company will pay all fees and expenses related to each BNY Trust and
the offering of the Trust Preferred Securities and will pay, directly or
indirectly, all ongoing costs, expenses and liabilities of each BNY
Trust.
The principal executive office of each BNY Trust is One Wall Street, New
York, New York 10286 and its telephone number is (212) 495-1784.
CERTAIN REGULATORY CONSIDERATIONS
Dividends
The Company is a legal entity separate and distinct from its subsidiaries
(including the Bank), although the principal source of the Company's cash
revenues are payments of interest and dividends from the Bank. There are
various legal and regulatory limitations on the extent to which the Bank can
finance or otherwise supply funds to the Company and certain of its other
affiliates.
The Bank is subject to dividend limitations under the Federal Reserve Act
and the New York Banking Law. Under these statutes, prior regulatory approval
is required for dividends in any year that would exceed the net income of the
Bank for such year combined with retained net income for the prior two years.
Also, the Bank is prohibited from paying a dividend in an amount greater than
"undivided profits then on hand."
Under the first of these two standards, at September 30, 1998 the Bank could
declare dividends of approximately $1,318 million. As of September 30, 1998 the
second standard was less restrictive than the first.
In addition to these statutory tests, the Bank's primary federal regulator
(the Federal Reserve Board) could prohibit a dividend if it determined that the
payment would constitute an unsafe or unsound banking practice. The Federal
Reserve Board has indicated that, generally, dividends should be paid by banks
only to the extent of earnings from continuing operations.
6
<PAGE>
Consistent with its policy regarding bank holding companies serving as a
source of financial strength for their subsidiary banks, the Federal Reserve
Board has indicated that, as a matter of prudent banking, a bank holding
company generally should not maintain a rate of cash dividends unless its net
income available to common stockholders has been sufficient to fully fund the
dividends, and the prospective rate of earnings retention appears consistent
with the bank holding company's capital needs, asset quality and overall
financial condition. In the year ended December 31, 1998, the Company's net
income available to common stockholders was $1,192 million and it paid common
stock dividends totaling $403 million.
Capital Adequacy
The Federal bank regulators have adopted risk-based capital guidelines for
bank holding companies and banks. The minimum ratio of qualifying total capital
("Total Capital") to risk-weighted assets (including certain off-balance sheet
items) is 8%. At least half of the Total Capital is to consist of common stock,
retained earnings, noncumulative perpetual preferred stock, minority interests
(including trust preferred securities) and, for bank holding companies, a
limited amount of qualifying cumulative perpetual preferred stock, less most
intangibles including goodwill ("Tier 1 Capital"). The remainder ("Tier 2
Capital") may consist of other preferred stock, certain other instruments, and
limited amounts of subordinated debt and the loan and lease loss allowance. Not
more than 25% of qualifying Tier 1 Capital may consist of trust preferred
securities.
In addition, the Federal Reserve Board has established minimum Leverage
Ratio (Tier 1 Capital to average total assets) guidelines for bank holding
companies and banks. The Federal Reserve Board's guidelines provide for a
minimum Leverage Ratio of 3% for bank holding companies and banks that meet
certain specified criteria, including those having the highest regulatory
rating. All other banking organizations will be required to maintain a Leverage
Ratio of at least 3% plus an additional cushion of 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. As of December 31, 1998 the Federal Reserve
Board has not advised the Company of any specific minimum Leverage Ratio
applicable to it.
Federal banking agencies recently have issued regulations that modify
existing rules related to capital ratios with respect to various areas of risk
including interest rate exposure and other market risk. The Company does not
believe that the aggregate impact of these modifications will have a
significant impact on its capital position.
Most banks and bank holding companies (including the Company and the Bank)
operate with capital ratios substantially above the regulatory minimums. The
capital ratios of the Bank are at the end of the subsection headed "FDICIA."
Certain consolidated ratios of the Company are included in the Company's
Current Report on Form 8-K dated January 19, 1999.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
among other things, requires federal banking regulators to take prompt
corrective action in respect of FDIC-insured depository institutions (such as
the Bank) that do not meet minimum capital requirements. FDICIA establishes
five capital tiers: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." A depository institution's capital tier will depend upon how
its capital levels compare to various relevant capital measures and certain
other factors, as established by regulation. Under applicable regulations, an
FDIC-insured bank is deemed to be: (i) well capitalized if it maintains a
Leverage Ratio of at least 5%, a Tier 1 Capital Ratio (Tier 1 Capital to risk-
weighted assets and certain off-balance sheet items) of at least 6% and a Total
Capital Ratio of at least 10% and is not subject to an order, written
agreement, capital directive, or prompt corrective action directive to meet and
maintain a specific level for any
7
<PAGE>
capital measure; (ii) adequately capitalized if it maintains a Leverage Ratio
of at least 4% (or a Leverage Ratio of at least 3% if it is rated composite 1
in its most recent report of examination, subject to appropriate federal
banking agency guidelines), a Tier 1 Capital Ratio of 4% and a Total Capital
Ratio of at least 8% and it is not defined to be well capitalized but meets all
of its minimum capital requirements; (iii) undercapitalized if it has a
Leverage Ratio of less than 4% (or a Leverage Ratio that is less than 3% if it
is rated composite 1 in its most recent report of examination, subject to
appropriate federal banking agency guidelines), a Tier 1 Capital Ratio less
than 4% and a Total Capital Ratio less than 10% and it does not meet the
definition of a significantly undercapitalized or critically undercapitalized
institution; (iv) significantly undercapitalized if it has a Leverage Ratio of
less than 3%, a Tier 1 Capital Ratio of less than 3% and a Total Capital Ratio
of less than 10% and it does not meet the definition of critically
undercapitalized; and (v) critically undercapitalized if it maintains a level
of tangible equity capital equal to or less than 2% of total assets. A bank may
be deemed to be in a capitalization category that is lower than is indicated by
its actual capital position if it receives an unsatisfactory examination
rating. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the capital
category in which an institution is classified.
FDICIA generally prohibits an FDIC-insured depository institution from
making any capital distribution (including payment of dividends) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve. In addition,
undercapitalized depository institutions are subject to growth limitations and
are required to submit a capital restoration plan. The federal banking agencies
may not accept a capital plan without determining, among other things, that the
plan is based on realistic assumptions and is likely to succeed in restoring
the depository institution's capital. In addition, for an undercapitalized
depository institution's capital restoration plan to be acceptable, its holding
company must guarantee the capital plan up to an amount equal to the lesser of
5% of the depository institution's assets at the time it became
undercapitalized or the amount of the capital deficiency when the institution
fails to comply with the plan. In the event of the parent holding company's
bankruptcy, such guarantee would take priority over the parent's general
unsecured creditors. If a depository institution fails to submit an acceptable
plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator. A depositary institution that is not well
capitalized is subject to certain limitations on brokered deposits.
At December 31, 1998, the Bank was well capitalized. At December 31, 1998,
the Bank had a Leverage Ratio of 6.95%, a risk-based Total Capital Ratio of
10.69% and a risk-based Tier 1 Capital Ratio of 7.37%.
Interstate Banking
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("IBBEA") permits bank holding companies, with Federal Reserve Board approval,
to acquire banks located in states other than the bank holding company's home
state without regard to whether the transaction is permitted under state law.
In addition, IBBEA provides that national banks and state banks with different
home states will be permitted to merge across state lines, with the approval of
the appropriate federal banking agency, unless the home state of a
participating bank passed legislation between the date of enactment of IBBEA
and May 31, 1997 expressly prohibiting interstate mergers. Most states,
including New York, New Jersey and Connecticut have not passed legislation
prohibiting interstate mergers. A bank may also establish and operate a de novo
branch in a state in which the bank does not maintain a branch if that state
expressly permits de novo branching. Once a bank has established branches in a
state through an interstate merger transaction, the bank may establish and
acquire additional branches at any location in the state where any bank
involved in the interstate merger transaction could have established or
acquired branches under applicable federal or state law. A bank that has
established a
8
<PAGE>
branch in a state through de novo branching may establish and acquire
additional branches in such state in the same manner and to the same extent as
a bank having a branch in such state as a result of an interstate merger.
Transactions with Affiliates
The Federal Reserve Act limits amounts of, and requires collateral on,
extensions of credit by the Company's insured bank subsidiaries to the Company
and, with certain exceptions, its nonbank affiliates; also, there are
restrictions on the amounts of investment by such banks in stock and other
securities of the Company and such affiliates, and restrictions on the
acceptance of their securities as collateral for loans by such banks.
Extensions of credit by insured bank subsidiaries to each of the Company and
such affiliates are limited to 10% of such bank subsidiary's Tier 1 capital,
and in the aggregate for the Company and all such affiliates to 20%.
Proposed Legislation
Various bills have been introduced into the United States Congress that
would revise the current limitations on affiliations between banks and
securities companies, insurance companies and (generally to a limited extent)
other companies. Other proposals to change the laws and regulations governing
the banking industry are frequently introduced in Congress, in the state
legislatures and before the various bank regulatory agencies. The Company
cannot determine the ultimate effect that potential legislation, if enacted, or
implementing regulations, would have upon its financial condition or results of
operations.
USE OF PROCEEDS
Except as may be set forth in a prospectus supplement, the Company will use
the net proceeds from the sale of the securities offered hereby for general
corporate purposes, including refinancing of existing debt, investments in, or
extensions of credit to, the Bank and, to a lesser extent, other existing or
future subsidiaries. Pending such use, the net proceeds may be temporarily
invested in short-term obligations. The precise amounts and timing of the
application of proceeds used for general corporate purposes will depend upon
funding requirements of the Company and its subsidiaries and the availability
of other funds. The Company expects, on a recurring basis, to engage in
additional financing of a character and amount to be determined as the need
arises.
9
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS
For the five years ended December 31, 1998, the consolidated ratios of
earnings to fixed charges and earnings to combined fixed charges and preferred
stock dividend requirements of the Company, computed as set forth below, were
as follows:
<TABLE>
<CAPTION>
Year ended December 31
----------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits............... 4.83x 5.12x 4.30x 3.61x 3.75x
Including Interest on Deposits............... 2.05 2.06 2.00 1.81 1.94
Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements:
Excluding Interest on Deposits............... 4.08x 4.35x 4.15x 3.51x 3.58x
Including Interest on Deposits............... 1.95 1.97 1.98 1.79 1.91
</TABLE>
For purposes of computing both the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income (loss) before extraordinary items plus applicable
income taxes and fixed charges. Fixed charges, excluding interest on deposits,
include interest expense (other than on deposits) and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases. Fixed charges, including interest on deposits, include all interest
expense and the proportion deemed representative of the interest factor of rent
expense, net of income from subleases. Pretax earnings required for preferred
stock dividends were computed using tax rates for the applicable year.
10
<PAGE>
DESCRIPTION OF SENIOR DEBT SECURITIES AND
SENIOR SUBORDINATED DEBT SECURITIES
Summary
The following description of the terms of the Senior Debt Securities and the
Senior Subordinated Debt Securities (referred to as the "Debt Securities" in
this section only) sets forth certain general terms and provisions. The
particular terms of any offering of Debt Securities will be contained in a
prospectus supplement. The prospectus supplement will describe the:
. specific designation
. aggregate principal amount
. denominations
. maturity
. premium, if any
. interest rate, if any (which may be fixed or variable)
. dates interest is paid
. terms for redemption at the option of the Company or the holder, if any
. terms for sinking or purchase fund payments, if any
. currency or currencies of denomination and payment, if other than U.S.
dollars
. securities exchanges, if any, on which the Debt Securities are to be
listed
. initial public offering price
. principal amounts, if any, to be purchased by underwriters
. other terms in connection with the offering and sale of the Debt
Securities being sold.
All or a portion of the Debt Securities may be issued in global form. This
means that you will not receive a paper certificate. Instead you will receive a
statement showing your ownership of the Debt Securities that you purchased. A
more detailed discussion appears under the heading "Book-Entry Issuance."
Senior and Senior Subordinated Debt Securities may be sold at a substantial
discount below their stated principal amount, bearing no interest or interest
at a rate which at the time of issuance is below market rates. Certain United
States Federal income tax consequences and special considerations applicable to
any such Senior and Senior Subordinated Debt Securities will be described in
the applicable prospectus supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Debt Securities, special United
States Federal income tax, accounting and other considerations applicable
thereto will be described in the applicable prospectus supplement.
The Senior Debt Securities are to be issued under an Indenture, dated as of
July 18, 1991, as it may be supplemented from time to time (the "Senior
Indenture"), between the Company and Bankers Trust Company, as Trustee (the
"Senior Trustee"). The Senior Subordinated Debt Securities are to be issued
under an Indenture, dated as of October 1, 1993, as it may be supplemented from
time to time (the "Senior Subordinated Indenture"), between the Company and
Chase Manhattan Trust Company, National Association, as Trustee (the "Senior
Subordinated Trustee"). The Senior Indenture is incorporated as an exhibit to
the registration statement of which this prospectus is a part by reference to
the Company's Registration Statement on Form S-3 (No. 33-51984) and the Senior
Subordinated Indenture is incorporated as an exhibit to the Registration
Statement of which this prospectus is a part by reference to the Company's
Registration Statement on Form S-3
11
<PAGE>
(No. 33-50333). The two Indentures are sometimes referred to collectively as
the "Indentures," and the two Trustees are sometimes referred to collectively
as the "Trustees." The Indentures are qualified under the Trust Indenture Act.
The following summaries of certain provisions of the Senior Debt Securities,
the Senior Subordinated Debt Securities and the Indentures are not complete.
For a complete description of these Debt Securities you should read the
Indenture applicable to a particular series of Debt Securities (the "Applicable
Indenture"), including the definitions therein of certain terms.
Wherever we refer to particular sections, articles or defined terms of the
Applicable Indentures we are incorporating those sections, articles or defined
terms into this prospectus by reference. Capitalized terms not otherwise
defined herein shall have the meaning given to them in the Applicable
Indenture.
General
The Indentures do not limit the aggregate principal amount of the Debt
Securities or of any particular series of Debt Securities that may be issued
thereunder and provide that Debt Securities may be issued from time to time in
series. The Senior Debt Securities will be unsecured and unsubordinated
obligations of the Company and will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The Senior Subordinated Debt
Securities will be unsecured subordinated obligations of the Company. A more
complete discussion appears under the heading "--Subordination of Senior
Subordinated Debt Securities."
The particular terms of any series of Debt Securities will be contained in
the prospectus supplement. The prospectus supplement will specify the following
terms or additional provisions of the Debt Securities:
(1) the title of the series of Debt Securities;
(2) whether the series of Debt Securities are Senior Debt Securities or
Senior Subordinated Debt Securities;
(3) any limit on the aggregate principal amount of the series of Debt
Securities;
(4) the price (expressed as a percentage of the aggregate principal
amount thereof) at which the series of the Debt Securities will be issued;
(5) the Person to whom any interest on a Debt Security of such series
will be payable, if other than the Person in whose name that Debt Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest;
(6) the date or dates on which the principal of the series of Debt
Securities will be payable;
(7) the rate or rates (or the formula pursuant to which such rate or
rates shall be determined) per annum at which the series of Debt Securities
will bear interest, if any;
(8) the date or dates from which any such interest will accrue and the
dates on which such payment of any such interest will be payable and the
Regular Record Dates for such interest payment dates;
(9) the place or places where the principal of (and premium, if any) and
interest on the series of Debt Securities shall be payable;
(10) the period or periods within which, the price or prices at which,
and the terms and conditions upon which, the series of Debt Securities may
be redeemed in whole or in part, at the option of the Company;
(11) the obligation, if any, of the Company to redeem, repay, or purchase
such series of Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof and the period or periods
within which, the price or prices at which, and the terms and conditions
upon which, such Debt Securities shall be redeemed, repaid or purchased, in
whole or in part, pursuant to such obligation;
12
<PAGE>
(12) the denominations in which such series of Debt Securities will be
issuable, if other than denominations of $1,000 and any integral multiple
thereof;
(13) the currency or currencies in which payment of principal and
premium, if any, and interest on the series of Debt Securities will be
payable, if other than United States dollars;
(14) if the principal of (and premium, if any) or interest, if any, on
such series of Debt Securities is to be payable, at the election of the
Company or a Holder thereof, in a currency or currencies other than that in
which such series of Debt Securities are stated to be payable, the currency
or currencies in which payment of the principal of (and premium, if any) or
interest, if any, on such series of Debt Securities as to which such
election is made will be payable, and the period or periods within which,
and the terms and conditions upon which, such election may be made;
(15) the index, if any, with reference to which the amount of any payment
of principal of (and premium, if any) or interest on the series of Debt
Securities will be determined;
(16) the portion of the principal amount of such series of Debt
Securities which will be payable upon declaration of acceleration of the
Maturity thereof, if other than the principal amount thereof;
(17) any additional Events of Default or, in the case of Senior
Subordinated Debt Securities, Default, solely with respect to the Debt
Securities;
(18) whether the provisions of the Applicable Indenture described under
"--Defeasance and Covenant Defeasance" will be applicable to such Debt
Securities;
(19) whether any of the series of Debt Securities are to be issuable in
global form;
(20) any additional restrictive covenants included solely for the benefit
of the series of Debt Securities;
(21) if the series of Debt Securities are Senior Subordinated Debt
Securities, whether the provisions in the Senior Subordinated Indenture
described under "--Subordination of Senior Subordinated Debt Securities" or
other subordination provisions will be applicable to such Senior
Subordinated Debt Securities; and
(22) any additional terms of the series of Debt Securities not
inconsistent with the provisions of the Applicable Indenture. (Sections 301
and 901).
With respect to Debt Securities sold through underwriters or agents, the
maturities and interest rates of such Debt Securities may be fixed by the
Company from time to time, in which case such maturities and rates will not be
set forth in the prospectus supplement relating thereto.
Unless otherwise provided in the prospectus supplement:
(i) principal of (and premium, if any) and interest on the Debt
Securities will be payable, and the Debt Securities will be exchangeable
and transfers thereof will be registerable, at the office or agency of The
Bank of New York in the Borough of Manhattan, The City of New York, except
that, at the option of the Company, interest may be paid by mailing a check
to the address of the Person entitled thereto as it appears in the Security
Register. (Sections 202, 305 and 1002); and
(ii) the Debt Securities will be issued only in registered form without
coupons and in denominations of $1,000 and integral multiples thereof.
(Section 302).
No service charge will be made for any transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. (Section
305).
Debt Securities may be issued as Original Issue Discount Debt Securities to
be sold at a substantial discount below their principal amount. Special Federal
income tax, accounting and other considerations
13
<PAGE>
applicable thereto will be described in the prospectus supplement relating
thereto. "Original Issue Discount Debt Security" means any security which
provides for an amount less than the principal amount thereof to be due and
payable upon the declaration of acceleration of the maturity thereof upon the
occurrence and continuance of an Event of Default. (Section 101).
If the Debt Securities are denominated in whole or in part in any currency
other than United States dollars, if the principal of (and premium, if any) or
interest, if any, on the Debt Securities are to be payable at the election of
the Company or a Holder thereof, in a currency or currencies other than that in
which such Debt Securities are to be payable, or if any index is used to
determine the amount of payments of principal of, premium, if any, or interest
on any series of the Debt Securities, special Federal income tax, accounting
and other considerations applicable thereto will be described in the prospectus
supplement relating thereto.
Because the Company is a holding company, its rights and the rights of its
creditors, including the holders of the Debt Securities, to a share of the
assets of any Subsidiary upon the liquidation or recapitalization of the
Subsidiary will be subject to the prior claims of the Subsidiary's creditors
(including, in the case of the Bank and The Bank of New York (Delaware), their
depositors), except to the extent that the Company may itself be a creditor
with recognized claims against the Subsidiary.
Indebtedness of the Company which is senior to the Senior Subordinated Debt
Securities, at December 31, 1998, totaled approximately $2,215,060,870. This
amount does not include indebtedness of subsidiaries of the Company. See also
"The Company" and "Certain Regulatory Considerations" for a more detailed
discussion.
The Indentures do not contain any provisions that would provide protection
to Holders of the Debt Securities against a sudden and dramatic decline in
credit quality of the Company resulting from any highly leveraged transaction,
takeover, merger, recapitalization or similar restructuring or change in
control.
The Indentures allow us to merge or consolidate with another company, or to
sell all or substantially all of our assets to another company. If these events
occur, the other company will be required to assume our responsibilities
relating to the Debt Securities, and we will be released from all liabilities
and obligations. See "--Merger, Consolidation and Sale of Assets" for a more
detailed discussion.
The Indentures provide that holders of a majority of the total principal
amount of outstanding Debt Securities of any series may vote to change certain
of our obligations or certain of your rights concerning the Debt Securities of
that series. However, to change the amount or timing of principal, interest or
other payments under the Debt Securities, every holder in the series must
consent. See "Modification of the Indentures" for a more detailed discussion.
Subordination of Senior Subordinated Debt Securities
The payment of the principal of and interest on the Senior Subordinated Debt
Securities will, to the extent set forth in the Senior Subordinated Indenture,
be subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined in the Senior Subordinated Indenture). In certain
events of insolvency, the payment of the principal of and interest on the
Senior Subordinated Debt Securities will, to the extent set forth in the Senior
Subordinated Indenture, also be effectively subordinated in right of payment to
the prior payment in full of all Other Financial Obligations (as defined in the
Senior Subordinated Indenture). Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any
bankruptcy, insolvency or similar proceedings of the Company, the holders of
all Senior Indebtedness will first be entitled to receive payment in full of
all amounts due or to become due thereon before the holders of the Senior
Subordinated Debt Securities will be entitled to receive any payment in respect
of the principal of or interest on the Senior Subordinated Debt Securities. If
upon any such payment or distribution of assets to creditors, there remain,
after giving effect to such subordination provisions in favor of the holders of
Senior Indebtedness, any amounts of cash, property or securities available for
payment or distribution in respect of Senior Subordinated Debt Securities (as
defined
14
<PAGE>
in the Senior Subordinated Indenture, "Excess Proceeds") and if, at such time,
any Entitled Persons in respect of Other Financial Obligations have not
received payment in full of all amounts due or to become due on or in respect
of such Other Financial Obligations, then such Excess Proceeds shall first be
applied to pay or provide for the payment in full of such Other Financial
Obligations before any payment or distribution may be made in respect of the
Senior Subordinated Debt Securities. In the event of the acceleration of the
maturity of any Senior Subordinated Debt Securities, the holders of all Senior
Indebtedness will first be entitled to receive payment in full of all amounts
due thereon before the holders of the Senior Subordinated Debt Securities will
be entitled to receive any payment upon the principal of or interest on the
Senior Subordinated Debt Securities. No payments on account of principal of or
interest on the Senior Subordinated Debt Securities or on account of the
purchase or acquisition of Senior Subordinated Debt Securities may be made if
there shall have occurred and be continuing a default in any payment with
respect to Senior Indebtedness, or if any judicial proceeding shall be pending
with respect to any such default. (Article Thirteen of the Senior Subordinated
Indenture).
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of insolvency, creditors of the Company who are not
holders of Senior Indebtedness or of the Senior Subordinated Debt Securities
may recover less, ratably, than holders of Senior Indebtedness and may recover
more, ratably, than the holders of the Senior Subordinated Debt Securities. By
reason of the obligation of the holders of Senior Subordinated Debt Securities
to pay over any Excess Proceeds to Entitled Persons in respect of Other
Financial Obligations, in the event of insolvency, holders of Existing
Subordinated Indebtedness may recover less, ratably, than Entitled Persons in
respect of Other Financial Obligations and may recover more, ratably, than the
holders of Senior Subordinated Debt Securities.
Unless otherwise specified in the prospectus supplement relating to the
particular series of Senior Subordinated Debt Securities offered thereby,
Senior Indebtedness is defined in the Senior Subordinated Indenture as (a) the
principal of (and premium, if any), and interest on all of the Company's
indebtedness for money borrowed, whether outstanding on the date of execution
of the Senior Subordinated Indenture or thereafter created, assumed or
incurred, except (i) such indebtedness as is by its terms expressly stated to
be junior in right of payment to the Senior Subordinated Debt Securities and
(ii) such indebtedness as is by its terms expressly stated to rank equally with
the Senior Subordinated Debt Securities and (b) any deferrals, renewals or
extensions of any such Senior Indebtedness; provided, however, that Senior
Indebtedness shall not include Existing Subordinated Indebtedness. (Section 101
of the Senior Subordinated Indenture). The term "indebtedness for money
borrowed" when used with respect to the Company is defined to mean any
obligation of, or any obligation guaranteed by, the Company for the repayment
of borrowed money, whether or not evidenced by bonds, debentures, notes or
other written instruments, and any deferred obligation of, or any such
obligation guaranteed by, the Company for the payment of the purchase price of
property or assets. (Section 101 of the Senior Subordinated Indenture).
Unless otherwise specified in the prospectus supplement relating to the
particular series of Senior Subordinated Debt Securities, Existing Subordinated
Indebtedness means the Company's:
. $350,000,000 7 5/8% Subordinated Notes due 2002
. $250,000,000 7 7/8% Subordinated Notes due 2002
. $300,000,000 6 5/8% Subordinated Notes due 2003
. $250,000,000 6 1/2% Subordinated Notes due 2003
. $300,000,000 8 1/2% Subordinated Notes due 2004
. $20,000,000 7% Subordinated Retail Medium-Term Notes due 2005
. $30,000,000 7.5% Subordinated Retail Medium-Term Notes due 2010
. $50,000,000 7.54% Subordinated Retail Medium-Term Notes due 2010
. $15,000,000 7.5% Subordinated Retail Medium-Term Notes due 2010
15
<PAGE>
. $25,000,000 7.56% Subordinated Retail Medium-Term Notes due 2007
. $50,000,000 7.00% Subordinated Retail Medium-Term Notes due 2010
. $10,000,000 7.125% Subordinated Retail Medium-Term Notes due 2015
. $25,000,000 6.60% Subordinated Retail Medium-Term Notes due 2011
. $10,000,000 6.70% Subordinated Retail Medium-Term Notes due 2011
. $10,000,000 6.70% Subordinated Retail Medium-Term Notes due 2011
. $15,000,000 6.75% Subordinated Retail Medium-Term Notes due 2011
. $10,000,000 7.00% Subordinated Retail Medium-Term Notes due 2011
. $10,000,000 7.00% Subordinated Retail Medium-Term Notes due 2011
. $20,000,000 7.10% Subordinated Retail Medium-Term Notes due 2011
. $25,000,000 6.75% Subordinated Retail Medium-Term Notes due 2018
. $25,000,000 6.50% Subordinated Retail Medium-Term Notes due 2013
. $15,000,000 6.57% Subordinated Retail Medium-Term Notes due 2013
. $25,000,000 6.50% Subordinated Retail Medium-Term Notes due 2013
. $10,000,000 6.50% Subordinated Retail Medium-Term Notes due 2013
. $25,000,000 6.25% Subordinated Retail Medium-Term Notes due 2013
. $70,600,000 7.4% Zero Coupon Subordinated Retail Medium-Term Notes due
2028 and
. $32,000,000 7.58% Zero Coupon Subordinated Retail Medium-Term Notes due
2028.
. $10,000,000 6.20% Subordinated Retail Medium Term Notes due 2018
Unless otherwise specified in the prospectus supplement, the term "Other
Financial Obligations" means all obligations of the Company to make payment
pursuant to the terms of financial instruments, such as:
(i) securities contracts and foreign currency exchange contracts,
(ii) derivative instruments, such as swap agreements (including interest
rate and foreign exchange rate swap agreements), cap agreements, floor
agreements, collar agreements, interest rate agreements, foreign exchange
rate agreements, options, commodity futures contracts, commodity option
contracts and
(iii) in the case of both (i) and (ii) above, similar financial
instruments, other than (A) obligations on account of Senior Indebtedness
and (B) obligations on account of indebtedness for money borrowed ranking
on a parity with or subordinate to the Senior Subordinated Debt Securities.
Unless otherwise specified in the prospectus supplement relating to the
particular series of Senior Subordinated Debt Securities offered thereby,
Entitled Persons means any person who is entitled to payment pursuant to
the terms of Other Financial Obligations. (Section 101 of the Senior
Subordinated Indenture).
Indebtedness of the Company which is senior to the Senior Subordinated Debt
Securities, at December 31, 1998, totaled approximately $2,215,060,870.
Indebtedness of the Company which ranks equally with the Senior Subordinated
Debt Securities, at December 31, 1998, totaled approximately $2,010,004,939.
The Company's obligations under the Senior Subordinated Debt Securities
shall rank equally in right of payment with each other and with the Existing
Subordinated Indebtedness, subject to the obligations of the
16
<PAGE>
Holders of Senior Subordinated Debt Securities to pay over any Excess Proceeds
to Entitled Persons in respect of Other Financial Obligations as provided in
the Senior Subordinated Indenture.
The Senior Subordinated Indenture does not limit or prohibit the incurrence
of additional Senior Indebtedness, which may include indebtedness that is
senior to the Senior Subordinated Debt Securities, but subordinate to other
obligations of the Company, including obligations of the Company in respect of
Other Financial Obligations. The Senior Debt Securities, when issued, will
constitute Senior Indebtedness. Junior Subordinated Debt Securities issued by
the Company pursuant to the Junior Indenture will be subordinate in right of
payment to the Senior Subordinated Debt Securities.
The prospectus supplement may further describe the provisions, if any,
applicable to the subordination of the Senior Subordinated Debt Securities of a
particular series.
Global Debt Securities
Unless otherwise stated in a prospectus supplement, each series of Debt
Securities will be represented by fully registered global certificates issued
as global Debt Securities to be deposited with a depositary with respect to
that series, instead of paper certificates issued to each individual owner. The
depositary arrangements that will apply, including the manner in which
principal of and premium, if any, and interest on any series of Debt Securities
and other payments will be payable are discussed in more detail under the
heading "Book-Entry Issuance."
Defeasance and Covenant Defeasance
The Indentures provide, if such provision is made applicable to the Debt
Securities of any series pursuant to Section 301 of the Applicable Indenture
(which will be indicated in the prospectus supplement applicable thereto), that
the Company may elect either (A) to defease and be discharged from any and all
obligations with respect to such Debt Securities then outstanding (including,
in the case of Senior Subordinated Debt Securities, the provisions described
under "--Subordination of Senior Subordinated Debt Securities" and except for
the obligations to register the transfer or exchange of such Debt Securities,
to replace temporary or mutilated, destroyed, lost or stolen Debt Securities,
to maintain an office or agency in respect of the Debt Securities and to hold
moneys for payment in trust) ("defeasance") or (B) to be released from its
obligations with respect to such Debt Securities then outstanding under Section
1005 and Section 1006 of the Senior Indenture and Section 1005 of the Senior
Subordinated Indenture (and any other sections applicable to such Debt
Securities that are determined pursuant to Section 301 to be subject to
covenant defeasance), the occurrence of an event of default specified in, in
the case of Senior Debt Securities, Section 501(4) of the Senior Indenture, and
in the case of Senior Subordinated Debt Securities, Section 503(C) of the
Senior Subordinated Indenture (with respect to Section 1005 and Section 1006 of
the Senior Indenture and Section 1005 of the Senior Subordinated Indenture and
any other sections applicable to such Debt Securities that are determined
pursuant to Section 301 to be subject to covenant defeasance), or, in the case
of Senior Debt Securities, Section 501(5) of the Senior Indenture, and in the
case of Senior Subordinated Debt Securities, Section 503(D) of the Senior
Subordinated Indenture (with respect to Section 1005 of the Indentures
containing the covenant to pay taxes and other claims, Section 1006 of the
Senior Indenture containing the restrictions described under "--Limitation on
Disposition of Stock of the Bank") and Sections 501(4) and 501(5) of the Senior
Indenture and Sections 503(C) and 503(D) of the Senior Subordinated Indenture
containing the provisions described under "--Defaults" relating to covenant
defaults and cross-defaults, respectively, and, in the case of Subordinated
Debt Securities, the provisions described under "--Subordination of Senior
Subordinated Debt Securities" ("covenant defeasance"), upon the deposit with
the applicable Trustee (or other qualifying trustee), in trust for such
purpose, of money and/or U.S. Government Obligations which through the payment
of principal and interest in accordance with their terms will provide money, in
an amount sufficient, without reinvestment, to pay the principal of (and
premium, if any) and interest on such Debt Securities to maturity or
redemption, as the case may be, and any mandatory sinking fund or analogous
payments thereon. As a condition to defeasance or covenant defeasance, the
Company must deliver to the applicable Trustee an Opinion of Counsel (as
17
<PAGE>
specified in the Applicable Indenture) to the effect that the Holders of such
Debt Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance or covenant
defeasance had not occurred. Such opinion, in the case of defeasance under
clause (A) above, must refer to and be based upon a ruling of the Internal
Revenue Service issued to the Company or published as a revenue ruling or upon
a change in applicable Federal income tax law, in any such case after the date
of the Applicable Indenture.
Under current Federal income tax law, defeasance would likely be treated as
a taxable exchange of such Debt Securities for interests in the defeasance
trust. As a consequence a Holder would recognize gain or loss equal to the
difference between the Holder's cost or other tax basis for such Debt
Securities and the value of the Holder's proportionate interest in the
defeasance trust, and thereafter would be required to include in income a
proportionate share of the income, gain and loss of the defeasance trust. Under
current Federal income tax law, covenant defeasance would ordinarily not be
treated as a taxable exchange of such Debt Securities. Purchasers of such Debt
Securities should consult their own advisors with respect to the tax
consequences to them of such defeasance and covenant defeasance, including the
applicability and effect of tax laws other than the Federal income tax law.
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of such Debt
Securities may not be accelerated by reference to the covenants noted under
clause (B) above. However, if such an acceleration were to occur, the
realizable value at the acceleration date of the money and U.S. Government
Obligations in the defeasance trust could be less than the principal and
interest then due on such Debt Securities, in that the required deposit in the
defeasance trust is based upon scheduled cash flows rather than market value,
which will vary depending upon interest rates and other factors. (Article 13
and Article 14 of the Senior Indenture and the Senior Subordinated Indenture,
respectively).
The prospectus supplement may further describe the provisions, if any,
applicable to defeasance or covenant defeasance with respect to the Debt
Securities of a particular series.
Limitation on Disposition of Stock of the Bank
The Senior Indenture contains a covenant by the Company that, so long as any
of the Senior Debt Securities issued pursuant to it are outstanding, but
subject to the rights of the Company in connection with its consolidation with
or merger into another Person or a sale of the Company's assets, neither the
Company nor any Intermediate Subsidiary will sell, assign, transfer, grant a
security interest in or otherwise dispose of any shares of, or securities
convertible into, or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock of the Bank (except to the Company or an Intermediate
Subsidiary), nor will the Company or any Intermediate Subsidiary permit the
Bank to issue any shares of, or securities convertible into, or options,
warrants or rights to subscribe for or purchase shares of, Voting Stock of the
Bank, unless (a) any such sale, assignment, transfer, grant of a security
interest or other disposition is made for fair market value, as determined by
the Board of Directors of the Company or any Intermediate Subsidiary, and (b)
the Company and any one or more Intermediate Subsidiaries will collectively own
at least 80% of the issued and outstanding Voting Stock of the Bank (or any
successor to the Bank) free and clear of any security interest after giving
effect to such transaction. The foregoing, however, shall not preclude the Bank
from being consolidated with or merged into another domestic banking
corporation, if after such merger or consolidation the Company, any successor
thereto in a permissible merger, or any one or more Intermediate Subsidiaries
own at least 80% of the Voting Stock of the resulting bank and immediately
after giving effect thereto no Event of Default and no event which would become
an Event of Default shall have occurred and be continuing. "Intermediate
Subsidiary" is defined in the Senior Indenture as a Subsidiary (i) that is
organized under the laws of any domestic jurisdiction and (ii) of which all the
shares of each class of capital stock issued and outstanding, and
18
<PAGE>
all securities convertible into, and options, warrants and rights to subscribe
for or purchase shares of, such capital stock, are owned directly by the
Company, free and clear of any security interest. The Company will further
covenant that it will not permit any Intermediate Subsidiary that owns any
shares of, or securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of the Bank to cease to be an
Intermediate Subsidiary. (Section 1006 of the Senior Indenture).
Defaults
The Senior Indenture
The Senior Indenture defines an Event of Default with respect to any series
of Senior Debt Securities as any one of the following events:
(a) default for 30 days in payment of interest on any Senior Debt
Security of that series;
(b) default in payment of principal of (or premium, if any), on any
Senior Debt Security of that series at Maturity;
(c) default in the deposit of any sinking fund payment, when and as due
by the terms of a Senior Debt Security of that series;
(d) failure by the Company for 60 days after due notice in performance or
the breach of any covenant or warranty in the Senior Indenture or any
Senior Debt Security of a particular series (other than a covenant or
warranty included in the Senior Indenture solely for the benefit of a
series of Senior Debt Securities other than that series);
(e) (i) failure by the Company or the Bank to pay indebtedness for money
borrowed (including Debt Securities of other series) in an aggregate
principal amount exceeding $25,000,000 at the later of final maturity or
upon the expiration of any applicable period of grace with respect to such
principal amount; or (ii) acceleration of the maturity of any indebtedness
of the Company or the Bank for borrowed money, in excess of $25,000,000, if
such failure to pay or acceleration results from a default under the
instrument giving rise to, or securing, such indebtedness and is not
annulled within 30 days after due notice, unless such default is contested
in good faith by appropriate proceedings;
(f) certain events of bankruptcy, insolvency or reorganization of the
Company or the Bank; and
(g) any other Event of Default provided with respect to Senior Debt
Securities of that series. (Section 501).
If an Event of Default occurs with respect to any series of Senior Debt
Securities, the trustee or holders of 25% of the outstanding principal amount
of that series may declare the principal amount (or, if the Senior Debt
Securities of that series are Original Issue Discount Senior Debt Securities,
such portion of the principal amount as may be specified in the terms of that
series) of the series immediately payable (provided that no such declaration is
required upon certain events of bankruptcy). As explained in more detail in
Sections 502 and 513 of the Senior Indenture, holders of a majority of the
principal amount may rescind this action.
The Senior Subordinated Indenture
The Senior Subordinated Indenture defines an Event of Default with respect
to any series of Senior Subordinated Debt Securities as being certain events
involving the bankruptcy, insolvency or reorganization of the Company. (Section
501).
The Senior Subordinated Indenture defines a Default with respect to Senior
Subordinated Debt Securities of any series as any one of the following events:
. an Event of Default;
. default for 30 days in payment of interest on any Senior Subordinated
Debt Securities of that series;
19
<PAGE>
. default in payment of principal of (or premium, if any), on any Senior
Subordinated Debt Security of that series at Maturity;
. default in the deposit of any sinking fund payment, when and as due by
the terms of a Senior Subordinated Debt Security of that series;
. failure by the Company for 60 days after due notice in performance or
the breach of any covenant or warranty in the Senior Subordinated
Indenture or any Senior Subordinated Debt Security of a particular
series (other than a covenant or warranty included in the Senior
Subordinated Indenture solely for the benefit of another series of
Senior Subordinated Debt Securities);
. (i) failure by the Company or the Bank to pay indebtedness for money
borrowed (including Subordinated Debt Securities or other series) in an
aggregate principal amount exceeding $25,000,000 at the later of final
maturity or upon the expiration of any applicable grace period with
respect to such principal amount: or (ii) acceleration of the maturity
of any indebtedness of the Company or the Bank for borrowed money in
excess of $25,000,000, if such failure to pay or acceleration results
from a default under the instrument giving rise to, or securing, such
indebtedness and is not annulled within 30 days after due notice, unless
such default is contested in good faith by appropriate proceedings; and
. any other Default with respect to Senior Subordinated Debt Securities of
that series.
In case a Default shall occur and be continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by appropriate judicial proceedings as the Trustee deems most
effectual. In case of a Default (including a default in the payment of
principal or interest) there is no right to declare the principal amount of the
series immediately payable.
If an Event of Default occurs with respect to any series of Senior
Subordinated Debt Securities, the trustee or holders of 25% of the outstanding
principal amount of that series may declare the principal amount of the series
immediately payable (provided that no such declaration is required upon certain
events of bankruptcy). However, as explained in more detail below holders of a
majority of the principal amount may rescind this action.
Upon certain conditions such declaration may be annulled and past defaults
(except, unless theretofore cured, a default in payment of principal of (or
premium, if any), or interest on the Senior Subordinated Debt Securities of
that series and certain other specified defaults) may be waived by the Holders
of a majority in principal amount of the outstanding Senior Subordinated Debt
Securities of that series on behalf of the Holders of all Senior Subordinated
Debt Securities of that series. (Sections 502 and 513).
Senior and Senior Subordinated Indentures
The Indentures provide that the applicable Trustee will, within 90 days
after the occurrence of a default with respect to Debt Securities of any series
at the time outstanding with respect to which it is Trustee, give to the
Holders of the outstanding Debt Securities of that series notice of such
default known to it if uncured or not waived, provided that, except in the case
of default in the payment of principal of (or premium, if any), or interest on
any Debt Security of that series, or in the payment of any sinking fund
installment which is provided, such Trustee will be protected in withholding
such notice if such Trustee in good faith determines that the withholding of
such notice is in the interest of the Holders of the outstanding Debt
Securities of such series; and, provided further, that such notice shall not be
given until 60 days after the occurrence of a default with respect to
outstanding Debt Securities of any series in the performance or breach of a
covenant in the Applicable Indenture other than for the payment of the
principal of (or premium, if any), or interest on any Debt Security of such
series or the deposit of any sinking fund payment with respect to the Debt
Securities of such series. The term default with respect to any series of
outstanding Debt Securities for the purpose only of this provision means the
happening of any of the Events of Default or, in the case of the Senior
Subordinated
20
<PAGE>
Indenture, Defaults, specified in the Applicable Indenture and relating to such
series of outstanding Debt Securities. (Section 602).
The Indentures provide that, subject to the duty of the Trustees during a
default to act with the required standard of care, the Trustees will not be
under an obligation to exercise any of their rights or powers under the
Indentures at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustees reasonable security or indemnity.
(Sections 601 and 603). The Indentures provide that the Holders of a majority
in principal amount of outstanding Debt Securities of any series may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee for that series, or exercising any trust or other power conferred
on such Trustee, provided that such Trustee may decline to act if such
direction is contrary to law or the applicable Indenture and may take any other
action deemed proper which is not inconsistent with such direction. (Section
512).
The Indentures include a covenant that the Company will file annually with
the Trustees a certificate of no default or specifying any default that exists.
(Section 1007 of the Senior Indenture and Section 1004 of the Senior
Subordinated Indenture).
Modification of the Indentures
From time to time the Company and the applicable Trustee may, without the
consent of the holders of any series of Debt Securities, amend, waive or
supplement each Indenture for specified purposes, including, among other
things, curing ambiguities or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of any series
of Debt Securities).
Modification and amendments of each Indenture may be made by the Company and
the Trustee under the applicable Indenture, only with the consent of the
Holders of not less than a majority in principal amount of each series of
outstanding Debt Securities issued under such Indenture and affected thereby,
by executing supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the Applicable Indenture or modifying the
rights of the Holders of outstanding Debt Securities of such series (including
the modification of the subordination provisions in a manner adverse to Holders
in the case of the Senior Subordinated Indenture), except that no such
supplemental indenture may:
(a) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Debt Security;
(b) reduce the principal amount of, or any premium or the rate of
interest on, any Debt Security;
(c) reduce the amount of principal of an Original Issue Discount Security
payable upon acceleration of the Maturity thereof,
(d) adversely affect any right of repayment at the option of the Holder
of any Debt Security;
(e) reduce the amount of, or postpone the date fixed for, the payment of
any sinking fund or analogous obligation;
(f) change the place or currency of payment of principal of (or premium,
if any) or interest on, any Debt Security;
(g) impair the right to institute suit for the enforcement of any payment
on or with respect to any Debt Security on or after the Stated Maturity
(or, in the case of redemption, on or after the Redemption Date);
(h) reduce the percentage in principal amount of outstanding Debt
Securities of any series, the consent of the Holders of which is required
for modification or amendment of the Applicable Indenture, for waiver of
compliance with certain provisions of the Applicable Indenture or for
waiver of certain covenant defaults;
21
<PAGE>
(i) modify the provisions of the Applicable Indenture relating to
modification and amendment of the Applicable Indenture; or
(j) in the case of the Senior Subordinated Indenture, modify the
subordination provisions adverse to the holders of Senior Indebtedness, in
each case, without such holders' consent.
The Indentures provide, however, that each of the amendments and
modifications listed in clauses (a) through (i) and, in the case of the Senior
Subordinated Indenture, (j) above may be made with the consent of the Holder of
each outstanding Security affected thereby. (Section 902 of the Indentures and
Section 907 of the Senior Subordinated Indenture).
Consolidation, Merger and Sale of Assets
The Company, without the consent of the Holders of any of the Debt
Securities under either Indenture, may consolidate with or merge into any other
Person or convey, transfer or lease its assets substantially as an entirety to
any Person, or, in the case of the Senior Subordinated Indenture, permit any
Person to consolidate with or merge into the Company or convey, transfer or
lease its properties substantially as an entirety to the Company, provided
that:
(i) if applicable, the successor is a Person, organized under the laws of
any domestic jurisdiction;
(ii) the successor Person, if other than the Company, assumes the
Company's obligations on the Debt Securities and under the Indentures;
(iii) after giving effect to the transaction no Event of Default, or, in
the case of the Senior Subordinated Indenture, Default, and no event which,
after notice or lapse of time, would become an Event of Default, or, in the
case of the Senior Subordinated Indenture, Default, shall have occurred and
be continuing; and
(iv) certain other conditions are met. (Section 801).
Upon any consolidation or merger into any other Person or any conveyance,
transfer or lease of the Company's assets substantially as an entirety to any
Person, the successor Person shall succeed to, and be substituted for, the
Company under the Indentures, and the Company, except in the case of a lease,
shall be relieved of all obligations and covenants under the Indentures and the
Debt Securities to the extent it was the predecessor Person.
Outstanding Debt Securities
The Indentures provide that, in determining whether the Holders of the
requisite principal amount of outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver under the
Applicable Indenture:
(i) the portion of the principal amount of an Original Issue Discount
Debt Security that shall be deemed to be outstanding for such purposes
shall be that portion of the principal amount thereof that would be due and
payable as of the date of such determination upon the declaration of
acceleration of the maturity thereof upon the occurrence and continuance of
an Event of Default,
(ii) the portion of the principal amount of a Debt Security denominated
in a foreign currency or currencies that shall be deemed to be outstanding
for such purpose shall be the U.S. dollar equivalent, determined on the
date of original issuance of such Debt Security, of the principal amount of
such Debt Security (or, in the case of an Original Issue Discount Debt
Security, the U.S. dollar equivalent on the date of original issuance of
such Debt Security of the amount determined as provided in (i) above), and
(iii) Debt Securities owned by the Company or any of its Affiliates shall
not be deemed to be outstanding. (Section 101).
22
<PAGE>
Concerning the Trustees
Bankers Trust Company and Chase Manhattan Trust Company, National
Association are the Trustees under the Senior Indenture and the Senior
Subordinated Indenture, respectively. Chase Manhattan Trust Company, National
Association is also trustee under the Senior Subordinated Indenture for the
Company's:
. 6 1/2% Subordinated Notes due December 2003
. 8 1/2% Subordinated Notes due December 2004
. 7% Subordinated Retail Medium-Term Notes due August 2005
. 7.5% Subordinated Retail Medium-Term Notes due August 2010
. 7.54% Subordinated Retail Medium-Term Notes due August 2010
. 7.5% Subordinated Retail Medium-Term Notes due August 2010
. 7.56% Subordinated Retail Medium-Term Notes due 2007
. 7.00% Subordinated Retail Medium-Term Notes due 2010
. 7.125% Subordinated Retail Medium-Term Notes due 2015
. 6.60% Subordinated Retail Medium-Term Notes due 2011
. 6.70% Subordinated Retail Medium-Term Notes due 2011
. 6.70% Subordinated Retail Medium-Term Notes due 2011
. 6.75% Subordinated Retail Medium-Term Notes due 2011
. 7.00% Subordinated Retail Medium-Term Notes due 2011
. 7.00% Subordinated Retail Medium-Term Notes due 2011
. 7.10% Subordinated Retail Medium-Term Notes due 2011
. 6.75% Subordinated Retail Medium-Term Notes due 2018
. 6.50% Subordinated Retail Medium-Term Notes due 2013
. 6.57% Subordinated Retail Medium-Term Notes due 2013
. 6.50% Subordinated Retail Medium-Term Notes due 2013
. 6.50% Subordinated Retail Medium-Term Notes due 2013
. 6.25% Subordinated Retail Medium-Term Notes due 2013
. 7.4% Zero Coupon Subordinated Retail Medium-Term Notes due 2028
. 7.58% Zero Coupon Subordinated Retail Medium-Term Notes due 2028
. 6.20% Subordinated Retail Medium-Term Notes due 2018
. Floating Rate Institutional Medium-Term Notes Due 2000
. Floating Rate Retail Medium-Term Notes Due 2000
. Floating Rate Institutional Medium-Term Notes Due 1999 and
. Floating Rate Institutional Medium-Term Notes Due 1999.
23
<PAGE>
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
Summary
The following description of the terms of the Junior Subordinated Debt
Securities sets forth certain general terms and provisions. The particular
terms of any Junior Subordinated Debt Securities will be contained in a
prospectus supplement. The prospectus supplement will describe the:
. specific designation
. aggregate principal amount
. maturity
. interest rate (which may be fixed or variable)
. dates interest is paid
. terms for redemption at the option of the Company or the holder, if any
. other terms in connection with the offering and sale of the Junior
Subordinated Debt Securities being sold.
Unless otherwise provided in the related prospectus supplement, the Junior
Subordinated Debt Securities will be issued in global (book-entry) form to a
BNY Trust. The Corresponding Junior Subordinated Debt Securities will be
registered in the name of the Property Trustee who will hold the Corresponding
Junior Subordinated Debt Securities for the benefit of the holders of the Trust
Preferred Securities.
The Junior Subordinated Debt Securities are to be issued in one or more
series under a Junior Subordinated Indenture, dated as of December 25, 1996, as
supplemented from time to time (as so supplemented, the "Junior Indenture"),
between the Company and The First National Bank of Chicago, as trustee (the
"Junior Indenture Trustee").
The following summary of certain terms and provisions of the Junior
Subordinated Debt Securities, Corresponding Junior Subordinated Debentures and
the Junior Indenture, is not complete. For a complete description you should
read the Junior Indenture. The Junior Indenture is incorporated as an exhibit
to the registration statement of which this prospectus is a part by reference
to the Company's Registration Statement on Form S-3 (Nos. 333-40837, 333-40837-
01, 333-40837-02 and 333-40837-03). The Junior Indenture is qualified under the
Trust Indenture Act.
Wherever we refer to particular sections, articles or defined terms of the
Junior Indenture we are incorporating those sections, articles or defined terms
into this prospectus by reference. Capitalized terms not otherwise defined
herein shall have the meaning given to them in the Junior Indenture.
General
Each series of Junior Subordinated Debt Securities will rank equally with
all other series of Junior Subordinated Debt Securities and will be unsecured
and subordinate and junior in right of payment to the extent and in the manner
set forth in the Junior Indenture to all Senior Debt (as defined below) of the
Company, including the Senior Debt Securities and the Senior Subordinated Debt
Securities. See "--Subordination".
Indebtedness of the Company which is senior to the Junior Subordinated Debt
Securities, at December 31, 1998, totaled approximately $4,225,065,809. This
amount does not include indebtedness of subsidiaries of the Company. See also
"The Company" and "Certain Regulatory Considerations" for a more detailed
discussion.
24
<PAGE>
Except as otherwise provided in the applicable prospectus supplement, the
Junior Indenture does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, including Senior Debt, whether under the Junior
Indenture, any other existing indenture or any other indenture that the Company
may enter into in the future or otherwise.
The Junior Subordinated Debt Securities will be issuable in one or more
series pursuant to an indenture supplemental to the Junior Indenture or a
resolution of the Company's Board of Directors or a committee thereof.
Junior Subordinated Debt Securities may be sold at a substantial discount
below their stated principal amount bearing no interest or interest at a rate
which at the time of issuance is below market rates. Certain United States
Federal income tax consequences and special considerations applicable to any
such Junior Subordinated Debt Securities will be described in the applicable
prospectus supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debt
Securities, special United States Federal income tax, accounting and other
considerations applicable thereto will be described in the applicable
prospectus supplement.
The Junior Indenture does not limit the aggregate principal amount of the
Junior Subordinated Debt Securities or of any particular series of Junior
Subordinated Debt Securities that may be issued thereunder and provides that
Junior Subordinated Debt Securities may be issued from time to time in series.
The applicable prospectus supplement or prospectus supplements will describe
the following terms of the Junior Subordinated Debt Securities:
(1) the title of the Junior Subordinated Debt Securities;
(2) any limit upon the aggregate principal amount of the Junior
Subordinated Debt Securities;
(3) the date or dates on which the principal of the Junior Subordinated
Debt Securities is payable (the "Stated Maturity") or the method of
determination thereof and the Company's right to shorten or extend such
date or dates;
(4) the rate or rates, if any, at which the Junior Subordinated Debt
Securities shall bear interest;
(5) the dates on which any such interest shall be payable (the "Interest
Payment Dates");
(6) the right, if any, of the Company to defer or extend an Interest
Payment Date;
(7) the record dates for any interest payable on any Interest Payment
Date or the method by which any of the foregoing shall be determined;
(8) the place or places where, subject to the terms of the Junior
Indenture as described below under "--Payment and Paying Agents", the
principal of and premium, if any, and interest on the Junior Subordinated
Debt Securities will be payable and where, subject to the terms of the
Junior Indenture as described below under "--Denominations, Registration
and Transfer," the Junior Subordinated Debt Securities may be presented for
registration of transfer or exchange and the place or places where notices
and demands to or upon the Company in respect of the Junior Subordinated
Debt Securities and the Junior Indentures may be made ("Place of Payment");
(9) any period or periods within which or date or dates on which, the
price or prices at which and the terms and conditions upon which Junior
Subordinated Debt Securities may be redeemed, in whole or in part, at the
option of the Company or a holder thereof;
(10) the obligation or the right, if any, of the Company or a holder
thereof to redeem, purchase or repay the Junior Subordinated Debt
Securities and the period or periods within which, the price or prices at
which, the currency or currencies (including currency unit or units) in
which and the other terms and
25
<PAGE>
conditions upon which the Junior Subordinated Debt Securities shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(11) the denominations in which any Junior Subordinated Debt Securities
shall be issuable if other than denominations of $25.00 and any integral
multiple thereof;
(12) if other than in U.S. Dollars, the currency or currencies (including
currency unit or units) in which the principal of (and premium, if any) and
interest and Additional Interest, if any, on the Junior Subordinated Debt
Securities shall be payable, or in which the Junior Subordinated Debt
Securities shall be denominated;
(13) any additions, modifications or deletions in the events of default
under the Junior Indenture or covenants of the Company specified in the
Junior Indenture with respect to the Junior Subordinated Debt Securities;
(14) if other than the principal amount thereof, the portion of the
principal amount of Junior Subordinated Debt Securities that shall be
payable upon declaration of acceleration of the maturity thereof;
(15) any additions or changes to the Junior Indenture with respect to a
series of Junior Subordinated Debt Securities as shall be necessary to
permit or facilitate the issuance of such series in bearer form,
registerable or not registerable as to principal, and with or without
interest coupons;
(16) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Junior Subordinated Debt
Securities and the manner in which such amounts will be determined;
(17) the terms and conditions relating to the issuance of a temporary
Global Security representing all of the Junior Subordinated Debt Securities
of such series and the exchange of such temporary Global Security for
definitive Junior Subordinated Debt Securities of such series;
(18) subject to the terms described herein under "--Global Junior
Subordinated Debt Securities", whether the Junior Subordinated Debt
Securities of the series shall be represented by fully registered global
certificates and, in such case, the depositary for such global
certificates, which Depositary shall be a clearing agency registered under
the Exchange Act;
(19) the appointment of any paying agent or agents;
(20) the terms and conditions of any obligation or right of the Company
or a holder to convert or exchange the Junior Subordinated Debt Securities
into other Company securities;
(21) the form of Trust Agreement, Guarantee Agreement and Expense
Agreement, if applicable;
(22) the relative degree, if any, to which such Junior Subordinated Debt
Securities of the series shall be senior to or be subordinated to other
series of such Junior Subordinated Debt Securities or other indebtedness of
the Company in right of payment, whether such other series of Junior
Subordinated Debt Securities or other indebtedness are outstanding or not;
and
(23) any other terms of the Junior Subordinated Debt Securities not
inconsistent with the provisions of the Junior Indenture.
If the Junior Subordinated Debt Securities are denominated in whole or in
part in any currency other than United States dollars, if the principal of (and
premium, if any) or interest, if any, on the Junior Subordinated Debt
Securities are to be payable at the election of the Company or a holder
thereof, in a currency or currencies other than that in which such Junior
Subordinated Debt Securities are to be payable, or if any index is used to
determine the amount of payments of principal of, premium, if any, or interest
on any series of the Junior Subordinated Debt Securities, special Federal
income tax, accounting and other considerations applicable thereto will be
described in the prospectus supplement relating thereto.
26
<PAGE>
The Junior Indenture does not contain any provisions that would provide
protection to holders of the Junior Subordinated Debt Securities against a
sudden and dramatic decline in credit quality of the Company resulting from any
highly leveraged transaction, takeover, merger, recapitalization or similar
restructuring or change in control.
The Junior Indenture allows us to merge or consolidate with another company,
or to sell all or substantially all of our assets to another company. If these
events occur, the other company will be required to assume our responsibilities
relating to the Junior Subordinated Debt Securities, and we will be released
from all liabilities and obligations. See "Consolidation, Merger, Sale of
Assets and Other Transactions" for a more detailed discussion.
The Junior Indenture provides that the Company and the Junior Indenture
Trustee may change certain of our obligations or certain of your rights
concerning the Junior Subordinated Debt Securities of that series. However, to
change the amount or timing of principal, interest or other payments under the
Junior Subordinated Debt Securities, every holder in the series must consent.
See "Modification of the Junior Indenture" for a more detailed discussion.
Denominations, Registration and Transfer
Unless otherwise specified in the applicable prospectus supplement, the
Junior Subordinated Debt Securities will be issuable only in registered form
without coupons in denominations of $25.00 and any integral multiple thereof.
See "Book Entry Issuance." Subject to restrictions relating to Junior
Subordinated Debt Securities represented by global certificates, Junior
Subordinated Debt Securities of any series will be exchangeable for other
Junior Subordinated Debt Securities of the same issue and series, of any
authorized denominations, of a like aggregate principal amount, of the same
original issue date and stated maturity and bearing the same interest rate.
Subject to restrictions relating to Junior Subordinated Debt Securities
represented by global certificates, Junior Subordinated Debt Securities may be
presented for exchange as provided above, and may be presented for registration
of transfer (with the form of transfer endorsed thereon, or a satisfactory
written instrument of transfer, duly executed), at the office of the
appropriate securities registrar or at the office of any transfer agent
designated by the Company for such purpose with respect to any series of Junior
Subordinated Debt Securities and referred to in the applicable prospectus
supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the Junior Indenture. The Company will
appoint the Trustee as securities registrar under the Junior Indenture. If the
applicable prospectus supplement refers to any transfer agents (in addition to
the securities registrar) initially designated by the Company with respect to
any series of Junior Subordinated Debt Securities, the Company may at any time
rescind the designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, provided that the Company
maintains a transfer agent in each place of payment for such series. The
Company may at any time designate additional transfer agents with respect to
any series of Junior Subordinated Debt Securities.
In the event of any redemption, neither the Company nor the Junior Indenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debt Securities of any series during the period beginning
at the opening of business 15 days before the day of selection for redemption
of Junior Subordinated Debt Securities of that series and ending at the close
of business on the day of mailing of the relevant notice of redemption or (ii)
transfer or exchange any Junior Subordinated Debt Securities so selected for
redemption, except, in the case of any Junior Subordinated Debt Securities
being redeemed in part, any portion thereof not to be redeemed.
Global Junior Subordinated Debt Securities
Unless otherwise stated in a prospectus supplement or unless issued to a BNY
Trust as Corresponding Junior Subordinated Debentures each series of the Junior
Subordinated Debt Securities will be represented by
27
<PAGE>
fully registered global certificates issued as global Junior Subordinated Debt
Securities to be deposited with a depositary with respect to that series
instead of paper certificates issued to each individual owner. The depositary
arrangements that will apply, including the manner in which principal of and
premium, if any, and interest on Junior Subordinated Debt Securities and other
payments will be payable are discussed in more detail under the heading "Book-
Entry Issuance."
Payment and Paying Agents
Unless otherwise indicated in the applicable prospectus supplement, payment
of principal of (and premium, if any) and any interest on Junior Subordinated
Debt Securities will be made at the office of the Junior Indenture Trustee in
the City of New York or at the office of such paying agent or paying agents as
the Company may designate from time to time, except that at the option of the
Company payment of any interest may be made (i) except in the case of Junior
Subordinated Debt Securities represented by global certificates or issued to a
BNY Trust, by check mailed to the address of the Person entitled thereto as
such address shall appear in the securities register or (ii) by transfer to an
account maintained by the person entitled thereto as specified in the
securities register, provided that proper transfer instructions have been
received by the Regular Record Date. Unless otherwise indicated in the
applicable prospectus supplement, payment of any interest on Junior
Subordinated Debt Securities will be made to the person in whose name such
Junior Subordinated Debenture is registered at the close of business on the
Regular Record Date for such interest, except in the case of Defaulted
Interest. The Company may at any time designate additional Paying Agents or
rescind the designation of any paying agent; however the Company will at all
times be required to maintain a paying agent in each place of payment for each
series of Junior Subordinated Debt Securities.
Any moneys deposited with the Junior Indenture Trustee or any paying agent,
or then held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
Option to Defer Interest Payments
If provided in the applicable prospectus supplement, so long as no Debenture
Event of Default (as defined herein) has occurred and is continuing, the
Company will have the right at any time and from time to time during the term
of any series of Junior Subordinated Debt Securities to defer payment of
interest for up to such number of consecutive interest payment periods as may
be specified in the applicable prospectus supplement (each, an "Extension
Period"), subject to the terms, conditions and covenants, if any, specified in
such prospectus supplement, provided that such Extension Period may not extend
beyond the Stated Maturity of such series of Junior Subordinated Debt
Securities. Certain United States Federal income tax consequences and special
considerations applicable to any such Junior Subordinated Debt Securities will
be described in the applicable prospectus supplement. As a consequence of any
such deferral, Distributions on the Related Trust Preferred Securities would be
deferred (but would continue to accumulate additional Distributions thereon at
the rate per annum set forth in the prospectus supplement for such Trust
Preferred Securities) by the BNY Trust of such Trust Preferred Securities
during any such Extension Period. During any such Extension Period, the Company
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
Company'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
Company that rank on a parity in all respects with or junior in interest to the
Corresponding Junior Subordinated Debt Securities (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of
28
<PAGE>
the Company (or securities convertible into or exercisable for such capital
stock) as consideration in an acquisition transaction entered into prior to the
applicable Extension Period, (b) as a result of any exchange or conversion of
any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company'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 any stockholder's rights
plan, or the issuance of rights, stock or other property under any
stockholder's 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 on a parity with or junior to such stock).
This covenant will also apply if:
(i) The Company has actual knowledge of an event that with the giving of
notice or the lapse of time, or both, would constitute an Event of Default
under the Junior Indenture with respect to such Junior Subordinated Debt
Securities and the Company has not taken reasonable steps to cure the
event; and
(ii) if such Junior Subordinated Debt Securities are held by a BNY Trust,
the Company is in default with respect to its payment of any obligations
under the Guarantee related to the Related Trust Preferred Securities.
Redemption
Unless otherwise indicated in the applicable prospectus supplement, Junior
Subordinated Debt Securities will not be subject to any sinking fund.
Unless otherwise indicated in the applicable prospectus supplement, the
Company may, at its option and subject to receipt of prior approval by the
Federal Reserve Board if such approval is then required under applicable
capital guidelines or policies, redeem the Junior Subordinated Debt Securities
of any series in whole at any time or in part from time to time. If the Junior
Subordinated Debt Securities of any series are so redeemable only on or after a
specified date or upon the satisfaction of additional conditions, the
applicable prospectus supplement will specify such date or describe such
conditions. Unless otherwise indicated in the applicable prospectus supplement,
Junior Subordinated Debt Securities in denominations larger than $25.00 may be
redeemed in part but only in integral multiples of $25.00. Except as otherwise
specified in the applicable prospectus supplement, the redemption price for any
Junior Subordinated Debenture so redeemed shall equal any accrued and unpaid
interest (including Additional Interest) thereon to the redemption date, plus
100% of the principal amount thereof.
Except as otherwise specified in the applicable prospectus supplement, if a
Tax Event (as defined below) in respect of a series of Junior Subordinated Debt
Securities or a Capital Treatment Event (as defined below) shall occur and be
continuing, the Company may, at its option and subject to receipt of prior
approval by the Federal Reserve Board if such approval is then required under
applicable capital guidelines or policies, redeem such series of Junior
Subordinated Debt Securities in whole (but not in part) at any time within 90
days following the occurrence of such Tax Event or Capital Treatment Event, at
a redemption price equal to 100% of the principal amount of such Junior
Subordinated Debt Securities then outstanding plus accrued and unpaid interest
to the date fixed for redemption, except as otherwise specified in the
applicable prospectus supplement.
"Tax Event" means the receipt by a BNY Trust or the Company 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 or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
29
<PAGE>
which pronouncement or decision is announced on or after the date of issuance
of the related Trust Preferred Securities under the Trust Agreement, there is
more than an insubstantial risk that (i) such BNY 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 corresponding series of
Corresponding Junior Subordinated Debt Securities, (ii) interest payable by the
Company on such series of Corresponding Junior Subordinated Debt Securities 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) such BNY 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.
A "Capital Treatment Event" means the reasonable determination by the
Company 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, rules or regulations, which amendment or change is effective or which
pronouncement, action or decision is announced on or after the date of issuance
of the related Trust Preferred Securities, there is more than an insubstantial
risk that the Company will not be entitled to treat an amount equal to the
aggregate Liquidation Amount of the Trust Preferred Securities as "Tier 1
Capital" (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Company.
Notice of any redemption will be mailed at least 45 days but not more than
75 days before the redemption date to each Holder of Junior Subordinated Debt
Securities to be redeemed at its registered address. Unless the Company
defaults in payment of the redemption price, on and after the redemption date
interest shall cease to accrue on such Junior Subordinated Debt Securities or
portions thereof called for redemption.
Modification of the Junior Indenture
From time to time the Company and the Junior Indenture Trustee may, without
the consent of the holders of any series of Junior Subordinated Debt
Securities, amend, waive or supplement the Junior Indenture for specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies (provided that any such action does not materially adversely
affect the interest of the holders of any series of Junior Subordinated Debt
Securities or, in the case of Corresponding Junior Subordinated Debt
Securities, the holders of the Related Trust Preferred Securities so long as
they remain outstanding) and qualifying, or maintaining the qualification of,
the Junior Indenture under the Trust Indenture Act. The Junior Indenture
contains provisions permitting the Company and the Junior Indenture Trustee,
with the consent of the holders of not less than a majority in principal amount
of each outstanding series of Junior Subordinated Debt Securities affected, to
modify the Junior Indenture in a manner affecting adversely the rights of the
holders of such series of the Junior Subordinated Debt Securities in any
material respect; provided, that no such modification may, without the consent
of the holder of each outstanding Junior Subordinated Debt Security so
affected, (i) change the Stated Maturity of any series of Junior Subordinated
Debt Securities (except as otherwise specified in the applicable prospectus
supplement), or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon or (ii) reduce the percentage of
principal amount of Junior Subordinated Debt Securities of any series, the
holders of which are required to consent to any such modification of the Junior
Indenture, provided that, in the case of Corresponding Junior Subordinated Debt
Securities, so long as any of the Related Trust Preferred Securities remain
outstanding, (a) no such modification may be made that adversely affects the
holders of such Trust Preferred Securities in any material respect, and no
termination of the Junior Indenture may occur, and no waiver of any event of
default or compliance with any covenant under the Junior Indenture may be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount of all outstanding Related Trust Preferred
Securities affected unless and until the principal of the Corresponding Junior
Subordinated Debt Securities and all accrued and unpaid interest thereon have
been paid in full and certain other conditions have been satisfied and (b)
where a consent under the Junior Indenture would require the consent of each
holder of Corresponding Junior Subordinated Debt Securities, no
30
<PAGE>
such consent will be given by the Property Trustee without the prior consent of
each holder of Related Trust Preferred Securities.
In addition, the Company and the Junior Indenture Trustee may execute,
without the consent of any holder of Junior Subordinated Debt Securities, any
supplemental Junior Indenture for the purpose of creating any new series of
Junior Subordinated Debt Securities.
Junior Subordinated Debt Security Events of Default
The Junior Indenture provides that any one or more of the following
described events with respect to a series of Junior Subordinated Debt
Securities that has occurred and is continuing constitutes a "Debenture Event
of Default" with respect to such series of Junior Subordinated Debt Securities:
(i) failure for 30 days to pay any interest on such series of Junior
Subordinated Debt Securities, including any Additional Interest in respect
thereof, when due (subject to the deferral of any interest payment in the
case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series of
Junior Subordinated Debt Securities when due whether at maturity or upon
redemption; or
(iii) failure to observe or perform any other covenants contained in the
indenture for 90 days after written notice to the Company from the Junior
Indenture Trustee or the holders of at least 25% in aggregate outstanding
principal amount of such affected series of outstanding Junior Subordinated
Debt Securities; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debt Securities of each series affected have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Junior Indenture Trustee. The Junior Indenture Trustee or the
holders of not less than 25% in aggregate outstanding principal amount of
Junior Subordinated Debt Securities of each series affected may declare the
principal (or, if the Junior Subordinated Debt Securities of such series are
Discount Securities, such portion of the principal amount as may be specified
in a prospectus supplement) due and payable immediately upon a Debenture Event
of Default, and, in the case of Corresponding Junior Subordinated Debt
Securities, should the Junior Indenture Trustee or such holders of such
Corresponding Junior Subordinated Debt Securities fail to make such
declaration, the holders of at least 25% in aggregate Liquidation Amount of the
Related Trust Preferred Securities shall have such right. The holders of a
majority in aggregate outstanding principal amount of Junior Subordinated Debt
Securities of each series affected may annul such declaration. In the case of
Corresponding Junior Subordinated Debt Securities, should the holders of such
Corresponding Junior Subordinated Debt Securities fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Related Trust Preferred Securities shall have such
right.
The holders of a majority in aggregate outstanding principal amount of each
series of Junior Subordinated Debt Securities affected thereby may, on behalf
of the holders of all the Junior Subordinated Debt Securities of such series,
waive any default, except a default in the payment of principal or interest
(including any Additional Interest) (unless such default has been cured and a
sum sufficient to pay all matured installments of interest (including any
Additional Interest) and principal due otherwise than by acceleration has been
deposited with the Junior Indenture Trustee) or a default in respect of a
covenant or provision which under the Junior Indenture cannot be modified or
amended without the consent of the holder of each outstanding Junior
Subordinated Debenture of such series. In the case of Corresponding Junior
Subordinated Debt Securities, should the holders of such Corresponding Junior
Subordinated Debt Securities fail to waive such default, the holders of a
majority in aggregate Liquidation Amount of the Related Trust Preferred
Securities shall have such right. The Company is required to file annually with
the Junior Indenture Trustee a certificate as to whether or not the Company is
in compliance with all the conditions and covenants applicable to it under the
Junior Indenture.
31
<PAGE>
In case a Debenture Event of Default shall occur and be continuing as to a
series of Corresponding Junior Subordinated Debt Securities, the Property
Trustee will have the right to declare the principal of and the interest on
such Corresponding Junior Subordinated Debt Securities, and any other amounts
payable under the Junior Indenture, to be forthwith due and payable and to
enforce its other rights as a creditor with respect to such Corresponding
Junior Subordinated Debt Securities.
Enforcement of Certain Rights by Holders of Trust Preferred Securities
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debt Securities has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or
principal on such Corresponding Junior Subordinated Debt Securities on the date
such interest or principal is due and payable, a holder of the Related Trust
Preferred Securities may institute a legal proceeding directly against the
Company for enforcement of payment to such holder of the principal of or
interest (including any Additional Interest) on such Corresponding Junior
Subordinated Debt Securities having a principal amount equal to the aggregate
Liquidation Amount of the Related Trust Preferred Securities of such holder (a
"Direct Action"). The Company may not amend the Junior Indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the Related Trust Preferred Securities outstanding. If
the right to bring a Direct Action is removed, the applicable BNY Trust may
become subject to the reporting obligations under the Exchange Act. The Company
shall have the right under the Junior Indenture to set-off any payment made to
such holder of the Related Trust Preferred Securities by the Company in
connection with a Direct Action.
The holders of such Related Trust Preferred Securities will not be able to
exercise directly any remedies other than those set forth in the preceding
paragraph available to the holders of the Junior Subordinated Debt Securities
unless there shall have been an event of default under the Trust Agreement. See
"Description of Trust Preferred Securities--Events of Default; Notice".
Consolidation, Merger, Sale of Assets and Other Transactions
The Junior Indenture provides that the Company shall 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 shall
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless (i)
in case the Company consolidates with or merges into another Person (and the
Company is not the surviving 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 Company's obligations
on the Junior Subordinated Debt Securities issued under the Junior Indenture;
(ii) immediately after giving effect thereto, no Debenture Event of Default,
and no event which, after notice or lapse of time or both, would become a
Debenture Event of Default, shall have occurred and be continuing; and (iii)
certain other conditions as prescribed by the Junior Indenture are met.
The general provisions of the Junior Indenture do not afford holders of the
Junior Subordinated Debt Securities protection in the event of a highly
leveraged transaction, takeover, merger, recapitalization or similar
restructuring or change in control or other transaction involving the Company
that may adversely affect holders of the Junior Subordinated Debt Securities.
Satisfaction and Discharge
The Junior Indenture provides that when, among other things, all Junior
Subordinated Debt Securities not previously delivered to the Junior Indenture
Trustee for cancellation (i) have become due and payable or (ii) will become
due and payable at their Stated Maturity within one year, and the Company
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount in the currency or currencies in which the
Junior Subordinated Debt Securities are payable sufficient to pay and discharge
the
32
<PAGE>
entire indebtedness on the Junior Subordinated Debt Securities not previously
delivered to the Junior Indenture Trustee for cancellation, for the principal
(and premium, if any) and interest (including any Additional Interest) to the
date of the deposit or to the Stated Maturity, as the case may be, then the
Junior Indenture will cease to be of further effect (except as to the Company's
obligations to pay all other sums due pursuant to the Junior Indenture and to
provide the officers' certificates and opinions of counsel described therein),
and the Company will be deemed to have satisfied and discharged the Junior
Indenture.
Defeasance and Covenant Defeasance
The Junior Indenture provides, if such provision is made applicable to the
Junior Subordinated Debt Securities of any series (which will be indicated in
the prospectus supplement applicable thereto), that the Company may elect
either:
(A) to defease ("defeasance") and be discharged from any and all
obligations with respect to such Junior Subordinated Debt Securities then
outstanding (including the provisions described under "--Subordination" and
except for the obligations to register the transfer or exchange of such
Junior Subordinated Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Junior Subordinated Debt Securities, to maintain
an office or agency in respect of the Junior Subordinated Debt Securities
and to hold moneys for payment in trust) or
(B) to be released from its obligations with respect to such Junior
Subordinated Debt Securities then outstanding under any sections of the
Junior Indenture applicable to such Junior Subordinated Debt Securities
that are subject to covenant defeasance ("covenant defeasance") upon the
deposit with the Debenture Trustee (or other qualifying trustee), in trust
for such purpose, of money, and/or U.S. Government Obligations which
through the payment of principal and interest in accordance with their
terms will provide money in an amount sufficient, without reinvestment, to
pay the principal of (and premium, if any) and interest on such Junior
Subordinated Debt Securities to maturity or redemption, as the case may be,
and any mandatory sinking fund or analogous payments thereon.
As a condition to defeasance or covenant defeasance, the Company must
deliver to the Debenture Trustee an Opinion of Counsel (as specified in the
Junior Indenture) to the effect that the holders of such Junior Subordinated
Debt Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance or covenant
defeasance had not occurred. Such opinion, in the case of defeasance under
clause (A) above, must refer to and be based upon a ruling of the Internal
Revenue Service issued to the Company or published as a revenue ruling or upon
a change in applicable Federal income tax law, in any such case after the date
of the Junior Indenture.
Under current Federal income tax law, defeasance would likely be treated as
a taxable exchange of such Junior Subordinated Debt Securities for interests in
the defeasance trust. As a consequence a holder would recognize gain or loss
equal to the difference between the holder's cost or other tax basis for such
Junior Subordinated Debt Securities and the value of the holder's proportionate
interest in the defeasance trust, and thereafter would be required to include
in income a proportionate share of the income, gain and loss of the defeasance
trust. Under current Federal income tax law, covenant defeasance would
ordinarily not be treated as a taxable exchange of such Junior Subordinated
Debt Securities. Purchasers of such Junior Subordinated Debt Securities should
consult their own advisors with respect to the tax consequences to them of such
defeasance and covenant defeasance, including the applicability and effect of
tax laws other than the Federal income tax law.
The Company may exercise its defeasance option with respect to Junior
Subordinated Debt Securities notwithstanding its prior exercise of its covenant
defeasance option. If the Company exercises its defeasance option, payment of
the Junior Subordinated Debt Securities may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option,
payment of such Junior Subordinated Debt
33
<PAGE>
Securities may not be accelerated by reference to the covenants noted under
clause (B) above. However, if such an acceleration were to occur, the
realizable value at the acceleration date of the money and U.S. Government
Obligations in the defeasance trust could be less than the principal and
interest then due on such Junior Subordinated Debt Securities, in that the
required deposit in the defeasance trust is based upon scheduled cash flows
rather than market value, which will vary depending upon interest rates and
other factors.
The prospectus supplement may further describe the provisions, if any,
applicable to defeasance or covenant defeasance with respect to the Junior
Subordinated Debt Securities of a particular series.
Conversion or Exchange
If and to the extent indicated in the applicable prospectus supplement, the
Junior Subordinated Debt Securities of any series may be convertible or
exchangeable into Junior Subordinated Debt Securities of another series or into
other securities of the Company. The specific terms on which Junior
Subordinated Debt Securities of any series may be so converted or exchanged
will be set forth in the applicable prospectus supplement. Such terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holder, or at the option of the Company, in which case the number or
principal amount of such other securities to be received by the holders of
Junior Subordinated Debt Securities would be calculated as of a time and in the
manner stated in the applicable prospectus supplement.
Subordination
The Junior Subordinated Debt Securities will be subordinate in right of
payment, to the extent set forth in the Junior Indenture, to all Senior Debt
(as defined in the Junior Indenture) of the Company. If the Company defaults in
the payment of any principal, premium, if any, or interest, if any, or any
other amount payable on any Senior Debt when the same becomes due and payable,
whether at maturity or at a date fixed for 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 Debt 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 Debt Securities, or in
respect of any redemption, repayment, retirement, purchase or other acquisition
of any of the Junior Subordinated Debt Securities.
As used in this section, "Senior Debt" means any obligation of the Company
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, but does not include trade accounts
payable and accrued liabilities arising in the ordinary course of business.
Senior Debt includes the Company's Senior Subordinated Debt Securities and any
Senior Subordinated Debt Securities issued in the future with substantially
similar subordination terms, but does not include the Junior Subordinated Debt
Securities of any series or any Junior Subordinated Debt Securities issued in
the future with subordination terms substantially similar to those of the
Junior Subordinated Debt Securities. Substantially all of the existing
indebtedness of the Company constitutes Senior Debt.
Indebtedness of the Company which is senior to the Junior Subordinated
Debentures, at December 31, 1998, totaled approximately $4,225,065,809.
Indebtedness existing under the Junior Indenture, at December 31, 1998, totaled
approximately $1,340,207,500. These amounts do not include indebtedness of
subsidiaries of the Company.
In the event of:
(i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company, its creditors or its property,
(ii) any proceeding for the liquidation, dissolution or other winding up
of the Company, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings,
34
<PAGE>
(iii) any assignment by the Company for the benefit of creditors, or
(iv) any other marshaling of the assets of the Company,
then all Senior Debt (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 Debt Securities.
In such event, any payment or distribution on account of the Junior
Subordinated Debt Securities, 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 Debt Securities will be paid
or delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among such holders until all Senior Debt (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 Debt, the holders of Junior Subordinated Debt
Securities, together with the holders of any obligations of the Company ranking
on a parity with the Junior Subordinated Debt Securities, will be entitled to
be paid from the remaining assets of the Company the amounts at the time due
and owing on the Junior Subordinated Debt Securities 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
Company ranking junior to the Junior Subordinated Debt Securities. If any
payment or distribution on account of the Junior Subordinated Debt Securities
of any character or any security, whether in cash, securities or other property
is received by any holder of any Junior Subordinated Debt Securities in
contravention of any of the terms hereof and before all the Senior Debt 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 Debt at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all Senior Debt remaining unpaid to the extent necessary to pay all such
Senior Debt in full. By reason of such subordination, in the event of the
insolvency of the Company, holders of Senior Debt may receive more, ratably,
and holders of the Junior Subordinated Debt Securities may receive less,
ratably, than the other creditors of the Company. Such subordination will not
prevent the occurrence of any Event of Default under the Junior Indenture.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Debt that may be incurred by the Company. The Company expects
from time to time to incur additional indebtedness constituting Senior Debt.
Trust Expenses
Pursuant to the Expense Agreement for each series of Corresponding Junior
Subordinated Debt Securities, the Company, as holder of the Trust Common
Securities, will irrevocably and unconditionally agree with each BNY Trust that
holds Junior Subordinated Debt Securities that the Company will pay to such BNY
Trust, and reimburse such BNY Trust for, the full amounts of any costs,
expenses or liabilities of the BNY Trust, other than obligations of the BNY
Trust to pay to the holders of any Trust Preferred Securities or other similar
interests in the BNY Trust the amounts due such holders pursuant to the terms
of the Trust Preferred Securities or such other similar interests, as the case
may be. Such payment obligation will include any such costs, expenses or
liabilities of the BNY Trust that are required by applicable law to be
satisfied in connection with a termination of such BNY Trust.
Governing Law
The Junior Indenture and the Junior Subordinated Debt Securities will be
governed by and construed in accordance with the laws of the State of New York.
35
<PAGE>
Information Concerning the Junior Indenture Trustee
The Junior Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Junior Indenture Trustee is
under no obligation to exercise any of the powers vested in it by the Junior
Indenture at the request of any holder of Junior Subordinated Debt Securities,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Junior Indenture 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 Junior Indenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
Corresponding Junior Subordinated Debt Securities
The Corresponding Junior Subordinated Debt Securities may be issued in one
or more series of Junior Subordinated Debt Securities under the Junior
Indenture with terms corresponding to the terms of a series of Related Trust
Preferred Securities. In that event, concurrently with the issuance of each BNY
Trust's Trust Preferred Securities, such BNY Trust will invest the proceeds
thereof and the consideration paid by the Company for the Trust Common
Securities of such BNY Trust in such series of Corresponding Junior
Subordinated Debt Securities issued by the Company to such BNY Trust. Each
series of Corresponding Junior Subordinated Debt Securities will be in the
principal amount equal to the aggregate stated Liquidation Amount of the
Related Trust Preferred Securities and the Trust Common Securities of such BNY
Trust and will rank on a parity with all other series of Junior Subordinated
Debt Securities. Holders of the Related Trust Preferred Securities for a series
of Corresponding Junior Subordinated Debt Securities will have the rights in
connection with modifications to the Junior Indenture or upon occurrence of
Debenture Events of Default, as described under "--Modification of Junior
Indenture" and "--Debenture Events of Default", unless provided otherwise in
the prospectus supplement for such Related Trust Preferred Securities.
Unless otherwise specified in the applicable prospectus supplement, if a Tax
Event or a Capital Treatment Event in respect of a BNY Trust shall occur and be
continuing, the Company may, at its option and subject to prior approval of the
Federal Reserve Board if then so required under applicable capital guidelines
or policies, redeem the Corresponding Junior Subordinated Debt Securities at
any time within 90 days of the occurrence of such Tax Event or Capital
Treatment Event, in whole but not in part, subject to the provisions of the
Junior Indenture and whether or not such Corresponding Junior Subordinated Debt
Securities are then otherwise redeemable at the option of the Company. Unless
provided otherwise in the related prospectus supplement, the redemption price
for any Corresponding Junior Subordinated Debt Securities shall be equal to
100% of the principal amount of such Corresponding Junior Subordinated Debt
Securities then outstanding plus accrued and unpaid interest to the date fixed
for redemption. For so long as the applicable BNY Trust is the holder of all
the outstanding Corresponding Junior Subordinated Debt Securities, the proceeds
of any such redemption will be used by the BNY Trust to redeem the
corresponding Trust Securities in accordance with their terms. In lieu of such
redemption, the Company has the right to dissolve the applicable BNY Trust and
to distribute such Corresponding Junior Subordinated Debt Securities to the
holders of the related series of Trust Securities in liquidation of such BNY
Trust. See "Description of Trust Preferred Securities--Redemption or Exchange--
Distribution of Corresponding Junior Subordinated Debentures" for a more
detailed discussion. The Company may not redeem a series of Corresponding
Junior Subordinated Debt Securities in part unless all accrued and unpaid
interest has been paid in full on all outstanding Corresponding Junior
Subordinated Debt Securities of such series for all interest periods
terminating on or prior to the Redemption Date.
The Company will covenant in the Junior Indenture, as to each series of
Corresponding Junior Subordinated Debt Securities, that if and so long as (i)
the BNY Trust of the related series of Trust Securities is the holder of all
such Corresponding Junior Subordinated Debt Securities, (ii) a Tax Event in
respect of such BNY Trust has occurred and is continuing and (iii) the Company
has elected to redeem such Corresponding Junior Subordinated Debt Securities or
dissolve such BNY Trust, and has not revoked such election, the Company will
pay to such BNY Trust Additional Sums (as defined under "Description of Trust
Preferred
36
<PAGE>
Securities--Redemption or Exchange"). The Company will also covenant, as to
each series of Corresponding Junior Subordinated Debt Securities, (i) to
maintain directly or indirectly 100% ownership of the Trust Common Securities
of the BNY Trust to which such Corresponding Junior Subordinated Debt
Securities have been issued, provided that certain successors which are
permitted pursuant to the Junior Indenture may succeed to the Company's
ownership of the Trust Common Securities, (ii) not to voluntarily terminate,
wind-up or liquidate any BNY Trust, except (a) in connection with a
distribution of Corresponding Junior Subordinated Debt Securities to the
holders of the Trust Preferred Securities in exchange therefor upon liquidation
of such BNY Trust or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the related Trust Agreement, in either such case, if
so specified in the applicable prospectus supplement upon prior approval of the
Federal Reserve, if then so required under applicable Federal Reserve capital
guidelines or policies, and (iii) to use its reasonable efforts, consistent
with the terms and provisions of the related Trust Agreement, to cause such BNY
Trust to be classified as a grantor trust and not as an association taxable as
a corporation for United States Federal income tax purposes.
DESCRIPTION OF TRUST PREFERRED SECURITIES
This summary of certain provisions of the Trust Preferred Securities and
each Trust Agreement is not complete. For a complete description you should
read each Trust Agreement. Wherever particular defined terms of a Trust
Agreement are referred to herein or in a prospectus supplement, such defined
terms are incorporated herein or therein by reference. The form of the Trust
Agreement has been filed with the SEC as an exhibit to the registration
statement of which this prospectus forms a part.
Pursuant to the terms of the Trust Agreement for each BNY Trust, each BNY
Trust will sell Trust Preferred Securities to the public and Trust Common
Securities to the Company. The Trust Preferred Securities represent preferred
beneficial interests in the BNY Trust that sold them. Holders of such Trust
Preferred Securities will be entitled to receive Distributions and amounts
payable on redemption or liquidation ahead of holders of the Trust Common
Securities. A more complete discussion appears under the heading "--
Subordination of Trust Common Securities". Holders of the Trust Preferred
Securities will also be entitled to other benefits as described in the
corresponding Trust Agreement.
Each of the BNY Trusts is a legally separate entity and the assets of one
are not available to satisfy the obligations of any of the others.
General
The Trust Preferred Securities of a BNY Trust will rank on a parity, and
payments will be made thereon pro rata, with the Trust Common Securities of
that BNY Trust except as described under "--Subordination of Trust Common
Securities". Legal title to the Corresponding Junior Subordinated Debt
Securities will be held by the Property Trustee in trust for the benefit of the
holders of the Related Trust Preferred Securities and Trust Common Securities.
Each Guarantee Agreement executed by the Company for the benefit of the
holders of a BNY Trust's Trust Preferred Securities will be a Guarantee on a
subordinated basis with respect to the Related Trust Preferred Securities but
will not guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Trust Preferred Securities when the related BNY Trust does
not have funds on hand available to make such payments. See "Description of
Guarantees."
Distributions
Distributions on the Trust Preferred Securities will be cumulative, will
accrue from the date of original issuance and will be payable on such dates as
specified in the applicable prospectus supplement. In the event that any date
on which Distributions are payable on the Trust Preferred Securities is not a
Business Day (as
37
<PAGE>
defined below), payment of the Distribution payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect to any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in either case with the same
force and effect as if made on such date (each date on which Distributions are
payable in accordance with the foregoing, a "Distribution Date"). A "Business
Day" shall mean any day other than a Saturday or a Sunday, or a day on which
banking institutions in The City of New York are authorized or required by law
or executive order to remain closed or a day on which the corporate trust
office of the Property Trustee or the Junior Indenture Trustee is closed for
business.
Each BNY Trust's Trust Preferred Securities represent preferred beneficial
interests in the applicable BNY Trust, and the Distributions on each Preferred
Security will be payable at a rate specified in the applicable prospectus
supplement for such Trust Preferred Securities. Distributions to which holders
of Trust Preferred Securities are entitled will accumulate additional
Distributions at the rate per annum if and as specified in the applicable
prospectus supplement. The term "Distributions" as used herein includes any
such additional Distributions unless otherwise stated.
If an Extension Period occurs with respect to the Corresponding Junior
Subordinated Debt Securities, distributions on the Related Trust Preferred
Securities will be correspondingly deferred. See "Description of Junior
Subordinated Debt Securities--Option to Defer Interest Payments."
The revenue of each BNY Trust available for distribution to holders of its
Trust Preferred Securities will be limited to payments under the Corresponding
Junior Subordinated Debt Securities in which the BNY Trust will invest the
proceeds from the issuance and sale of its Trust Securities. See "Description
of Junior Subordinated Debt Securities--Corresponding Junior Subordinated Debt
Securities." If the Company does not make interest payments on such
Corresponding Junior Subordinated Debt Securities, the Property Trustee will
not have funds available to pay Distributions on the Related Trust Preferred
Securities. The payment of Distributions (if and to the extent the BNY Trust
has funds legally available for the payment of such Distributions and cash
sufficient to make such payments) is guaranteed by the Company on a limited
basis as set forth herein under "Description of Guarantees".
Distributions on the Trust Preferred Securities will be payable to the
holders thereof as they appear on the register of such BNY Trust on the
relevant record dates, which, as long as the Trust Preferred Securities remain
in book-entry form, will be one Business Day prior to the relevant Distribution
Date. Subject to any applicable laws and regulations and the provisions of the
applicable Trust Agreement, each such payment will be made as described under
"Book-Entry Issuance." In the event any Trust Preferred Securities are not in
book-entry form, the relevant record date for such Trust Preferred Securities
shall be the date at least 15 days prior to the relevant Distribution Date, as
specified in the applicable prospectus supplement.
Redemption or Exchange
Mandatory Redemption. Upon the repayment or redemption, in whole or in part,
of any Corresponding Junior Subordinated Debt Securities, whether at maturity
or upon earlier redemption as provided in the Junior Indenture, the proceeds
from such repayment or redemption shall be applied by the Property Trustee to
redeem a Like Amount (as defined below) of the Trust Securities, upon not less
than 30 nor more than 60 days notice, at a redemption price (the "Redemption
Price") equal to the aggregate Liquidation Amount of such Trust Securities plus
accumulated but unpaid Distributions thereon to the date of redemption (the
"Redemption Date") and the related amount of the premium, if any, paid by the
Company upon the concurrent redemption of such Corresponding Junior
Subordinated Debt Securities. See "Description of Junior Subordinated Debt
Securities--Redemption". If less than all of any series of Corresponding Junior
Subordinated Debt Securities are to be repaid or redeemed on a Redemption Date,
then the proceeds from such repayment or redemption shall be allocated to the
redemption pro rata of the Related Trust Preferred Securities and the Trust
Common Securities. The amount of premium, if any, paid by the Company upon the
redemption of all or any part of any series of any Corresponding Junior
Subordinated Debt Securities to be repaid or redeemed on a Redemption
38
<PAGE>
Date shall be allocated to the redemption pro rata of the Related Trust
Preferred Securities and the Trust Common Securities.
The Company will have the right to redeem any series of Corresponding Junior
Subordinated Debt Securities (i) on or after such date as may be specified in
the applicable prospectus supplement, in whole at any time or in part from time
to time, (ii) at any time, in whole (but not in part), upon the occurrence of a
Tax Event or Capital Treatment Event or (iii) as may be otherwise specified in
the applicable prospectus supplement, in each case subject to receipt of prior
approval by the Federal Reserve Board if then so required under applicable
Federal Reserve capital guidelines or policies.
Distribution of Corresponding Junior Subordinated Debt Securities. Subject
to the Company having received prior approval of the Federal Reserve Board to
do so if such approval is then required under applicable capital guidelines or
policies of the Federal Reserve Board, the Company has the right at any time to
terminate any BNY Trust and, after satisfaction of the liabilities of creditors
of such BNY Trust as provided by applicable law, cause such Corresponding
Junior Subordinated Debt Securities in respect of the Trust Preferred
Securities and Trust Common Securities issued by such BNY Trust to be
distributed to the holders of such Trust Preferred Securities and Trust Common
Securities in liquidation of such BNY Trust.
Tax Event or Capital Treatment Event Redemption. If a Tax Event or Capital
Treatment Event in respect of a series of Trust Preferred Securities and Trust
Common Securities shall occur and be continuing, the Company has the right to
redeem the Corresponding Junior Subordinated Debt Securities in whole (but not
in part) and thereby cause a mandatory redemption of such Trust Preferred
Securities and Trust Common Securities in whole (but not in part) at the
Redemption Price within 90 days following the occurrence of such Tax Event or
Capital Treatment Event. In the event a Tax Event or Capital Treatment Event in
respect of a series of Trust Preferred Securities and Trust Common Securities
has occurred and is continuing and the Company does not elect to redeem the
Corresponding Junior Subordinated Debt Securities and thereby cause a mandatory
redemption of such Trust Preferred Securities or to liquidate the related BNY
Trust and cause the Corresponding Junior Subordinated Debt Securities to be
distributed to holders of such Trust Preferred Securities and Trust Common
Securities in exchange therefor upon liquidation of the BNY Trust as described
above, such Trust Preferred Securities will remain outstanding and Additional
Sums may be payable on the Corresponding Junior Subordinated Debt Securities.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by a BNY Trust on the
outstanding Trust Preferred Securities and Trust Common Securities of the BNY
Trust shall not be reduced as a result of any additional taxes, duties and
other governmental charges to which such BNY Trust has become subject as a
result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to the principal amount of Corresponding Junior
Subordinated Debt Securities to be contemporaneously redeemed in accordance
with the Junior Indenture, the proceeds of which will be used to pay the
Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Corresponding Junior Subordinated Debt Securities to holders of
any series of Trust Securities in connection with a dissolution or liquidation
of the related BNY Trust, Corresponding Junior Subordinated Debt Securities
having a principal amount equal to the Liquidation Amount of the Trust
Securities in respect of which such distribution is made.
"Liquidation Amount" means the stated liquidation amount per Trust Security
of $25 (or such other stated amount as is set forth in the applicable
prospectus supplement).
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debt Securities for any Trust Preferred Securities:
(i) such Trust Preferred Securities will no longer be deemed to be
outstanding,
39
<PAGE>
(ii) The Depository Trust Company ("DTC") (for a more detailed
explanation of DTC, see "Book-Entry Issuance") or its nominee, as the
record holder of such Trust Preferred Securities, will receive a registered
global certificate or certificates representing the Corresponding Junior
Subordinated Debt Securities to be delivered upon such distribution, and
(iii) any certificates representing such Trust Preferred Securities not
held by DTC or its nominee will be deemed to represent the Corresponding
Junior Subordinated Debt Securities having a principal amount equal to the
stated Liquidation Amount of such Trust Preferred Securities, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Trust Preferred Securities until such certificates
are presented to the Administrative Trustees or their agent for transfer or
reissuance.
There can be no assurance as to the market prices for the Trust Preferred
Securities or the Corresponding Junior Subordinated Debt Securities that may be
distributed in exchange for Trust Preferred Securities if a dissolution and
liquidation of a BNY Trust were to occur. Accordingly, the Trust Preferred
Securities that an investor may purchase, or the Corresponding Junior
Subordinated Debt Securities that the investor may receive on dissolution and
liquidation of a BNY Trust, may trade at a discount to the price that the
investor paid to purchase the Trust Preferred Securities offered hereby.
Redemption Procedures
Trust Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Corresponding Junior Subordinated Debt
Securities. Redemptions of the Trust Preferred Securities shall be made and the
Redemption Price shall be payable on each Redemption Date only to the extent
that the related BNY Trust has funds on hand available for the payment of such
Redemption Price. See also "--Subordination of Trust Common Securities".
If the Property Trustee gives a notice of redemption in respect of any Trust
Preferred Securities, then, while such Trust Preferred Securities are in book-
entry form, by 12:00 noon, New York City time, on the Redemption Date, to the
extent funds are available, the Property Trustee will deposit irrevocably with
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 such Trust Preferred Securities. See "Book-Entry Issuance". If such
Trust Preferred Securities are no longer in book-entry form, the Property
Trustee, to the extent funds are available, will irrevocably deposit with the
paying agent for such Trust Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Trust Preferred
Securities. Notwithstanding the foregoing, Distributions payable on or prior to
the Redemption Date for any Trust Preferred Securities called for redemption
shall be payable to the holders of such Trust Preferred Securities on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of such Trust Preferred
Securities so called for redemption will cease, except the right of the holders
of such Trust Preferred Securities to receive the Redemption Price and any
Distribution payable in respect of the Trust Preferred Securities on or prior
to the Redemption Date, but without interest on such Redemption Price, and such
Trust Preferred Securities will cease to be outstanding. In the event that any
date fixed for redemption of Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in 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
Trust Preferred Securities called for redemption is improperly withheld or
refused and not paid either by a BNY Trust or by the Company pursuant to the
related Guarantee as described under "Description of Guarantees", Distributions
on such Trust Preferred Securities will continue to accrue at the then
applicable rate from the Redemption Date originally established by such BNY
Trust for such Trust Preferred Securities to the
40
<PAGE>
date such Redemption Price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
Redemption Price.
Subject to applicable law (including, without limitation, United States
Federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Trust Preferred Securities by tender, in
the open market or by private agreement.
Payment of the Redemption Price on the Trust Preferred Securities and any
distribution of Corresponding Junior Subordinated Debt Securities to holders of
Trust Preferred Securities shall be made to the applicable record holders
thereof as they appear on the register for such Trust Preferred Securities on
the relevant record date, which, as long as the Trust Preferred Securities
remain in book-entry form, shall be one Business Day prior to the relevant
Redemption Date or liquidation date, as applicable; provided, however, that in
the event that such Trust Preferred Securities are not in book-entry form, the
relevant record date for such Trust Preferred Securities shall be a date at
least 15 days prior to the Redemption Date or liquidation date, as applicable,
as specified in the applicable prospectus supplement.
If less than all of the Trust Preferred Securities and Trust Common
Securities issued by a BNY Trust are to be redeemed on a Redemption Date, then
the aggregate Liquidation Amount of such Trust Preferred Securities and Trust
Common Securities to be redeemed shall be allocated pro rata to the Trust
Preferred Securities and the Trust Common Securities based upon the relative
Liquidation Amounts of such classes. The particular Trust Preferred Securities
to be redeemed shall be selected on a pro rata basis not more than 60 days
prior to the Redemption Date by the Property Trustee from the outstanding Trust
Preferred Securities not previously called for redemption, by such method as
the Property Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $25 or an integral multiple
of $25 in excess thereof, unless a different amount is specified in the
applicable prospectus supplement) of the Liquidation Amount of Preferred
Securities of a denomination larger than $25 (or such other denomination as is
specified in the applicable prospectus supplement). The Property Trustee shall
promptly notify the Securities Registrar in writing of the Trust Preferred
Securities selected for redemption and, in the case of any Trust Preferred
Securities selected for partial redemption, the Liquidation Amount thereof to
be redeemed. For all purposes of each Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Trust
Preferred Securities shall relate, in the case of any Trust Preferred
Securities redeemed or to be redeemed only in part, to the portion of the
aggregate Liquidation Amount of Trust Preferred 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 holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the Redemption Price on the Corresponding Junior Subordinated Debt Securities,
on and after the Redemption Date interest will cease to accrue on such Junior
Subordinated Debt Securities or portions thereof (and Distributions will cease
to accrue on the Related Trust Preferred Securities or portions thereof) called
for redemption.
Subordination of Trust Common Securities
Payment of Distributions on, and the Redemption Price of, each BNY Trust's
Trust Preferred Securities and Trust Common Securities, as applicable, shall be
made pro rata based on the Liquidation Amount of such Trust Preferred
Securities and Trust Common Securities; provided, however, that if on any
Distribution Date, Redemption Date or liquidation date a Debenture Event of
Default shall have occurred and be continuing, no payment of any Distribution
on, or Redemption Price of, or Liquidation Distribution (as defined below) in
respect of, any of such BNY Trust's Trust Common Securities, and no other
payment on account of the redemption, liquidation or other acquisition of such
Trust Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of such BNY Trust's outstanding
Trust Preferred Securities for all Distribution periods terminating on or prior
thereto, or in the case of payment of the Redemption Price the full amount of
such Redemption Price on all of such BNY Trust's outstanding Preferred
41
<PAGE>
Securities then called for redemption, or in the case of payment of the
Liquidation Distribution the full amount of such Liquidation Distribution on
all outstanding Trust Preferred Securities, 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,
such BNY Trust's Trust Preferred Securities then due and payable.
In the case of any event of default under the applicable Trust Agreement
resulting from a Debenture Event of Default, the Company as holder of such BNY
Trust's Trust Common Securities will be deemed to have waived any right to act
with respect to any such Event of Default under the applicable Trust Agreement
until the effect of all such Events of Default with respect to such Trust
Preferred Securities have been cured, waived or otherwise eliminated. Until any
such Events of Default under the applicable Trust Agreement with respect to the
Trust Preferred Securities have been so cured, waived or otherwise eliminated,
the Property Trustee shall act solely on behalf of the holders of such Trust
Preferred Securities and not on behalf of the Company as holder of such BNY
Trust's Trust Common Securities, and only the holders of such Trust Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf.
Liquidation Distribution Upon Termination
Pursuant to each Trust Agreement, each BNY Trust shall terminate on the
first to occur of:
(i) the expiration of its term;
(ii) certain events of bankruptcy, dissolution or liquidation of the
holder of the Trust Common Securities;
(iii) the distribution of a Like Amount of the Corresponding Junior
Subordinated Debt Securities to the holders of its Trust Securities, if the
Company, as Depositor, has given written direction to the Property Trustee
to terminate such BNY Trust (subject to the Company having received prior
approval of the Federal Reserve if then so required under applicable
capital guidelines or policies);
(iv) redemption of all of such BNY Trust's Preferred Securities as
described under "--Redemption or Exchange--Mandatory Redemption"; and
(v) the entry of an order for the dissolution of such BNY Trust by a
court of competent jurisdiction.
If an early termination occurs as described in clause (ii), (iii) or (v)
above, the relevant BNY Trust shall be liquidated by the related BNY Trust
Trustees as expeditiously as such BNY Trust Trustees determine to be possible
by distributing, after satisfaction of liabilities to creditors of such BNY
Trust as provided by applicable law, to the holders of such Trust Securities in
exchange therefor a Like Amount of the Corresponding Junior Subordinated Debt
Securities, 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 such BNY Trust available for distribution to holders, after
satisfaction of liabilities to creditors of such BNY Trust as provided by
applicable law, an amount equal to, in the case of holders of Trust Preferred
Securities, the aggregate of the Liquidation Amount plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because such BNY Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
such BNY Trust on its Trust Preferred Securities shall be paid on a pro rata
basis. The holder(s) of such BNY Trust's Trust Common Securities will be
entitled to receive distributions upon any such liquidation pro rata with the
holders of its Trust Preferred Securities, except that if a Debenture Event of
Default has occurred and is continuing, the Trust Preferred Securities shall
have a priority over the Trust Common Securities.
Events of Default; Notice
Any one of the following events constitutes an "Event of Default" under each
Trust Agreement with respect to the Trust Preferred Securities issued
thereunder (whatever the reason for such Event of Default and
42
<PAGE>
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Junior
Indenture (see "Description of Junior Subordinated Debt Securities--
Debenture Events of Default"); or
(ii) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the BNY Trust Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting BNY
Trust Trustee or Trustees by the holders of at least 25% in aggregate
Liquidation Amount of the outstanding Trust Preferred Securities of the
applicable BNY Trust, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" under such Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such BNY Trust's Trust
Preferred Securities, the Administrative Trustees and the Company, as
Depositor, unless such Event of Default shall have been cured or waived. The
Company, as Depositor, and the Administrative Trustees are required to file
annually with the Property Trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under
each Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities shall have a preference over the Trust Common Securities
as described above. See "--Liquidation Distribution Upon Termination." The
existence of an Event of Default does not entitle the holders of Trust
Preferred Securities to accelerate the maturity thereof.
Removal of BNY Trust Trustees
Unless a Debenture Event of Default shall have occurred and be continuing,
any BNY Trust Trustee may be removed at any time by the holder of the Trust
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
Trust Preferred Securities. In no event will the holders of the Trust Preferred
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Company as the holder of the Trust Common Securities. No resignation or removal
of a BNY Trust Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the applicable Trust Agreement.
Co-trustees and Separate Property Trustee
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Company, as the holder of the Trust
Common Securities, and the Administrative Trustees shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
43
<PAGE>
trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such person or
persons in such capacity any property, title, right or power deemed necessary
or desirable, subject to the provisions of the applicable Trust Agreement. In
case a Debenture Event of Default has occurred and is continuing, the Property
Trustee alone shall have power to make such appointment.
Merger or Consolidation of BNY Trust Trustees
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under each Trust
Agreement, provided such Person shall be otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the BNY Trusts
A BNY 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 corporation or other Person, except as
described below. A BNY Trust may, at the request of the Company, with the
consent of the Administrative Trustees and without the consent of the holders
of the related Trust Preferred Securities, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, that:
(i) such successor entity either (a) expressly assumes all of the
obligations of such BNY Trust with respect to such Trust Preferred
Securities or (b) substitutes for such Trust Preferred Securities other
securities having substantially the same terms as such Trust Preferred
Securities (the "Successor Securities") so long as the Successor Securities
rank the same as such Trust Preferred Securities in priority with respect
to distributions and payments upon liquidation, redemption and otherwise,
(ii) the Company expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as the holder
of the Corresponding Junior Subordinated Debt Securities,
(iii) the Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or other organization on which such Trust Preferred Securities are
then listed, if any,
(iv) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Trust Preferred Securities to be
downgraded by any nationally recognized statistical rating organization
which assigns ratings to the Trust Preferred Securities,
(v) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the material rights,
preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect,
(vi) such successor entity has a purpose identical to that of the BNY
Trust,
(vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion from
independent counsel to the BNY Trust experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the material
rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect,
and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the BNY 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
44
<PAGE>
(viii) the Company or any permitted successor or assignee owns all of the
Trust 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 related Guarantee.
Notwithstanding the foregoing, a BNY Trust shall not, except with the
consent of holders of 100% in Liquidation Amount of the related Trust Preferred
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the BNY 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.
There are no provisions that afford holders of any Trust Preferred
Securities protection in the event of a sudden and dramatic decline in credit
quality of the Company resulting from any highly leveraged transaction,
takeover, merger, recapitalization or similar restructuring or change in
control of the Company. Nor are there any provisions that require the
repurchase of any Trust Preferred Securities upon a change in control of the
Company.
Voting Rights; Amendment of Each Trust Agreement
Except as provided below and under "Description of Guarantees--Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Trust Preferred Securities will have no voting
rights.
Each Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under such Trust Agreement, which shall not be inconsistent
with the other provisions of such Trust Agreement provided that any such
amendment does not adversely affect the interests of any holder of Trust
Securities, or (ii) to modify, eliminate or add to any provisions of such Trust
Agreement to such extent as shall be necessary to ensure that the relevant BNY
Trust will be classified for United States Federal income tax purposes as a
grantor trust or as other than an association taxable as a corporation at all
times that any Trust Securities are outstanding, to ensure that the
Corresponding Junior Subordinated Debt Securities will be treated as
indebtedness of the Company or to ensure that such BNY Trust will not be
required to register as an "investment company" under the Investment Company
Act. Any amendments of such Trust Agreement shall become effective when notice
thereof is given to the holders of Trust Securities. Each Trust Agreement may
be amended by the related BNY Trust Trustees and the Company with (i) the
consent of holders representing not less than a majority (based upon
Liquidation Amounts) of the outstanding Trust Securities, and (ii) receipt by
such BNY Trust Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to such BNY Trust Trustees in
accordance with such amendment will not cause such BNY Trust to be taxable as a
corporation or affect such BNY Trust's status as a grantor trust for United
States Federal income tax purposes or such BNY Trust's exemption from status as
an "investment company" under the Investment Company Act, provided that without
the consent of each holder of Trust Securities, such Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date
or (ii) restrict the right of a holder of Trust Securities to institute suit
for the enforcement of any such payment on or after such date.
So long as any Corresponding Junior Subordinated Debt Securities are held by
the Property Trustee, the related BNY Trust Trustees shall not (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Junior Indenture Trustee, or executing any trust or power conferred on the
Property Trustee with respect to such Corresponding Junior Subordinated Debt
Securities, (ii) waive any past default that
45
<PAGE>
is waivable under the Junior Indenture, (iii) exercise any right to rescind or
annul a declaration that the principal of all the Junior Subordinated Debt
Securities shall be due and payable or (iv) consent to any amendment,
modification or termination of the Junior Indenture or such Corresponding
Junior Subordinated Debt Securities, where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of a
majority in aggregate Liquidation Amount of all outstanding Trust Preferred
Securities; provided, however, that where a consent under the Junior Indenture
would require the consent of each holder of Corresponding Junior Subordinated
Debt Securities affected thereby, no such consent shall be given by the
Property Trustee without the prior consent of each holder of the Related Trust
Preferred Securities. The BNY Trust Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Trust
Preferred Securities except by subsequent vote of the holders of such Trust
Preferred Securities. The Property Trustee shall notify each holder of Trust
Preferred Securities of any notice of default with respect to the Corresponding
Junior Subordinated Debt Securities. In addition to obtaining the foregoing
approvals of the holders of the Trust Preferred Securities, prior to taking any
of the foregoing actions, the BNY Trust Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the BNY Trust will not
be classified as an association taxable as a corporation for United States
Federal income tax purposes on account of such action and such action would not
cause the BNY Trust to be classified as other than a grantor trust for United
States Federal income tax purposes.
Any required approval of holders of Trust Preferred Securities may be given
at a meeting of holders of Trust Preferred Securities convened for such purpose
or pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Trust Preferred Securities are entitled to vote, or
of any matter upon which action by written consent of such holders is to be
taken, to be given to each holder of record of Trust Preferred Securities in
the manner set forth in each Trust Agreement.
No vote or consent of the holders of Trust Preferred Securities will be
required for a BNY Trust to redeem and cancel its Trust Preferred Securities in
accordance with the applicable Trust Agreement.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the BNY Trust Trustees or
any affiliate of the Company or any BNY Trust Trustees, shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
Global Trust Preferred Securities
Unless otherwise set forth in a prospectus supplement, any Trust Preferred
Securities will be represented by fully registered global certificates issued
as global Trust Preferred Securities to be deposited with a depositary with
respect to that series, instead of paper certificates issued to each individual
holder. The depositary arrangements that will apply, including the manner in
which principal of and premium, if any, and interest on global Trust Preferred
Securities and other payments will be payable are discussed in more detail
under the heading "Book-Entry Issuance."
Payment and Paying Agency
Payments in respect of Trust Preferred Securities represented by global
certificates shall be made to DTC as described under "Book-Entry Issuance." If
any Trust Preferred Securities are not represented by global certificates, such
payments shall be made by check mailed to the address of the holder entitled
thereto as such address shall appear on the Register. Unless otherwise
specified in the applicable prospectus supplement, the paying agent (the
"Paying Agent") shall initially be the Property Trustee and any co-paying agent
chosen by the Property Trustee and acceptable to the Administrative Trustees
and the Company. The Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee and the Company. In the
event that the Property Trustee shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor (which shall be a bank or
trust company acceptable to the Administrative Trustees and the Company) to act
as Paying Agent.
46
<PAGE>
Registrar and Transfer Agent
Unless otherwise specified in the applicable prospectus supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of each BNY Trust, but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. The BNY Trusts will not be required to register or cause
to be registered the transfer of their Trust Preferred Securities after such
Trust Preferred Securities have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the powers vested in
it by the applicable Trust Agreement at the request of any holder of Trust
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the applicable Trust Agreement or is unsure of the application of any provision
of the applicable Trust Agreement, and the matter is not one on which holders
of Trust Preferred Securities are entitled under such Trust Agreement to vote,
then the Property Trustee shall take such action as is directed by the Company
and if not so directed, shall take such action as it deems advisable and in the
best interests of the holders of the Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the BNY Trusts in such a way that no BNY Trust will
be deemed to be an "investment company" required to be registered under the
Investment Company Act or 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 Corresponding Junior Subordinated Debt Securities will be
treated as indebtedness of the Company for United States Federal income tax
purposes. In this connection, the Company and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of each BNY Trust or each Trust Agreement, that the
Company and the Administrative Trustees determine in their discretion to be
necessary or desirable for such purposes. The Company and the BNY Trustees may
amend each Trust Agreement without the consent of the holders of the related
Trust Preferred Securities and even if such amendment would adversely affect
the interests of such holders, as shall be necessary to ensure that each BNY
Trust will be classified for United States Federal income tax purposes as a
grantor trust and will not be required to register as an investment company
under the Investment Company Act and to ensure that the Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the Company. A more
detailed discussion appears under the heading "--Voting Rights; Amendment of
Each Trust Agreement."
Holders of the Trust Preferred Securities have no preemptive or similar
rights.
No BNY Trust may borrow money or issue debt or mortgage or pledge any of its
assets.
47
<PAGE>
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Company at the same time
each BNY Trust issues its Trust Preferred Securities. Each Guarantee is for the
benefit of the holders from time to time of such Trust Preferred Securities.
The First National Bank of Chicago will act as indenture trustee ("Guarantee
Trustee") under each Guarantee for the purposes of compliance with the Trust
Indenture Act and each Guarantee will be qualified as an indenture under the
Trust Indenture Act. The Guarantee Trustee will hold each Guarantee for the
benefit of the holders of the related BNY Trust's Trust Preferred Securities.
This summary of certain terms and provisions of the Guarantees, is not
complete. For a complete description you should read each Guarantee. The form
of the Guarantee has been filed as an exhibit to the registration statement of
which this prospectus forms a part. The Junior Indenture is qualified under the
Trust Indenture Act.
When we refer to Trust Preferred Securities we mean the Trust Preferred
Securities issued by the related BNY Trust to which a Guarantee relates.
General
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to
the holders of the Trust Preferred Securities, as and when due, regardless of
any defense, right of set-off or counterclaim that such BNY Trust may have or
assert other than the defense of payment. The following payments with respect
to the Trust Preferred Securities, to the extent not paid by or on behalf of
the related BNY Trust (the "Guarantee Payments"), will be subject to the
related Guarantee:
(i) any accumulated and unpaid Distributions required to be paid on such
Trust Preferred Securities, to the extent that such BNY Trust has funds on
hand available therefor at such time,
(ii) the Redemption Price with respect to any Trust Preferred Securities
called for redemption, to the extent that such BNY Trust has funds on hand
available therefor at such time, or
(iii) upon a voluntary or involuntary dissolution, winding up or
liquidation of such BNY Trust (unless the Corresponding Junior Subordinated
Debt Securities are distributed to holders of such Trust Preferred
Securities in exchange therefor), the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of such BNY Trust remaining
available for distribution to holders of Trust Preferred Securities after
satisfaction of liabilities to creditors of such BNY Trust as required by
applicable law.
The Company's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of the
applicable Trust Preferred Securities or by causing the BNY Trust to pay such
amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related BNY Trust's obligations under the Trust Preferred Securities, but
will apply only to the extent that such related BNY Trust has funds sufficient
to make such payments, and is not a guarantee of collection.
If the Company does not make interest payments on the Corresponding Junior
Subordinated Debt Securities held by the BNY Trust, the BNY Trust will not be
able to pay Distributions on the Trust Preferred Securities and will not have
funds legally available therefor. Each Guarantee will rank subordinate and
junior in right of payment to all Senior Debt of the Company. See "--Status of
the Guarantees." Because the Company is a holding company, the right of the
Company to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of that subsidiary, except to the extent the Company
may itself be recognized as a creditor of that subsidiary. Accordingly, the
Company's obligations under the Guarantees will be effectively subordinated to
all existing and future liabilities of the Company's subsidiaries, and
claimants should look only to the assets of the
48
<PAGE>
Company for payments thereunder. See "The Company." Except as otherwise
provided in the applicable prospectus supplement, the Guarantees do not limit
the incurrence or issuance of other secured or unsecured debt of the Company,
including Senior Debt, whether under the Junior Indenture, any other existing
indenture or any other indenture that the Company may enter into in the future
or otherwise.
The Company has, through the applicable Guarantee, the applicable Trust
Agreement, the applicable series of Corresponding Junior Subordinated Debt
Securities, the Junior Indenture and the applicable Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of the related
BNY Trust's obligations under the related Trust Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of a BNY Trust's obligations under its related Trust
Preferred Securities. See "Relationship Among the Trust Preferred Securities,
the Corresponding Junior Subordinated Debt Securities and the Guarantees."
Status of the Guarantees
Each Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt of the
Company in the same manner as Corresponding Junior Subordinated Debt
Securities.
Each Guarantee will rank equally with all other Guarantees issued by the
Company. Each Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the related Trust
Preferred Securities. Each Guarantee will not be discharged except by payment
of the Guarantee Payments in full to the extent not paid by the BNY Trust or
upon distribution to the holders of the Trust Preferred Securities of the
Corresponding Junior Subordinated Debt Securities. None of the Guarantees
places a limitation on the amount of additional Senior Debt that may be
incurred by the Company. The Company expects from time to time to incur
additional indebtedness constituting Senior Debt.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the material rights of holders of the related Trust Preferred Securities (in
which case no vote will be required), no Guarantee may be amended without the
prior approval of the holders of not less than a majority of the aggregate
Liquidation Amount of such outstanding Trust Preferred Securities. The manner
of obtaining any such approval will be as set forth under "Description of Trust
Preferred Securities--Voting Rights; Amendment of Each Trust Agreement." All
guarantees and agreements contained in each Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the related Trust Preferred
Securities then outstanding.
Events of Default
An event of default under each Guarantee will occur upon the failure of the
Company to perform any of its payment obligations thereunder or to perform any
non-payment obligations if such non-payment default remains unremedied for 30
days. The holders of not less than a majority in aggregate Liquidation Amount
of the related Trust Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of such Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the Trust Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under such
Guarantee without first instituting a legal proceeding against the BNY Trust,
the Guarantee Trustee or any other person or entity.
49
<PAGE>
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company 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 Company in performance of any Guarantee, undertakes to perform
only such duties as are specifically set forth in each Guarantee and, after
default with respect to any Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or
her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any Trust Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
Termination of the Guarantees
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Trust Preferred Securities,
upon full payment of the amounts payable upon liquidation of the related BNY
Trust or upon distribution of Corresponding Junior Subordinated Debt Securities
to the holders of the related Trust Preferred Securities in exchange therefor.
Each Guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of the related Trust Preferred Securities
must restore payment of any sums paid under such Trust Preferred Securities or
such Guarantee.
Governing Law
Each Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
The Expense Agreement
Pursuant to the Expense Agreement that will be entered into by the Company
under each Trust Agreement (the "Expense Agreement"), the Company will, as
holder of the Trust Common Securities, irrevocably and unconditionally
guarantee to each Person or entity to whom the BNY Trust becomes indebted or
liable, the full payment of any costs, expenses or liabilities of the BNY
Trust, other than obligations of the BNY Trust to pay to the holders of any
Trust Preferred Securities or other similar interests in the BNY Trust of the
amounts due such holders pursuant to the terms of the Trust Preferred
Securities or such other similar interests, as the case may be. The Expense
Agreement will be enforceable by third parties.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE CORRESPONDING JUNIOR
SUBORDINATED DEBT SECURITIES, THE EXPENSE AGREEMENT AND THE GUARANTEES
This section relates to Junior Subordinated Debt Securities which are issued
by a BNY Trust and accordingly are Corresponding Junior Subordinated Debt
Securities for a series of Related Trust Preferred Securities.
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent the related BNY Trust has funds available for the
payment of such Distributions) are irrevocably guaranteed by the Company as and
to the extent set forth under "Description of Guarantees." Taken together, the
Company's obligations under each series of Corresponding Junior Subordinated
Debt Securities, the Junior Indenture, the related Trust Agreement, the related
Expense Agreement, and the related Guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of Distributions and other
amounts due on the
50
<PAGE>
Related Trust Preferred Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
related BNY Trust's obligations under the Related Trust Preferred Securities.
If and to the extent that the Company does not make payments on any series of
Corresponding Junior Subordinated Debt Securities, such BNY Trust will not pay
Distributions or other amounts due on its Related Trust Preferred Securities.
The Guarantees do not cover payment of Distributions when the related BNY Trust
does not have sufficient funds to pay such Distributions. In such event, the
remedy of a holder of any Trust Preferred Securities is to institute a legal
proceeding directly against the Company pursuant to the terms of the Junior
Indenture for enforcement of payment of amounts of such Distributions to such
holder after the applicable due dates. The obligations of the Company under
each Guarantee are subordinate and junior in right of payment to all Senior
Debt of the Company.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on each
series of Corresponding Junior Subordinated Debt Securities, such payments will
be sufficient to cover Distributions and other payments due on the Related
Trust Preferred Securities, primarily because:
(i) the aggregate principal amount of each series of Corresponding Junior
Subordinated Debt Securities will be equal to the sum of the aggregate
stated Liquidation Amount of the Related Trust Preferred Securities and
related Trust Common Securities;
(ii) the interest rate and interest and other payment dates on each
series of Corresponding Junior Subordinated Debt Securities will match the
Distribution rate and Distribution and other payment dates for the Related
Trust Preferred Securities;
(iii) the Company shall pay, under the related Expense Agreement, for all
and any costs, expenses and liabilities of such BNY Trust except the BNY
Trust's obligations to holders of its Trust Preferred Securities under such
Trust Preferred Securities; and
(iv) each Trust Agreement provides that the BNY Trust will not engage in
any activity that is not consistent with the limited purposes of such BNY
Trust.
Notwithstanding anything to the contrary in the Junior Indenture, the
Company has the right to set-off any payment it is otherwise required to make
thereunder with and to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the related
Guarantee.
Enforcement Rights of Holders of Trust Preferred Securities
A holder of any related Trust Preferred Security may institute a legal
proceeding directly against the Company to enforce its rights under the related
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related BNY Trust or any other person or entity.
A default or event of default under any Senior Debt of the Company would not
constitute a default or Event of Default under the Junior Indenture. However,
in the event of payment defaults under, or acceleration of, Senior Debt of the
Company, the subordination provisions of the Junior Indenture provide that no
payments may be made in respect of the Corresponding Junior Subordinated Debt
Securities until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on any
series of Corresponding Junior Subordinated Debt Securities would constitute an
Event of Default under the Junior Indenture.
Limited Purpose of BNY Trusts
Each BNY Trust's Trust Preferred Securities evidence a preferred and
undivided beneficial interest in such BNY Trust, and each BNY Trust exists for
the sole purpose of issuing its Trust Preferred Securities and Trust
51
<PAGE>
Common Securities and investing the proceeds thereof in Corresponding Junior
Subordinated Debt Securities and engaging in only those other activities
necessary or incidental thereto. A principal difference between the rights of a
holder of a Trust Preferred Security and a holder of a Corresponding Junior
Subordinated Debenture is that a holder of a Corresponding Junior Subordinated
Debenture is entitled to receive from the Company the principal amount of and
interest accrued on Corresponding Junior Subordinated Debt Securities held,
while a holder of Trust Preferred Securities is entitled to receive
Distributions from such BNY Trust (or from the Company under the applicable
Guarantee) if and to the extent such BNY Trust has funds available for the
payment of such Distributions.
Rights Upon Termination
Upon any voluntary or involuntary termination, winding-up or liquidation of
any BNY Trust not involving the distribution of the Corresponding Junior
Subordinated Debt Securities, the holders of the related Trust Preferred
Securities will be entitled to receive, out of the assets held by such BNY
Trust, the Liquidation Distribution in cash. See "Description of Trust
Preferred Securities--Liquidation Distribution Upon Termination." Upon any
voluntary or involuntary liquidation or bankruptcy of the Company, the Property
Trustee, as holder of the Corresponding Junior Subordinated Debt Securities,
would be a subordinated creditor of the Company, subordinated in right of
payment to all Senior Debt as set forth in the Junior Indenture, but entitled
to receive payment in full of principal and interest, before any stockholders
of the Company receive payments or distributions. Since the Company is the
guarantor under each Guarantee and has agreed, under the related Expense
Agreement, to pay for all costs, expenses and liabilities of each BNY Trust
(other than the BNY Trust's obligations to the holders of its Trust Preferred
Securities), the positions of a holder of such Trust Preferred Securities and a
holder of such Corresponding Junior Subordinated Debt Securities relative to
other creditors and to stockholders of the Company in the event of liquidation
or bankruptcy of the Company are expected to be substantially the same.
DESCRIPTION OF PREFERRED STOCK
Summary
The following summary contains a description of certain general terms of the
Preferred Stock. The particular terms of any series of preferred stock being
offered by us under this shelf registration (the "Preferred Stock") will be
described in the prospectus supplement relating to that series of Preferred
Stock. Those terms may include:
. the specific title and stated value,
. number of shares or fractional interests therein,
. any dividend, liquidation, redemption, voting and other rights,
. the terms for conversion into Common Stock or other preferred stock or
for exchange for Common Stock or other Debt Securities,
. the securities exchanges, if any, on which such Preferred Stock is to be
listed,
. the initial public offering price, and the number of shares, if any, to
be purchased by the underwriters.
The terms of any series of Preferred Stock being offered may differ from the
terms set forth below. If the terms differ, those terms will also be disclosed
in the prospectus supplement relating to that series of Preferred Stock. The
following summary is not complete. You should refer to the Certificate of
Amendment to the Company's Certificate of Incorporation relating to the series
of the Preferred Stock for the complete terms of that Preferred Stock. That
Certificate of Amendment will be filed with the SEC promptly after the offering
of the Preferred Stock.
52
<PAGE>
General
Under the Company's Certificate of Incorporation, the Board of Directors of
the Company is authorized, without further stockholder action, to provide for
the issuance of up to 5,000,000 shares of Preferred Stock, without par value,
(the "No Par Preferred Stock") and 5,000,000 shares of Class A Preferred Stock,
par value $2.00 per share (the "Class A Preferred Stock" and together with the
No Par Preferred Stock, being collectively referred to as the "Preferred
Stock"). The Preferred Stock may be issued in one or more series, with such
designations of titles; dividend rates; special or relative rights in the event
of liquidation, distribution or sale of assets or dissolution or winding up of
the Company; any sinking fund provisions; any redemption or purchase account
provisions; any conversion provisions; and any voting rights thereof, as shall
be set forth as and when established by the Board of Directors of the Company.
The shares of any series of Preferred Stock will be, when issued, fully paid
and non-assessable and holders thereof will have no preemptive rights in
connection therewith.
The liquidation preference of any series of Preferred Stock is not
necessarily indicative of the price at which shares of such series of Preferred
Stock will actually trade at or after the time of their issuance. The market
price of any series of Preferred Stock can be expected to fluctuate with
changes in market and economic conditions, the financial condition and
prospects of the Company and other factors that generally influence the market
prices of securities.
Rank
Any series of the No Par Preferred Stock or Class A Preferred Stock will,
with respect to dividend rights and rights on liquidation, winding up and
dissolution rank (i) senior to all classes of common stock of the Company and
with all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank junior to the No Par
Preferred Stock or Class A Preferred Stock, as the case may be (collectively
referred to as the "Junior Securities"); (ii) on a parity with all equity
securities issued by the Company, the terms of which specifically provide that
such equity securities will rank on a parity with the No Par Preferred Stock or
Class A Preferred Stock, as the case may be, including the Company's 7.75%
Cumulative Convertible Preferred Stock (collectively referred to as the "Parity
Securities"); and (iii) junior to all equity securities issued by the Company,
the terms of which specifically provide that such equity securities will rank
senior to the No Par Preferred Stock or Class A Preferred Stock, as the case
may be (collectively referred to as the "Senior Securities"). All shares of No
Par Preferred Stock and Class A Preferred Stock will, regardless of series, be
of equal rank. As used in any Certificate of Amendment for these purposes, the
term "equity securities" will not include debt securities convertible into or
exchangeable for equity securities.
Dividends
Holders of each series of Preferred Stock will be entitled to receive, when,
as and if declared by the Board of Directors of the Company out of funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the prospectus supplement relating to such series of Preferred
Stock. Dividends will be payable to holders of record of Preferred Stock as
they appear on the books of the Company (or, if applicable, the records of the
Depositary referred to below under "Description of Depositary Shares") on such
record dates as shall be fixed by the Board of Directors. Dividends on any
series of Preferred Stock may be cumulative or non-cumulative.
The Company's ability to pay dividends on its Preferred Stock and Common
Stock is subject to policies established by the Federal Reserve. See "Certain
Regulatory Considerations--Dividends."
No full dividends may be declared or paid or funds set apart for the payment
of dividends on any Parity Securities unless dividends shall have been paid or
set apart for such payment on the No Par Preferred Stock and Class A Preferred
Stock. If full dividends are not so paid, the No Par Preferred Stock and Class
A Preferred Stock shall share dividends pro rata with the Parity Securities.
53
<PAGE>
Conversion
The prospectus supplement for any series of Preferred Stock will state the
terms, if any, on which shares of that series are convertible into shares of
another series of Preferred Stock or Common Stock.
For any series of Preferred Stock which is convertible, the Company shall at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued No Par Preferred Stock or Class A
Preferred Stock, as the case may be, or Common Stock or shares held in its
treasury or both, for the purpose of effecting the conversion of the shares of
such series of Preferred Stock, the full number of shares of No Par Preferred
Stock, Class A Preferred Stock or Common Stock, as the case may be, then
deliverable upon the conversion of all outstanding shares of such series.
No fractional shares or scrip representing fractional shares of Preferred
Stock or Common Stock will be issued upon the conversion of shares of any
series of convertible Preferred Stock. Each holder to whom fractional shares
would otherwise be issued will instead be entitled to receive, at the Company's
election, either (a) a cash payment equal to the current market price of such
holder's fractional interest or (b) a cash payment equal to such holder's
proportionate interest in the net proceeds (following the deduction of
applicable transaction costs) from the sale promptly by an agent, on behalf of
such holders, of shares of Preferred Stock or Common Stock representing the
aggregate of such fractional shares.
The holders of any series of shares of Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares (except that holders of shares called for
redemption on a redemption date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date but instead will receive accrued and unpaid dividends to
such redemption date) on the corresponding dividend payment date
notwithstanding the conversion thereof or the Company's default in payment of
the dividend due. Except as provided above, the Company will make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the shares of No Par Preferred Stock, Class A Preferred
Stock or Common Stock issued upon conversion.
Exchangeability
The holders of shares of Preferred Stock of any series may be obligated at
any time or at maturity to exchange such shares for Common Stock or debt
securities of the Company. The terms of any such exchange and any such debt
securities will be described in the prospectus supplement relating to such
series of Preferred Stock.
Redemption
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Company or the holder thereof upon terms and at the
redemption prices set forth in the prospectus supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by mandatory
or optional redemption, the shares to be redeemed will be determined by lot or
pro rata, as may be determined by the Board of Directors of the Company or by
any other method determined to be equitable by the Board of Directors.
On and after a redemption date, unless the Company defaults in the payment
of the redemption price, dividends will cease to accrue on shares of Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
Under current regulations, bank holding companies, except in certain
narrowly defined circumstances, may not exercise any option to redeem shares of
preferred stock included as Tier 1 Capital without the prior approval of the
Federal Reserve. Ordinarily, the Federal Reserve Board would not permit such a
redemption
54
<PAGE>
unless (1) the shares are redeemed with the proceeds of a sale by the bank
holding company of common stock or perpetual preferred stock or (2) the Federal
Reserve determines that the bank holding company's condition and circumstances
warrant the reduction of a source of permanent capital.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of each series of Preferred Stock that ranks senior to the
Junior Securities will be entitled to receive out of assets of the Company
available for distribution to shareholders, before any distribution is made on
any Junior Securities, including Common Stock, distributions upon liquidation
in the amount set forth in the prospectus supplement relating to such series of
Preferred Stock, plus an amount equal to any accrued and unpaid dividends. If
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock of any series
and any other Parity Securities are not paid in full, the holders of the
Preferred Stock of such series and the Parity Securities will share ratably in
any such distribution of assets of the Company in proportion to the full
liquidation preferences to which each is entitled. After payment of the full
amount of the liquidation preference to which they are entitled, the holders of
such series of Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company.
Voting Rights
Except as indicated below or in the prospectus supplement relating to a
particular series of Preferred Stock or except as expressly required by
applicable law, the holders of shares of Preferred Stock will have no voting
rights.
Under regulations adopted by the Federal Reserve, if the holders of shares
of any series of Preferred Stock of the Company become entitled to vote for the
election of directors, such series may then be deemed a "class of voting
securities" and a holder of 25% or more of such series (or a holder of 5% if it
otherwise exercises a "controlling influence" over the Company) may then be
subject to regulation as a bank holding company in accordance with the BHC Act.
In addition, at such time as such series is deemed a class of voting
securities, (i) any other bank holding company may be required to obtain the
approval of the Federal Reserve Board to acquire or retain 5% or more of such
series, and (ii) any person other than a bank holding company may be required
to file with the Federal Reserve Board under the Change in Bank Control Act, a
federal law, to acquire or retain 10% or more of such series.
Preferred Stock outstanding
As of the date hereof, the Company has issued and outstanding no shares of
No Par Preferred Stock and 22,820 shares of Class A Preferred Stock with an
aggregate liquidation preference of $.6 million. The 7.75% Cumulative
Convertible Preferred Stock (22,820 shares) is the only series of Class A
Preferred Stock outstanding. The shares of outstanding Class A Preferred Stock
are fully paid and non-assessable. The Company has also authorized a series of
No Par Preferred Stock in connection with its preferred stock purchase rights
plan. See "Description of Preferred Stock Purchase Rights."
Holders of shares of 7.75% Cumulative Convertible Preferred Stock are
entitled to cumulative dividends, when declared by the Company's Board of
Directors.
In the event of any voluntary or involuntary liquidation, distribution or
sale of assets, dissolution, or winding up of the Company, the holder of a
share of outstanding Preferred Stock will be entitled to receive prior to any
payment upon the Company's Common Stock, cash in the amount of $25 in the case
of the 7.75% Cumulative Convertible Preferred Stock.
Holders of 7.75% Cumulative Convertible Preferred Stock have no general
voting rights but have the right to vote in certain events. When an amount
equal to at least six quarterly dividends payable on the 7.75%
55
<PAGE>
Cumulative Convertible Preferred Stock is in arrears, the number of directors
of the Company will be increased by two and the holders of 7.75% Cumulative
Convertible Preferred Stock, voting separately as a class with the holders of
any one or more other series of Preferred Stock of the Company ranking on a
parity with the 7.75% Cumulative Convertible Preferred Stock either as to
payment of dividends or upon liquidation, dissolution or winding up and upon
which like voting rights have been conferred and are exercisable, will be
entitled at the next annual meeting of shareholders of the Company and each
subsequent annual meeting of shareholders to elect two directors to fill such
vacancies. In each case, such right shall continue until there are no dividends
in arrears upon the Company's No Par Preferred Stock or Class A Preferred
Stock.
The 7.75% Cumulative Convertible Preferred Stock is redeemable at any time
at the option of the Company and is convertible at any time into Common Stock
at the option of the holders. The conversion rights of the 7.75% Cumulative
Convertible Preferred Stock will terminate at the close of business on the
tenth day preceding the date fixed for redemption of shares of such series.
The Bank of New York is the Transfer Agent, Registrar and Dividend
Disbursement Agent for the Company's No Par Preferred Stock and Class A
Preferred Stock.
DESCRIPTION OF DEPOSITARY SHARES
The following summary is not complete. You should refer to the applicable
provisions of the forms of the Company's Deposit Agreement (as defined below)
and Depositary Receipt (as defined below) relating to the Preferred Stock for a
complete statement of the terms and rights of the Depositary Shares. These
documents are incorporated by reference and have been filed with the SEC in
Amendment No. 1 to the Company's Registration Statement on Form S-3 (No. 33-
51984).
General
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, the Company will issue Depositary Receipts, each of which
will represent a fraction (to be set forth in the prospectus supplement
relating to a particular series of Preferred Stock) of a share of a particular
series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 (the "Depositary"). Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including dividend, voting, redemption, conversion and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing the fractional shares
of Preferred Stock in accordance with the terms of the offering.
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Company or any holder of deposited Preferred
Stock, execute and deliver temporary Depositary Receipts which are
substantially identical to, and entitle the holders thereof to all the rights
pertaining to, the definitive Depositary Receipts. Definitive Depositary
Receipts will be prepared thereafter without unreasonable delay, and temporary
Depositary Receipts will be exchangeable for definitive Depositary Receipts at
the Company's expense.
56
<PAGE>
Dividends and Other Distributions
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the deposited Preferred Stock to the
record holders of Depositary Shares relating to such Preferred Stock in
proportion to the numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto. If the Depositary determines that it is not feasible to make
such distribution, it may, with the approval of the Company, sell such property
and distribute the net proceeds from such sale to such holders.
Redemption or Exchange of Stock
If a series of Preferred Stock represented by Depositary Shares is to be
redeemed or exchanged, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of Preferred Stock held by the Depositary, or exchanged for the
Common Stock or debt securities to be issued in exchange for the Preferred
Stock (as the case may be, in accordance with the terms of such series of
Preferred Stock). The Depositary Shares will be redeemed or exchanged by the
Depositary at a price per Depositary Share equal to the applicable fraction of
the redemption price per share or market value of Common Stock or debt
securities per Depositary Share paid in respect of the shares of Preferred
Stock so redeemed or exchanged. Whenever the Company redeems or exchanges
shares of Preferred Stock held by the Depositary, the Depositary will redeem or
exchange as of the same date the number of Depositary Shares representing
shares of Preferred Stock so redeemed or exchanged. If fewer than all the
Depositary Shares are to be redeemed or exchanged, the Depositary Shares to be
redeemed or exchanged will be selected by the Depositary by lot or pro rata or
by any other equitable method as may be determined by the Company.
Withdrawal of Stock
Any holder of Depositary Shares may, upon surrender of the Depositary
Receipts at the corporate trust office of the Depositary (unless the related
Depositary Shares have previously been called for redemption), receive the
number of whole shares of the related series of Preferred Stock and any money
or other property represented by such Depositary Receipts. Holders of
Depositary Shares making such withdrawals will be entitled to receive whole
shares of Preferred Stock on the basis set forth in the related prospectus
supplement for such series of Preferred Stock, but holders of such whole shares
of Preferred Stock will not thereafter be entitled to deposit such Preferred
Stock under the Deposit Agreement or to receive Depositary Receipts therefor.
If the Depositary Shares surrendered by the holder in connection with such
withdrawal exceed the number of Depositary Shares that represent the number of
whole shares of Preferred Stock to be withdrawn, the Depositary will deliver to
such holder at the same time a new Depositary Receipt evidencing such excess
number of Depositary Shares.
Voting Deposited Preferred Stock
Upon receipt of notice of any meeting at which the holders of any series of
deposited Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such series of Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the same
date as the record date for the relevant series of Preferred Stock) will be
entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of the Preferred Stock represented by such holder's
Depositary Shares. The Depositary will endeavor, insofar as practicable, to
vote the amount of such series of Preferred Stock represented by such
Depositary Shares in accordance with such instructions, and the Company will
agree to take all reasonable actions which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The
57
<PAGE>
Depositary will abstain from voting shares of the Preferred Stock to the extent
it does not receive specific instructions from the holder of Depositary Shares
representing such Preferred Stock.
Conversion Rights
Any holder of Depositary Shares, upon surrender of the Depositary Receipts
therefor and delivery of instructions to the Depositary, may cause the Company
to convert any specified number of whole or fractional shares of Preferred
Stock represented by the Depositary Shares into the number of whole shares of
Common Stock or Preferred Stock (as the case may be, in accordance with the
terms of such series of the Preferred Stock) of the Company obtained by
dividing the aggregate liquidation preference of such Depositary Shares by the
Conversion Price (as such term is defined in the Certificate of Amendment) then
in effect, as such Conversion Price may be adjusted by the Company from time to
time as provided in the Certificate of Amendment. In the event that a holder
delivers Depositary Receipts to the Depositary for conversion which in the
aggregate are convertible either into less than one whole share of such Common
Stock or Preferred Stock or into any number of whole shares of such Common
Stock or Preferred Stock plus an excess constituting less than one whole share
of such Common Stock or Preferred Stock, the holder shall receive payment in
lieu of such fractional share.
Amendment and Termination of the Deposit Agreement
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of Depositary Shares
representing Preferred Stock of any series will not be effective unless such
amendment has been approved by the holders of at least 66 2/3% of the
Depositary Shares then outstanding representing Preferred Stock of such series.
Every holder of an outstanding Depositary Receipt at the time any such
amendment becomes effective, or any transferee of such holder, shall be deemed,
by continuing to hold such Depositary Receipt, or by reason of the acquisition
thereof, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. The Deposit Agreement automatically terminates if
(i) all outstanding Depositary Shares have been redeemed; or (ii) each share of
Preferred Stock has been converted into Common Stock or Preferred Stock or has
been exchanged for Common Stock or debt securities; or (iii) there has been a
final distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of Depositary Shares.
Charges of Depositary
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay all charges of the Depositary in connection with the initial deposit
of the relevant series of Preferred Stock and any redemption or exchange of
such Preferred Stock. Holders of Depositary Receipts will pay other transfer
and other taxes and governmental charges and such other charges or expenses as
are expressly provided in the Deposit Agreement to be for their accounts.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
58
<PAGE>
Miscellaneous
The Depositary will forward all reports and communications from the Company
which are delivered to the Depositary and which the Company is required to
furnish to the holders of the deposited Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares, Depositary
Receipts or shares of Preferred Stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or upon
information provided by holders of Depositary Receipts or other persons
believed to be competent and on documents believed to be genuine.
DESCRIPTION OF COMMON STOCK
The following summary is not complete. You should refer to the applicable
provisions of the Company's Certificate of Incorporation, including the
Certificates of Amendment pursuant to which the outstanding series of preferred
stock were issued, and to the New York Business Corporation Law for a complete
statement of the terms and rights of the Common Stock.
The Company is authorized to issue 1,600,000,000 shares of Common Stock, par
value $7.50 per share. As of December 31, 1998, 771,318,305 shares of Common
Stock were outstanding. The Common Stock is listed on the New York Stock
Exchange. Its symbol is BK.
Dividends--The holders of the Common Stock of the Company are entitled to
receive dividends, when, as and if declared by the Board of Directors out of
any funds legally available therefor.
Voting--Holders of Common Stock are entitled to one vote for each share held
on all matters as to which shareholders are entitled to vote. The holders of
the Common Stock do not have cumulative voting rights.
Liquidation Rights--Upon liquidation of the Company, holders of Common Stock
are entitled to receive pro rata the net assets of the Company after
satisfaction in full of the prior rights of creditors (including holders of the
Company's Debt Securities) of the Company and holders of any preferred stock.
The principal source of funds for payment of dividends by the Company is
dividends paid by its subsidiary banks. See "Certain Regulatory
Considerations--Dividends."
Miscellaneous--Holders of Common Stock do not have any preferential or
preemptive right with respect to any securities of the Company or any
conversion rights. The Common Stock is not subject to redemption. The
outstanding shares of Common Stock are fully paid and non-assessable.
The Bank of New York is the Transfer Agent, Registrar and Dividend
Disbursement Agent for the Common Stock of the Company.
The New York Business Corporation Law restricts certain business
combinations. The statute prohibits certain New York corporations from engaging
in a merger or other business combination with a holder of 20% or more of the
corporation's outstanding voting stock ("acquiring person") for a period of
five years following acquisition of the stock unless the merger or other
business combination, or the acquisition of the stock, is approved by the
corporation's board of directors prior to the date of the stock acquisition.
The statute also prohibits consummation of such a merger or other business
combination at any time unless the transaction has been approved by the
corporation's board of directors or by a majority of the outstanding voting
stock not beneficially owned by the acquiring person or certain "fair price"
conditions have been met. Under the provisions of the statute, the Company may
amend its by-laws by a vote of the shareholders to elect not to be governed by
this statute. As of the date of this prospectus, the by-laws of the Company
have not been so amended.
59
<PAGE>
DESCRIPTION OF PREFERRED STOCK PURCHASE RIGHTS
The following summary is not complete. You should refer to Rights Agreement,
dated as of December 10, 1985, and amended as of June 13, 1989, April 30, 1993,
and March 8, 1994 (as amended, the "Rights Agreement"), between the Company and
The Bank of New York, as Rights Agent for a complete statement of the terms and
rights of the Preferred Stock Purchase Rights.
The Rights Agreement is incorporated by reference as an exhibit to the
registration statement of which this prospectus is a part. A copy of the Rights
Agreement can be obtained as described under "Available Information" or by
writing to the Rights Agent: The Bank of New York, 101 Barclay Street, New
York, New York 10007, Attention: Shareholder Relations Department-11th Floor.
On December 10, 1985, the Company adopted a preferred stock purchase rights
plan. This plan was amended as of June 13, 1989, April 30, 1993 and March 8,
1994. The entire plan, as amended is also referred to as the "Plan". Under the
Plan the Company declared a dividend of one right (a "Right" and, collectively,
the "Rights") for each outstanding share of Common Stock.
As of the date of this prospectus. the Rights are not represented by
separate certificates. Instead, each share of Common Stock also represents a
Right.
When the dividend of one Right per share was declared it was declared on
shares of Common Stock that were then outstanding as well as shares of Common
Stock that would be issued by the Company thereafter, but before the Separation
Date (as defined below). Anyone who acquires shares of Common Stock, before the
Separation Date, issued upon conversion of or exchange for any shares of
Preferred Stock will receive one Right for each share of Common Stock.
Subject to adjustment upon the occurrence of certain events described below,
each Right may be exercised by the holder thereof to purchase one/one-
thousandth of a share of a new series of the Company's No Par Preferred Stock
(the "Purchase Rights Preferred Stock") for $200 (the "Exercise Price"), 10
days after the earliest of:
(i) the date of public announcement that a person or group (an "Acquiring
Person") has acquired 20% or more of the Company's Common Stock,
(ii) the date of approval under the BHC Act or the date of notice of
nondisapproval under the Change in Bank Control Act for any person to
acquire 25% or more of the outstanding shares of the Company's Common Stock
and
(iii) the date of commencement of or first public announcement of the
intent of any person to commence a tender or exchange offer to acquire 25%
or more of the outstanding shares of the Company's Common Stock. The first
date on which the right to purchase the Purchase Rights Preferred Stock
could be exercised is referred to herein as the Separation Date.
The Exercise Price, the number of Rights outstanding and the Redemption
Price (as defined below) will be adjusted in the event
(i) of a stock dividend on, or subdivision or combination of, the Common
Stock or
(ii) that the Company issues in a reclassification, merger or
consolidation any shares of capital stock in respect of or in lieu of
existing Common Stock.
If there is a merger or other business combination between the Company and
an Acquiring Person, or if certain other events occur involving an Acquiring
Person, each Right (if not previously exercised) would entitle the holder to
purchase $200 in market value of the Acquiring Person's stock (or, in certain
events, the stock of another company) for $100.
60
<PAGE>
In addition, if a Separation Date occurs other than as a result of a merger,
business combination or other event referred to above and a person or group
acquires 20% or more of the outstanding shares of the Common Stock, each Right
(if not previously exercised and other than Rights beneficially owned by an
Acquiring Person) would entitle the holder to purchase $200 in market value of
the Company's Common Stock for $100.
Prior to the Separation Date, the Rights cannot be transferred apart from
the Common Stock and are represented solely by the Common Stock certificates.
If the Separation Date occurs, separate certificates representing the Rights
will be mailed to holders of the Common Stock as of such date, and the Rights
could then begin to trade separately from the Common Stock.
The Rights are redeemable by the Company at $.05 per Right (the "Redemption
Price"), subject to adjustment upon the occurrence of certain events, at any
time prior to the occurrence of the Separation Date. The Rights will expire on
the earliest of (i) the time at which the Rights are exchanged for Common Stock
or Purchase Rights Preferred Stock as described herein, (ii) the time at which
the Rights are redeemed as described herein, and (iii) the close of business on
March 7, 2004.
The Rights do not have any voting rights and are not entitled to dividends.
The terms of the Rights may be amended without the consent of the holders,
provided the amendment does not adversely affect the interests of the holders.
Each share of Purchase Rights Preferred Stock will have a liquidation
preference of $200,000 ($200 for every one/one-thousandth of a share of
Purchase Rights Preferred Stock) and have a dividend rate equal to the
dividends on 1,000 shares of Common Stock. The Purchase Rights Preferred Stock
will have no sinking fund, but is redeemable at the option of the Company two
years after the Separation Date at the liquidation preference per share. The
Purchase Rights Preferred Stock will have certain limited voting rights.
The Rights may have certain anti-takeover effects. The Rights may cause
substantial dilution to an Acquiring Person if it attempts to merge with, or
engage in certain other transactions with, the Company. The Rights should not,
however, interfere with any merger or other business combination approved by
the Company's Board of Directors prior to the occurrence of a Separation Date
because the Rights may be redeemed prior to such time.
BOOK-ENTRY ISSUANCE
If any Debt Securities or Trust Preferred Securities (collectively, "Book
Entry Securities") are to be represented by global certificates, The Depository
Trust Company ("DTC") will act as securities depositary for all of the Book
Entry Securities, unless otherwise referred to in the prospectus supplement
relating to an offering of the particular series of Book Entry Securities.
The following is a summary of the depository arrangements applicable to such
securities issued in global form and for which DTC acts as depositary. If there
are any changes from this summary they will appear in a prospectus supplement.
If any securities are to be issued in global form, you will not receive a
paper certificate representing the Debt Securities you have purchased. Instead
the Company will deposit with DTC or its custodian one or more fully-registered
global certificates ("Global Certificates") registered in the name of Cede &
Co. (DTC's nominee) for the Book Entry Securities, representing in the
aggregate the total number of a BNY Trust's Trust Preferred Securities,
aggregate principal balance of Junior Subordinated Debt Securities or aggregate
principal amount of Debt Securities, respectively.
Since the Global Certificate is registered in the name of DTC or its
nominee, DTC or its nominee is said to have legal or record ownership of the
Global Certificate. Persons who buy interests in the Global Security by
purchasing securities are said to own a beneficial interest in the Global
Security.
61
<PAGE>
Only institutions (sometimes referred to as "participants") that have
accounts with DTC or its nominee or persons that may hold interests through
participants, such as individual members of the public, may own beneficial
interests in a Global Certificate.
Ownership of beneficial interests in a Global Certificate by participants
will be evidenced only by, and the transfer of that ownership interest will be
effected only through, records maintained by DTC or its nominee.
Ownership of beneficial interests in a Global Certificate by persons that
hold through participants will be evidenced only by, and the transfer of that
ownership interest within that participant will be effected only through,
records maintained by that participant.
DTC has no knowledge of the actual beneficial owners of the Book-Entry
Securities. Beneficial owners will not receive written confirmation from DTC of
their purchase, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the participants through which the
beneficial owners purchased the securities.
DTC alone is responsible for any aspect of its records, any nominee or any
participant relating to, or payments made on account of, beneficial interests
in a Global Certificate or for maintaining, supervising or reviewing any of the
records of DTC, any nominee or any participant relating to such beneficial
interests.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in a Global Certificate.
We have been advised by DTC that upon the issuance of a Global Certificate
and the deposit of that Global Certificate with DTC, DTC will immediately
credit, on its book-entry registration and transfer system, the respective
principal amounts represented by that Global Certificate to the accounts of its
participants.
The Company will pay principal of, and interest or premium on, securities
represented by a Global Certificate registered in the name of or held by DTC or
its nominee to the relevant Trustee who in turn will make payments to DTC or
its nominee, as the case may be, as the registered owner and holder of the
Global Certificate representing those securities in immediately available
funds. We have been advised by DTC that upon receipt of any payment of
principal of, or interest or premium on, a Global Certificate, DTC will
immediately credit, on its book-entry registration and transfer system,
accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of that Global
Certificate as shown in the records of DTC. Payments by participants to owners
of beneficial interests in a Global Certificate held through those participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the sole responsibility of those
participants, subject to any statutory or regulatory requirements as may be in
effect from time to time.
A Global Certificate is exchangeable for definitive securities (paper
certificates) registered in the name of, and a transfer of a Global Certificate
may be registered to, any person other than DTC or its nominee, only if:
(a) DTC notifies us that it is unwilling or unable to continue as
depositary for that Global Certificate or if at any time DTC ceases to be
registered under the Exchange Act;
(b) we determine in our discretion that the Global Certificate shall be
exchangeable for definitive securities in registered form; or
(c) in the case of Debt Securities, there shall have occurred and be
continuing an Event of Default or an event which, with notice or the lapse
of time or both, would constitute an Event of Default with respect to the
Debt Securities.
62
<PAGE>
Any Global Certificate representing a Debt Security that is exchangeable
pursuant to the preceding paragraph will be exchangeable in whole for
definitive Debt Securities in registered form, of like tenor and of an equal
aggregate principal amount as the Global Certificate, in denominations
specified in the applicable prospectus supplement (if other than $1,000 and
integral multiples of $1,000). The definitive Debt Securities will be
registered by the registrar in the name or names instructed by DTC. We expect
that such instructions may be based upon directions received by DTC from its
participants with respect to ownership of beneficial interests in the Global
Certificate. Unless otherwise indicated in a prospectus supplement any
principal, premium and interest will be payable, the transfer of the definitive
Debt Securities will be registerable and the definitive Debt Securities will be
exchangeable at the corporate trust office of The Bank of New York in the
Borough of Manhattan, The City of New York, provided that payment of interest
may be made at the option of the Company by check mailed to the address of the
person entitled to that interest payment as of the record date and as shown on
the register for the Debt Securities.
Any Global Certificate representing a Trust Preferred Security that is
exchangeable pursuant to (a) or (b) above will be exchangeable in whole for
definitive Trust Preferred Securities in registered form, of like tenor and of
an equal aggregate principal amount as the Global Certificate, in denominations
specified in the applicable prospectus supplement (if other than $25.00 and
integral multiples of $25.00). The definitive Trust Preferred Securities will
be registered by the registrar in the name or names instructed by DTC. We
expect that such instructions may be based upon directions received by DTC from
its participants with respect to ownership of beneficial interests in the
Global Certificate. Any Distributions and other payments will be payable, the
transfer of the definitive Trust Preferred Securities will be registerable and
the definitive Trust Preferred Securities will be exchangeable at the corporate
trust office of The Bank of New York in the Borough of Manhattan, The City of
New York, provided that such payment may be made at the option of the Company
by check mailed to the address of the person entitled to that payment as of the
record date and as shown on the register for the Trust Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to any of the Book Entry Securities at any time by giving reasonable
notice to the relevant Trustee and the Company. In the event that a successor
securities depositary is not obtained, definitive Debt Security or Trust
Preferred Security or certificates representing such Debt Security or Trust
Preferred Security are required to be printed and delivered. The Company, at
its option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After an Event of Default under the
applicable Indenture, the holders of a majority in liquidation amount of Trust
Preferred Securities or aggregate principal amount of Debt Securities may
determine to discontinue the system of book-entry transfers through DTC. In any
such event, definitive certificates for such Trust Preferred Securities or Debt
Securities will be printed and delivered.
Except as provided above, owners of the beneficial interests in a Global
Security will not be entitled to receive physical delivery of Debt Securities
in definitive form and will not be considered the holders of securities for any
purpose under the Indentures, and no Global Security shall be exchangeable
except for another Global Security of like denomination and tenor to be
registered in the name of DTC or its nominee. Accordingly, each person owning a
beneficial interest in a Global Security must rely on the procedures of DTC
and, if that person is not a participant, on the procedures of the participant
through which that person owns its interest, to exercise any rights of a holder
under the Global Security or the Indentures.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Book Entry Securities. If less than all of a series of the Debt Securities
or a BNY Trust's Trust Securities are being redeemed, DTC will determine the
amount of the interest of each direct participant to be redeemed in accordance
with its then current procedures.
Although voting with respect to the Book Entry Securities is limited to the
holders of record of the Book Entry Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Book Entry Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the relevant Trustee as soon as possible
after the record date. The Omnibus Proxy
63
<PAGE>
assigns Cede & Co.'s consenting or voting rights to those direct participants
to whose accounts such Book Entry Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
DTC has advised us that DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered under the Exchange Act. DTC was created
to hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.
Access to DTC's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. The rules
applicable to DTC and its participants are on file with the SEC.
DTC management is aware that some computer applications, systems and the
like for processing data that are dependent upon calendar dates, including
dates before, on and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its data processing
computer applications and systems relating to the timely payment of
distributions (including principal and income payments) to securityholders,
book-entry deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. In addition, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time
frames.
However, DTC's ability to perform its services properly is also dependent
upon other parties, including issuers and their agents, as well as third-party
vendors from whom DTC licenses software and hardware, and third-party vendors
on whom DTC relies for information or the provision of services, including
telecommunication and electrical utility service providers, among others. DTC
has informed the financial community that it is contacting (and will continue
to contact) third-party vendors from whom DTC acquires services to: (i) impress
upon them the importance of those services being Year 2000 compliant; and (ii)
determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, DTC is in the process of
developing contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to Year 2000 has
been provided to the financial community for informational purposes only and is
not intended to serve as a representation, warranty or contract modification of
any kind.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the BNY Trusts and the Company believe to
be accurate, but the BNY Trusts and the Company assume no responsibility for
the accuracy thereof. Neither the BNY Trusts nor the Company 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.
64
<PAGE>
VALIDITY OF SECURITIES
Unless otherwise indicated below or in the applicable prospectus supplement,
the validity of the securities will be passed upon for the Company by Paul A.
Immerman, Senior Counsel of The Bank of New York and for the underwriters by
Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New York
10004.
Unless otherwise indicated in the applicable prospectus supplement, certain
matters of Delaware law relating to the validity of the Trust Preferred
Securities, the enforceability of the Trust Agreements and the formation of the
BNY Trusts will be passed upon by Pepper Hamilton LLP, 1201 Market Street,
Wilmington, Delaware 19899, special Delaware counsel to the Company and the BNY
Trusts.
Unless otherwise indicated in the applicable prospectus supplement, the
validity of the Guarantees and the Junior Subordinated Securities will be
passed upon for the Company by Sullivan & Cromwell, 125 Broad Street, New York,
New York 10004.
Certain matters relating to United States Federal income tax considerations
will be passed upon for the Company by Sullivan & Cromwell, as special tax
counsel for the Company. Winthrop, Stimson, Putnam & Roberts from time to time
performs legal services for the Company and its affiliates.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our 1996 and 1997
consolidated financial statements included in our Annual Report on Form 10-K
for the year ended December 31, 1997, as set forth in their report, which is
incorporated in this prospectus by reference. Such consolidated financial
statements are incorporated by reference in reliance on their report given on
their authority as experts in accounting and auditing.
Our consolidated financial statements for the year ended December 31, 1995,
incorporated in this prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 have been audited by Deloitte
& Touche LLP independent auditors, as stated in their report, which is
incorporated herein by reference, and have been incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
PLAN OF DISTRIBUTION
The securities may be sold in a public offering to or through agents,
underwriters or dealers designated from time to time or directly to purchasers.
The Company and each BNY Trust may sell its securities as soon as practicable
after effectiveness of the registration statement of which this prospectus
forms a part. The names of any underwriters or dealers involved in the sale of
the securities in respect of which this prospectus is delivered, the amount or
number of Securities to be purchased by any such underwriters and any
applicable commissions or discounts will be set forth in the applicable
prospectus supplement.
Underwriters may offer and sell securities at a fixed price or prices, which
may be changed, or from time to time at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. In connection with the sale of Debt Securities and Trust Preferred
Securities, underwriters may be deemed to have received compensation from the
Company and/or the applicable BNY Trust in the form of underwriting discounts
or commissions and may also receive commissions. Underwriters may sell
securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters.
65
<PAGE>
Any underwriters utilized may engage in stabilizing transactions and
syndicate covering transactions in accordance with Rule 104 under the Exchange
Act. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the securities in the open market
after the distribution has been completed in order to cover syndicate short
positions. Such stabilizing transactions and syndicate covering transactions
may cause the price of the securities to be higher than it would otherwise be
in the absence of such transactions.
Any underwriting compensation paid by the Company and/or the applicable BNY
Trust to underwriters in connection with the offering of securities, and any
discounts, concessions or commissions allowed by such underwriters to
participating dealers, will be described in an accompanying prospectus
supplement. Underwriters and dealers participating in the distribution of
securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of such securities
may be deemed to be underwriting discounts and commissions, under the
Securities Act. Underwriters and dealers may be entitled under agreements with
the Company and a BNY Trust, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by the Company for certain expenses.
In connection with the offering of the securities of the Company or any BNY
Trust, the Company or such BNY Trust may grant to the underwriters an option to
purchase additional securities to cover over-allotments, if any, at the initial
public offering price (with an additional underwriting commission), as may be
set forth in the accompanying prospectus supplement. If the Company or such BNY
Trust grants any over-allotment option, the terms of such over-allotment option
will be set forth in the prospectus supplement for such securities.
Underwriters and dealers may engage in transactions with, or perform
services for, the Company and/or the applicable BNY Trust and/or any of their
affiliates in the ordinary course of business. Certain of the underwriters and
their associates may be customers of, including borrowers from, engage in
transactions with, and perform services for, the Company, the Bank and other
subsidiaries of the Company in the ordinary course of business.
Securities other than the Common Stock will be new issues of securities and
will have no established trading market. Any underwriters to whom such
securities are sold for public offering and sale may make a market in such
securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. Such securities may
or may not be listed on a national securities exchange or the NASDAQ National
Market. No assurance can be given as to the liquidity of or the existence of
trading markets for any securities other than the Common Stock.
66
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$300,000,000
The Bank of New York Company, Inc.
7.30% Senior Subordinated Notes due 2009
---------------------------------
PROSPECTUS SUPPLEMENT
---------------------------------
Merrill Lynch & Co.
BNY Capital Markets, Inc.
November 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
