<PAGE>
PROSPECTUS SUPPLEMENT RULE 424(b)(5)
(TO PROSPECTUS DATED DECEMBER 5, 1996) REGISTRATION STATEMENT NOS.
333-15559 AND 333-15559-01
12,000,000 PREFERRED SECURITIES
BANKAMERICA CAPITAL I
7 3/4% TRUST ORIGINATED PREFERRED SECURITIES,/(SM)/
SERIES 1("TOPRS/(SM)/")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
BANKAMERICA CORPORATION
---------------
The 7 3/4% Trust Originated Preferred Securities, Series 1 (the "Series 1
Preferred Securities"), offered hereby represent beneficial interests in
BankAmerica Capital I, a trust created under the laws of the State of Delaware
(the "Series 1 Issuer Trust"). BankAmerica Corporation, a Delaware corporation
(the "Corporation"), will be the owner of all of the beneficial interests
represented by common securities of the Series 1 Issuer Trust ("Series 1
Common Securities" and, collectively with the Series 1 Preferred Securities,
the "Series 1 Securities"). Bankers Trust Company is the Property Trustee of
the Series 1 (Continued on next page)
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-4 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES 1 PREFERRED SECURITIES.
---------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK OR ANY NONBANK SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY
OTHER GOVERNMENTAL AGENCY.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING THE SERIES 1
OFFERING PRICE(1) COMMISSION(2) ISSUER TRUST(3)(4)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security....... $25.00 (3) $25.00
- --------------------------------------------------------------------------------
Total........................ $300,000,000 (3) $300,000,000
</TABLE>
================================================================================
(1) Plus accrued Distributions, if any, from December 20, 1996.
(2) The Series 1 Issuer Trust and the Corporation have each agreed to
indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) In view of the fact that the proceeds of the sale of the Series 1
Preferred Securities will be invested in the Series 1 Subordinated
Debentures, the Corporation has agreed to pay to the Underwriters as
compensation ("Underwriters' Compensation") for their arranging the
investment therein of such proceeds $.7875 per Series 1 Preferred Security
or $.25 per Series 1 Preferred Security with respect to Series 1 Preferred
Securities that have been initially allocated for sale to certain
institutions. Based on such initial allocation, the estimated aggregate
Underwriters' Compensation is $9,428,500. The actual aggregate
Underwriters' Compensation will depend on the number of Series 1 Preferred
Securities that are actually sold to institutions, which may be greater or
less than the initial allocation. See "Underwriting."
(4) Expenses of the offering, which are payable by the Corporation, are
estimated to be $320,000.
---------------
This Prospectus Supplement and the related Prospectus may be used by BA
Securities, Inc., an affiliate of the Corporation and the Series 1 Issuer
Trust, in connection with offers and sales related to secondary market
transactions in the Series 1 Preferred Securities. BA Securities, Inc. may act
as principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale or otherwise.
The Series 1 Preferred Securities offered hereby are offered severally by
the Underwriters, as specified herein, subject to receipt and acceptance by
them and subject to their right to reject any order in whole or in part. It is
expected that the Series 1 Preferred Securities will be ready for delivery in
book-entry form only through the facilities of The Depository Trust Company in
New York, New York, on or about December 20, 1996, against payment therefor in
immediately available funds.
---------------
MERRILL LYNCH & CO. DEAN WITTER REYNOLDS INC.
BA SECURITIES, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
---------------
The date of this Prospectus Supplement is December 16, 1996.
- -------
(SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 1
PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
----------------
(cover page continued)
Issuer Trust. The Series 1 Issuer Trust exists for the sole purpose of issuing
the Series 1 Securities and investing the proceeds thereof in 7 3/4% Junior
Subordinated Deferrable Interest Debentures, Series 1 (the "Series 1
Subordinated Debentures"), to be issued by the Corporation. The Series 1
Subordinated Debentures will mature on December 31, 2026, which date may be
(i) shortened to a date not earlier than December 20, 2001 or (ii) extended to
a date not later than December 31, 2045, in each case if certain conditions
are met (including, in the case of a shortening of the Stated Maturity (as
defined herein), the Corporation having received prior approval of the Board
of Governors of the Federal Reserve System (the "Federal Reserve") to do so if
then required under applicable capital guidelines or policies of the Federal
Reserve). The Series 1 Preferred Securities will have a preference under
certain circumstances with respect to cash distributions and amounts payable
on liquidation, redemption or otherwise over the Series 1 Common Securities.
See "Description of Preferred Securities--Subordination of Common Securities"
in the accompanying Prospectus.
Holders of the Series 1 Preferred Securities will be entitled to receive
preferential cumulative cash distributions accumulating from the date of
original issuance and payable quarterly in arrears on the last day of March,
June, September and December of each year, commencing March 31, 1997, at the
annual rate of 7 3/4% of the Liquidation Amount of $25 per Series 1 Preferred
Security ("Distributions"). The Distribution on March 31, 1997 will be $.54358
per Series 1 Preferred Security. The Corporation has the right to defer
payment of interest on the Series 1 Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive quarters with
respect to each deferral period (each, an "Extension Period"), provided that
no Extension Period may extend beyond the Stated Maturity of the Series 1
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Corporation may elect to begin a new
Extension Period subject to the requirements set forth herein. If interest
payments on the Series 1 Subordinated Debentures are so deferred,
Distributions on the Series 1 Preferred Securities will also be deferred and
the Corporation will not be permitted, subject to certain exceptions described
herein, to declare or pay any cash distributions with respect to the
Corporation's capital stock or debt securities of the Corporation that rank
pari passu in all respects with or junior to the Series 1 Subordinated
Debentures. During an Extension Period, interest on the Series 1 Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of the Series 1 Preferred Securities are entitled will accumulate) at
the rate of 7 3/4% per annum, compounded quarterly, and holders of Series 1
Preferred Securities will be required to accrue interest income for United
States federal income tax purposes. See "Certain Terms of Series 1
Subordinated Debentures--Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
The Corporation has, through the Series 1 Guarantee, the Trust Agreement,
the Series 1 Subordinated Debentures, the Junior Subordinated Indenture and
the Expense Agreement (each as defined herein), taken together, fully,
irrevocably and unconditionally guaranteed all of the Series 1 Issuer Trust's
obligations under the Series 1 Preferred Securities. See "Relationship Among
the Preferred Securities, the Corresponding Junior Subordinated Debentures and
the Guarantees--Full and Unconditional Guarantee" in the accompanying
Prospectus. The Series 1 Guarantee of the Corporation guarantees the payment
of Distributions and payments on liquidation or redemption of the Series 1
Preferred Securities, but only in each case to the extent of funds held by the
Series 1 Issuer Trust, as described herein (the "Series 1 Guarantee"). See
"Description of Guarantees" in the accompanying Prospectus. If the Corporation
does not make interest payments on the Series 1 Subordinated Debentures held
by the Series 1 Issuer Trust, the Series 1 Issuer Trust will have insufficient
funds to pay Distributions on the Series 1 Preferred Securities. The Series 1
Guarantee does not cover payment of Distributions when the Series 1 Issuer
Trust does not have sufficient funds to pay such
S-2
<PAGE>
(cover page continued)
Distributions. In such event, a holder of Series 1 Preferred Securities may
institute a legal proceeding directly against the Corporation to enforce
payment of such Distributions to such holder. See "Description of Junior
Subordinated Debentures-- Enforcement of Certain Rights By Holders of
Preferred Securities" in the accompanying Prospectus. The obligations of the
Corporation under the Series 1 Guarantee are subordinate and junior in right
of payment to all Senior Indebtedness (as defined in "Description of Junior
Subordinated Debentures--Subordination" in the accompanying Prospectus) of the
Corporation.
The Series 1 Preferred Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series 1 Subordinated Debentures at
maturity or their earlier redemption. Subject to the Corporation having
received prior approval of the Federal Reserve to do so if then required under
applicable capital guidelines or policies of the Federal Reserve, the Series 1
Subordinated Debentures are redeemable prior to maturity at the option of the
Corporation (i) on or after December 20, 2001, in whole at any time or in part
from time to time, or (ii) in whole (but not in part) at any time within 90
days following the occurrence of a Tax Event or Capital Treatment Event (each
as defined herein), in each case at a redemption price equal to the accrued
and unpaid interest on the Series 1 Subordinated Debentures so redeemed to the
date fixed for redemption, plus 100% of the principal amount thereof. See
"Certain Terms of Series 1 Preferred Securities--Redemption."
The Corporation will have the right at any time to terminate the Series 1
Issuer Trust and, after satisfaction of liabilities to creditors of the Series
1 Issuer Trust as required by applicable law, cause the Series 1 Subordinated
Debentures to be distributed to the holders of the Series 1 Securities in
liquidation of the Series 1 Issuer Trust, subject to the Corporation having
received prior approval of the Federal Reserve to do so if then required under
applicable capital guidelines or policies of the Federal Reserve. See "Certain
Terms of Series 1 Preferred Securities--Liquidation of Series 1 Issuer Trust
and Distribution of Series 1 Subordinated Debentures to Holders."
The Series 1 Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness. See "Risk Factors--Ranking of Subordinated Obligations
Under the Series 1 Guarantee and the Series 1 Subordinated Debentures."
In the event of the termination of the Series 1 Issuer Trust, after
satisfaction of liabilities to creditors of the Series 1 Issuer Trust as
required by applicable law, the holders of the Series 1 Preferred Securities
will be entitled to receive a Liquidation Amount of $25 per Series 1 Preferred
Security plus accumulated and unpaid Distributions thereon to the date of
payment, which may be in the form of a distribution of such amount in Series 1
Subordinated Debentures, subject to certain exceptions. See "Description of
Preferred Securities--Liquidation Distribution Upon Termination" in the
accompanying Prospectus.
The Series 1 Preferred Securities have been approved for listing on the New
York Stock Exchange under the symbol "BAC PrZ", subject to notice of issuance.
Trading of the Series 1 Preferred Securities on the New York Stock Exchange is
expected to commence within a 30-day period after the initial delivery of the
Series 1 Preferred Securities. If the Series 1 Subordinated Debentures are
distributed to the holders of Series 1 Preferred Securities upon the
liquidation of the Series 1 Issuer Trust, the Corporation will use its best
efforts to list the Series 1 Subordinated Debentures on the New York Stock
Exchange or such other stock exchanges or other automated quotation systems,
if any, on which the Series 1 Preferred Securities are then listed or traded.
The Series 1 Preferred Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Series 1 Preferred Securities will be shown on,
and transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described in the accompanying Prospectus,
Series 1 Preferred Securities in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Issuance" in the
accompanying Prospectus.
S-3
<PAGE>
The information in this Prospectus Supplement supplements and should be read
in conjunction with the information contained in the accompanying Prospectus.
As used herein, (i) the "Junior Subordinated Indenture" means the Junior
Subordinated Indenture, as amended and supplemented from time to time, between
the Corporation and Bankers Trust Company, as trustee (the "Debenture
Trustee"), and (ii) the "Trust Agreement" means the Amended and Restated Trust
Agreement relating to the Series 1 Issuer Trust among the Corporation, as
Depositor, Bankers Trust Company, as Property Trustee (the "Property
Trustee"), Bankers Trust (Delaware), as Delaware Trustee (the "Delaware
Trustee"), and the Administrative Trustees named therein (collectively, with
the Property Trustee and Delaware Trustee, the "Issuer Trustees"). Each of the
other capitalized terms used in this Prospectus Supplement and not otherwise
defined in this Prospectus Supplement has the meaning set forth in the
accompanying Prospectus.
RISK FACTORS
Prospective purchasers of the Series 1 Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and
in the accompanying Prospectus and should particularly consider the following
matters.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES 1 GUARANTEE AND THE
SERIES 1 SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series 1 Guarantee issued by
the Corporation for the benefit of the holders of Series 1 Preferred
Securities and under the Series 1 Subordinated Debentures are subordinate and
junior in right of payment to all Senior Indebtedness of the Corporation. At
September 30, 1996, the aggregate outstanding Senior Indebtedness of the
Corporation was approximately $17.1 billion. Because the Corporation is a
holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary, including Bank of America National
Trust and Savings Association, Bank of America Illinois and Bank of America
NW, National Association, upon such subsidiary's liquidation or reorganization
or otherwise (and thus the ability of holders of the Series 1 Preferred
Securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary, except to the extent that the
Corporation may itself be recognized as a creditor of that subsidiary. In
addition, there are also various legal limitations on the extent to which the
Corporation's depository subsidiaries may extend credit, pay dividends or
otherwise supply funds to the Corporation or various of its affiliates.
Accordingly, the Series 1 Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Series 1 Subordinated Debentures and the Series 1
Guarantee should look only to the assets of the Corporation for payments on
the Series 1 Subordinated Debentures and the Series 1 Guarantee. See
"BankAmerica Corporation." None of the Junior Subordinated Indenture, the
Series 1 Guarantee or the Trust Agreement places any limitation on the amount
of secured or unsecured debt, including Senior Indebtedness, that may be
incurred by the Corporation. See "Description of Guarantees--Status of the
Guarantees" and "Description of Junior Subordinated Debentures--Subordination"
in the accompanying Prospectus.
The ability of the Series 1 Issuer Trust to pay amounts due on the Series 1
Preferred Securities is solely dependent upon the Corporation making payments
on the Series 1 Subordinated Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Event of Default under the Junior Subordinated Indenture has
occurred or is continuing, the Corporation has the right under the Junior
Subordinated Indenture to defer the payment of interest on the Series 1
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the Stated Maturity of the
Series 1 Subordinated Debentures. As a
S-4
<PAGE>
consequence of any such deferral, quarterly Distributions on the Series 1
Preferred Securities by the Series 1 Issuer Trust will be deferred (and the
amount of Distributions to which holders of the Series 1 Preferred Securities
are entitled will accumulate additional Distributions thereon at the rate of 7
3/4% per annum, compounded quarterly from the relevant payment date for such
Distributions) during any such Extension Period. During any such Extension
Period, the Corporation may not, and may not permit any subsidiary of the
Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Corporation's capital stock, (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including other Junior Subordinated Debentures)
that rank pari passu in all respects with or junior in interest to the Series
1 Subordinated Debentures or (iii) make any guarantee payments with respect to
any guarantee by the Corporation of the debt securities of any subsidiary of
the Corporation if such guarantee ranks pari passu with or junior in interest
to the Series 1 Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under any
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Corporation's (including its subsidiaries')
benefit plans for their directors, officers or employees). Prior to the
termination of any such Extension Period, the Corporation may further defer
the payment of interest, provided that no Extension Period may exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Series 1
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all interest then accrued and unpaid (together with interest
thereon at the annual rate of 7 3/4%, compounded quarterly, to the extent
permitted by applicable law), the Corporation may elect to begin a new
Extension Period subject to the above requirements. There is no limitation on
the number of times that the Corporation may elect to begin an Extension
Period. See "Certain Terms of Series 1 Preferred Securities--Distributions"
and "Certain Terms of Series 1 Subordinated Debentures--Option to Extend
Interest Payment Period."
Should an Extension Period occur, a holder of Series 1 Preferred Securities
will continue to accrue income (in the form of original issue discount, which
will include both stated interest and any de minimis original issue discount
on the Series 1 Subordinated Debentures) in respect of its pro rata share of
the Series 1 Subordinated Debentures held by the Series 1 Issuer Trust for
United States federal income tax purposes. As a result, a holder of Series 1
Preferred Securities will include such income in gross income for United
States federal income tax purposes in advance of the receipt of cash, and will
not receive the cash related to such income from the Series 1 Issuer Trust if
the holder disposes of the Series 1 Preferred Securities prior to the record
date for the payment of Distributions. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount" and "--Sales or
Redemption of Series 1 Preferred Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series 1
Subordinated Debentures. However, should the Corporation elect to exercise
such right in the future, the market price of the Series 1 Preferred
Securities is likely to be affected. A holder that disposes of its Series 1
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Series 1 Preferred Securities. In addition, as a result of the existence of
the Corporation's right to defer interest payments, the market price of the
Series 1 Preferred Securities (which represent preferred beneficial interests
in the Series 1 Issuer Trust) may be more volatile than the market prices of
other securities on which original issue discount accrues that are not subject
to such deferrals.
S-5
<PAGE>
TAX EVENT OR CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and during the continuation of a Tax Event or Capital
Treatment Event, the Corporation has the right to redeem the Series 1
Subordinated Debentures in whole (but not in part) within 90 days following
the occurrence of such Tax Event or Capital Treatment Event and therefore
cause a mandatory redemption of the Series 1 Preferred Securities before, as
well as on or after, December 20, 2001. The exercise of such right is subject
to the Corporation having received prior approval of the Federal Reserve to do
so if then required under applicable capital guidelines or policies of the
Federal Reserve.
A "Tax Event" means the receipt by the Series 1 Issuer Trust of an opinion
of counsel to the Corporation experienced in such matters to the effect that,
as a result of any amendment to, or change (including any announced
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 which pronouncement or decision is announced on or after the
date of issuance of the Series 1 Preferred Securities under the Trust
Agreement, there is more than an insubstantial risk that (i) the Series 1
Issuer Trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Series 1 Subordinated Debentures, (ii) interest payable by the
Corporation on the Series 1 Subordinated Debentures is not, or within 90 days
of such opinion, will not be, deductible by the Corporation, in whole or in
part, for United States federal income tax purposes, or (iii) the Series 1
Issuer Trust is, or will be within 90 days of the date of the opinion, subject
to more than a de minimis amount of other taxes, duties or other governmental
charges.
See "--Possible Tax Law Changes Affecting the Series 1 Preferred Securities"
for a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Corporation to cause a redemption of
the Series 1 Preferred Securities prior to December 20, 2001.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or
decision is announced on or after the date of issuance of the Series 1
Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that the Corporation will not be entitled to treat an
amount equal to the Liquidation Amount of the Series 1 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 Corporation.
EXCHANGE OF SERIES 1 SECURITIES FOR SERIES 1 SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series 1
Issuer Trust and after satisfaction of the liabilities of creditors of the
Series 1 Issuer Trust as provided by applicable law cause the Series 1
Subordinated Debentures to be distributed to the holders of the Series 1
Securities in liquidation of the Series 1 Issuer Trust. The exercise of such
right is subject to the Corporation having received prior approval of the
Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve. See "Certain Terms of Series 1 Preferred
Securities--Liquidation of Series 1 Issuer Trust and Distribution of Series 1
Subordinated Debentures to Holders."
EXTENSION OF STATED MATURITY OF SERIES 1 SUBORDINATED DEBENTURES
The Corporation will also have the right to extend the maturity of the
Series 1 Subordinated Debentures, whether or not the Series 1 Issuer Trust is
terminated and the Series 1 Subordinated
S-6
<PAGE>
Debentures are distributed to holders of the Series 1 Preferred Securities, to
a date no later than December 31, 2045, provided that the Corporation can
extend the maturity only if at the time such election is made and at the time
of such extension (i) the Corporation is not in bankruptcy, otherwise
insolvent or in liquidation, (ii) the Corporation is not in default in the
payment of any interest or principal on the Series 1 Subordinated Debentures,
(iii) the Series 1 Issuer Trust is not in arrears on payments of Distributions
on the Series 1 Preferred Securities and no deferred Distributions are
accumulated and (iv) the Series 1 Subordinated Debentures are rated not less
than BBB- by Standard & Poor's Ratings Services or Baa3 by Moody's Investors
Service, Inc. or the equivalent by any other nationally recognized statistical
rating organization.
MARKET PRICES
There can be no assurance as to the market prices for Series 1 Preferred
Securities or Series 1 Subordinated Debentures that may be distributed in
exchange for Series 1 Preferred Securities if a liquidation of the Series 1
Issuer Trust occurs. Accordingly, the Series 1 Preferred Securities that an
investor may purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Series 1 Subordinated Debentures that a holder of
Series 1 Preferred Securities may receive on liquidation of the Series 1
Issuer Trust, may trade at a discount to the price that the investor paid to
purchase the Series 1 Preferred Securities offered hereby. In addition,
because the Corporation has the right (i) to shorten the Stated Maturity of
the Series 1 Subordinated Debentures (subject to prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of
the Federal Reserve) or (ii) to extend the maturity of the Series 1
Subordinated Debentures (subject to the conditions described above), there can
be no assurance that the Corporation will not exercise its option to change
the maturity of the Series 1 Subordinated Debentures as permitted by the terms
thereof and of the Junior Subordinated Indenture. Because holders of Series 1
Preferred Securities may receive Series 1 Subordinated Debentures on
termination of the Series 1 Issuer Trust, prospective purchasers of Series 1
Preferred Securities are also making an investment decision with regard to the
Series 1 Subordinated Debentures and should carefully review all the
information regarding the Series 1 Subordinated Debentures contained herein.
See "Certain Terms of the Series 1 Subordinated Debentures" in this Prospectus
Supplement and "Description of Junior Subordinated Debentures--Corresponding
Junior Subordinated Debentures" in the accompanying Prospectus.
RIGHTS UNDER THE SERIES 1 GUARANTEE
The Series 1 Guarantee will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Bankers Trust
Company will act as the indenture trustee under the Series 1 Guarantee (the
"Guarantee Trustee") for the purposes of compliance with the Trust Indenture
Act and will hold the Series 1 Guarantee for the benefit of the holders of the
Series 1 Preferred Securities. Bankers Trust Company will also act as
Debenture Trustee for the Series 1 Subordinated Debentures and as Property
Trustee and Bankers Trust (Delaware) will act as Delaware Trustee under the
Trust Agreement. The Series 1 Guarantee guarantees to the holders of the
Series 1 Preferred Securities the following payments, to the extent not paid
by the Series 1 Issuer Trust: (i) any accrued and unpaid Distributions
required to be paid on the Series 1 Preferred Securities, to the extent that
the Series 1 Issuer Trust has funds on hand available therefor at such time,
(ii) the Redemption Price with respect to any Series 1 Preferred Securities
called for redemption, to the extent that the Series 1 Issuer Trust has funds
on hand available therefor at such time and (iii) upon a voluntary or
involuntary termination, winding-up or liquidation of the Series 1 Issuer
Trust (unless the Series 1 Subordinated Debentures are distributed to holders
of the Series 1 Preferred Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accrued and unpaid Distributions to the date of
payment to the extent that the Series 1 Issuer Trust has funds on hand
available therefor at such time and (b) the amount of assets of the Series 1
Issuer Trust remaining available for distribution to holders of the Series 1
Preferred Securities on liquidation of the Series 1 Issuer Trust. The Series 1
S-7
<PAGE>
Guarantee is subordinate as described under "--Ranking of Subordinated
Obligations Under the Series 1 Guarantee and the Series 1 Subordinated
Debentures." The holders of not less than a majority in aggregate Liquidation
Amount of the Series 1 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 the Series 1 Guarantee or to direct the
exercise of any trust power conferred upon the Guarantee Trustee under the
Series 1 Guarantee. Any holder of the Series 1 Preferred Securities may
institute a legal proceeding directly against the Corporation to enforce its
rights under the Series 1 Guarantee without first instituting a legal
proceeding against the Series 1 Issuer Trust, the Guarantee Trustee or any
other person or entity. If the Corporation were to default on its obligation
to pay amounts payable under the Series 1 Subordinated Debentures, the Series
1 Issuer Trust would lack funds for the payment of Distributions or amounts
payable on redemption of the Series 1 Preferred Securities or otherwise, and,
in such event, holders of the Series 1 Preferred Securities would not be able
to rely upon the Series 1 Guarantee for payment of such amounts. Instead, in
the event a Debenture Event of Default shall have occurred and be continuing
and such event is attributable to the failure of the Corporation to pay
interest on or principal of the Series 1 Subordinated Debentures on the
payment date on which such payment is due and payable, then a holder of
Series 1 Preferred Securities may institute a legal proceeding directly
against the Corporation for enforcement of payment to such holder of the
principal of or interest on such Series 1 Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Series 1
Preferred Securities of such holder (a "Direct Action"). In connection with
such Direct Action, the Corporation will have a right of set-off under the
Junior Subordinated Indenture to the extent of any payment made by the
Corporation to such holder of Series 1 Preferred Securities in the Direct
Action. Except as described herein, holders of Series 1 Preferred Securities
will not be able to exercise directly any other remedy available to the
holders of the Series 1 Subordinated Debentures or assert directly any other
rights in respect of the Series 1 Subordinated Debentures. See "Description of
Junior Subordinated Debentures--Enforcement of Certain Rights by Holders of
Preferred Securities," "--Debenture Events of Default" and "Description of
Guarantees" in the accompanying Prospectus. The Trust Agreement provides that
each holder of Series 1 Preferred Securities by acceptance thereof agrees to
the provisions of the Series 1 Guarantee and the Junior Subordinated
Indenture.
LIMITED VOTING RIGHTS
Holders of Series 1 Preferred Securities will generally have limited voting
rights relating only to the modification of the Series 1 Preferred Securities
and the exercise of the Series 1 Issuer Trust's rights as holder of Series 1
Subordinated Debentures and the Series 1 Guarantee. Holders of Series 1
Preferred Securities will not be entitled to vote to appoint, remove or
replace the Property Trustee or the Delaware Trustee, and such voting rights
are vested exclusively in the holder of the Series 1 Common Securities except
upon the occurrence of certain events described herein. The Property Trustee,
the Administrative Trustees and the Corporation may amend the Trust Agreement
without the consent of holders of Series 1 Preferred Securities to ensure that
the Series 1 Issuer Trust will be classified for United States federal income
tax purposes as a grantor trust unless such action materially and adversely
affects the interests of such holders. See "Description of Preferred
Securities--Voting Rights; Amendment of Each Trust Agreement" and "--Removal
of Issuer Trustees" in the accompanying Prospectus.
TRADING CHARACTERISTICS OF SERIES 1 PREFERRED SECURITIES
The Series 1 Preferred Securities have been approved for listing on the New
York Stock Exchange, subject to notice of issuance. Trading of the Series 1
Preferred Securities on the New York Stock Exchange is expected to commence
within a 30-day period after the initial delivery of the Series 1 Preferred
Securities. The Series 1 Preferred Securities may trade at prices that do not
fully reflect the value of accrued but unpaid interest with respect to the
underlying Series 1 Subordinated Debentures.
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A holder of Series 1 Preferred Securities that disposes of its Series 1
Preferred Securities could recognize a capital loss even though the total
selling price exceeds the holder's purchase price. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Sales or Redemption of Series 1 Preferred Securities."
POSSIBLE TAX LAW CHANGES AFFECTING THE SERIES 1 PREFERRED SECURITIES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the
revenue portion of President Clinton's budget proposal, was released. The Bill
would, among other things, generally deny interest deductions for interest on
an instrument issued by a corporation that has a maximum weighted average
maturity of more than 40 years. The Bill would also generally deny interest
deductions for interest on an instrument, issued by a corporation, that has a
maximum term of more than 20 years and that is not shown as indebtedness on
the separate balance sheet of the issuer or, where the instrument is issued to
a related party (other than a corporation), where the holder or some other
related party issues a related instrument that is not shown as indebtedness on
the issuer's consolidated balance sheet. If either provision were to apply to
the Series 1 Subordinated Debentures, the Corporation would be unable to
deduct interest on the Series 1 Subordinated Debentures. On March 29, 1996,
the Chairmen of the Senate Finance and House Ways and Means Committees issued
a joint statement to the effect that it was their intention that the effective
date of the President's legislative proposals, if adopted, will be no earlier
than the date of appropriate Congressional action. Under current law, the
Corporation will be able to deduct interest on the Series 1 Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of the
Corporation to deduct interest on the Series 1 Subordinated Debentures. Such a
change could give rise to a Tax Event, which may permit the Corporation, upon
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve, to cause a redemption of the
Series 1 Preferred Securities before, as well as on or after, December 20,
2001. See "Certain Terms of Series 1 Subordinated Debentures--Redemption" in
this Prospectus Supplement and "Description of Preferred Securities--
Redemption" in the accompanying Prospectus. See also "Certain Federal Income
Tax Consequences--Possible Tax Law Changes."
BANKAMERICA CAPITAL I
BankAmerica Capital I is a statutory business trust created under Delaware
law pursuant to (i) the Trust Agreement executed by the Corporation, as
Depositor, Bankers Trust Company, as Property Trustee, Bankers Trust
(Delaware), as Delaware Trustee, and the Administrative Trustees named
therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on November 4, 1996. The Series 1 Issuer Trust's business
and affairs are conducted by the Issuer Trustees: Bankers Trust Company, as
Property Trustee, and Bankers Trust (Delaware), as Delaware Trustee, and three
individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Series 1 Issuer Trust exists for the
exclusive purposes of (i) issuing and selling the Series 1 Securities,
(ii) using the proceeds from the sale of Series 1 Securities to acquire Series
1 Subordinated Debentures issued by the Corporation and (iii) engaging in only
those other activities necessary or incidental thereto (such as registering
the transfer of the Series 1 Securities). Accordingly, the Series 1
Subordinated Debentures and the right to reimbursement of expenses under the
related Expense Agreement will be the sole assets of the Series 1 Issuer
Trust, and payments under the Series 1 Subordinated Debentures and the related
Expense Agreement will be the sole revenue of the Series 1 Issuer Trust. All
of the Series 1 Common Securities will be owned by the Corporation. The Series
1 Common Securities will rank pari passu, and payments will be made thereon
pro rata, with the Series 1 Preferred Securities, except that upon the
occurrence and continuance of an event of default under the Trust Agreement
resulting from an Event of Default under the Junior Subordinated Indenture,
the rights
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of the Corporation as holder of the Series 1 Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Series 1
Preferred Securities. See "Description of Preferred Securities--Subordination
of Common Securities" in the accompanying Prospectus. The Corporation will
acquire Series 1 Common Securities in an aggregate liquidation amount equal to
3% of the total capital of the Series 1 Issuer Trust. The Series 1 Issuer
Trust has a term of 55 years, but may terminate earlier as provided in the
Trust Agreement. The principal executive office of the Series 1 Issuer Trust
is 555 California Street, San Francisco, California 94104, Attention:
Secretary, and its telephone number is (415) 622-3530. See "The Issuer Trusts"
in the accompanying Prospectus.
BANKAMERICA CORPORATION
The Corporation is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), and was incorporated in the
State of Delaware in 1968. At September 30, 1996, the Corporation was one of
the three largest bank holding companies in the United States, based on total
assets.
The Corporation's largest subsidiaries, based on total assets, are Bank of
America National Trust and Savings Association ("Bank of America"), Bank of
America Illinois ("BAI"), and Bank of America NW, National Association,
formerly Seattle-First National Bank ("BANW").
Bank of America became a subsidiary of the Corporation in 1969. Bank of
America began business in San Francisco, California, as Bank of Italy in 1904
and adopted its present name in 1930. BAI, headquartered in Chicago, Illinois,
was acquired by the Corporation in 1994. BANW, the largest commercial bank in
Washington based on total assets at September 30, 1996, was acquired by the
Corporation in 1983.
The Corporation, through its network of subsidiaries, provides banking and
other financial services throughout the United States and in selected
international markets to consumers and business customers, including
corporations, governments and other institutions.
The Corporation's principal executive offices are located at 555 California
Street, San Francisco, California 94104 (telephone (415) 622-3530).
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the Corporation including its
consolidated subsidiaries is computed by dividing earnings by fixed charges.
Earnings consist primarily of income (loss) before income taxes adjusted for
fixed charges. Fixed charges consist primarily of interest expense on short-
and long-term borrowings and one-third (the portion deemed representative of
the interest factor) of net rents under long-term leases.
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The following table sets forth the ratio of earnings to fixed charges for
the Corporation and its consolidated subsidiaries for the periods indicated
and reflects the effects of the merger of Continental Bank Corporation with
and into the Corporation subsequent to its consummation on August 31, 1994 and
the effects of the merger of Security Pacific Corporation with and into the
Corporation subsequent to its consummation on April 22, 1992.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- ------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Excluding interest on deposits.......... 2.72 2.75 2.77 3.26 3.55 3.18 3.25
Including interest on deposits.......... 1.60 1.61 1.61 1.74 1.79 1.53 1.34
</TABLE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of September 30, 1996 and as adjusted to
give effect to the consummation of the offering of the Series 1 Preferred
Securities and the offering of $450,000,000 of 8.07% Capital Securities,
Series A (the "Series A Securities") and $300,000,000 of 7.7% Capital
Securities, Series B (the "Series B Securities"), each of which was
consummated on November 27, 1996. The following data should be read in
conjunction with the consolidated financial statements and notes thereto of
the Corporation and its subsidiaries incorporated in the accompanying
Prospectus by reference.
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
-----------------
AS
ACTUAL ADJUSTED
(DOLLAR AMOUNTS IN MILLIONS) ------- --------
<S> <C> <C>
Long-Term Debt:
Senior Debt
The Corporation............................................. $ 8,244 $ 8,244
Subsidiary obligations...................................... 415 415
======= =======
8,659 8,659
------- -------
Subordinated Debt
The Corporation............................................. 5,986 5,986
Subsidiary obligations...................................... 454 454
------- -------
6,440 6,440
------- -------
Total Long-Term Debt...................................... 15,099 15,099
------- -------
Subordinated Capital Notes(a)................................. 355 355
------- -------
Corporation Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Solely Junior
Subordinated Deferrable Interest Debentures of the
Corporation(b)............................................... -- 1,050
Preferred Stock (authorized: 70,000,000 shares;
issued: 36,538,239 shares)................................... 2,242 2,242
------- -------
Common Stockholders' Equity:
Common stock, par value $1.5625 (authorized: 700,000,000
shares; issued: 387,291,562 shares)........................ 605 605
Additional paid-in capital.................................. 8,458 8,458
Retained earnings........................................... 10,989 10,989
Net unrealized loss on available-for-sale securities........ (27) (27)
Common stock in treasury, at cost (28,465,838 shares)....... (1,755) (1,755)
------- -------
Total Common Stockholders' Equity......................... 18,270 18,270
------- -------
Total Capitalization of the Corporation(c)............... $35,966 $37,016
======= =======
</TABLE>
- --------
(a) Issuances of common and preferred stock of $350 million have been
dedicated to retire or redeem subordinated capital notes.
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(b) The Series 1 Preferred Securities are issued by the Series 1 Issuer Trust.
The sole assets of the Series 1 Issuer Trust consist of approximately
$309,279,000 principal amount of Series 1 Subordinated Debentures issued
by the Corporation to the Series 1 Issuer Trust and the Expense Agreement.
The Series 1 Subordinated Debentures will bear interest at the rate of 7
3/4% per annum and will mature on December 31, 2026, which date may be
shortened to a date not earlier than December 20, 2001 or extended to a
date not later than December 31, 2045, in either case, if certain
conditions are met. The Corporation owns all of the Series 1 Common
Securities of the Series 1 Issuer Trust.
The Series A Securities were issued by BankAmerica Institutional Capital A
(the "Series A Trust"). The sole assets of the Series A Trust consist of
$463,918,000 principal amount of 8.07% Junior Subordinated Deferrable
Interest Debentures, Series A (the "Series A Debentures") issued by the
Corporation to the Series A Trust and a related expense reimbursement
agreement issued by the Corporation. The Series A Debentures bear interest
at the rate of 8.07% per annum and will mature on December 31, 2026. The
Corporation owns all of the Common Securities of the Series A Trust.
The Series B Securities were issued by BankAmerica Institutional Capital B
(the "Series B Trust"). The sole assets of the Series B Trust consist of
$309,279,000 principal amount of 7.7% Junior Subordinated Deferrable
Interest Debentures, Series B (the "Series B Debentures") issued by the
Corporation to the Series B Trust and a related expense reimbursement
agreement issued by the Corporation. The Series B Debentures bear interest
at the rate of 7.7% per annum and will mature on December 31, 2026. The
Corporation owns all of the Common Securities of the Series B Trust.
(c) Subsequent to September 30, 1996, the capitalization of the Corporation
and its consolidated subsidiaries has been affected by various issuances,
redemptions, repurchases and maturities which are not reflected in this
table.
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ACCOUNTING TREATMENT
For financial reporting purposes, the Series 1 Issuer Trust will be treated
as a subsidiary of the Corporation and, accordingly, the accounts of the
Series 1 Issuer Trust will be included in the consolidated financial
statements of the Corporation. The Series 1 Preferred Securities will be
included in a separate line item in the consolidated balance sheets of the
Corporation, entitled "Corporation Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Solely Junior Subordinated Deferrable
Interest Debentures of the Corporation" and appropriate disclosures about the
Series 1 Preferred Securities, the Series 1 Guarantee and the Series 1
Subordinated Debentures will be included in the notes to the consolidated
financial statements. For financial reporting purposes, the Corporation will
record Distributions payable on the Series 1 Preferred Securities as an
expense in the consolidated statements of income.
The Corporation has agreed that future financial reports of the Corporation
will: (i) present the preferred securities issued by other trusts created by
the Corporation on the Corporation's balance sheet in the separate line item
entitled "Corporation Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely Junior Subordinated Deferrable Interest
Debentures of the Corporation"; (ii) include in a footnote to the financial
statements disclosure that the sole assets of the trusts are the junior
subordinated debentures and the related expense agreement (specifying as to
each trust the principal amount, interest rate and maturity date of junior
subordinated debentures held); and (iii) if Staff Accounting Bulletin 53
treatment is sought, include, in an audited footnote to the financial
statements, disclosure that (a) the trusts are wholly owned, (b) the sole
assets of the trusts are the junior subordinated debentures (specifying as to
each trust the principal amount, interest rate and maturity date of the junior
subordinated debentures held) and the related expense agreement, and (c) the
obligations of the Corporation under the junior subordinated debentures, the
relevant indenture, trust agreement and guarantee, in the aggregate,
constitute a full and unconditional guarantee by the Corporation of such
trust's obligations under the preferred securities issued by such trust.
CERTAIN TERMS OF SERIES 1 PREFERRED SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series 1
Preferred Securities supplements the description of the terms and provisions
of the Preferred Securities set forth in the accompanying Prospectus under the
heading "Description of Preferred Securities," to which description reference
is hereby made. This summary of certain terms and provisions of the Series 1
Preferred Securities, which describes the material provisions thereof, does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the Trust Agreement, to which reference is hereby made. The
form of the Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and accompanying Prospectus form
a part.
DISTRIBUTIONS
The Series 1 Preferred Securities represent beneficial interests in the
Series 1 Issuer Trust, and Distributions on each Series 1 Preferred Security
will be payable at the annual rate of 7 3/4% of the stated Liquidation Amount
of $25, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, to the holders of the Series 1 Preferred Securities
at the close of business on the relevant record dates. The record dates will
be, for so long as the Series 1 Preferred Securities remain in book-entry
form, one Business Day prior to the relevant Distribution payment date and, in
the event the Series 1 Preferred Securities are not in book-entry form, the
15th day of the month in which the relevant Distribution payment date occurs.
Distributions will accumulate from the date of original issuance. The first
Distribution payment date for the Series 1 Preferred Securities will
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<PAGE>
be March 31, 1997 and the Distribution will be $.54358 per Series 1 Preferred
Security. The amount of Distributions payable for any period less than a full
Distribution period will be computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in a period.
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. In the event that any date on which
Distributions are payable on the Series 1 Preferred Securities is not a
Business Day, then payment of the Distributions payable on such date will be
made on the next succeeding day that is a Business Day (and without any
additional Distributions or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the date such payment was
originally payable. See "Description of Preferred Securities--Distributions"
in the accompanying Prospectus.
So long as no Event of Default under the Junior Subordinated Indenture has
occurred and is continuing, the Corporation has the right under the Junior
Subordinated Indenture to defer the payment of interest on the Series 1
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the Stated Maturity of the
Series 1 Subordinated Debentures. As a consequence of any such election,
quarterly Distributions on the Series 1 Preferred Securities will be deferred
by the Series 1 Issuer Trust during any such Extension Period. Distributions
to which holders of the Series 1 Preferred Securities are entitled will
accumulate additional Distributions thereon at the rate per annum of 7 3/4%
thereof, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in a period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Corporation may not, and may not permit any subsidiary of the
Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Corporation's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including other Junior Subordinated Debentures)
that rank pari passu in all respects with or junior in interest to the Series
1 Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Corporation of the debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in interest to
the Series 1 Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under any
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Corporation's (including its subsidiaries')
benefit plans for their directors, officers or employees). Prior to the
termination of any such Extension Period, the Corporation may further defer
the payment of interest, provided that no Extension Period may exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Series 1
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Corporation may elect to begin a new
Extension Period. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period. See "Certain Terms of
Series 1 Subordinated Debentures--Option to Extend Interest Payment Period"
and "Certain Federal Income Tax Consequences--Interest Income and Original
Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series 1
Subordinated Debentures.
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<PAGE>
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series 1
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Junior Subordinated 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 Series 1 Securities, upon not less than
30 nor more than 90 days notice prior to the date fixed for repayment or
redemption, at a redemption price, with respect to the Series 1 Securities
(the "Redemption Price"), equal to the aggregate Liquidation Amount of such
Series 1 Securities plus accumulated and unpaid Distributions thereon to but
excluding the date of redemption (the "Redemption Date"). See "Description of
Preferred Securities--Redemption" in the accompanying Prospectus. For a
description of the Stated Maturity and redemption provisions of the Series 1
Subordinated Debentures, see "Certain Terms of Series 1 Subordinated
Debentures--General" and "--Redemption."
The Corporation has the right to redeem the Series 1 Subordinated Debentures
(i) on or after December 20, 2001, in whole at any time or in part from time
to time, or (ii) in whole (but not in part) at any time within 90 days
following the occurrence of a Tax Event or Capital Treatment Event, in each
case at a redemption price equal to the accrued and unpaid interest on the
Series 1 Subordinated Debentures so redeemed to but excluding the date fixed
for redemption, plus 100% of the principal amount thereof. A redemption of the
Series 1 Subordinated Debentures would cause a mandatory redemption of the
Series 1 Preferred Securities and Series 1 Common Securities.
"Like Amount" means (i) with respect to a redemption of Series 1 Securities,
Series 1 Securities having a Liquidation Amount (as defined below) equal to
that portion of the principal amount of Series 1 Subordinated Debentures to be
contemporaneously redeemed in accordance with the Junior Subordinated
Indenture, allocated to the Series 1 Common Securities and to the Series 1
Preferred Securities based upon the relative Liquidation Amounts of such
classes and the proceeds of which will be used to pay the Redemption Price of
the Series 1 Securities and (ii) with respect to a distribution of Series 1
Subordinated Debentures to holders of Series 1 Securities in connection with a
dissolution or liquidation of the Series 1 Issuer Trust, Series 1 Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Series 1 Securities of the holder to whom such Series 1 Subordinated
Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Series 1 Security.
"Tax Event" means the receipt by the Series 1 Issuer Trust of an opinion of
counsel to the Corporation experienced in such matters to the effect that, as
a result of any amendment to, or change (including any announced 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 which pronouncement or decision is announced on or after the
date of issuance of such Series 1 Preferred Securities under the Trust
Agreement, there is more than an insubstantial risk that (i) the Series 1
Issuer Trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Series 1 Subordinated Debentures, (ii) interest payable by the
Corporation on the Series 1 Subordinated Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Corporation, in
whole or in part, for United States federal income tax purposes or (iii) the
Series 1 Issuer Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision
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<PAGE>
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement, action or decision is announced on or after the date of
issuance of the Series 1 Preferred Securities under the Trust Agreement, there
is more than an insubstantial risk that the Corporation will not be entitled
to treat an amount equal to the Liquidation Amount of the Series 1 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 Corporation.
LIQUIDATION OF SERIES 1 ISSUER TRUST AND DISTRIBUTION OF SERIES 1 SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to terminate the Series 1
Issuer Trust and cause the Series 1 Subordinated Debentures to be distributed
to the holders of the Series 1 Securities in liquidation of the Series 1
Issuer Trust. Such right is subject to the Corporation having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve.
Under current United States federal income tax law and interpretations and
assuming, as expected, the Series 1 Issuer Trust is treated as a grantor
trust, a distribution of the Series 1 Subordinated Debentures should not be a
taxable event to holders of the Series 1 Preferred Securities. Should there be
a change in law, a change in legal interpretation, a Tax Event or other
circumstances, however, the distribution could be a taxable event to holders
of the Series 1 Preferred Securities. See "Certain Federal Income Tax
Consequences--Distribution of Series 1 Subordinated Debentures to Holders of
Series 1 Preferred Securities." If the Corporation elects neither to redeem
the Series 1 Subordinated Debentures prior to maturity nor to liquidate the
Series 1 Issuer Trust and distribute the Series 1 Subordinated Debentures to
holders of the Series 1 Securities, the Series 1 Preferred Securities will
remain outstanding until the repayment of the Series 1 Subordinated
Debentures.
If the Corporation elects to liquidate the Series 1 Issuer Trust and thereby
causes the Series 1 Subordinated Debentures to be distributed to holders of
the Series 1 Securities in liquidation of the Series 1 Issuer Trust, the
Corporation shall continue to have the right to shorten or extend the maturity
of such Series 1 Subordinated Debentures, subject to certain conditions as
described under "Certain Terms of Series 1 Subordinated Debentures--General."
LIQUIDATION VALUE
The amount payable on the Series 1 Preferred Securities in the event of any
liquidation of the Series 1 Issuer Trust is $25 per Series 1 Preferred
Securities plus accumulated and unpaid Distributions, which may be in the form
of a distribution of such amount in Series 1 Subordinated Debentures, subject
to certain exceptions. See "Description of Preferred Securities--Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
REGISTRATION OF SERIES 1 PREFERRED SECURITIES
The Series 1 Preferred Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the
Series 1 Preferred Securities will be shown on, and transfers thereof will be
effected only through, records maintained by participants in DTC. Except as
described below and in the accompanying Prospectus, Series 1 Preferred
Securities in certificated form will not be issued in exchange for the global
certificates. See "Book-Entry Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Series 1 Preferred Securities
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Corporation that it is unwilling or
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unable to continue as a depository for such global security and no successor
depository shall have been appointed, or if at any time DTC ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, at a time when DTC is required to be so registered to act as such
depository, (ii) the Corporation in its sole discretion determines that such
global security shall be so exchangeable or (iii) there shall have occurred
and be continuing an Event of Default under the Junior Subordinated Indenture
with respect to the Series 1 Subordinated Debentures. Any global security that
is exchangeable pursuant to the preceding sentence shall be exchangeable for
definitive certificates registered in such names as DTC shall direct. It is
expected that such instructions will be based upon directions received by DTC
from its Participants (as defined in the accompanying Prospectus) with respect
to ownership of beneficial interests in such global security. In the event
that Series 1 Preferred Securities are issued in definitive form, such Series
1 Preferred Securities will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Series 1 Preferred Securities represented by a global security
will be made to DTC, as the depository for the Series 1 Preferred Securities.
In the event Series 1 Preferred Securities are issued in definitive form, the
Redemption Price and Distributions will be payable, the transfer of the Series
1 Preferred Securities will be registrable, and Series 1 Preferred Securities
will be exchangeable for Series 1 Preferred Securities of other denominations
of a like aggregate Liquidation Amount, at the corporate trust office of the
Property Trustee in New York, New York, or at the offices of any paying agent
or transfer agent appointed by the Administrative Trustees, provided that
payment of any Distribution may be made at the option of the Administrative
Trustees by check mailed to the address of the persons entitled thereto or by
wire transfer. In addition, if the Series 1 Preferred Securities are issued in
certificated form, the record dates for payment of Distributions will be the
15th day of the last month of each calendar quarter. For a description of DTC
and the terms of the depository arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-
Entry Issuance" in the accompanying Prospectus.
CERTAIN TERMS OF SERIES 1 SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series 1
Subordinated Debentures supplements the description of the terms and
provisions of the Corresponding Junior Subordinated Debentures set forth in
the accompanying Prospectus under the headings "Description of Junior
Subordinated Debentures" and "Description of Junior Subordinated Debentures--
Corresponding Junior Subordinated Debentures," to which description reference
is hereby made. The summary of certain terms and provisions of the Series 1
Subordinated Debentures set forth below, which describes the material terms
thereof, does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Junior Subordinated Indenture, to which
reference is hereby made. The Junior Subordinated Indenture has been filed as
an exhibit to the Registration Statement of which this Prospectus Supplement
and the accompanying Prospectus form a part.
Concurrently with the issuance of the Series 1 Preferred Securities, the
Series 1 Issuer Trust will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series 1 Common Securities, in
the Series 1 Subordinated Debentures issued by the Corporation. The Series 1
Subordinated Debentures will bear interest at the annual rate of 7 3/4% of the
principal amount thereof, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing March 31, 1997, to the person in whose name each Series 1
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment
Date. It is anticipated that, until the liquidation, if any, of the Series 1
Issuer Trust, each Series 1 Subordinated Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the Series 1
Securities. The amount of
S-17
<PAGE>
interest payable for any period less than a full interest period will be
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in a period. The amount of interest payable
for any full interest period will be computed by dividing the rate per annum
by four. In the event that any date on which interest is payable on the Series
1 Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment
was originally payable. Accrued interest that is not paid on the applicable
Interest Payment Date will bear additional interest on the amount thereof (to
the extent permitted by law) at the rate per annum of 7 3/4% thereof,
compounded quarterly. The term "interest" as used herein shall include
quarterly interest payments, interest on quarterly interest payments not paid
on the applicable Interest Payment Date and Additional Sums (as defined
below), as applicable.
The Series 1 Subordinated Debentures will be issued as a series of junior
subordinated debentures under the Junior Subordinated Indenture. The Series 1
Subordinated Debentures will mature on December 31, 2026 (such date, as it may
be shortened or extended as hereinafter described, the "Stated Maturity").
Such date may be shortened at any time by the Corporation to any date not
earlier than December 20, 2001, subject to the Corporation having received
prior approval of the Federal Reserve if then required under applicable
capital guidelines or policies of the Federal Reserve. Such date may also be
extended at any time at the election of the Corporation for one or more
periods, but in no event to a date later than December 31, 2045, provided that
at the time such election is made and at the time of extension (i) the
Corporation is not in bankruptcy, otherwise insolvent or in liquidation, (ii)
the Corporation is not in default in the payment of any interest or principal
on the Series 1 Subordinated Debentures, (iii) the Series 1 Issuer Trust is
not in arrears on payments of Distributions on the Series 1 Preferred
Securities and no deferred Distributions are accumulated and (iv) the Series 1
Subordinated Debentures are rated not less than BBB- by Standard & Poor's
Ratings Services or Baa3 by Moody's Investors Service, Inc. or the equivalent
by any other nationally recognized statistical rating organization. In the
event the Corporation elects to shorten or extend the Stated Maturity of the
Series 1 Subordinated Debentures, it shall give notice to the Debenture
Trustee, and the Debenture Trustee shall give notice of such shortening or
extension to the holders of the Series 1 Subordinated Debentures no more than
90 and no less than 30 days prior to the effectiveness thereof.
The Series 1 Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Corporation. Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary,
including Bank of America, BAI and BANW, upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Series 1
Preferred Securities to benefit indirectly from such distribution), is subject
to the prior claims of creditors of that subsidiary, except to the extent that
the Corporation may itself be recognized as a creditor of that subsidiary. In
addition, there are also various legal limitations on the extent to which the
Corporation's depository subsidiaries may extend credit, pay dividends or
otherwise supply funds to the Corporation or various of its affiliates.
Accordingly, the Series 1 Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Series 1 Subordinated Debentures should look only
to the assets of the Corporation for payments on the Series 1 Subordinated
Debentures. See "BankAmerica Corporation." The Junior Subordinated Indenture
does not limit the incurrence or issuance of other secured or unsecured debt
of the Corporation, including Senior Indebtedness, whether under the Junior
Subordinated Indenture or any existing or other indenture that the Corporation
may enter into in the future or otherwise. See "Description of Junior
Subordinated Debentures--Subordination" in the accompanying Prospectus.
S-18
<PAGE>
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Event of Default under the Junior Subordinated Indenture has
occurred and is continuing, the Corporation has the right under the Junior
Subordinated Indenture at any time during the term of the Series 1
Subordinated Debentures to defer the payment of interest at any time or from
time to time for a period not exceeding 20 consecutive quarters with respect
to each Extension Period, provided that no Extension Period may extend beyond
the Stated Maturity of the Series 1 Subordinated Debentures. At the end of
such Extension Period, the Corporation must pay all interest then accrued and
unpaid (together with interest thereon at the annual rate of 7 3/4%). During
an Extension Period, interest will continue to accrue and holders of Series 1
Subordinated Debentures (or holders of Series 1 Preferred Securities while
such series is outstanding) will be required to accrue interest income for
United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not, and may not
permit any subsidiary of the Corporation to, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Corporation's capital stock or (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation (including other Junior
Subordinated Debentures) that rank pari passu in all respects with or junior
in interest to the Series 1 Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation if such guarantee ranks pari
passu with or junior in interest to the Series 1 Subordinated Debentures
(other than (a) dividends or distributions in common stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under any Guarantee and (d) purchases of common stock related to
the issuance of common stock or rights under any of the Corporation's
(including its subsidiaries') benefit plans for their directors, officers or
employees). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest, provided that no
Extension Period may exceed 20 consecutive quarters or extend beyond the
Stated Maturity of the Series 1 Subordinated Debentures. Upon the termination
of any such Extension Period and the payment of all amounts then due on any
Interest Payment Date, the Corporation may elect to begin a new Extension
Period subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. The Corporation must
give the Property Trustee, the Administrative Trustees and the Debenture
Trustee notice of its election of such Extension Period at least one Business
Day prior to the earlier of (i) the date the Distributions on the Series 1
Preferred Securities would have been payable except for the election to begin
such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to the New York Stock Exchange, the Nasdaq National
Market or other applicable self-regulatory organization or to holders of such
Series 1 Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Property Trustee shall give notice of the
Corporation's election to begin a new Extension Period to the holders of the
Series 1 Preferred Securities. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period. See "Description
of Junior Subordinated Debentures--Option to Extend Interest Payment Date" in
the accompanying Prospectus.
ADDITIONAL SUMS
In the event a Tax Event has occurred and is continuing and the Series 1
Issuer Trust is the holder of all of the Series 1 Subordinated Debentures, the
Corporation will pay Additional Sums, if any (as defined below), on the Series
1 Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions paid by the Series 1 Issuer Trust on the
outstanding Series 1 Preferred Securities and
S-19
<PAGE>
Common Securities of the Series 1 Issuer Trust shall not be reduced as a
result of any additional taxes, duties and other governmental charges to which
the Series 1 Issuer Trust has become subject as a result of a Tax Event.
REDEMPTION
Subject to the Corporation having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of
the Federal Reserve, the Series 1 Subordinated Debentures are redeemable prior
to maturity at the option of the Corporation (i) on or after December 20,
2001, in whole at any time or in part from time to time, or (ii) in whole (but
not in part) at any time within 90 days following the occurrence of a Tax
Event or Capital Treatment Event, in each case at a redemption price equal to
the accrued and unpaid interest on the Series 1 Subordinated Debentures so
redeemed to but excluding the date fixed for redemption, plus 100% of the
principal amount thereof. See "Description of Junior Subordinated Debentures--
Redemption" in the accompanying Prospectus.
DISTRIBUTION OF SERIES 1 SUBORDINATED DEBENTURES
As described under "Certain Terms of Series 1 Preferred Securities--
Liquidation of Series 1 Issuer Trust and Distribution of Series 1 Subordinated
Debentures to Holders," under certain circumstances involving the termination
of the Series 1 Issuer Trust, Series 1 Subordinated Debentures may be
distributed to the holders of the Series 1 Securities in liquidation of the
Series 1 Issuer Trust after satisfaction of liabilities to creditors of the
Series 1 Issuer Trust as provided by applicable law. If distributed to holders
of Series 1 Securities in liquidation, the Series 1 Subordinated Debentures
will initially be issued in the form of one or more global securities and DTC,
or any successor depository for the Series 1 Preferred Securities, will act as
depository for the Series 1 Subordinated Debentures. It is anticipated that
the depository arrangements for the Series 1 Subordinated Debentures would be
substantially identical to those in effect for the Series 1 Preferred
Securities. If the Series 1 Subordinated Debentures are distributed to the
holders of Series 1 Preferred Securities upon the liquidation of the Series 1
Issuer Trust, the Corporation will use its best efforts to list the Series 1
Subordinated Debentures on the New York Stock Exchange or such other stock
exchanges, if any, on which the Series 1 Preferred Securities are then listed.
There can be no assurance as to the market price of any Series 1 Subordinated
Debentures that may be distributed to the holders of Series 1 Preferred
Securities.
S-20
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Series 1 Preferred
Securities. This summary only addresses the tax consequences to a person that
acquires Series 1 Preferred Securities on their original issue at their
original offering price and that is (i) an individual citizen or resident of
the United States, (ii) a corporation or partnership organized in or under the
laws of the United States or any state thereof or the District of Columbia or
(iii) an estate or trust the income of which is subject to United States
federal income tax regardless of source (a "United States Person"). This
summary does not address all tax consequences that may be applicable to a
United States Person that is a beneficial owner of Series 1 Preferred
Securities, nor does it address the tax consequences to (i) persons that are
not United States Persons, (ii) persons that may be subject to special
treatment under United States federal income tax law, such as banks, insurance
companies, thrift institutions, regulated investment companies, real estate
investment trusts, tax-exempt organizations and dealers in securities or
currencies, (iii) persons that will hold Series 1 Preferred Securities as part
of a position in a "straddle" or as part of a "hedging," "conversion" or other
integrated investment transaction for federal income tax purposes, (iv)
persons whose functional currency is not the United States dollar or (v)
persons that do not hold Series 1 Preferred Securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Orrick, Herrington & Sutcliffe LLP, counsel to the
Corporation and the Series 1 Issuer Trust. This summary is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
Internal Revenue Service rulings and pronouncements and judicial decisions now
in effect, all of which are subject to change at any time. Such changes may be
applied retroactively in a manner that could cause the tax consequences to
vary substantially from the consequences described below, possibly adversely
affecting a beneficial owner of Series 1 Preferred Securities. In particular,
legislation has been proposed that could adversely affect the Corporation's
ability to deduct interest on the Series 1 Subordinated Debentures, which may
in turn permit the Corporation to cause a redemption of the Series 1 Preferred
Securities. See "--Possible Tax Law Changes." An opinion of counsel is not
binding on the Internal Revenue Service or the courts, and the authorities on
which this summary is based are subject to various interpretations. It is
therefore possible that the federal income tax treatment of the purchase,
ownership and disposition of Series 1 Preferred Securities may differ from the
treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES 1 PREFERRED SECURITIES,
AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE SERIES 1 ISSUER TRUST
In connection with the issuance of the Series 1 Preferred Securities,
Orrick, Herrington & Sutcliffe LLP will render its opinion to the effect that,
under then current law and assuming compliance with the terms of the Trust
Agreement, and based on certain facts and assumptions contained in such
opinion, the Series 1 Issuer Trust will be classified as a grantor trust and
not as an association taxable as a corporation for United States federal
income tax purposes. As a result, each beneficial owner of Series 1 Preferred
Securities (a "Securityholder") will be treated as owning an undivided
beneficial interest in the Series 1 Subordinated Debentures. Accordingly, each
Securityholder will be required to include in its gross income its pro rata
share of the items of income realized with respect to the Series 1
Subordinated Debentures whether or not cash is actually distributed to the
Securityholders. See "--Interest Income and Original Issue Discount." No
amount included in income with respect to the Series 1 Preferred Securities
will be eligible for the dividends-received deduction.
S-21
<PAGE>
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Final Treasury Regulations issued on June 11, 1996 generally provide that
stated interest on a debt instrument is not "qualified stated interest" and,
therefore, will give rise to original issue discount ("OID") unless such
interest is unconditionally payable in cash or in property (other than debt
instruments of the issuer) at least annually at a single fixed rate. Interest
is considered to be unconditionally payable only if reasonable legal remedies
exist to compel timely payment or the debt instrument otherwise provides terms
and conditions that make the likelihood of late payment (other than late
payment that occurs within a reasonable grace period) or non-payment a "remote
contingency."
Under the Junior Subordinated Indenture, the Corporation has the right, at
any time and from time to time during the term of the Series 1 Subordinated
Debentures to defer payments of interest by extending the interest payment
period for a period not exceeding 20 consecutive quarters with respect to each
Extension Period. Unless the likelihood of exercise of such right to defer is
remote, the Series 1 Subordinated Debentures would be issued with OID. During
any Extension Period, (a) the Corporation will not be permitted to declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock, and (b) the
Corporation will not be permitted to make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Corporation that rank pari passu with or
junior to the Series 1 Subordinated Debentures (although these restrictions
will not apply to dividends or distributions in common stock of the
Corporation and in certain other limited situations). See "Certain Terms of
Series 1 Subordinated Debentures--Option to Extend Interest Payment Period."
The Corporation currently believes that the adverse impact that the imposition
of such restrictions would have on the Corporation and the value of the equity
securities of the Corporation makes the likelihood of the Corporation
exercising its right to defer payments of interest on the Series 1
Subordinated Debentures remote. Accordingly, the Corporation believes that the
stated interest on the Series 1 Subordinated Debentures should be considered
unconditionally payable for purposes of the OID provisions of the Code and
that the Series 1 Subordinated Debentures should not be considered to have
been issued with OID (other than de minimis OID, if any). As a result, each
Securityholder will be required to include interest payments in taxable income
at the time accrued or received in accordance with its own method of
accounting. There can be no assurance, however, that the Internal Revenue
Service will agree with such determination.
However, if the Corporation does exercise its right to defer payments of
interest thereon, the Series 1 Subordinated Debentures will be considered to
be retired and reissued for their adjusted issue price at such time, and the
Series 1 Subordinated Debentures thereafter will be considered to have been
issued with OID. In such case, all the interest payments thereafter payable
will be treated as OID. If the payments were treated as OID (either because
the Corporation exercises the right to defer interest payments or because the
exercise of such right was not remote at the time of issuance), holders must
include that discount in income on an economic accrual basis before the
receipt of cash attributable to the interest, regardless of their method of
tax accounting. The amount of OID that accrues in any quarter will
approximately equal the amount of the interest that accrues in that quarter at
the stated interest rate and any de minimis OID allocated to such period. In
the event that the interest payment period is extended, holders will continue
to accrue OID approximately equal to the amount of the interest payment due at
the end of the extended interest payment period and any de minimis OID
allocated to such period on an economic accrual basis over the length of the
extended interest period. A Securityholder that disposes of the Series 1
Preferred Securities during an Extension Period may suffer a loss because the
market value of the Series 1 Preferred Securities likely will fall if the
Corporation exercises its option to defer payments of interest on the Series 1
Subordinated Debentures. To the extent the selling price is less than the
Securityholder's adjusted tax basis (which will include all accrued but unpaid
interest), a Securityholder will recognize a capital loss.
S-22
<PAGE>
DISTRIBUTION OF SERIES 1 SUBORDINATED DEBENTURES TO HOLDERS OF SERIES 1
PREFERRED SECURITIES
Under current law, a distribution by the Series 1 Issuer Trust of the Series
1 Subordinated Debentures, as described under the caption "Certain Terms of
Series 1 Preferred Securities--Liquidation of Series 1 Issuer Trust and
Distribution of Series 1 Subordinated Debentures to Holders," will be non-
taxable and will result in the Securityholder receiving directly his pro rata
share of the Series 1 Subordinated Debentures previously held indirectly
through the Series 1 Issuer Trust, with a holding period and aggregate tax
basis equal to the holding period and aggregate tax basis such Securityholder
had in its Series 1 Preferred Securities before such distribution.
SALES OR REDEMPTION OF SERIES 1 PREFERRED SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Series 1
Preferred Securities (including a redemption for cash) in an amount equal to
the difference between the amount realized and the Securityholder's adjusted
tax basis in the Series 1 Preferred Securities sold or so redeemed. A
Securityholder's adjusted tax basis in the Series 1 Preferred Securities will
be increased by any OID included in gross income and decreased by any interest
payments not treated as "qualified stated interest" (as defined above). See
"--Interest Income and Original Issue Discount." Gain or loss recognized by a
Securityholder on Series 1 Preferred Securities held for more than one year
generally will be taxable as long-term capital gain or loss. Amounts
attributable to accrued interest with respect to a Securityholder's pro rata
share of the Series 1 Subordinated Debentures not previously included in
income will be taxable as ordinary income.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest paid or OID accrued on the Series 1 Preferred
Securities held of record by United States Persons (other than corporations
and other exempt Securityholders) will be reported to the Internal Revenue
Service. "Backup" withholding at a rate of 31% will apply to payments of
interest to non-exempt United States Persons unless the Securityholder
furnishes its taxpayer identification number in the manner prescribed in
applicable Treasury Regulations, certifies that such number is correct,
certifies as to no loss of exemption from backup withholding and meets certain
other conditions.
Payment of the proceeds from the disposition of Series 1 Preferred
Securities to or through the United States office of a broker is subject to
information reporting and backup withholding unless the holder or beneficial
owner establishes an exemption from information reporting and backup
withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information
is furnished to the Internal Revenue Service.
It is anticipated that income on the Series 1 Preferred Securities will be
reported to holders on Form 1099 and mailed to holders of the Series 1
Preferred Securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the
revenue portion of President Clinton's budget proposal, was released. The Bill
would, among other things, generally deny interest deductions for interest on
an instrument issued by a corporation that has a maximum weighted average
maturity of more than 40 years. The Bill would also generally deny interest
deductions for interest on an instrument issued by a corporation that has a
maximum term of more than 20 years and
S-23
<PAGE>
that is not shown as indebtedness on the separate balance sheet of the issuer
or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. For purposes of determining the weighted average maturity or
the term of an instrument, any right to extend would be treated as exercised.
The above-described provisions of the Bill were proposed to be effective
generally for instruments issued on or after December 7, 1995. If either
provision were to apply to the Series 1 Subordinated Debentures, the
Corporation would be unable to deduct interest on the Series 1 Subordinated
Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance and
House Ways and Means Committees issued a joint statement to the effect that it
was their intention that the effective date of the President's legislative
proposals, if adopted, will be no earlier than the date of appropriate
Congressional action. Under current law, the Corporation will be able to
deduct interest on the Series 1 Subordinated Debentures. There can be no
assurance, however, that current or future legislative proposals or final
legislation will not affect the ability of the Corporation to deduct interest
on the Series 1 Subordinated Debentures. Such a change could give rise to a
Tax Event, which may permit the Corporation to cause a redemption of the
Series 1 Preferred Securities, as described more fully in the accompanying
Prospectus under "Description of Preferred Securities--Redemption" and "--
Distribution of Corresponding Junior Subordinated Debentures."
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Corporation and the Series 1 Issuer Trust have agreed that the Series 1
Issuer Trust will sell to each of the Underwriters named below, and each of
such Underwriters for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Dean Witter Reynolds Inc., BA Securities, Inc., PaineWebber Incorporated,
Prudential Securities Incorporated and Smith Barney Inc. are acting as
representatives has severally agreed to purchase from the Series 1 Issuer
Trust, the respective number of Series 1 Preferred Securities set forth
opposite its name below. In the Underwriting Agreement, the several
Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all the Series 1 Preferred Securities offered hereby if
any of the Series 1 Preferred Securities are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the purchase commitments of the nondefaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
SERIES 1
PREFERRED
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... 1,650,000
Dean Witter Reynolds Inc. ..................................... 1,650,000
BA Securities, Inc. ........................................... 1,650,000
PaineWebber Incorporated....................................... 1,650,000
Prudential Securities Incorporated............................. 1,650,000
Smith Barney Inc. ............................................. 1,650,000
Bear, Stearns & Co. Inc........................................ 70,000
Alex. Brown & Sons Incorporated................................ 70,000
Cowen & Company................................................ 70,000
Dain Bosworth Incorporated..................................... 70,000
Dillon, Read & Co. Inc. ....................................... 70,000
Donaldson, Lufkin & Jenrette Securities Corporation............ 70,000
A.G. Edwards & Sons, Inc. ..................................... 70,000
EVEREN Securities, Inc. ....................................... 70,000
The Ohio Company............................................... 70,000
Oppenheimer & Co., Inc. ....................................... 70,000
Piper Jaffray Inc. ............................................ 70,000
Raymond James & Associates, Inc. .............................. 70,000
Tucker Anthony Incorporated.................................... 70,000
Wheat, First Securities, Inc. ................................. 70,000
Advest, Inc. .................................................. 35,000
Robert W. Baird & Co. Incorporated............................. 35,000
Sanford C. Bernstein & Co., Inc. .............................. 35,000
J.C. Bradford & Co. ........................................... 35,000
Crowell, Weedon & Co. ......................................... 35,000
Davenport & Co. of Virginia, Inc. ............................. 35,000
Fahnestock & Co. Inc. ......................................... 35,000
Gibraltar Securities Co. ...................................... 35,000
Gruntal & Co., Incorporated.................................... 35,000
Interstate/Johnson Lane Corporation............................ 35,000
Janney Montgomery Scott Inc. .................................. 35,000
Josephthal Lyon & Ross Incorporated............................ 35,000
Kennedy, Cabot & Co. .......................................... 35,000
</TABLE>
S-25
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SERIES 1
PREFERRED
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Legg Mason Wood Walker, Incorporated........................... 35,000
McDonald & Company Securities, Inc. ........................... 35,000
McGinn, Smith & Co., Inc. ..................................... 35,000
Mesirow Financial, Inc. ....................................... 35,000
Morgan Keegan & Company, Inc. ................................. 35,000
David A. Noyes & Company....................................... 35,000
Olde Discount Corporation...................................... 35,000
Principal Financial Securities, Inc. .......................... 35,000
Rauscher Pierce Refsnes, Inc. ................................. 35,000
Redwood Securities Group, Inc. ................................ 35,000
Robertson, Stephens & Company LLC.............................. 35,000
The Robinson-Humphrey Company, Inc. ........................... 35,000
Roney & Co., LLC............................................... 35,000
Scott & Stringfellow, Inc. .................................... 35,000
Stifel, Nicolaus & Company, Incorporated....................... 35,000
Stone & Youngberg.............................................. 35,000
Sutro & Co. Incorporated....................................... 35,000
US Clearing Corp. ............................................. 35,000
Utendahl Capital Partners, L.P. ............................... 35,000
----------
Total...................................................... 12,000,000
==========
</TABLE>
In view of the fact that the proceeds from the sale of the Series 1
Preferred Securities will ultimately be used to purchase the Series 1
Subordinated Debentures of the Corporation, the Underwriting Agreement
provides that the Corporation will pay as compensation ("Underwriters'
Compensation") to the Underwriters arranging the investment therein of such
proceeds, an amount in immediately available funds for the accounts of the
several Underwriters of $.7875 per Series 1 Preferred Security or, in the case
of Series 1 Preferred Securities that have been initially allocated for sale
to certain institutions, $.25 per Series 1 Preferred Security. Based on such
initial allocation, the estimated aggregate Underwriters' Compensation is
$9,428,500. The actual aggregate Underwriters' Compensation will depend on the
number of Series 1 Preferred Securities actually purchased by such
institutional investors, which may be greater or less than the initial
allocation.
The Underwriters propose initially to offer the Series 1 Preferred
Securities to the public at the public offering price set forth on the cover
page of this Prospectus Supplement and to certain dealers at such price less a
concession not in excess of $.50 ($.15 in the case of Series 1 Preferred
Securities allocated to certain institutions) per Series 1 Preferred Security.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of $.45 per Series 1 Preferred Security to certain other dealers. After
the initial public offering, the public offering price, concession and
discount may be changed.
Prior to this offering, there has been no public market for the Series 1
Preferred Securities. The Series 1 Preferred Securities have been approved for
listing on the New York Stock Exchange, subject to notice of issuance. Trading
of the Series 1 Preferred Securities on the New York Stock Exchange is
expected to commence within a 30-day period after the initial delivery of the
Series 1 Preferred Securities. The Underwriters have advised the Corporation
that they intend to make a market in the Series 1 Preferred Securities prior
to commencement of trading on the New York Stock Exchange, but are not
obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market
for the Series 1 Preferred Securities.
S-26
<PAGE>
In order to meet one of the requirements for listing the Series 1 Preferred
Securities on the New York Stock Exchange, the Underwriters have undertaken to
sell lots of 100 or more Series 1 Preferred Securities to a minimum of 400
beneficial holders.
The Corporation and the Series 1 Issuer Trust have agreed to indemnify the
several Underwriters against, or contribute to payments that the Underwriters
may be required to make in respect of, certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
BA Securities, Inc. ("BASI") is a wholly-owned subsidiary of the Corporation
and an affiliate of the Series 1 Issuer Trust. Accordingly, any offer and sale
of the Series 1 Preferred Securities will comply with Rule 2720 of the Rules
of Conduct of the National Association of Securities Dealers, Inc. (the
"NASD") regarding underwriting securities of an affiliate. No NASD member
participating in the offering of the Series 1 Preferred Securities will
execute a transaction in the Series 1 Preferred Securities in a discretionary
account without the prior written specific approval of the member's customer.
This Prospectus Supplement and the accompanying Prospectus may be used by
BASI in connection with offers and sales related to secondary market
transactions in the Series 1 Preferred Securities. BASI may act as principal
or agent in such transactions. Such sales will be made at prices related to
prevailing market prices at the time of sale or otherwise.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series 1
Preferred Securities, the enforceability of the Trust Agreement and the
creation of the Series 1 Issuer Trust will be passed upon by Richards, Layton
& Finger, special Delaware Counsel to the Corporation and the Series 1 Issuer
Trust. The validity of the Series 1 Guarantee and the Series 1 Subordinated
Debentures will be passed upon for the Corporation by Orrick, Herrington &
Sutcliffe LLP, San Francisco, California and for the Underwriters by Sullivan
& Cromwell, Los Angeles, California. Orrick, Herrington & Sutcliffe LLP and
Sullivan & Cromwell will rely on the opinion of Richards, Layton & Finger as
to matters of Delaware law. Certain matters relating to United States federal
income tax considerations will be passed upon for the Corporation by Orrick,
Herrington & Sutcliffe LLP.
S-27
<PAGE>
$1,500,000,000
BANKAMERICA CORPORATION
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
DEBT SECURITIES
BANKAMERICA CAPITAL I
BANKAMERICA CAPITAL II
BANKAMERICA CAPITAL III
BANKAMERICA CAPITAL IV
BANKAMERICA CAPITAL V
BANKAMERICA CAPITAL VI
BANKAMERICA CAPITAL VII
BANKAMERICA CAPITAL VIII
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
BANKAMERICA CORPORATION
BankAmerica Corporation, a Delaware corporation (the "Corporation"), may
from time to time offer in one or more series or issuances its junior
subordinated deferrable interest debentures (the "Junior Subordinated
Debentures"). The Junior Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to all Senior Indebtedness (as
defined in "Description of Junior Subordinated Debentures--Subordination") of
the Corporation. If provided in an accompanying Prospectus Supplement, the
Corporation will have the right to defer payments of interest on any series of
Junior Subordinated Debentures by extending the interest payment period
thereon at any time or from time to time for such number of consecutive
interest payment periods (which shall not extend beyond the Stated Maturity
(as defined herein) of the Junior Subordinated Debentures) with respect to
each deferral period as may be specified in such Prospectus Supplement (each,
an "Extension Period"). See "Description of Junior Subordinated Debentures--
Option to Extend Interest Payment Date."
(continued on next page)
----------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK OR NONBANK SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is December 5, 1996.
<PAGE>
(cover page continued)
BankAmerica Capital I, BankAmerica Capital II, BankAmerica Capital III,
BankAmerica Capital IV, BankAmerica Capital V, BankAmerica Capital VI,
BankAmerica Capital VII and BankAmerica Capital VIII, each a trust created
under the laws of the State of Delaware (each, an "Issuer Trust," and
collectively, the "Issuer Trusts"), may severally offer, from time to time,
preferred securities (the "Preferred Securities") representing preferred
beneficial interests in such Issuer Trust. The Corporation will be the owner
of the common securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") representing common undivided
beneficial interests in such Issuer Trust. The payment of periodic cash
distributions ("Distributions") with respect to the Preferred Securities of
each Issuer Trust and payments on liquidation or redemption with respect to
such Preferred Securities, in each case out of funds held by such Issuer
Trust, are each irrevocably guaranteed by the Corporation to the extent
described herein (each, a "Guarantee"). See "Description of Guarantees." The
obligations of the Corporation under each Guarantee will be subordinate and
junior in right of payment to all Senior Indebtedness of the Corporation.
Concurrently with the issuance by an Issuer Trust of its Preferred Securities,
such Issuer Trust will invest the proceeds thereof and any contributions made
in respect of the Common Securities in a corresponding series of the
Corporation's Junior Subordinated Debentures (the "Corresponding Junior
Subordinated Debentures") with terms corresponding to the terms of that Issuer
Trust's Preferred Securities (the "Related Preferred Securities"). The
Corresponding Junior Subordinated Debentures will be the sole assets of each
Issuer Trust, and payments under the Corresponding Junior Subordinated
Debentures and the related Expense Agreement (as defined herein) will be the
only revenue of each Issuer Trust. If provided in an accompanying Prospectus
Supplement, the Corporation may, upon receipt of approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve") (if such
approval is then required), redeem the Corresponding Junior Subordinated
Debentures (and cause the redemption of the Trust Securities) or may terminate
each Issuer Trust and, after satisfaction of liabilities to creditors of such
Issuer Trust as required by applicable law, cause the Corresponding Junior
Subordinated Debentures to be distributed to the holders of Preferred
Securities in liquidation of their interests in such Issuer Trust. See
"Description of Preferred Securities--Liquidation Distribution Upon
Termination."
Holders of the Preferred Securities will be entitled to receive preferential
cumulative Distributions accumulating from the date of original issuance and
payable periodically as specified in an accompanying Prospectus Supplement. If
provided in an accompanying Prospectus Supplement, the Corporation will have
the right to defer payments of interest on any series of Corresponding Junior
Subordinated Debentures by extending the interest payment period thereon at
any time or from time to time for one or more Extension Periods (which shall
not extend beyond the Stated Maturity of the Corresponding Junior Subordinated
Debentures). If interest payments are so deferred, Distributions on the
Related Preferred Securities will also be deferred and the Corporation will
not be permitted, subject to certain exceptions set forth herein, to declare
or pay any cash distributions with respect to the Corporation's capital stock
or debt securities that rank pari passu in all respects with or junior to the
Corresponding Junior Subordinated Debentures. During an Extension Period,
Distributions will continue to accumulate (and the Preferred Securities will
accumulate additional Distributions thereon at the rate per annum set forth in
the related Prospectus Supplement). See "Description of Preferred Securities--
Distributions."
Taken together, the Corporation's obligations under each series of Junior
Subordinated Debentures, the Junior Subordinated Indenture, the related Trust
Agreement, the related Expense Agreement and the related Guarantee (each, as
defined herein), in the aggregate, provide a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the related series of Preferred Securities. See "Relationship Among the
Preferred Securities, the Corresponding Junior Subordinated Debentures and the
Guarantees--Full and Unconditional Guarantee."
2
<PAGE>
(cover page continued)
The Corporation may from time to time also offer in one or more series or
issuances its unsecured debt securities, which may be either senior (the
"Senior Securities") or subordinated (the "Subordinated Securities," the
Senior Securities and the Subordinated Securities being referred to
collectively as the "Debt Securities"). The Senior Securities will rank
equally with all other unsubordinated and unsecured indebtedness of the
Corporation. The Subordinated Securities will be subordinated to all existing
and future Senior Debt (as defined in "Description of Debt Securities--
Subordination") of the Corporation.
The Junior Subordinated Debentures, Preferred Securities and Debt Securities
may be offered in amounts, at prices and on terms to be determined at the time
of offering; provided, however, the aggregate initial public offering price of
all Junior Subordinated Debentures (other than Corresponding Junior
Subordinated Debentures), Preferred Securities (including the Corresponding
Junior Subordinated Debentures), and Debt Securities, issued pursuant to the
Registration Statement of which this Prospectus forms a part, shall not exceed
$1,500,000,000. Certain specific terms of the Junior Subordinated Debentures,
Preferred Securities or Debt Securities, in respect of which this Prospectus
is being delivered, will be described in an accompanying Prospectus
Supplement.
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax consequences relating to the
Junior Subordinated Debentures, Preferred Securities or Debt Securities.
The Junior Subordinated Debentures, Preferred Securities and Debt Securities
may be sold to or through underwriters, through dealers, remarketing firms or
agents or directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures, Preferred Securities or Debt Securities in
respect of which this Prospectus is being delivered and any applicable fee,
commission or discount arrangements with them will be set forth in a
Prospectus Supplement. The Prospectus Supplement will state whether the Junior
Subordinated Debentures, Preferred Securities or Debt Securities will be
listed on any national securities exchange or automated quotation system. If
the Junior Subordinated Debentures, Preferred Securities or Debt Securities
are not listed on any national securities exchange or automated quotation
system, there can be no assurance that there will be a secondary market for
the Junior Subordinated Debentures, Preferred Securities or Debt Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures, Preferred Securities or Debt Securities, unless accompanied by a
Prospectus Supplement.
3
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities of the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, Suite 1300, New York, New York
10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
at http://www.sec.gov. In addition, such reports, proxy statements and other
information concerning the Corporation can be inspected at the offices of the
New York, Chicago and Pacific Stock Exchanges.
The Corporation and the Issuer Trusts have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Corporation and the securities offered hereby,
reference is made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as
an exhibit to the Registration Statement.
No separate financial statements of any Issuer Trust have been included
herein. The Corporation and the Issuer Trusts do not consider that such
financial statements would be material to holders of the Preferred Securities
because each Issuer Trust is a newly formed special purpose entity, has no
operating history or independent operations and is not engaged in and does not
propose to engage in any activity other than holding as trust assets the
Corresponding Junior Subordinated Debentures of the Corporation and issuing
the Trust Securities. In addition, the Corporation's obligations under the
Junior Subordinated Debentures, the Junior Subordinated Indenture, the Trust
Agreements, the Guarantees and the Expense Agreements (as defined) provide a
full and unconditional guarantee of the Preferred Securities. See "The Issuer
Trusts," "Description of Preferred Securities," "Description of Junior
Subordinated Debentures--Corresponding Junior Subordinated Debentures" and
"Description of Guarantees." In addition, the Corporation does not expect that
any of the Issuer Trusts will file reports under the Exchange Act with the
Commission.
4
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995;
2. the Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996; and
3. the Corporation's Current Reports on Form 8-K dated January 17, 1996,
February 5, 1996, March 4, 1996, April 17, 1996, July 17, 1996 and October
16, 1996.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part
of this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of the Registration Statement or this
Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein
(other than exhibits not specifically incorporated by reference into the texts
of such documents). Requests for such documents should be directed to
BankAmerica Corporation, Corporate Secretary's Office, P.O. Box 37000, San
Francisco, California 94137, telephone number (415) 622-3530.
5
<PAGE>
BANKAMERICA CORPORATION
The Corporation is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), and was incorporated in the
State of Delaware in 1968. At September 30, 1996, the Corporation was one of
the three largest bank holding companies in the United States, based on total
assets. The Corporation's principal executive offices are located at 555
California Street, San Francisco, California 94104 (telephone (415) 622-3530).
The Corporation's largest subsidiaries, based on total assets, are Bank of
America National Trust and Savings Association ("Bank of America"), Bank of
America Illinois ("BAI"), and Bank of America NW, National Association,
formerly Seattle-First National Bank ("BANW"). Bank of America became a
subsidiary of the Corporation in 1969. Bank of America began business in San
Francisco, California, as Bank of Italy in 1904 and adopted its present name
in 1930. BAI, headquartered in Chicago, Illinois, was acquired by the
Corporation in 1994. BANW, the largest commercial bank in Washington based on
total assets at September 30, 1996, was acquired by the Corporation in 1983.
The Corporation, through its network of subsidiaries, provides banking and
other financial services throughout the United States and in selected
international markets to customers and business customers, including
corporations, governments and other institutions.
Because the Corporation is a holding company, the rights of its creditors,
including the holders of the Junior Subordinated Debentures and Debt
Securities, to participate in the assets of any subsidiary upon the latter's
liquidation or reorganization or otherwise (and thus the ability of the
holders of the Preferred Securities to benefit indirectly from such
distribution) will be subject to the claims of the subsidiary's creditors,
which will take priority except to the extent that the Corporation may itself
be a creditor with recognized claims against the subsidiary. There are also
various legal limitations on the extent to which Bank of America, BAI, BANW
and certain other bank subsidiaries of the Corporation may pay dividends,
extend credit or otherwise supply funds to the Corporation or various of its
affiliates.
Under the National Bank Act and other federal laws, the Corporation's
national banking subsidiaries are subject to prohibitions on the payment of
dividends in certain circumstances and to restrictions on the amount that each
can pay without the prior approval of the Office of the Comptroller of the
Currency. Without the Comptroller's approval, dividends for a given year
cannot exceed each bank's net income (as defined by national banking laws) for
that year and retained net income from the preceding two years. In addition,
dividends may not be paid in excess of each bank's undivided profits, subject
to other applicable provisions of law. Based upon these laws, Bank of America
could have declared dividends for 1995 of $2,466 million, BANW could have
declared dividends of $338 million and the Corporation's other national
banking subsidiaries could have declared dividends of $6 million. At December
31, 1995, the unutilized dividends allowed under these laws for Bank of
America, BANW and other national banking subsidiaries were $866 million, $45
million and $6 million, respectively.
In addition, state-chartered member and non-member banking subsidiaries are
subject to dividend limitations imposed by applicable federal or state law.
State-chartered member banking subsidiaries could have declared dividends of
$61 million without approval of the Federal Reserve for 1995. State-chartered
non-member banking subsidiaries could have declared dividends without state
approval of $158 million for 1995. At December 31, 1995, the unutilized
dividends allowed under these laws for the state-chartered member and non-
member banking subsidiaries were $4 million and $58 million, respectively.
The Corporation's subsidiary, Bank of America, FSB, is subject to regulatory
restrictions by the Office of Thrift Supervision on its payment of dividends.
Under these restrictions, Bank of America, FSB could have declared dividends
without regulatory approval of $101 million for 1995. At December 31, 1995,
the unutilized dividends allowed under these laws were $73 million.
6
<PAGE>
The depository subsidiaries are also subject to certain restrictions of the
Federal Reserve Act on loans each subsidiary may extend to their parent
companies. Among other things, the aggregate of such loans may not exceed 10%
of the sum of such subsidiary's capital stock and surplus. Such loans must be
secured by collateral with a value between 100% and 130% of the loan,
depending on the type of collateral. Under these restrictions, and assuming
the Corporation provided the collateral required, Bank of America, BAI, BANW,
Bank of America National Association and other depository subsidiaries could
have loaned to the Corporation a maximum of $1,198 million, $207 million, $163
million, $95 million, and $308 million, respectively, at December 31, 1995.
The net assets of depository subsidiaries restricted from flowing to the
Corporation by legal limitations were $17,576 million at December 31, 1995.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
contains a "cross-guarantee" provision which could result in any insured
depository institution owned by the Corporation (i.e., any bank subsidiary)
being assessed for losses incurred by the Federal Deposit Insurance
Corporation ("FDIC") in connection with assistance provided to, or the failure
of, any other depository institution owned by the Corporation. Under Federal
Reserve policy, the Corporation is expected to act as a source of financial
strength and to commit resources to support each subsidiary bank. As a result
of such policy and the legislation described below, the Corporation may be
required to commit resources to its subsidiary banks in circumstances where it
might not do so absent such policy.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
provides, among other things, that if a bank does not meet any one of its
minimum capital requirements set by its regulators, the bank must submit a
capital restoration plan for improving its capital. A holding company of a
bank must guarantee that the bank will meet its capital restoration plan,
subject to certain limitations. If such a guarantee were deemed to be a
commitment to maintain capital under the Federal Bankruptcy Code, a claim
under such guarantee in a bankruptcy proceeding involving the holding company
would be entitled to a priority over third party creditors of the holding
company. In addition, FDICIA prohibits a bank from making a capital
distribution to its holding company or otherwise if it fails to meet any
minimum capital requirements or if the payment of such capital distribution
would cause it to fail to meet any minimum capital requirements. Furthermore,
under certain circumstances, a holding company of a bank that fails to meet
its minimum capital requirements may be prohibited from making any capital
distributions to its shareholders or otherwise. At September 30, 1996, the
capital ratios of each of the Corporation's banking subsidiaries exceeded the
"well capitalized" threshold prescribed in the rules of the subsidiary's
principal federal regulator. The categories of capital so prescribed are
determined by the regulators solely for the purposes of meeting their
responsibilities under federal law, and the category in which each subsidiary
falls may not necessarily constitute an accurate representation of its overall
financial condition or prospects.
7
<PAGE>
THE ISSUER TRUSTS
Each Issuer Trust is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement executed by the Corporation, as sponsor of
the Issuer Trust, and the Delaware Trustee (as defined herein) of such Issuer
Trust and (ii) the filing of a certificate of trust 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 Issuer 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 corresponding series of
Corresponding Junior Subordinated Debentures issued by the Corporation and
(iii) engaging in only those other activities necessary or incidental thereto
(such as registering the transfer of Trust Securities). Accordingly, the
Corresponding Junior Subordinated Debentures and the right to reimbursement of
expenses under the related Expense Agreement will be the sole assets of each
Issuer Trust, and payments under the Corresponding Junior Subordinated
Debentures and the related Expense Agreement will be the sole revenue of each
Issuer Trust.
All of the Common Securities of each Issuer Trust will be owned by the
Corporation. The Common Securities of an Issuer Trust will rank pari passu,
and payments will be made thereon pro rata, with the Preferred Securities of
such Issuer Trust, except that upon the occurrence and continuance of an event
of default under a Trust Agreement resulting from a Debenture Event of Default
(as defined herein), the rights of the Corporation as holder of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Preferred Securities of such Issuer Trust. See "Description of
Preferred Securities--Subordination of Common Securities." The Corporation
will acquire Common Securities in an aggregate liquidation amount equal to not
less than 3% of the total capital of each Issuer Trust.
Unless otherwise specified in the applicable Prospectus Supplement, each
Issuer Trust has a term of approximately 55 years, but may terminate earlier
as provided in the applicable Trust Agreement. Each Issuer Trust's business
and affairs are conducted by its trustees, each of which have been appointed
by the Corporation as holder of the Common Securities. The trustees for each
Issuer Trust will be Bankers Trust Company, as the Property Trustee (the
"Property Trustee"), Bankers Trust (Delaware), as the Delaware Trustee (the
"Delaware Trustee"), and three individual trustees (the "Administrative
Trustees") who are employees or officers of or affiliated with the Corporation
(collectively, the "Issuer Trustees"). Bankers Trust Company, as Property
Trustee, will act as sole indenture trustee under each Trust Agreement for
purposes of compliance with the Trust Indenture Act. Bankers Trust Company
will also act as trustee under the Guarantees and the Junior Subordinated
Indenture (each as defined herein). See "Description of Guarantees" and
"Description of Junior Subordinated Debentures." The holder of the Common
Securities of an Issuer Trust, or the holders of a majority in liquidation
preference of the Related Preferred Securities if a Debenture Event of Default
under the Trust Agreement for such Issuer Trust has occurred and is
continuing, will be entitled to appoint, remove or replace the Property
Trustee and/or the Delaware Trustee for such Issuer Trust. In no event will
the holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees; such voting rights are vested
exclusively in the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the applicable Trust Agreement. The
Corporation will pay all fees and expenses related to each Issuer Trust and
the offering of the Preferred Securities and will pay, directly or indirectly,
all ongoing costs, expenses and liabilities of each Issuer Trust.
The principal executive office of each Issuer Trust is 555 California
Street, San Francisco, California 94104 and its telephone number is (415) 622-
3530.
8
<PAGE>
USE OF PROCEEDS
All of the proceeds from the sale of the Preferred Securities will be
invested by each Issuer Trust in the Corresponding Junior Subordinated
Debentures. Except as otherwise set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of the Corporation's Junior
Subordinated Debentures (including Corresponding Junior Subordinated
Debentures) and Debt Securities will be used for general corporate purposes,
which may include without limitation funding investments in, or extension of
credit to, the Corporation's subsidiaries, repayment of maturing obligations,
redemption of outstanding indebtedness or preferred stock or other securities
and financing possible future acquisitions. Pending such use, the Corporation
may temporarily invest the net proceeds or may use them to reduce short-term
indebtedness.
The Corporation is required by the Federal Reserve to maintain certain
levels of capital for bank regulatory purposes. On October 21, 1996, the
Federal Reserve announced that cumulative preferred securities having the
characteristics of the Preferred Securities could be included as Tier 1
capital for bank holding companies. Such Tier 1 capital treatment, together
with the Corporation's ability to deduct, for federal income tax purposes,
interest payable on the Corresponding Junior Subordinated Debentures, will
provide the Corporation with a more cost-effective means of obtaining capital
for bank regulatory purposes than if the Corporation were to issue preferred
stock.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under a Junior Subordinated Indenture, as supplemented from time to time (as
so supplemented, the "Junior Subordinated Indenture"), between the Corporation
and Bankers Trust Company, as trustee (the "Debenture Trustee"). This summary
of certain terms and provisions of the Junior Subordinated Debentures,
Corresponding Junior Subordinated Debentures and the Junior Subordinated
Indenture, which together with the applicable Prospectus Supplement will
describe the material terms thereof, does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Junior
Subordinated Indenture, the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and to the Trust
Indenture Act, to each of which reference is hereby made. The Junior
Subordinated Indenture is qualified under the Trust Indenture Act. Whenever
particular defined terms of the Junior Subordinated Indenture (as supplemented
or amended from time to time) are referred to herein or in a Prospectus
Supplement, such defined terms are incorporated herein or therein by
reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu with all
other series of Junior Subordinated Debentures and will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth in the Junior Subordinated Indenture to all Senior Indebtedness of the
Corporation. See "--Subordination." Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization
or otherwise, is subject to the prior claims of creditors of the subsidiary,
except to the extent the Corporation may itself be recognized as a creditor of
that subsidiary. Accordingly, the Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Junior Subordinated Debentures
should look only to the assets of the Corporation for payments on the Junior
Subordinated Debentures. Except as otherwise provided in the applicable
Prospectus Supplement, the Junior Subordinated Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Indebtedness, whether under the Junior Subordinated
Indenture, any other indenture that the Corporation may enter into in the
future or otherwise. See "--Subordination" and the Prospectus Supplement
relating to any offering of Securities.
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The Junior Subordinated Debentures will be issuable in one or more series
pursuant to an indenture supplemental to the Junior Subordinated Indenture or
a resolution of the Corporation's Board of Directors or a committee thereof.
The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the Junior Subordinated Debentures: (1) the title of
the Junior Subordinated Debentures; (2) any limit upon the aggregate principal
amount of the Junior Subordinated Debentures; (3) the date or dates on which
the principal of the Junior Subordinated Debentures is payable (the "Stated
Maturity") or the method of determination thereof; (4) the rate or rates, if
any, at which the Junior Subordinated Debentures shall bear interest, the
Interest Payment Dates on which any such interest shall be payable, the right,
if any, of the Corporation to defer or extend an Interest Payment Date, and
the Regular Record Date for any interest payable on any Interest Payment Date
or the method by which any of the foregoing shall be determined; (5) the place
or places where, subject to the terms of the Junior Subordinated Indenture as
described below under "Payment and Paying Agents," the principal of and
premium, if any, and interest on the Junior Subordinated Debentures will be
payable and where, subject to the terms of the Junior Subordinated Indenture
as described below under "--Denominations, Registration and Transfer," the
Junior Subordinated Debentures may be presented for registration of transfer
or exchange and the place or places where notices and demands to or upon the
Corporation in respect of the Junior Subordinated Debentures and the Junior
Subordinated Indenture may be made ("Place of Payment"); (6) any period or
periods within or date or dates on which, the price or prices at which and the
terms and conditions upon which Junior Subordinated Debentures may be
redeemed, in whole or in part, at the option of the Corporation; (7) the
obligation or the right, if any, of the Corporation or a holder thereof to
redeem, purchase or repay the Junior Subordinated Debentures 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 conditions
upon which the Junior Subordinated Debentures shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation; (8) the
denominations in which any Junior Subordinated Debentures shall be issuable if
other than denominations of $25 and any integral multiple thereof; (9) 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,
if any, on the Junior Subordinated Debentures shall be payable, or in which
the Junior Subordinated Debentures shall be denominated; (10) any additions,
modifications or deletions in the Events of Default or covenants of the
Corporation specified in the Junior Subordinated Indenture with respect to the
Junior Subordinated Debentures; (11) if other than the principal amount
thereof, the portion of the principal amount of Junior Subordinated Debentures
that shall be payable upon declaration of acceleration of the maturity
thereof; (12) any additions or changes to the Junior Subordinated Indenture
with respect to a series of Junior Subordinated Debentures as shall be
necessary to permit or facilitate the issuance of such series in bearer form,
registrable or not registrable as to principal, and with or without interest
coupons; (13) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Junior Subordinated Debentures and
the manner in which such amounts will be determined; (14) any terms and
conditions relating to the issuance of a temporary Global Security
representing all of the Junior Subordinated Debentures of such series and the
exchange of such temporary Global Security for definitive Junior Subordinated
Debentures of such series; (15) subject to the terms described under "--Global
Junior Subordinated Debentures," whether the Junior Subordinated Debentures of
the series shall be issued in whole or in part in the form of one or more
Global Securities and, in such case, the Depository for such Global
Securities, which Depository shall be a clearing agency registered under the
Exchange Act; (16) the appointment of any Paying Agent or Agents; (17) the
terms and conditions of any obligation or right of the Corporation or a holder
to convert or exchange the Junior Subordinated Debentures into Preferred
Securities or Debt Securities; (18) the form of Trust Agreement and Guarantee
Agreement, if applicable; (19) the relative degree, if any, to which such
Junior Subordinated Debentures of the series shall be senior to or be
subordinated to other series of such Junior Subordinated Debentures or other
indebtedness of the Corporation in right of payment,
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whether such other series of Junior Subordinated Debentures or other
indebtedness are outstanding or not; and (20) any other terms of the Junior
Subordinated Debentures not inconsistent with the provisions of the Junior
Subordinated Indenture.
Junior Subordinated Debentures 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 Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, premium, if any, or interest, if any,
on any Junior Subordinated Debentures is payable in one or more foreign
currencies or currency units, the restrictions, elections, certain United
States federal income tax consequences, specific terms and other information
with respect to such issue of Junior Subordinated Debentures and such foreign
currency or currency units will be set forth 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 Debentures,
special United States federal income tax, accounting and other considerations
applicable thereto will be described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof.
Junior Subordinated Debentures of any series will be exchangeable for other
Junior Subordinated Debentures 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.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the appropriate Securities Registrar or at
the office of any transfer agent designated by the Corporation for such
purpose with respect to any series of Junior Subordinated Debentures 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 Subordinated Indenture. The Corporation will appoint the Trustee as
Securities Registrar under the Junior Subordinated Indenture. If the
applicable Prospectus Supplement refers to any transfer agents (in addition to
the Securities Registrar) initially designated by the Corporation with respect
to any series of Junior Subordinated Debentures, the Corporation 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
Corporation maintains a transfer agent in each Place of Payment for such
series. The Corporation may at any time designate additional transfer agents
with respect to any series of Junior Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of any series during a period beginning at the
opening of business 15 days before the day of selection for redemption of
Junior Subordinated Debentures 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 Debentures so selected for
redemption, except, in the case of any Junior Subordinated Debentures being
redeemed in part, any portion thereof not to be redeemed.
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GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Junior Subordinated Debentures that
will be deposited with, or on behalf of, a depository (the "Depository")
identified in the Prospectus Supplement relating to such series. Global Junior
Subordinated Debentures may be issued only in fully registered form and in
either temporary or permanent form. Unless and until it is exchanged in whole
or in part for the individual Junior Subordinated Debentures represented
thereby, a Global Junior Subordinated Debenture may not be transferred except
as a whole by the Depository for such Global Junior Subordinated Debenture to
a nominee of such Depository or by a nominee of such Depository to such
Depository or another nominee of such Depository or by the Depository or any
nominee to a successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to a series of
Junior Subordinated Debentures will be described in the Prospectus Supplement
relating to such series. The Corporation anticipates that the following
provisions will generally apply to depository arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, and the deposit
of such Global Junior Subordinated Debenture with or on behalf of the
Depository, the Depository for such Global Junior Subordinated Debenture or
its nominee will credit, on its book-entry registration and transfer system,
the respective principal amounts of the individual Junior Subordinated
Debentures represented by such Global Junior Subordinated Debenture to the
accounts of persons that have accounts with such Depository ("Participants").
Such accounts shall be designated by the dealers, underwriters or agents with
respect to such Junior Subordinated Debentures or by the Corporation if such
Junior Subordinated Debentures are offered and sold directly by the
Corporation. Ownership of beneficial interests in a Global Junior Subordinated
Debenture will be limited to Participants or persons that may hold interests
through Participants. Ownership of beneficial interests in such Global Junior
Subordinated Debenture will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the applicable Depository
or its nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests
in a Global Junior Subordinated Debenture.
So long as the Depository for a Global Junior Subordinated Debenture, or its
nominee, is the registered owner of such Global Junior Subordinated Debenture,
such Depository or such nominee, as the case may be, will be considered the
sole owner or holder of the Junior Subordinated Debentures represented by such
Global Junior Subordinated Debenture for all purposes under the Junior
Subordinated Indenture governing such Junior Subordinated Debentures. Except
as provided below, owners of beneficial interests in a Global Junior
Subordinated Debenture will not be entitled to have any of the individual
Junior Subordinated Debentures of the series represented by such Global Junior
Subordinated Debenture registered in their names, will not receive or be
entitled to receive physical delivery of any such Junior Subordinated
Debentures of such series in definitive form and will not be considered the
owners or holders thereof under the Junior Subordinated Indenture.
Payments of principal of (and premium, if any) and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depository or its nominee will be made
to the Depository or its nominee, as the case may be, as the registered owner
of the Global Junior Subordinated Debenture representing such Junior
Subordinated Debentures. None of the Corporation, the Debenture Trustee, any
Paying Agent, or the Securities Registrar for such Junior Subordinated
Debentures will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Junior Subordinated Debenture representing such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
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The Corporation expects that the Depository for a series of Junior
Subordinated Debentures or its nominee, upon receipt of any payment of
principal, premium or interest in respect of a permanent Global Junior
Subordinated Debenture representing any of such Junior Subordinated
Debentures, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of such Global Junior Subordinated Debenture for such Junior
Subordinated Debentures as shown on the records of such Depository or its
nominee. The Corporation also expects that payments by Participants to owners
of beneficial interests in such Global Junior Subordinated Debenture held
through such 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." Such payments will
be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depository for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depository and a successor
depository is not appointed by the Corporation within 90 days, the Corporation
will issue individual Junior Subordinated Debentures of such series in
exchange for the Global Junior Subordinated Debenture representing such series
of Junior Subordinated Debentures. In addition, the Corporation may at any
time and in its sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Junior Subordinated Debentures,
determine not to have any Junior Subordinated Debentures of such series
represented by one or more Global Junior Subordinated Debentures and, in such
event, will issue individual Junior Subordinated Debentures of such series in
exchange for the Global Junior Subordinated Debenture or Securities
representing such series of Junior Subordinated Debentures. Further, if the
Corporation so specifies with respect to the Junior Subordinated Debentures of
a series, an owner of a beneficial interest in a Global Junior Subordinated
Debenture representing Junior Subordinated Debentures of such series may, on
terms acceptable to the Corporation, the Debenture Trustee and the Depository
for such Global Junior Subordinated Debenture, receive individual Junior
Subordinated Debentures of such series in exchange for such beneficial
interests, subject to any limitations described in the Prospectus Supplement
relating to such Junior Subordinated Debentures. In any such instance, an
owner of a beneficial interest in a Global Junior Subordinated Debenture will
be entitled to physical delivery of individual Junior Subordinated Debentures
of the series represented by such Global Junior Subordinated Debenture equal
in principal amount to such beneficial interest and to have such Junior
Subordinated Debentures registered in its name. Individual Junior Subordinated
Debentures of such series so issued will be issued in denominations, unless
otherwise specified by the Corporation, of $25 and integral multiples thereof.
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
Debentures will be made at the office of the Debenture Trustee in the City of
New York or at the office of such Paying Agent or Paying Agents as the
Corporation may designate from time to time in the applicable Prospectus
Supplement, except that at the option of the Corporation payment of any
interest may be made (i) except in the case of Global Junior Subordinated
Debentures, 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 Debentures 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
Corporation may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent; however the Corporation will at all times be
required to maintain a Paying Agent in each Place of Payment for each series
of Junior Subordinated Debentures.
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Any moneys deposited with the Debenture Trustee or any Paying Agent, or then
held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall, at the request of the
Corporation, be repaid to the Corporation and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general unsecured creditor,
only to the Corporation for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
If provided in the applicable Prospectus Supplement, the Corporation shall
have the right at any time and from time to time during the term of any series
of Junior Subordinated Debentures to defer payment of interest for 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 Debentures. Certain United States
Federal income tax consequences and special considerations applicable to any
such Junior Subordinated Debentures will be described in the applicable
Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, Junior
Subordinated Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation may, at its option and subject to receipt of prior approval by the
Federal Reserve if then required under applicable capital guidelines or
policies, redeem the Junior Subordinated Debentures of any series in whole at
any time or in part from time to time. If the Junior Subordinated Debentures
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. Junior Subordinated
Debentures in denominations larger than the minimum denomination may be
redeemed in part but only in integral multiples of the minimum denomination.
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 thereon to but excluding the redemption date,
plus the principal amount thereof.
Notice of any redemption will be mailed at least 30 days but not more than
90 days before the redemption date to each Holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Corporation
defaults in payment of the redemption price, on and after the redemption date
interest ceases to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation will also covenant, as to each series of Junior Subordinated
Debentures, that it will not, and will not permit any subsidiary of the
Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Corporation's capital stock or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including other Junior Subordinated Debentures)
that rank pari passu in all respects with or junior in interest to the Junior
Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Corporation of the debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in interest to
the Junior Subordinated Debentures (other than (a) dividends or distributions
in common stock of the Corporation, (b) any declaration of a dividend in
connection with
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the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under any Guarantee and (d) purchases of
common stock related to the issuance of common stock or rights under any of
the Corporation's (including its subsidiaries') benefit plans for their
directors, officers or employees), if at such time (i) there shall have
occurred any event of which the Corporation has actual knowledge that (a) with
the giving of notice or the lapse of time, or both, would constitute an "Event
of Default" under the Junior Subordinated Indenture with respect to the Junior
Subordinated Debentures of such series and (b) in respect of which the
Corporation shall not have taken reasonable steps to cure, (ii) if such Junior
Subordinated Debentures are held by an Issuer Trust of a series of Related
Preferred Securities, the Corporation shall be in default with respect to its
payment of any obligations under the Guarantee relating to such Related
Preferred Securities or (iii) the Corporation shall have given notice of its
selection of an Extension Period as provided in the Junior Subordinated
Indenture with respect to the Junior Subordinated Debentures of such series
and shall not have rescinded such notice, or such Extension Period, or any
extension thereof, shall be continuing.
MODIFICATION OF JUNIOR SUBORDINATED INDENTURE
From time to time the Corporation and the Debenture Trustee may, without the
consent of the holders of any series of Junior Subordinated Debentures, amend,
waive or supplement the Junior Subordinated 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 Debentures or, in
the case of Corresponding Junior Subordinated Debentures, the holders of the
Related Preferred Securities so long as they remain outstanding) and
qualifying, or maintaining the qualification of, the Indenture under the Trust
Indenture Act. The Junior Subordinated Indenture contains provisions
permitting the Corporation and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of each outstanding
series of Junior Subordinated Debentures affected, to modify the Junior
Subordinated Indenture in a manner affecting the rights of the holders of such
series of the Junior Subordinated Debentures; provided, that no such
modification may, without the consent of the holder of each outstanding Junior
Subordinated Debenture so affected, (i) change the Stated Maturity of any
series of Junior Subordinated Debentures (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 Debentures of
any series, the holders of which are required to consent to any such
modification of the Junior Subordinated Indenture, provided that, in the case
of Corresponding Junior Subordinated Debentures, so long as any of the Related
Preferred Securities remain outstanding, (a) no such modification may be made
that adversely affects the holders of such Preferred Securities in any
material respect, and no termination of the Junior Subordinated Indenture may
occur, and no waiver of any Debenture Event of Default or compliance with any
covenant under the Junior Subordinated Indenture may be effective, without the
prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of such Related Preferred Securities unless and until the
principal of the Corresponding Junior Subordinated Debentures and all accrued
and unpaid interest thereon have been paid in full and certain other
conditions are satisfied and (b) where a consent under the Junior Subordinated
Indenture would require the consent of each holder of Corresponding Junior
Subordinated Debentures, no such consent shall be given by the Property
Trustee without the prior consent of each holder of Related Preferred
Securities.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debentures, any supplemental
Junior Subordinated Indenture for the purpose of creating any new series of
Junior Subordinated Debentures.
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DEBENTURE EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to a series of Junior Subordinated
Debentures that has occurred and is continuing constitutes a "Debenture Event
of Default" with respect to such series of Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on such series of the Junior
Subordinated Debentures, when due (subject to the deferral of any due date
in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series of
Junior Subordinated Debentures when due whether at maturity, upon
redemption, by declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Junior Subordinated Indenture for 90 days after
written notice to the Corporation from the Debenture Trustee or the holders
of at least 25% in aggregate outstanding principal amount of such series of
outstanding Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of such
series of Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25%
in aggregate outstanding principal amount of such series of Junior
Subordinated Debentures may declare the principal due and payable immediately
upon a Debenture Event of Default, and, in the case of Corresponding Junior
Subordinated Debentures, should the Debenture Trustee or such holders of such
Corresponding Junior Subordinated Debentures fail to make such declaration,
the holders of at least 25% in aggregate Liquidation Amount of the Related
Preferred Securities shall have such right. The holders of a majority in
aggregate outstanding principal amount of such series of Junior Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of such series of Junior
Subordinated Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee. In the case of Corresponding Junior Subordinated
Debentures, should the holders of such Corresponding Junior Subordinated
Debentures fail to annul such declaration and waive such default, the holders
of a majority in aggregate Liquidation Amount of the Related Preferred
Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders
of all the Junior Subordinated Debentures, waive any past default, except a
default in the payment of principal or interest (unless such default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default in respect of a covenant or provision which
under the Junior Subordinated Indenture cannot be modified or amended without
the consent of the holder of each outstanding Junior Subordinated Debenture.
In the case of Corresponding Junior Subordinated Debentures, should the
holders of such Corresponding Junior Subordinated Debentures fail to annul
such declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount of the Related Preferred Securities shall have
such right. The Corporation is required to file annually with the Debenture
Trustee a certificate as to whether or not the Corporation is in compliance
with all the conditions and covenants applicable to it under the Junior
Subordinated Indenture.
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In case a Debenture Event of Default shall occur and be continuing as to a
series of Corresponding Junior Subordinated Debentures, the Property Trustee
will have the right to declare the principal of and the interest on such
Corresponding Junior Subordinated Debentures, and any other amounts payable
under the Junior Subordinated Indenture, to be forthwith due and payable and
to enforce its other rights as a creditor with respect to such Corresponding
Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Corporation to pay interest or
principal on the related Junior Subordinated Debentures on the date such
interest or principal is otherwise payable, a holder of Preferred Securities
may institute a legal proceeding directly against the Corporation for
enforcement of payment to such holder of the principal of or interest on such
related Junior Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the related Preferred Securities of such
holder (a "Direct Action"). The Corporation may not amend the Junior
Subordinated Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the Preferred
Securities. If the right to bring a Direct Action is removed, the applicable
Issuer Trust may become subject to the reporting obligations under the
Securities Exchange Act of 1934, as amended. The Corporation shall have the
right under the Junior Subordinated Indenture to set-off any payment made to
such holder of Preferred Securities by the Corporation in connection with a
Direct Action.
The holders of the Preferred Securities would 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 Debentures unless there
shall have been an Event of Default under the Trust Agreement. See
"Description of Preferred Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Junior Subordinated Indenture provides that the Corporation 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 Corporation or convey,
transfer or lease its properties and assets substantially as an entirety to
the Corporation, unless (i) in case the Corporation consolidates with or
merges into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any state or the District of Columbia,
and such successor Person expressly assumes the Corporation's obligations on
the Junior Subordinated Debentures issued under the Junior Subordinated
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 happened and be continuing;
(iii) in the case of Corresponding Junior Subordinated Debentures, such
transaction is permitted under the related Trust Agreement and Guarantee and
does not give rise to any breach or violation of the related Trust Agreement
or Guarantee; and (iv) certain other conditions as prescribed in the Junior
Subordinated Indenture are met.
The general provisions of the Junior Subordinated Indenture do not afford
holders of the Junior Subordinated Debentures protection in the event of a
highly leveraged or other transaction involving the Corporation that may
adversely affect holders of the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Junior Subordinated Indenture provides that when, among other things,
all Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation (i) have become due and payable or (ii) will become
due and payable at their Stated Maturity within one year,
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and the Corporation deposits or causes to be deposited with the Debenture
Trustee trust funds, in trust, for the purpose and in an amount in the
currency or currencies in which the Junior Subordinated Debentures are payable
sufficient to pay and discharge the entire indebtedness on the Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation, for the principal (and premium, if any) and interest to the date
of the deposit or to the Stated Maturity, as the case may be, then the Junior
Subordinated Indenture will cease to be of further effect (except as to the
Corporation's obligations to pay all other sums due pursuant to the Junior
Subordinated Indenture and to provide the officers' certificates and opinions
of counsel described therein), and the Corporation will be deemed to have
satisfied and discharged the Junior Subordinated Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or
exchangeable into Preferred Securities of another series or Debt Securities of
another series. The specific terms on which Junior Subordinated Debentures 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 Corporation, in which case the number of shares of Preferred
Securities or other securities to be received by the Holders of Junior
Subordinated Debentures would be calculated as of a time and in the manner
stated in the applicable Prospectus Supplement.
SUBORDINATION
The Junior Subordinated Debentures shall be subordinate and junior in right
of payment, to the extent set forth in the Junior Subordinated Indenture, to
all Senior Indebtedness (as defined below) of the Corporation. In the event
that the Corporation shall default in the payment of any principal, premium,
if any, or interest, if any, on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and until such default
shall have been cured or waived or shall have ceased to exist or all Senior
Indebtedness shall have been paid, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made for principal, premium, if any, or interest, if any, on the Junior
Subordinated Debentures, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Junior Subordinated
Debentures.
As used herein, "Senior Debt" means any obligation of the Corporation to its
creditors, whether now outstanding or subsequently incurred, other than any
obligation as to which, in the instrument creating or evidencing the
obligation or pursuant to which the obligation is outstanding, it is provided
that such obligation is not Senior Debt. As used herein, "Subordinated Debt"
means any obligation of the Corporation to its creditors, whether now
outstanding or subsequently incurred, where the instrument creating or
evidencing the obligation or pursuant to which the obligation is outstanding,
provides that it is subordinate and junior in right of payment to Senior Debt.
Subordinated Debt includes the Corporation's outstanding subordinated debt
securities and any subordinated debt securities issued in the future with
substantially similar subordination terms but does not include the Junior
Subordinated Debentures, the Corporation's 8.07% Junior Subordinated
Deferrable Interest Debentures, Series A, the Corporation's 7.7% Junior
Subordinated Deferrable Interest Debentures, Series B or any subordinated debt
securities issued in the future with substantially similar subordination
terms. Senior Debt does not include Subordinated Debt or the Junior
Subordinated Debentures.
As used herein, "Senior Indebtedness" shall include (i) Senior Debt (but
excluding trade accounts payable and accrued liabilities arising in the
ordinary course of business) and (ii) the Allocable Amounts of Subordinated
Debt. As of September 30, 1996, the Corporation (the Parent) had approximately
$17.1 billion of Senior Indebtedness outstanding.
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As used herein, "Allocable Amounts," when used with respect to any
Subordinated Debt, means the amount necessary to pay all principal of (and
premium, if any) and interest, if any, on such Subordinated Debt in full less,
if applicable, any portion of such amounts which would have been paid to, and
retained by, the holders of such Subordinated Debt (whether as a result of the
receipt of payments by the holders of such Subordinated Debt from the
Corporation or any other obligor thereon or from any holders of, or trustee in
respect of, other indebtedness that is subordinate and junior in right of
payment to such Subordinated Debt pursuant to any provision of such
indebtedness for the payment over of amounts received on account of such
Indebtedness to the holders of such Subordinated Debt) but for the fact that
such Subordinated Debt is subordinate or junior in right of payment to trade
accounts payable or accrued liabilities arising in the ordinary course of
business.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv)
any other marshalling of the assets of the Corporation, all Senior
Indebtedness (including any interest thereon accruing after the commencement
of any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made on
account of the principal of or premium, if any, or interest, if any, on the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the principal of or premium, if any, or interest, if any, on the
Junior Subordinated Debentures, whether in cash, securities or other property
(other than securities of the Corporation or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in the subordination provisions
with respect to the Subordinated Securities, to the payment of all Senior
Indebtedness at the time outstanding, and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for the subordination provisions) be payable or deliverable in
respect of the Junior Subordinated Debentures shall be paid or delivered
directly to the holders of Senior Indebtedness in accordance with the
priorities then existing among such holders until all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall have been paid in full.
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Corporation
ranking on a parity with the Junior Subordinated Debentures, shall be entitled
to be paid from the remaining assets of the Corporation the amounts at the
time due and owing on account of unpaid principal of and premium, if any, and
interest, if any, on the Junior Subordinated Debentures and such other
obligations before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any capital stock or
obligations of the Corporation ranking junior to the Junior Subordinated
Debentures and such other obligations. If any payment or distribution on
account of the principal of or interest on the Junior Subordinated Debentures
of any character or any security, whether in cash, securities or other
property (other than securities of the Corporation or any other corporation
provided for by a plan of reorganization or readjustment the payment of which
is subordinate, at least to the extent provided in the subordination
provisions with respect to the Junior Subordinated Debentures, to the payment
of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment) shall be received by any holder of any Junior Subordinated
Debentures in contravention of any of the terms hereof and before all the
Senior Indebtedness shall have been paid in full, such payment or distribution
or security shall be received in trust for the benefit of, and shall be paid
over or delivered and transferred to, the holders of the Senior Indebtedness
at the time outstanding in accordance with the priorities then existing among
such holders for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all such Senior Indebtedness
in
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full. By reason of such subordination, in the event of the insolvency of the
Corporation, holders of Senior Indebtedness may receive more, ratably, and
holders of the Junior Subordinated Debentures having a claim pursuant to such
securities may receive less, ratably, than the other creditors of the
Corporation. Such subordination will not prevent the occurrence of any Event
of Default in respect of the Junior Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional indebtedness
constituting Senior Indebtedness.
The Junior Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Junior
Subordinated Debentures, may be changed prior to such issuance. Any such
change would be described in the applicable Prospectus Supplement.
GOVERNING LAW
The Junior Subordinated Indenture and the Junior Subordinated Debentures
will be governed by and construed in accordance with the laws of the State of
California except that the rights, duties and obligations of the Debenture
Trustee will be governed by the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture 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 Debenture Trustee is
under no obligation to exercise any of the powers vested in it by the Junior
Subordinated Indenture at the request of any holder of Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
Bankers Trust Company, the Debenture Trustee, also serves as trustee under
three indentures, one for Senior Debt, one for Subordinated Debt and one for
junior subordinated debt that ranks pari passu with the Junior Subordinated
Debentures, pursuant to which certain debentures and notes of the Corporation
are outstanding. In addition, Bank of America and certain of its affiliates
maintain deposit accounts and/or conduct other banking transactions with
Bankers Trust Company.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Junior Subordinated
Indenture with terms corresponding to the terms of a series of Related
Preferred Securities. In that event, concurrently with the issuance of each
Issuer Trust's Preferred Securities, such Issuer Trust will invest the
proceeds thereof and the consideration paid by the Corporation for the Common
Securities in a series of Corresponding Junior Subordinated Debentures issued
by the Corporation to such Issuer Trust. Each series of Corresponding Junior
Subordinated Debentures will be in the principal amount equal to the aggregate
stated Liquidation Amount of the Related Preferred Securities and the Common
Securities of such Issuer Trust and will rank pari passu with all other series
of Junior Subordinated Debentures. Holders of the Related Preferred Securities
for a series of Corresponding Junior Subordinated Debentures will have the
rights in connection with modifications to the Junior Subordinated Indenture
or upon occurrence of Debenture Events of Default described under "--
Modification of Junior Subordinated Indenture" and "--Debenture Events of
Default," unless otherwise provided in the Prospectus Supplement for such
Related Preferred Securities.
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Unless otherwise specified in the applicable Prospectus Supplement, if the
Corporation redeems the Corresponding Junior Subordinated Debentures, for so
long as the applicable Issuer Trust is the holder of all of such Corresponding
Junior Subordinated Debentures, the proceeds of any such redemption will be
used by the Issuer Trust to redeem the corresponding Trust Securities in
accordance with their terms. The Corporation may not redeem a series of
Corresponding Junior Subordinated Debentures in part unless all accrued and
unpaid interest has been paid in full on all outstanding Corresponding Junior
Subordinated Debentures of such series for all interest periods terminating on
or prior to the Redemption Date.
The Corporation will covenant in the Junior Subordinated Indenture as to
each series of Corresponding Junior Subordinated Debentures, that if and so
long as (i) the Issuer Trust of the related series of Trust Securities is the
holder of all such Corresponding Junior Subordinated Debentures and (ii) a Tax
Event (as defined below) in respect of such Issuer Trust has occurred and is
continuing, the Corporation will pay to such Issuer Trust Additional Sums (as
defined below) in respect of such Trust Securities.
The Corporation will also covenant in the Junior Subordinated Indenture as
to each series of Corresponding Junior Subordinated Debentures (i) to maintain
directly or indirectly 100% ownership of the Common Securities of the Issuer
Trust to which Corresponding Junior Subordinated Debentures have been issued,
provided that certain successors which are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Corporation's ownership of the
Common Securities, (ii) not to voluntarily terminate, wind-up or liquidate any
Issuer Trust, except upon prior approval of the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal
Reserve and (a) in connection with a distribution of Corresponding Junior
Subordinated Debentures to the holders of the Preferred Securities in
liquidation of such Issuer Trust or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the related Trust Agreement and
(iii) to use its reasonable efforts, consistent with the terms and provisions
of the related Trust Agreement, to cause such Issuer Trust to remain
classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes.
"Tax Event" means the receipt by the Issuer Trust of a series of Preferred
Securities of an opinion of counsel to the Corporation experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced 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 which pronouncement or
decision is announced on or after the date of issuance of such Preferred
Securities under the related Trust Agreement, there is more than an
insubstantial risk that (i) such Issuer Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the corresponding series of
Corresponding Junior Subordinated Debentures, (ii) interest payable by the
Corporation on such series of Corresponding Junior Subordinated Debentures is
not, or within 90 days of the date of such opinion, will not be, deductible by
the Corporation, in whole or in part, for United States federal income tax
purposes or (iii) such Issuer Trust is, or will be within 90 days of the date
of such opinion, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then paid by an Issuer Trust on the
outstanding Preferred Securities and Common Securities of such Issuer Trust
shall not be reduced as a result of any additional taxes, duties and other
governmental charges to which such Issuer Trust has become subject as a result
of a Tax Event.
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DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Issuer Trust, the
Issuer Trustees on behalf of such Issuer Trust will issue the Preferred
Securities and the Common Securities. The Preferred Securities of a particular
issue will represent preferred beneficial interests in the Issuer Trust and
the holders thereof will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption or liquidation
over the Common Securities of such Issuer Trust, as well as other benefits as
described in the corresponding Trust Agreement. This summary of certain
provisions of the Preferred Securities and each Trust Agreement, which
together with the applicable Prospectus Supplement will describe the material
terms thereof, does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of each Trust
Agreement, including the definitions therein of certain terms, and the Trust
Indenture Act, to each of which reference is hereby made. Wherever particular
defined terms of a Trust Agreement (as amended or supplemented from time to
time) 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 as an exhibit to the Registration Statement of which
this Prospectus forms a part. Each of the Issuer 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 Preferred Securities of an Issuer Trust will rank pari passu, and
payments will be made thereon pro rata, with the Common Securities of that
Issuer Trust except as described under "--Subordination of Common Securities."
Legal title to the Corresponding Junior Subordinated Debentures will be held
in the name of the relevant Issuer Trust in trust for the benefit of the
holders of the related Preferred Securities and Common Securities. Each
Guarantee Agreement executed by the Corporation for the benefit of the holders
of an Issuer Trust's Preferred Securities (the "Guarantee" for such Preferred
Securities) will be a guarantee on a subordinated basis with respect to the
related Preferred Securities but will not guarantee payment of Distributions
or amounts payable on redemption or liquidation of such Preferred Securities
when the related Issuer Trust does not have funds on hand available to make
such payments. See "Description of Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate 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 Preferred Securities is not
a Business Day (as 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 of any such delay) except
that, if such Business Day is in the next succeeding calendar year, payment of
such Distribution shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on 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
Debenture Trustee is closed for business.
Each Issuer Trust's Preferred Securities represent preferred beneficial
interests in the applicable Issuer Trust, and the Distributions on each
Preferred Security will be payable at a rate specified in the Prospectus
Supplement for such Preferred Securities. The amount of Distributions payable
for any period less than a full Distribution period will be computed on the
basis of a 360-day year of twelve 30-day months and the actual days elapsed in
a partial month in a period unless otherwise specified in the applicable
Prospectus Supplement. The amount of any Distributions payable for any full
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Distribution period will be computed by dividing the per annum rate by the
number of dates on which distributions are payable in a calendar year.
Distributions to which holders of 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 provided in the applicable Prospectus Supplement, the Corporation has the
right under the Junior Subordinated Indenture, pursuant to which it will issue
the Corresponding Junior Subordinated Debentures, to defer the payment of
interest at any time or from time to time on any series of the Corresponding
Junior Subordinated Debentures for a period which will be specified in such
Prospectus Supplement relating to such series (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity of the
Corresponding Junior Subordinated Debentures. As a consequence of any such
extension, Distributions on the corresponding 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 Preferred
Securities) by the Issuer Trust of such Preferred Securities during any such
Extension Period. During such Extension Period the Corporation may not, and
may not permit any subsidiary of the Corporation to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation that rank pari
passu in all respects with or junior in interest to the Corresponding Junior
Subordinated Debentures or (iii) make any guarantee payments with respect to
any guarantee by the Corporation of debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in interest to
the Corresponding Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Corporation, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under any
Guarantee and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Corporation's (including its subsidiaries')
benefit plans for their directors, officers or employees).
The revenue of each Issuer Trust available for distribution to holders of
its Preferred Securities will be limited to payments under the Corresponding
Junior Subordinated Debentures in which the Issuer Trust will invest the
proceeds from the issuance and sale of its Trust Securities. See "Description
of Junior Subordinated Debentures--Corresponding Junior Subordinated
Debentures." If the Corporation does not make interest payments on such
Corresponding Junior Subordinated Debentures, the Property Trustee will not
have funds available to pay Distributions on the Related Preferred Securities.
The payment of Distributions (if and to the extent the Issuer Trust has funds
legally available for the payment of such Distributions and cash sufficient to
make such payments) is guaranteed by the Corporation on a limited basis as set
forth herein under "Description of Guarantees."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Issuer Trust on the relevant
record dates, which, as long as the 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 Preferred Securities are not in book-
entry form, the relevant record date for such Preferred Securities shall be
the date at least 15 days prior to the relevant Distribution Date, as
specified in the applicable Prospectus Supplement.
REDEMPTION
Upon the repayment or redemption, in whole or in part, of any Corresponding
Junior Subordinated Debentures, whether at maturity or upon earlier redemption
as provided in the Junior Subordinated
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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 90 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 Corporation upon the concurrent
redemption of such Corresponding Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures--Redemption." If less than all
of any series of Corresponding Junior Subordinated Debentures are to be repaid
or redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the related
Preferred Securities and the Common Securities. The amount of premium, if any,
paid by the Corporation upon the redemption of all or any part of any series
of any Corresponding Junior Subordinated Debentures to be repaid or redeemed
on a Redemption Date shall be allocated to the redemption pro rata of the
related Preferred Securities and the Common Securities.
The Corporation will have the right to redeem any series of Corresponding
Junior Subordinated Debentures on such terms as may be specified in the
applicable Prospectus Supplement, in each case subject to receipt of prior
approval by the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve.
"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 that portion of the principal amount of Corresponding
Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Junior Subordinated Indenture, allocated to the Common Securities and
to the Preferred Securities based upon the relative Liquidation Amounts of
such classes and 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 Debentures to holders of any series of Trust
Securities in connection with a dissolution or liquidation of the related
Issuer Trust, Corresponding Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of the Trust Securities of the holder
to whom such Corresponding Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount per Trust Security as set forth
in the applicable Prospectus Supplement.
REDEMPTION PROCEDURES
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 Debentures. Redemptions of
the Preferred Securities shall be made and the Redemption Price shall be
payable on each Redemption Date only to the extent that the related Issuer
Trust has funds on hand available for the payment of such Redemption Price.
See also "--Subordination of Common Securities."
If an Issuer Trust gives a notice of redemption in respect of its Preferred
Securities, then, 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 The Depository Trust Company ("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 Preferred
Securities. See "Book-Entry Issuance." If such 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 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 Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior
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to the Redemption Date for any Preferred Securities called for redemption
shall be payable to the holders of such 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 Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price, and such 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 the event that payment of the
Redemption Price in respect of Preferred Securities called for redemption is
improperly withheld or refused and not paid either by the Issuer Trust or by
the Corporation pursuant to the Guarantee as described under "Description of
Guarantees," Distributions on such Preferred Securities will continue to
accrue at the then applicable rate, from the Redemption Date originally
established by the Issuer Trust for such Preferred Securities to the date such
Redemption Price is actually paid, in which case the actual payment date will
be the date fixed for redemption for purposes of calculating the Redemption
Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time
and from time to time purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
If less than all of the Preferred Securities and Common Securities issued by
an Issuer Trust are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the
Common Securities based upon the relative Liquidation Amounts of such classes.
The particular Preferred Securities to be redeemed shall be selected on a pro
rata basis not more than 90 days prior to the Redemption Date by the Property
Trustee from the outstanding 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 the Liquidation Amount or an integral multiple of such Liquidation
Amount in excess thereof) of the Liquidation Amount of Preferred Securities of
a denomination larger than the Liquidation Amount per Preferred Security. The
Property Trustee shall promptly notify the trust registrar in writing of the
Preferred Securities selected for redemption and, in the case of any 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 Preferred
Securities shall relate, in the case of any Preferred Securities redeemed or
to be redeemed only in part, to the portion of the aggregate Liquidation
Amount of 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
90 days before the Redemption Date to each Holder of Trust Securities to be
redeemed at its registered address. Unless the Corporation defaults in payment
of the Redemption Price on the Corresponding Junior Subordinated Debentures,
on and after the Redemption Date interest will cease to accrue on such Junior
Subordinated Debentures or portions thereof (and distributions will cease to
accrue on the Related Preferred Securities or portions thereof) called for
redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer
Trust's Preferred Securities and Common Securities, as applicable, shall be
made pro rata based on the Liquidation Amount of such Preferred Securities and
Common Securities; provided, however, that if on any Distribution Date
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or Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution on, or Redemption Price of, any of
the Issuer Trust's Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall
be made unless payment in full in cash of all accumulated and unpaid
Distributions on all of the Issuer Trust's outstanding 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 the Issuer Trust's outstanding Preferred Securities then called for
redemption, shall have been made or provided for, and all funds available to
the Property Trustee shall first be applied to the payment in full in cash of
all Distributions on, or Redemption Price of, the Issuer Trust's Preferred
Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the Corporation as holder of such Issuer Trust's
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 Preferred Securities
have been cured, waived or otherwise eliminated. Until any such Events of
Default under the applicable Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the holders of such Preferred Securities
and not on behalf of the Corporation as holder of the Issuer Trust's Common
Securities, and only the holders of such Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Unless otherwise specified in the applicable Prospectus Supplement, subject
to the Corporation having received prior approval of the Federal Reserve to do
so if then required under applicable capital guidelines or policies of the
Federal Reserve, the Corporation has the right at any time to terminate any
Issuer Trust and, after satisfaction of the liabilities of creditors of such
Issuer Trust as provided by applicable law, cause such Corresponding Junior
Subordinated Debentures in respect of the Preferred Securities and Common
Securities issued by such Issuer Trust to be distributed to the holders of
such Preferred Securities and Common Securities in liquidation of the Issuer
Trust.
Pursuant to each Trust Agreement, each Issuer Trust shall automatically
terminate upon expiration of its term and shall terminate on the first to
occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
holder of the Common Securities; (ii) the distribution of a Like Amount of the
Corresponding Junior Subordinated Debentures to the holders of its Trust
Securities, if the Corporation, as Depositor, has given written direction to
the Property Trustee to terminate such Issuer Trust (which direction is
optional and wholly within the discretion of the Corporation, as Depositor);
(iii) redemption of all of the Issuer Trust's Preferred Securities as
described under "Description of Preferred Securities--Redemption"; and (iv)
the entry of an order for the dissolution of the Issuer Trust by a court of
competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer Trust shall be liquidated by the Issuer Trustees as
expeditiously as the Issuer Trustees determine to be possible by distributing,
after satisfaction of liabilities to creditors of such Issuer Trust as
provided by applicable law, to the holders of such Trust Securities a Like
Amount of the Corresponding Junior Subordinated Debentures, unless such
distribution is determined by the Property Trustee not to be practical, in
which event such holders will be entitled to receive out of the assets of the
Issuer Trust available for distribution to holders, after satisfaction of
liabilities to creditors of such Issuer Trust as provided by applicable law,
an amount equal to, in the case of holders of 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 Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by such
Issuer Trust on its Preferred Securities shall
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be paid on a pro rata basis. The holder(s) of such Issuer Trust's Common
Securities will be entitled to receive distributions upon any such liquidation
pro rata with the holders of its Preferred Securities, except that if a
Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities. A supplemental
Junior Subordinated Indenture may provide that if an early termination occurs
as described in clause (iv) above, the Corresponding Junior Subordinated
Debentures may be subject to optional redemption in whole (but not in part).
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Preferred Securities (i) such
series of Preferred Securities will no longer be deemed to be outstanding,
(ii) DTC or its nominee, as the record holder of such series of Preferred
Securities, will receive a registered global certificate or certificates
representing the Corresponding Junior Subordinated Debentures to be delivered
upon such distribution and (iii) any certificates representing such series of
Preferred Securities not held by DTC or its nominee will be deemed to
represent the Corresponding Junior Subordinated Debentures having a principal
amount equal to the stated Liquidation Amount of such series of Preferred
Securities and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on such series of 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 Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of an Issuer Trust were to occur. Accordingly, the Preferred
Securities that an investor may purchase, or the Corresponding Junior
Subordinated Debentures that the investor may receive on dissolution and
liquidation of an Issuer Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under each
Trust Agreement with respect to the Preferred Securities issued thereunder
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Junior
Subordinated Indenture (see "Description of Junior Subordinated
Debentures--Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period
of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in 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 Issuer
Trustee or Trustees by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Preferred Securities of the applicable Issuer
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 Corporation to
appoint a successor Property Trustee within 60 days thereof.
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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 Issuer Trust's
Preferred Securities, the Administrative Trustees and the Corporation, as
Depositor, unless such Event of Default shall have been cured or waived. The
Corporation, as Depositor, and the Administrative Trustees are required to
file annually with the Property Trustee a certificate as to whether or not
they are in compliance with all the conditions and covenants applicable to
them under each Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
termination of each Issuer Trust as described above. See "--Liquidation
Distribution Upon Termination." The existence of an Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity
thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by
the holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property
may at the time be located, the Corporation, as the holder of the 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 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 ISSUER TRUSTEES
Any entity into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
entity 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 entity shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER TRUSTS
An Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any entity, except as described below or as
otherwise set forth in the Trust Agreement. An Issuer Trust may, at the
request of the Corporation, with the consent of the Administrative Trustees
and without the consent of the
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holders of the 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 Issuer Trust with respect to
the Preferred Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Preferred Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Corporation
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 Debentures, (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 the Preferred
Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the 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 substantially identical to
that of the Issuer Trust, (vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Corporation has
received an opinion from independent counsel to the Issuer Trust experienced
in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect and
(b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Issuer Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
(viii) the Corporation or any permitted successor or assignee owns all of the
common securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, an Issuer Trust
shall not, except with the consent of holders of 100% in Liquidation Amount of
the 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 Issuer Trust or the successor entity to be classified as
other than a grantor trust for United States Federal income tax purposes.
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 Preferred Securities will have no voting rights.
Each Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of
the holders of the 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, 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 Issuer Trust will be
classified for United States Federal income tax purposes as a grantor trust at
all times that any Trust Securities are outstanding or to ensure that the
Issuer Trust will not be required to register as an "investment company" under
the Investment Company Act; provided, however, that in the case of either
clause (i) or clause (ii) such
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action shall not adversely affect in any material respect the interests of any
holder of Trust Securities, and 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 Issuer Trustees and the
Corporation 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 the Issuer Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the Issuer
Trustees in accordance with such amendment will not affect the Issuer Trust's
status as a grantor trust for United States federal income tax purposes or the
Issuer 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 Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method
and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or executing any trust or power conferred on the Property
Trustee with respect to such Corresponding Junior Subordinated Debentures,
(ii) waive any past default that is waivable under Section 5.13 of the Junior
Subordinated Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or such Corresponding Junior Subordinated
Debentures, 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 Preferred Securities; provided, however,
that where a consent under the Junior Subordinated Indenture would require the
consent of each holder of Corresponding Junior Subordinated Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior consent of each holder of the corresponding Preferred
Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Preferred Securities
except by subsequent vote of the holders of the Preferred Securities. The
Property Trustee shall notify each holder of Preferred Securities of any
notice of default with respect to the Corresponding Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the holders of
the Preferred Securities, prior to taking any of the foregoing actions, the
Issuer Trustees shall obtain an opinion of counsel experienced in such matters
to the effect that the Issuer Trust will be classified as a grantor trust for
United States federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of 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 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 Preferred Securities in the
manner set forth in each Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for an Issuer Trust to redeem and cancel its Preferred Securities in
accordance with the applicable Trust Agreement.
Notwithstanding that holders of 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 Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
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GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited
with, or on behalf of, the Depository identified in the Prospectus Supplement
relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement for such series, the Depository will be DTC. Global
Preferred Securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Preferred Securities represented thereby, a Global
Preferred Security may not be transferred except as a whole by the Depository
for such Global Preferred Security to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository or by the Depository or any nominee to a successor Depository or
any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of
Preferred Securities will be described in the Prospectus Supplement relating
to such series. The Corporation anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-
entry registration and transfer system, the respective aggregate Liquidation
Amounts of the individual Preferred Securities represented by such Global
Preferred Securities to the accounts of Participants. Such accounts shall be
designated by the dealers, underwriters or agents with respect to such
Preferred Securities or by the Corporation if such Preferred Securities are
offered and sold directly by the Corporation. Ownership of beneficial
interests in a Global Preferred Security will be limited to Participants or
persons that may hold interests through Participants. Ownership of beneficial
interests in such Global Preferred Security will be shown on, and the transfer
of that ownership will be effected only through, records maintained by the
applicable Depositary or its nominee (with respect to interests of
Participants) and the records of Participants (with respect to interests of
persons who hold through Participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Preferred Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Preferred Securities represented by such Global Preferred Security for
all purposes under the Junior Subordinated Indenture governing such Preferred
Securities. Except as provided below, owners of beneficial interests in a
Global Preferred Security will not be entitled to have any of the individual
Preferred Securities of the series represented by such Global Preferred
Security registered in their names, will not receive or be entitled to receive
physical delivery of any such Preferred Securities of such series in
definitive form and will not be considered the owners or holders thereof under
the Junior Subordinated Indenture.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Corporation, the
Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount
(whether upon redemption or otherwise), premium
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or Distributions in respect of a permanent Global Preferred Security
representing any of such Preferred Securities, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security for such Preferred Securities as shown on the
records of such Depositary or its nominee. The Corporation also expects that
payments by Participants to owners of beneficial interests in such Global
Preferred Security held through such 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."
Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is
not appointed by the Corporation within 90 days, the Corporation will issue
individual Preferred Securities of such series in exchange for the Global
Preferred Security representing such series of Preferred Securities. In
addition, the Corporation may at any time and in its sole discretion, subject
to any limitations described in the Prospectus Supplement relating to such
Preferred Securities, determine not to have any Preferred Securities of such
series represented by one or more Global Preferred Securities and, in such
event, will issue individual Preferred Securities of such series in exchange
for the Global Preferred Security or Securities representing such series of
Preferred Securities. Further, if the Corporation so specifies with respect to
the Preferred Securities of a series, an owner of a beneficial interest in a
Global Preferred Security representing Preferred Securities of such series
may, on terms acceptable to the Corporation, the Property Trustee and the
Depository for such Global Preferred Security, receive individual Preferred
Securities of such series in exchange for such beneficial interests, subject
to any limitations described in the Prospectus Supplement relating to such
Preferred Securities. In any such instance, an owner of a beneficial interest
in a Global Preferred Security will be entitled to physical delivery of
individual Preferred Securities of the series represented by such Global
Preferred Security equal in principal amount to such beneficial interest and
to have such Preferred Securities registered in its name. Individual Preferred
Securities of such series so issued will be issued in denominations, unless
otherwise specified by the Corporation, of the Liquidation Amount of a
Preferred Security of such series and integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depository, which shall credit the relevant accounts at the Depository on the
applicable Distribution Dates or, if any Issuer Trust's Preferred Securities
are not held by the Depository, 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 Corporation. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Corporation. 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 Corporation) to act as Paying Agent.
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 Preferred Securities will be effected without
charge by or on behalf of each Issuer Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Issuer Trusts will not be required to register or cause
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to be registered the transfer of their Preferred Securities after such
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
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 Preferred Securities are entitled under such Trust Agreement
to vote, then the Property Trustee shall take such action as is directed by
the Corporation 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.
For information concerning the relationships between Bankers Trust Company,
the Property Trustee, and the Corporation, see "Description of Junior
Subordinated Debentures--Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuer Trusts in such a way that no Issuer Trust
will be deemed to be an "investment company" required to be registered under
the Investment Company Act and will be classified as a grantor trust for
United States federal income tax purposes and so that the Corresponding Junior
Subordinated Debentures will be treated as indebtedness of the Corporation for
United States federal income tax purposes. In this connection, the Corporation
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of each Issuer
Trust or each Trust Agreement, that the Corporation and the Administrative
Trustees determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially adversely affect the
interests of the holders of the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer Trust may borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Corporation concurrently
with the issuance by each Issuer Trust of its Preferred Securities for the
benefit of the holders from time to time of such Preferred Securities. Bankers
Trust Company 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.
This summary of certain provisions of the Guarantees, which together with the
applicable Prospectus Supplement will describe the material terms thereof,
does not purport to be complete and is subject to, and qualified in its
entirety by reference to, all of the provisions of each Guarantee Agreement,
including the definitions therein of certain terms, and the Trust Indenture
Act to each of which reference is hereby made. The
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form of the Guarantee has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Reference in this summary to
Preferred Securities means that Issuer Trust's Preferred Securities to which a
Guarantee relates. The Guarantee Trustee will hold each Guarantee for the
benefit of the holders of the related Issuer Trust's Preferred Securities.
GENERAL
The Corporation 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 Preferred Securities, as and when due, regardless
of any defense, right of set-off or counterclaim that such Issuer Trust may
have or assert other than the defense of payment. The following payments with
respect to the Preferred Securities, to the extent not paid by or on behalf of
the related Issuer Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accrued and unpaid Distributions required to be paid on
such Preferred Securities, to the extent that such Issuer Trust has funds on
hand available therefor at such time, (ii) the Redemption Price with respect
to any Preferred Securities called for redemption to the extent that such
Issuer Trust has funds on hand available therefor at such time or (iii) upon a
voluntary or involuntary termination, winding up or liquidation of such Issuer
Trust (unless the Corresponding Junior Subordinated Debentures are distributed
to holders of such Preferred Securities), the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of such Issuer Trust remaining
available for distribution to holders of Preferred Securities on liquidation
of such Issuer Trust. The Corporation's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Corporation
to the holders of the applicable Preferred Securities or by causing the Issuer
Trust to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Issuer Trust's obligations under the Preferred Securities, but
will apply only to the extent that such related Issuer Trust has funds
sufficient to make such payments, and is not a guarantee of collection.
If the Corporation does not make interest payments on the Corresponding
Junior Subordinated Debentures held by the Issuer Trust, the Issuer Trust will
not be able to pay Distributions on the Preferred Securities and will not have
funds legally available therefor. Each Guarantee will rank subordinate and
junior in right of payment to all Senior Indebtedness of the Corporation. See
"-- Status of the Guarantees." Because the Corporation is a holding company,
the right of the Corporation to participate in any distribution of assets of
any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent the Corporation may itself be recognized as a creditor of
that subsidiary. Accordingly, the Corporation's obligations under the
Guarantees will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and claimants should look only
to the assets of the Corporation for payments thereunder. See "BankAmerica
Corporation." 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 Corporation, including Senior Indebtedness,
whether under the Junior Subordinated Indenture, any other indenture that the
Corporation may enter into in the future or otherwise. See the Prospectus
Supplement relating to any offering of Preferred Securities.
The Corporation has, through the applicable Guarantee, the applicable Trust
Agreement, the Junior Subordinated Debentures, the Junior Subordinated
Indenture and the Expense Agreement, taken together, fully, irrevocably and
unconditionally guaranteed all of the Issuer Trust's obligations under the
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
Issuer Trust's obligations under the Preferred Securities. See "Relationship
Among the Preferred Securities, the Corresponding Junior Subordinated
Debentures and the Guarantees."
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STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Corporation in the same manner as Junior Subordinated
Debentures.
Each Guarantee will rank pari passu with all other Guarantees issued by the
Corporation. 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 Guarantor 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 Preferred Securities. Each Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or upon distribution to the holders of the Preferred Securities of the
Corresponding Junior Subordinated Debentures. None of the Guarantees places a
limitation on the amount of additional Senior Indebtedness that may be
incurred by the Corporation. The Corporation expects from time to time to
incur additional indebtedness constituting Senior Indebtedness.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related 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 Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of the 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 Corporation and shall inure to
the benefit of the holders of the related Preferred Securities then
outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
related 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 Preferred Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under such Guarantee
without first instituting a legal proceeding against the Issuer Trust, the
Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Corporation in performance of 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 Preferred Securities
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unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
For information concerning the relationship between Bankers Trust Company,
the Property Trustee, and the Corporation, see "Description of Junior
Subordinated Debentures--Information Concerning the Debenture Trustee."
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 Preferred Securities, upon
full payment of the amounts payable upon liquidation of the related Issuer
Trust or upon distribution of Corresponding Junior Subordinated Debentures to
the holders of the related Preferred Securities. 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 Preferred Securities must restore payment of any sums
paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the laws
of the State of California.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by the Corporation under each
Trust Agreement (the "Expense Agreement"), the Corporation, as holder of the
Common Securities, will irrevocably and unconditionally guarantee to each
person or entity to whom the Issuer Trust becomes indebted or liable, the full
payment of any costs, expenses or liabilities of the Issuer Trust, other than
obligations of the Issuer Trust to pay to the holders of any Preferred
Securities or other similar interests in the Issuer Trust of the amounts due
such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. The Expense Agreement will constitute
an unsecured obligation of the Corporation, as holder of the Common
Securities.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of Guarantees." Taken together, the
Corporation's obligations under each series of Junior Subordinated Debentures,
the Junior Subordinated 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 related series of 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 Issuer Trust's obligations under the Preferred
Securities. If and to the extent that the Corporation does not make payments
on any series of Corresponding Junior Subordinated Debentures, such Issuer
Trust will not pay Distributions or other amounts due on its Preferred
Securities. The Guarantees do not cover payment of Distributions when
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the related Issuer Trust does not have sufficient funds to pay such
Distributions. In such event, the remedy of a holder of a series of Preferred
Securities is to institute a legal proceeding directly against the Corporation
pursuant to the terms of the Junior Subordinated Indenture for enforcement of
payment of the corresponding Junior Subordinated Debentures to such holder.
The obligations of the Corporation under each Guarantee are subordinate and
junior in right of payment to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on each
series of Corresponding Junior Subordinated Debentures, such payments will be
sufficient to cover Distributions and other payments due on the related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debentures will be equal to
the sum of the aggregate stated Liquidation Amount of the Related Preferred
Securities and related Common Securities; (ii) the interest rate and interest
and other payment dates on each series of Corresponding Junior Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the related Preferred Securities; (iii) the Corporation, as holder
of the Common Securities, shall pay for all and any costs, expenses and
liabilities of such Issuer Trust except the Issuer Trust's obligations to
holders of its Preferred Securities under such Preferred Securities; and (iv)
each Trust Agreement further provides that the Issuer Trust will not engage in
any activity that is not consistent with the limited purposes of such Issuer
Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Corporation has the right to set-off any payment it is
otherwise required to make thereunder with and to the extent the Corporation
has theretofore made, or is concurrently on the date of such payment making, a
payment under the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any related Preferred Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the related
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related Issuer Trust or any other person or entity.
A default or event of default under any Senior Indebtedness of the
Corporation would not constitute a default or Event of Default. However, in
the event of payment defaults under, or acceleration of, Senior Indebtedness
of the Corporation, the subordination provisions of the Junior Subordinated
Indenture provide that no payments may be made in respect of the Corresponding
Junior Subordinated Debentures until such Senior Indebtedness 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
Debentures would constitute an Event of Default.
LIMITED PURPOSE OF ISSUER TRUSTS
Each Issuer Trust's Preferred Securities evidence a beneficial interest in
such Issuer Trust, and each Issuer Trust exists for the sole purpose of
issuing its Preferred Securities and Common Securities and investing the
proceeds thereof in Corresponding Junior Subordinated Debentures. A principal
difference between the rights of a holder of a 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
Corporation the principal amount of and interest accrued on Corresponding
Junior Subordinated Debentures held, while a holder of Preferred Securities is
entitled to receive Distributions from such Issuer Trust (or from the
Corporation under the applicable Guarantee) if and to the extent such Issuer
Trust has funds available for the payment of such Distributions.
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RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
any Issuer Trust involving the liquidation of the Corresponding Junior
Subordinated Debentures, after satisfaction of the liabilities of creditors of
such Issuer Trust as required by applicable law, the holders of the related
Preferred Securities will be entitled to receive, out of assets held by such
Issuer Trust, the Liquidation Distribution in cash. See "Description of
Preferred Securities--Liquidation Distribution Upon Termination." Upon any
voluntary or involuntary liquidation or bankruptcy of the Corporation, the
Property Trustee, as holder of the Corresponding Junior Subordinated
Debentures, would be a subordinated creditor of the Corporation, subordinated
in right of payment to all Senior Indebtedness as set forth in the Junior
Subordinated Indenture, but entitled to receive payment in full of principal
and interest, before any stockholders of the Corporation receive payments or
distributions. Since the Corporation, as the holder of the Common Securities,
is the guarantor under each Guarantee and has agreed to pay for all costs,
expenses and liabilities of each Issuer Trust (other than the Issuer Trust's
obligations to the holders of its Preferred Securities), the positions of a
holder of such Preferred Securities and a holder of such Corresponding Junior
Subordinated Debentures relative to other creditors and to stockholders of the
Corporation in the event of liquidation or bankruptcy of the Corporation are
expected to be substantially the same.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be
described in the Prospectus Supplement relating to such Debt Securities.
The Senior Securities are to be issued under an Indenture dated as of
November 1, 1991, as amended by a First Supplemental Indenture dated as of
August 1, 1994 (as so amended, the "Senior Indenture"), between the
Corporation and First Trust of California, National Association, as successor
trustee (the "Senior Trustee"). The Subordinated Securities are to be issued
under an Indenture dated as of November 1, 1991, as amended by a First
Supplemental Indenture dated as of September 8, 1992 (as so amended, the
"Subordinated Indenture"), between the Corporation and Chemical Trust Company
of California, as trustee (the "Subordinated Trustee," and together with the
Senior Trustee, the "Trustees"). The Senior Indenture and the Subordinated
Indenture (collectively, the "Indentures") are exhibits to the Registration
Statement. The following summaries of provisions of the Indentures, which
together with the applicable Prospectus Supplement will describe the material
terms thereof, do not purport to be complete and are qualified in their
entirety by reference to the provisions of the Indentures, to which reference
is hereby made. Numerical references in parentheses below are to sections of
the Indentures. Wherever particular sections or defined terms of the
Indentures are referred to, it is intended that such sections or defined terms
shall be incorporated herein by reference. Unless otherwise indicated,
capitalized terms shall have the meanings ascribed to them in the Indentures.
GENERAL
The amount of Debt Securities offered by this Prospectus will be limited to
the amount described on the cover of this Prospectus. Each Indenture provides
that Debt Securities in an unlimited amount may be issued thereunder from time
to time in one or more series. (Section 301)
The Senior Securities will be unsecured and will rank pari passu with other
unsecured Senior Debt of the Corporation. The Subordinated Securities will be
unsecured and will rank pari passu with other debt of the Corporation that has
substantially similar subordination provisions ("Subordinated Debt")
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and, together with such other Subordinated Debt, will be subordinate and
junior in right of payment to the prior payment in full of the Senior Debt of
the Corporation as described below under "Subordination." Because the
Corporation is a holding company, the right of the Corporation to participate
in any distribution of assets of any subsidiary upon such subsidiary's
liquidation or reorganization or otherwise, is subject to the prior claims of
creditors of the subsidiary, except to the extent the Corporation may itself
be recognized as a creditor of that subsidiary. Accordingly, the Debt
Securities will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Debt Securities
should look only to the assets of the Corporation for payments on the Debt
Securities. Except as otherwise provided in the applicable Prospectus
Supplement, the Indentures do not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Debt, whether
under the Subordinated Indenture, any other indenture that the Corporation may
enter into in the future or otherwise. See "--Subordination" and the
Prospectus Supplement relating to any offering of Securities.
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Debt Securities for the terms of such Debt Securities,
including, where applicable: (i) the designation and any limit on the
aggregate principal amount of such Debt Securities; (ii) the price (expressed
as a percentage of the aggregate principal amount thereof) at which such Debt
Securities will be issued; (iii) the date or dates on which such Debt
Securities will mature or method by which such dates can be determined; (iv)
the currency or currencies in which such Debt Securities are being sold and
are denominated and the circumstances, if any, under which any Debt Securities
may be payable in a currency other than the currency in which such Debt
Securities are denominated, and if so, the exchange rate, the exchange rate
agent and, if the Holder of any such Debt Securities may elect the currency in
which payments thereon are to be made, the manner of such election; (v) the
denominations in which any Debt Securities which are Registered Securities
will be issuable, if other than denominations of $1,000 and any integral
multiple thereof, and the denomination or denominations in which any Debt
Securities which are Bearer Securities will be issuable, if other than the
denomination of $5,000; (vi) the rate or rates (which may be fixed or
variable) at which such Debt Securities will bear interest, which rate may be
zero in the case of certain Debt Securities issued at an issue price
representing a discount from the principal amount payable at maturity; (vii)
the date from which interest on such Debt Securities will accrue, the dates on
which such interest will be payable or method by which such dates can be
determined, the date on which payment of such interest will commence and the
circumstances, if any, in which the Corporation may defer interest payments;
(viii) the dates on which, and the price or prices at which, such Debt
Securities will, pursuant to any mandatory sinking fund provision, or may,
pursuant to any optional redemption or required repayment provisions, be
redeemed or repaid and the other terms and provisions of any such optional
redemption or required repayment; (ix) whether such Debt Securities are to be
issuable as Bearer Securities and/or Registered Securities and, if issuable as
Bearer Securities, the terms upon which any Bearer Securities may be exchanged
for Registered Securities; (x) whether such Debt Securities are to be issued
in the form of one or more temporary or permanent Global Securities and, if
so, the identity of the depository for such Global Security or Securities;
(xi) if a temporary global Debt Security is to be issued with respect to such
series, the extent to which, and the manner in which, any interest thereon
payable on an interest payment date prior to the issuance of a permanent
Global Security or definitive Bearer Securities will be credited to the
accounts of the persons entitled thereto on such interest payment date; (xii)
if a temporary Global Security is to be issued with respect to such series,
the terms upon which interests in such temporary Global Security may be
exchanged for interests in a permanent Global Security or for definitive Debt
Securities of the series and the terms upon which interests in a permanent
Global Security, if any, may be exchanged for definitive Debt Securities of
the series; (xiii) any additional restrictive covenants included for the
benefit of Holders of such Debt Securities; (xiv) any additional Events of
Default provided with respect to such Debt Securities; (xv) information with
respect to book-entry procedures, if any; (xvi) whether the Debt Securities
will be repayable at the option of the Holder in the event of a change in
control of the Corporation; (xvii) any other material
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terms of the Debt Securities not inconsistent with the provisions of the
applicable Indenture; and (xviii) the material terms of any securities being
offered together with or separately from the Debt Securities. Such Prospectus
Supplement will also describe any special provisions for the payment of
additional amounts with respect to the Debt Securities and certain United
States federal income tax consequences and other special considerations
applicable to such series of Debt Securities. If a Debt Security is
denominated in a foreign currency, such Debt Security may not trade on a U.S.
national securities exchange unless and until the Commission has approved
appropriate rule changes pursuant to the Securities Act to accommodate the
trading of such Debt Security.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable in definitive form solely as
Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Unless otherwise indicated in the Prospectus
Supplement, Bearer Securities other than Bearer Securities in temporary or
permanent global form will have interest coupons attached. (Section 201) Each
Indenture also provides that Bearer Securities or Registered Securities of a
series may be issuable in permanent global form. (Section 203) See "Permanent
Global Securities."
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of authorized denominations and of a
like aggregate principal amount, tenor and terms. In addition, if Debt
Securities of any series are issuable as both Registered Securities and Bearer
Securities, at the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable Indenture, Bearer Securities (with all
unmatured coupons, except as provided below, and all matured coupons in
default) of such series will be exchangeable into Registered Securities of the
same series of any authorized denominations and of a like aggregate principal
amount, tenor and terms. Bearer Securities surrendered in exchange for
Registered Securities between the close of business on a Regular Record Date
or a Special Record Date and the relevant date for payment of interest shall
be surrendered without the coupon relating to such date for payment of
interest, and interest will not be payable in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such coupon when due in accordance with the terms of the
applicable Indenture. Bearer Securities will not be issued in exchange for
Registered Securities. (Section 305) Each Bearer Security, other than a
temporary global Bearer Security, and each interest coupon will bear the
following legend: "Any United States Person who holds this obligation will be
subject to limitations under the United States federal income tax laws
including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code."
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (duly
endorsed or accompanied by a satisfactory written instrument of transfer), at
the office of the Security Registrar or at the office of any transfer agent
designated by the Corporation for such purpose with respect to such series of
Debt Securities, without service charge and upon payment of any taxes and
other governmental charges. (Section 305) If the applicable Prospectus
Supplement refers to any transfer agent (in addition to the Security
Registrar) initially designated by the Corporation with respect to any series
of Debt Securities, the Corporation 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 (or Security Registrar) acts, except that, if Debt
Securities of a series are issuable solely as Registered Securities, the
Corporation will be required to maintain a transfer agent in each Place of
Payment for such series and, if Debt Securities of a series are issuable as
Bearer Securities, the Corporation will be required to maintain (in addition
to the Security Registrar) a transfer agent in a Place of Payment for such
series located outside the United States. The Corporation may at any time
designate additional transfer agents with respect to any series of Debt
Securities. (Section 1002)
The Corporation shall not be required (i) to issue, register the transfer of
or exchange Debt Securities of any particular series to be redeemed for a
period of 15 days preceding the first publication
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of the relevant notice of redemption or, if Registered Securities are
outstanding and there is no publication, the mailing of the relevant notice of
redemption, (ii) to register the transfer of any Registered Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Registered Security being redeemed in part or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of like tenor and terms of that series,
provided that such Registered Security shall be surrendered for redemption.
(Section 305) Additional information regarding restrictions on the issuance,
exchange and transfer of, and special United States federal income tax
considerations relating to, Bearer Securities will be set forth in the
applicable Prospectus Supplement.
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series which are issuable as Bearer Securities
will initially be represented by one or more temporary Global Securities,
without interest coupons, to be deposited with a common depository in London
for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of
the Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel")
for credit to designated accounts. On and after the date determined as
provided in any such temporary Global Security and described in the applicable
Prospectus Supplement, but within a reasonable time, each such temporary
Global Security will be exchangeable for definitive Bearer Securities,
definitive Registered Securities or all or a portion of a permanent global
Bearer Security, or any combination thereof, as specified in such Prospectus
Supplement. No definitive Bearer Security or permanent global Bearer Security
delivered in exchange for a portion of a temporary Global Security shall be
mailed or otherwise delivered to any location in the United States in
connection with such exchange.
Additional information regarding restrictions on and special United States
federal income tax consequences relating to temporary Global Securities will
be set forth in the Prospectus Supplement relating thereto.
PERMANENT GLOBAL SECURITIES
If any Debt Securities of a series are issuable in permanent global form,
the applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such permanent Global
Security may exchange such interests for Debt Securities of such series and of
like tenor and principal amount of any authorized form and denomination.
Principal of and any premium and interest on a permanent Global Security will
be payable in the manner described in the Prospectus Supplement relating
thereto.
PAYMENTS AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payments
of principal of and premium, if any, and interest, if any, on Bearer
Securities will be payable in the currency designated in the Prospectus
Supplement, subject to any applicable laws and regulations, at such paying
agencies outside the United States as the Corporation may appoint from time to
time. Unless otherwise provided in the Prospectus Supplement, such payments
may be made, at the option of the Holder, by a check in the designated
currency or by transfer to an account in the designated currency maintained by
the payee with a bank located outside the United States. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of interest on
Bearer Securities on any Interest Payment Date will be made only against
surrender of the coupon relating to such Interest Payment Date to a paying
agent outside the United States. (Section 1001) No payment with respect to any
Bearer Security will be made at any office or paying agency maintained by the
Corporation in the United States nor will any such payment be made by transfer
to an account, or by mail to an address, in the United States.
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Notwithstanding the foregoing, payments of principal of and premium, if any,
and interest, if any, on Bearer Securities denominated and payable in U.S.
dollars will be made in U.S. dollars at an office or agency of, and designated
by, the Corporation located in the United States, if payment of the full
amount thereof in U.S. dollars at all paying agencies outside the United
States is illegal or effectively precluded by exchange controls or other
similar restrictions, and the Trustee receives an opinion of counsel that such
payment within the United States is legal. (Section 1002) As used in this
Prospectus, "United States" means the United States of America (including the
States and the District of Columbia) and its possessions including Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Marianas Islands.
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of and premium, if any, and interest, if any, on a Registered
Security will be payable in the currency designated in the Prospectus
Supplement, and interest will be payable at the office of such paying agent or
paying agents as the Corporation may appoint from time to time, except that at
the option of the Corporation payment of any interest may be made by a check
in such currency mailed to the Holder at such Holder's registered address or
by wire transfer to an account in such currency designated by such Holder in
writing not less than ten days prior to the date of such payment. Unless
otherwise indicated in the applicable Prospectus Supplement, payment of any
installment of interest on a Registered Security will be made to the Person in
whose name such Registered Security is registered at the close of business on
the Regular Record Date for such payments. (Section 307) Unless otherwise
indicated in the applicable Prospectus Supplement, principal payable at
maturity will be paid to the registered holder upon surrender of the
Registered Security at the office of a duly appointed paying agent.
The paying agents outside the United States initially appointed by the
Corporation for a series of Debt Securities will be named in the applicable
Prospectus Supplement. The Corporation may terminate the appointment of any of
the paying agents from time to time, except that the Corporation will maintain
at least one paying agent outside the United States so long as any Bearer
Securities are outstanding where Bearer Securities may be presented for
payment and may be surrendered for exchange, provided that so long as any
series of Debt Securities is listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Corporation will maintain a paying agent in London or
Luxembourg or any other required city located outside the United States, as
the case may be, for such series of Debt Securities. (Section 1002)
All moneys paid by the Corporation to a paying agent for the payment of
principal of or premium, if any, or interest, if any, on any Debt Security
that remains unclaimed at the end of two years after such principal, premium
or interest shall have become due and payable will, at request of the
Corporation, be repaid to the Corporation, and the Holder of such Debt
Security or any coupon appertaining thereto will thereafter look only to the
Corporation for payment thereof. (Section 1003)
COVENANTS CONTAINED IN INDENTURES
The Senior Indenture provides that the Corporation (a) will not sell,
transfer, or otherwise dispose of any shares of Voting Stock of Bank of
America or permit Bank of America to issue, sell, or otherwise dispose of any
shares of its Voting Stock unless, after giving effect to any such
transaction, Bank of America remains a Controlled Subsidiary, and (b) will not
permit Bank of America to (i) merge or consolidate unless the surviving
corporation is a Controlled Subsidiary or (ii) convey or transfer its
properties and assets substantially as an entirety to any person, except to a
Controlled Subsidiary. (Section 1005 of the Senior Indenture) "Controlled
Subsidiary" means any corporation more than 80% of the outstanding shares of
"Voting Stock" (except for directors' qualifying shares) of which is at the
time owned directly by the Corporation. With the consent of the Holders of at
least a majority in
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principal amount of the outstanding Senior Securities of each series issued
under the Senior Indenture, such definition in the Senior Indenture may be
modified so as to reduce the required percentage of ownership from 80% to a
majority. (Section 902 of the Senior Indenture) The term "Voting Stock" of
Bank of America refers to stock of any class or classes, however designated,
having ordinary voting power for the election of a majority of the Board of
Directors of Bank of America, other than stock having such power only by
reason of the happening of a contingency. (Section 101 of the Senior
Indenture)
The Senior Indenture also prohibits the Corporation from creating, assuming,
incurring or suffering to exist, as security for indebtedness for borrowed
money, any mortgage, pledge, encumbrance or lien or charge of any kind upon
the Voting Stock of Bank of America (other than directors' qualifying shares)
without effectively providing that the Senior Securities shall be secured
equally and ratably with (or prior to) such indebtedness; provided, however,
that the Corporation may create, assume, incur or suffer to exist any such
mortgage, pledge, encumbrance or lien or charge without regard to the
foregoing provisions so long as after giving effect thereto, the Corporation
will own at least 80% of the Voting Stock of Bank of America then issued and
outstanding, free and clear of any such mortgage, pledge, encumbrance or lien
or charge. (Section 1004 of the Senior Indenture)
The Subordinated Indenture does not contain any of the foregoing covenants.
The Corporation is not restricted by the Indentures from incurring, assuming
or becoming liable for any type of debt or other obligations, from creating
liens on its property (other than, in the case of the Senior Indenture, the
Voting Stock of Bank of America as described above) for any purposes or from
paying dividends or making distributions on its capital stock or purchasing or
redeeming its capital stock. The Indentures do not require the maintenance of
any financial ratios or specified levels of net worth or liquidity. In
addition, the Indentures do not contain any provision which would require the
Corporation to repurchase or redeem or otherwise modify the terms of any of
its Debt Securities upon a change in control or other events involving the
Corporation which may adversely affect the creditworthiness of the Debt
Securities.
MODIFICATION AND WAIVER
Except as to the definition of Controlled Subsidiary in the Senior Indenture
and certain other modifications and amendments not adverse to Holders of Debt
Securities, modifications and amendments of and waivers of compliance with
certain restrictive provisions under each Indenture may be made only with the
consent of the Holders of not less than 66 2/3% in principal amount of the
Outstanding Debt Securities of each series thereunder affected by such
modification, amendment or waiver; provided that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security or coupon affected thereby: (i) change the Stated Maturity of the
principal or any installment of principal or any installment of interest, if
any; (ii) reduce the amount of principal or interest, if any, thereon, or any
premium payable upon redemption or repayment thereof or in the case of an
Original Issue Discount Security the amount of principal payable upon
acceleration of the Maturity thereof; (iii) change the place of payment or the
currency in which principal or interest, if any, is payable; (iv) impair the
right to institute suit for the enforcement of any payment of the principal,
premium, if any, and interest, if any, or adversely affect the right of
repayment, if any, at the option of the Holder; (v) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of the applicable
Indenture or for waiver of compliance with certain provisions of the
applicable Indenture or for waiver of certain defaults; (vi) reduce the
requirements contained in the applicable Indenture for quorum or voting; or
(vii) modify any of the above provisions. (Section 902)
Each Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series issued thereunder if Debt Securities of that
series are issuable in whole or in part as Bearer
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Securities. (Section 1401 of the Senior Indenture, Section 1601 of the
Subordinated Indenture) A meeting may be called at any time by the Trustee for
such Debt Securities, or upon the request of the Corporation or the Holders of
at least 10% in principal amount of the Outstanding Debt Securities of such
series, in any such case upon notice given in accordance with the Indenture
with respect thereto. (Section 1402 of the Senior Indenture, Section 1602 of
the Subordinated Indenture) Except as limited by the proviso in the preceding
paragraph, any resolution presented at a meeting or adjourned meeting at which
a quorum is present may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that
series; provided, however, that any resolution with respect to any consent or
waiver which may be given by the Holders of not less than 66 2/3% in principal
amount of the Outstanding Debt Securities of a series issued under an
Indenture may be adopted at a meeting or an adjourned meeting at which a
quorum is present only by the affirmative vote of the Holders of not less than
66 2/3% in principal amount of such Outstanding Debt Securities of that
series; and provided further, that any resolution with respect to any demand,
consent, waiver or other action which may be made, given or taken by the
Holders of a specified percentage, which is less than a majority, in principal
amount of the Outstanding Debt Securities of a series issued under an
Indenture may be adopted at a meeting or adjourned meeting at which a quorum
is present by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Debt Securities of that series.
(Section 1404 of the Senior Indenture, Section 1604 of the Subordinated
Indenture)
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the applicable Indenture
with respect thereto will be binding on all Holders of Debt Securities of that
series and the related coupons issued under that Indenture. The quorum at any
meeting of Holders of a series of Debt Securities called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the Outstanding Debt Securities
of such series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the Holders
of not less than 66 2/3% in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing 66 2/3% in
principal amount of the Outstanding Debt Securities of such series issued
under that Indenture will constitute a quorum. (Section 1404 of the Senior
Indenture, Section 1604 of the Subordinated Indenture)
EVENTS OF DEFAULT
Unless otherwise provided in the applicable Prospectus Supplement, any
series of Senior Securities issued under the Senior Indenture will provide
that the following shall constitute Events of Default with respect to such
series: (i) default in payment of principal of or premium, if any, on any
Senior Security of such series when due; (ii) default for 30 days in payment
of interest, if any, on any Senior Security of such series or related coupon,
if any, when due; (iii) default in the deposit of any sinking fund payment on
any Senior Security of such series when due; (iv) default in the performance
or breach of any other covenant in such Indenture for the benefit of such
series, continued for 90 days after written notice thereof by the Trustee
thereunder or the Holders of at least 25% in principal amount of the
Outstanding Senior Securities of such series issued under that Indenture; and
(v) certain events of bankruptcy, insolvency or reorganization of the
Corporation or Bank of America. Unless otherwise provided in the applicable
Prospectus Supplement, an Event of Default will not be triggered with respect
to any series of Senior Securities issued under the Senior Indenture as a
result of an event of default pertaining to any other indebtedness of the
Corporation, including any other series of Debt Securities issued under the
Senior Indenture. (Section 501 of the Senior Indenture)
Unless otherwise provided in the applicable Prospectus Supplement, any
series of Subordinated Securities issued under the Subordinated Indenture will
provide that the only Event of Default will be certain events of bankruptcy of
the Corporation. (Section 501 of the Subordinated Indenture) Unless
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specifically stated in the applicable Prospectus Supplement for a particular
series of Subordinated Securities, there is no right of acceleration of the
payment of principal of the Subordinated Securities upon a default in the
payment of principal, premium, if any, or interest, if any, or in the
performance of any covenant or agreement in the Subordinated Securities or
Subordinated Indenture. In the event of a default in the payment of principal,
premium, if any, or interest, if any, or the performance of any covenant or
agreement in the Subordinated Securities or Subordinated Indenture, the
Trustee, subject to certain limitations and conditions, may institute judicial
proceedings to enforce payment of such principal, premium, if any, or
interest, if any, or to obtain the performance of such covenant or agreement
or any other proper remedy. (Section 503 of the Subordinated Indenture)
The Corporation is required to file with each Trustee annually an Officers'
Certificate as to the existence of any default in the performance and
observance of any of the terms, provisions and conditions of the applicable
Indenture. (Section 1007 of the Senior Indenture, Section 1004 of the
Subordinated Indenture) Each Indenture provides that if an Event of Default
specified therein shall occur and be continuing with respect to any series of
Debt Securities, either the Trustee thereunder or the Holders of not less than
25% in principal amount of the Outstanding Debt Securities of such series may
declare the principal of all the Debt Securities of such series (or in the
case of Original Issue Discount Securities, such portion of the principal
amount thereof as may be specified in the terms thereof) and all accrued but
unpaid interest thereon to be due and payable. (Section 502) In certain cases,
the Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may, on behalf of the Holders of all Debt Securities
of any such series and any related coupons, waive any past default or Event of
Default except a default (i) in payment of the principal of or premium, if
any, or interest, if any, on any of the Debt Securities of such series or (ii)
in respect of a covenant or provision of the Indenture which cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security of such series or coupon affected. (Section 513)
Each Indenture contains a provision entitling the Trustee thereunder,
subject to the duty of such Trustee during default to act with the required
standard of care, to be indemnified by the Holders of the Debt Securities of
any series thereunder or any related coupons before proceeding to exercise any
right or power under such Indenture with respect to such series at the request
of such Holders. (Section 603) Each Indenture provides that no Holder of any
Debt Securities of any series thereunder or any related coupons may institute
any proceeding, judicial or otherwise, to enforce such Indenture except in the
case of failure of the Trustee thereunder, for 60 days, to act after it is
given notice of default, a request to enforce such Indenture by the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of
such series and an offer of reasonable indemnity. (Section 507) This provision
will not prevent any Holder of Debt Securities or any related coupons from
enforcing payment of the principal thereof and premium, if any, and interest,
if any, thereon at the respective due dates thereof. (Section 508) The Holders
of a majority in principal amount of the Outstanding Debt Securities of any
series issued under an Indenture may direct the time, method and place of
conducting any proceedings for any remedy available to the Trustee for such
Debt Securities or exercising any trust or power conferred on it with respect
to the Debt Securities of such series. However, such Trustee may refuse to
follow any direction that conflicts with law or the Indenture under which it
serves or which it determines in good faith would be unjustly prejudicial to
Holders not joining therein. (Section 512)
Each Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to any series of Debt
Securities thereunder known to it, give to the Holders of Debt Securities of
such series notice of such default if not cured or waived, but, except in the
case of a default in the payment of principal of or premium, if any, or
interest, if any, on any Debt Securities of such series or any related coupons
or in the payment of any sinking fund installment with respect to Debt
Securities of such series, the Trustee for such Debt Securities shall be
protected in withholding such notice if, and so long as, the Trustee
determines in good faith that the withholding of such notice is in the
interest of the Holders of such Debt Securities. (Section 602)
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DEFEASANCE
The Corporation may terminate certain of its obligations under each
Indenture with respect to the Debt Securities of any series thereunder,
including its obligations to comply with the covenants described under the
heading "Covenants Contained in Indentures" above, with respect to such Debt
Securities, on the terms and subject to the conditions contained in such
Indentures, by depositing in trust with the Trustee money and/or, to the
extent such Debt Securities are denominated and payable in U.S. dollars only,
Eligible Instruments which, through the payment of principal and interest in
accordance with their terms, will provide money in an amount sufficient to pay
the principal and premium, if any, and interest, if any, on such Debt
Securities, and any mandatory sinking fund, repayment or analogous payments
thereon, on the scheduled due dates therefor. Such deposit and termination is
conditioned upon the Corporation's delivery of an opinion of counsel that the
Holders of such Debt Securities will have no federal income tax consequences
as a result of such deposit and termination. Such termination will not relieve
the Corporation of its obligation to pay when due the principal of or interest
on such Debt Securities if such Debt Securities of such series are not paid
from the money or Eligible Instruments held by the Trustee for the payment
thereof. (Section 1501 of the Senior Indenture, Section 1701 of the
Subordinated Indenture) The applicable Prospectus Supplement may further
describe the provisions, if any, permitting or restricting such defeasance
with respect to the Debt Securities of a particular series.
SUBORDINATION
The Subordinated Securities shall be subordinate and junior in right of
payment, to the extent set forth in the Subordinated Indenture, to all Senior
Debt (as defined below) of the Corporation. In the event that the Corporation
shall default in the payment of any principal, premium, if any, or interest,
if any, on any Senior Debt when the same becomes due and payable, whether at
Maturity or at a date fixed for prepayment or by declaration of acceleration
or otherwise, then, unless and until such default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made for principal, premium, if any, or interest, if any, on the Subordinated
Securities, or in respect of any redemption, repayment, retirement, purchase
or other acquisition of any of the Subordinated Securities. (Section 1801 of
the Subordinated Indenture) "Senior Debt" means any obligation of the
Corporation to its creditors, whether now outstanding or subsequently
incurred, other than (i) 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 and (ii)
the Subordinated Securities. (Section 101 of the Subordinated Indenture) As of
September 30, 1996, the Corporation (the Parent) had approximately $10.9
billion of Senior Debt outstanding.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv)
any other marshalling of the assets of the Corporation, all Senior 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
principal of or premium, if any, or interest, if any, on the Subordinated
Securities. In such event, any payment or distribution on account of the
principal of or premium, if any, or interest, if any, on the Subordinated
Securities, whether in cash, securities or other property (other than
securities of the Corporation or any other corporation provided for by a plan
of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in the subordination provisions with respect to
the Subordinated Securities, to the payment of all Senior Debt at the time
outstanding, and to any securities issued in respect thereof under any such
plan of reorganization or readjustment), which would otherwise (but for the
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subordination provisions) be payable or deliverable in respect of the
Subordinated Securities shall 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) shall have been paid in full. (Section
1801 of the Subordinated Indenture)
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Debt, the Holders of Subordinated Securities, together
with the holders of any obligations of the Corporation ranking on a parity
with the Subordinated Securities, shall be entitled to be paid from the
remaining assets of the Corporation the amounts at the time due and owing on
account of unpaid principal of and premium, if any, and interest, if any, on
the Subordinated Securities and such other obligations before any payment or
other distribution, whether in cash, property or otherwise, shall be made on
account of any capital stock or obligations of the Corporation ranking junior
to the Subordinated Securities and such other obligations. If any payment or
distribution on account of the principal of or interest on the Subordinated
Securities of any character or any security, whether in cash, securities or
other property (other than securities of the Corporation or any other
corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the Subordinated Securities, to the
payment of all Senior Debt at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment) shall be received by any Holder of any Subordinated Securities
in contravention of any of the terms hereof and before all the Senior Debt
shall have been paid in full, such payment or distribution or security shall
be received in trust for the benefit of, and shall 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. (Section 1801 of the
Subordinated Indenture) By reason of such subordination, in the event of the
insolvency of the Corporation, holders of Senior Debt may receive more,
ratably, and holders of the Subordinated Securities having a claim pursuant to
such securities may receive less, ratably, than the other creditors of the
Corporation. Such subordination will not prevent the occurrence of any Event
of Default in respect of the Subordinated Securities.
The Subordinated Indenture may be modified or amended as provided under
"Modification and Waiver" above, provided that no such modification or
amendment may, without the consent of the holders of all Senior Debt
outstanding, modify any of the provisions of the Subordinated Indenture
relating to the subordination of the Subordinated Securities and any related
coupons in a manner adverse to such holders. (Section 902 of the Subordinated
Indenture)
INFORMATION CONCERNING THE TRUSTEES
The Senior Trustee serves as trustee under two indentures, and an affiliate
of the Senior Trustee, First Trust of New York, serves as trustee under one
indenture, in each case, for Senior Debt pursuant to which certain debentures
and notes of the Corporation are outstanding. Bank of America and certain of
its affiliates also maintain deposit accounts and/or conduct other banking
transactions with First Bank Systems, Inc., an affiliate of the Senior
Trustee.
The Subordinated Trustee serves as trustee under three indentures for
subordinated debt pursuant to which certain debentures and notes of the
Corporation are outstanding. An affiliate of the Subordinated Trustee,
ChaseMellon Shareholders Services, L.L.C., serves as transfer agent and
registrar for the Corporation's outstanding common and preferred stock, as
depositary for certain of the Corporation's preferred stock issues and as
Rights Agent with respect to rights associated with the Corporation's common
stock. The Chase Manhattan Bank, an affiliate of the Subordinated Trustee,
serves as trustee under two indentures, one for subordinated debt and one for
Senior Debt, of the
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Corporation. In addition, Bank of America and certain of its affiliates
maintain deposit accounts and/or conduct other banking transactions with The
Chase Manhattan Bank.
The Trustees may, from time to time, make loans to the Corporation and
perform other services for the Corporation in the normal course of business.
Under the provisions of the Trust Indenture Act, upon the occurrence of a
default under an indenture, if a trustee has a conflicting interest (as
defined in the Trust Indenture Act) the trustee must, within 90 days, either
eliminate such conflicting interest or resign. Under the provisions of the
Trust Indenture Act, an indenture trustee shall be deemed to have a
conflicting interest if the trustee is a creditor of the obligor. If the
trustee fails either to eliminate the conflicting interest or to resign within
10 days after the expiration of such 90-day period, the trustee is required to
notify debt holders to this effect and any debt holder who has been a bona
fide holder for at least six months may petition a court to remove the trustee
and to appoint a successor trustee.
BOOK-ENTRY ISSUANCE
DTC will act as securities depository for all of the Preferred Securities,
the Junior Subordinated Debentures and the Debt Securities issued in book-
entry form, unless otherwise specified in the Prospectus Supplement relating
to an offering of Preferred Securities, Junior Subordinated Debentures or Debt
Securities. In such case, the Preferred Securities, the Junior Subordinated
Debentures and the Debt Securities, will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates will be issued for the Preferred
Securities of each Issuer Trust and the Junior Subordinated Debentures and
Debt Securities, representing in the aggregate the total number of such Issuer
Trust's Preferred Securities or aggregate principal balance of Junior
Subordinated Debentures or Debt Securities, respectively, and will be
deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. "Direct Participants" include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
Purchases of Preferred Securities, Junior Subordinated Debentures or Debt
Securities within the DTC system must be made by or through Direct
Participants, which will receive a credit for the Preferred Securities, Junior
Subordinated Debentures or Debt Securities on DTC's records. The ownership
interest of each actual purchaser of each Preferred Security, each Junior
Subordinated Debenture and each Debt Security ("Beneficial Owner") is in turn
to be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which the Beneficial Owners
purchased Preferred Securities, Junior Subordinated Debentures or Debt
Securities. Transfers of ownership interests in the Preferred Securities,
Junior Subordinated Debentures or Debt Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
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ownership interests in Preferred Securities, Junior Subordinated Debentures or
Debt Securities, except in the event that use of the book-entry system for the
Preferred Securities of such Issuer Trust or Junior Subordinated Debentures or
Debt Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities, Junior Subordinated Debentures or Debt Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Preferred Securities, Junior Subordinated Debentures or Debt Securities are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities, Junior Subordinated Debentures or Debt Securities.
If less than all of an Issuer Trust's Preferred Securities or the Junior
Subordinated Debentures or Debt Securities are being redeemed, DTC's current
practice is to determine by lot the amount of the interest of each Direct
Participant to be redeemed.
Although voting with respect to the Preferred Securities, the Junior
Subordinated Debentures or Debt Securities is limited to the holders of record
of the Preferred Securities, Junior Subordinated Debentures or Debt
Securities, in those instances in which a vote is required, neither DTC nor
Cede & Co. will itself consent or vote with respect to Preferred Securities,
Junior Subordinated Debentures or Debt 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 assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts such Preferred Securities, Junior Subordinated Debentures or Debt
Securities are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
Distribution payments on the Preferred Securities, the Junior Subordinated
Debentures or the Debt Securities will be made by the relevant Trustee to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payments on
such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participant and not of DTC, the relevant Trustee, the
Issuer Trust thereof or the Corporation, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
Distributions to DTC is the responsibility of the relevant Trustee,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to any of the Preferred Securities, the Junior Subordinated Debentures
or the Debt Securities at any time by giving reasonable notice to the relevant
Trustee and the Corporation. In the event that a successor securities
depository is not obtained, definitive Preferred Security, Junior Subordinated
Debenture or Debt Security certificates representing such Preferred
Securities, Junior Subordinated Debentures or Debt Securities are required to
be printed and delivered. The Corporation, at its option, may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depository). After a Debenture Event of Default, the holders of a
majority in liquidation preference of Preferred Securities or aggregate
principal amount of Junior Subordinated Debentures or Debt Securities may
determine
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<PAGE>
to discontinue the system of book-entry transfers through DTC. In any such
event, definitive certificates for such Preferred Securities, Junior
Subordinated Debentures or Debt Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuer Trusts and the Corporation
believe to be accurate, but the Issuer Trusts and the Corporation assume no
responsibility for the accuracy thereof. Neither the Issuer Trusts nor the
Corporation has any responsibility for the performance by DTC or its
Participants of their respective obligations as described herein or under the
rules and procedures governing their respective operations.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures, the Preferred Securities or Debt
Securities may be sold in a public offering to or through underwriters or
dealers designated from time to time. The Corporation and each Issuer Trust
may sell its Junior Subordinated Debentures, Preferred Securities or Debt
Securities as soon as practicable after effectiveness of the Registration
Statement of which this Prospectus is a part. The names of any underwriters or
dealers involved in the sale of the Junior Subordinated Debentures, Preferred
Securities or Debt Securities, as the case may be, in respect of which this
Prospectus is delivered, the amount or number of Junior Subordinated
Debentures, Preferred Securities and Debt Securities to be purchased by any
such underwriters and any applicable commissions or discounts will be set
forth in the Prospectus Supplement.
Underwriters may offer and sell Junior Subordinated Debentures, Preferred
Securities or Debt 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 Preferred Securities, underwriters may be deemed
to have received compensation from the Corporation and/or the applicable
Issuer Trust in the form of underwriting discounts or commissions and may also
receive commissions. Underwriters may sell Junior Subordinated Debentures,
Preferred Securities or Debt Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters.
Any underwriting compensation paid by the Corporation and/or the applicable
Issuer Trust to underwriters in connection with the offering of Junior
Subordinated Debentures, Preferred Securities or Debt Securities, and any
discounts, concessions or commissions allowed by such underwriters to
participating dealers, will be described in a Prospectus Supplement.
Underwriters and dealers participating in the distribution of Junior
Subordinated Debentures, Preferred Securities or Debt 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 Junior Subordinated Debentures,
Preferred Securities or Debt Securities may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters and dealers
may be entitled, under agreement with the Corporation and the applicable
Issuer Trust, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act, and to
reimbursement by the Corporation for certain expenses.
In connection with the offering of the Preferred Securities of any Issuer
Trust, such Issuer Trust may grant to the underwriters an option to purchase
additional Preferred 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 such Issuer
Trust grants any over-allotment option, the terms of such over-allotment
option will be set forth in the Prospectus Supplement for such Preferred
Securities.
50
<PAGE>
Underwriters and dealers may engage in transactions with, or perform
services for, the Corporation and/or the applicable Issuer Trust and/or any of
their affiliates in the ordinary course of business.
The Junior Subordinated Debentures, the Preferred Securities and the Debt
Securities will be new issues of securities and will have no established
trading market. Any underwriters to whom Junior Subordinated Debentures,
Preferred Securities or Debt Securities are sold for public offering and sale
may make a market in such Junior Subordinated Debentures, Preferred Securities
and Debt Securities, but such underwriters will not be obligated to do so and
may discontinue any market making at any time without notice. Such Junior
Subordinated Debentures, Preferred Securities or Debt 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 Junior Subordinated Debentures, Preferred Securities or Debt
Securities.
This Prospectus and the related prospectus Supplement may be used by BA
Securities, Inc., an affiliate of the Corporation and each Issuer Trust, in
connection with offers and sales related to market-making transactions in the
Debt Securities and Junior Subordinated Debentures and, to the extent
authorized, the Preferred Securities. BA Securities, Inc. may act as principal
or agent in such transactions. Such sales will be made at prices related to
prevailing market prices at the time of sale or otherwise.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed upon for the Corporation and the Issuer Trusts
with respect to the Junior Subordinated Debentures, the Preferred Securities
and the Guarantees by Orrick, Herrington & Sutcliffe LLP, San Francisco,
California, counsel to the Corporation, and for the Issuer Trusts by Richards,
Layton & Finger, special Delaware counsel to the Corporation and the Issuer
Trusts. The validity of the Debt Securities will be passed upon for the
Corporation by James N. Roethe, Executive Vice President and General Counsel
of the Corporation. As of October 31, 1996, Mr. Roethe had a direct or
indirect interest in 2,264 shares of Common Stock of the Corporation and had
options to purchase an additional 53,000 shares of which 31,000 options will
be exercisable as of December 30, 1996. Orrick, Herrington & Sutcliffe LLP
will rely on the opinion of Richards, Layton & Finger as to matters of
Delaware law.
EXPERTS
The consolidated financial statements and schedules of the Corporation and
subsidiaries incorporated by reference in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1995, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
incorporated therein and herein by reference. Such consolidated financial
statements and schedules are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
51
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE ISSUER TRUSTS OR BY THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE CORPORATION OR THE ISSUER TRUSTS SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Risk Factors.............................................................. S-4
BankAmerica Capital I..................................................... S-9
BankAmerica Corporation................................................... S-10
Ratio of Earnings to Fixed Charges........................................ S-10
Capitalization............................................................ S-11
Accounting Treatment...................................................... S-13
Certain Terms of Series 1 Preferred Securities............................ S-13
Certain Terms of Series 1 Subordinated Debentures......................... S-17
Certain Federal Income Tax Consequences................................... S-21
Underwriting.............................................................. S-25
Validity of Securities.................................................... S-27
<CAPTION>
PROSPECTUS
<S> <C>
Available Information .................................................... 4
Incorporation of Certain Documents by Reference........................... 5
BankAmerica Corporation................................................... 6
The Issuer Trusts......................................................... 8
Use of Proceeds........................................................... 9
Description of Junior Subordinated Debentures............................. 9
Description of Preferred Securities....................................... 22
Description of Guarantees................................................. 33
Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees............................... 36
Description of Debt Securities............................................ 38
Book-Entry Issuance....................................................... 48
Plan of Distribution...................................................... 50
Validity of Securities.................................................... 51
Experts................................................................... 51
</TABLE>
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RECYCLE LOGO
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12,000,000 PREFERRED SECURITIES
BANKAMERICA CAPITAL I
7 3/4% TRUST ORIGINATED
PREFERRED SECURITIES,/(SM)/
SERIES 1 ("TOPRS/(SM)/")
FULLY AND UNCONDITIONALLY GUARANTEED,
TO THE EXTENT DESCRIBED HEREIN, BY
LOGO
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS
BA SECURITIES, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
DECEMBER 16, 1996
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