-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GDIq+j1XTv8MAbYR0ZpoypJyWoU+yxB//iLT/D5P9HtCf7WfHrFFpBisGNB/12SO aik/c93g5lsnrhSVXxLJeA== 0000950123-94-000390.txt : 19940221 0000950123-94-000390.hdr.sgml : 19940221 ACCESSION NUMBER: 0000950123-94-000390 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHEMICAL BANKING CORP CENTRAL INDEX KEY: 0000019617 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 132624428 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B5 SEC ACT: 33 SEC FILE NUMBER: 033-49965 FILM NUMBER: 94510545 BUSINESS ADDRESS: STREET 1: 270 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122706000 FORMER COMPANY: FORMER CONFORMED NAME: CHEMICAL NEW YORK CORP DATE OF NAME CHANGE: 19880508 424B5 1 DEBT SECURITIES WARRANTS PROSPECTUS 1 Pursuant to Rule 424(b)(5) File No. 33-49965 PROSPECTUS (LOGO) Chemical Banking Corporation Debt Securities Warrants Chemical Banking Corporation (the "Company") may offer from time to time in one or more series its debt securities (the "CBC Debt Securities"), which may be either senior (the "CBC Senior Securities") or subordinated (the "CBC Subordinated Securities"). In connection with the merger of Manufacturers Hanover Corporation ("MHC") with and into the Company on December 31, 1991, the Company assumed the obligations of MHC with respect to certain senior (the "MHC Senior Securities") and certain subordinated (the "MHC Subordinated Securities" or the "Assumed MHC Subordinated Indebtedness") series of debt securities (collectively, the "MHC Debt Securities"). The CBC Senior Securities and the MHC Senior Securities are collectively referred to as the "Senior Securities." The CBC Subordinated Securities and the MHC Subordinated Securities are collectively referred to as the "Subordinated Securities." The Senior Securities will rank equally with all other unsubordinated and unsecured indebtedness of the Company. The CBC Subordinated Securities will be subordinate to all existing and future Senior Indebtedness of the Company (as defined herein) and certain series of such CBC Subordinated Securities (as more fully described herein) will be subordinate to Additional Senior Obligations (as defined herein) under certain circumstances. The MHC Subordinated Securities are subordinate to Senior Indebtedness, Additional Senior Obligations and all other obligations of the Company to its creditors other than any obligation of the Company as is by its terms expressly stated to be not superior in right of payment to or to rank pari passu in right of payment with such Assumed MHC Subordinated Indebtedness. The holders of the Subordinated Securities of any series may be obligated at maturity to exchange such securities for Capital Securities (as defined herein) of the Company. Unless otherwise indicated in this Prospectus, the maturity of the Subordinated Securities will be subject to acceleration only in the event of certain events of bankruptcy or reorganization of the Company. The Company may from time to time issue warrants (the "Securities Warrants") to purchase CBC Debt Securities, preferred stock, par value $1 per share (the "Preferred Stock"), or Common Stock, par value $1 per share (the "Common Stock"), or currency warrants entitling the holder to receive the cash value in U.S. dollars of the right to purchase or the right to sell foreign currencies or composite currencies, including European Currency Units ("ECU") ("Currency Warrants"). The following CBC Debt Securities are issued and outstanding as of the date of this Prospectus with respect to which offers and sales relating to secondary market transactions may be made by direct or indirect wholly-owned subsidiaries of the Company: $100,000,000 aggregate principal amount of 8.70% Senior Notes due May 15, 1994 $100,000,000 aggregate principal amount of 10 3/8% Subordinated Notes Due 1999 $100,000,000 aggregate principal amount of Floating Rate Senior Notes Due 1994 $300,000,000 aggregate principal amount of 9 3/4% Subordinated Capital Notes Due 1999 $100,000,000 Floating Rate Notes Due August 3, 1994 $150,000,000 aggregate principal amount of 10 1/8% $100,000,000 aggregate principal amount of Floating Subordinated Capital Notes Due 2000 Rate Senior Notes Due December 1, 1994 $200,000,000 aggregate principal amount of 8 1/2% $300,000,000 aggregate principal amount of Floating Subordinated Notes Due 2002 Rate Senior Notes Due February 15, 1995 $150,000,000 aggregate principal amount of 8 5/8% $100,000,000 aggregate principal amount of Floating Subordinated Debentures Due 2002 Rate Senior Notes Due 1995 $100,000,000 aggregate principal amount of 8 1/8% $100,000,000 aggregate principal amount of Floating Subordinated Notes Due June 15, 2002 Rate Senior Notes Due March 11, 1996 $200,000,000 aggregate principal amount of 7 5/8% $150,000,000 aggregate principal amount of Floating Subordinated Notes Due 2003 Rate Senior Notes Due May 6, 1996 $200,000,000 aggregate principal amount of 7 1/8% $100,000,000 aggregate principal amount of 7 3/8% Subordinated Debentures Due 2005 Senior Notes Due 1997 $200,000,000 aggregate principal amount of 6 1/2% $300,000,000 aggregate principal amount of 6 5/8% Subordinated Debentures Due 2009 Senior Notes Due 1998 $1,879,300,000 aggregate principal amount of Senior Medium-Term Notes, Series C, Due from 9 Months to 30 Years from Date of Issue
The following MHC Debt Securities are issued and outstanding as of the date of this Prospectus with respect to which offers and sales relating to secondary market transactions may be made by direct or indirect wholly-owned subsidiaries of the Company: $100,000,000 aggregate principal amount of 9 1/2% Notes Due March 15, 1994 $150,000,000 aggregate principal amount of 8 1/2% Subordinated Capital Notes Due February 15, 1999 $150,000,000 aggregate principal amount of 8 1/8% Notes Due January 15, 1997 $8,000,000 of Medium Term Notes
------------------------------------ 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. ------------------------------------ This Prospectus has been prepared by Chemical Securities Inc. ("CSI") in connection with offers and sales related to secondary market transactions in the CBC Debt Securities and MHC Debt Securities (the "Debt Securities"). CSI 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. THE DATE OF THIS PROSPECTUS IS FEBRUARY 11, 1994. 2 AVAILABLE INFORMATION The Company 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 offices of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following regional offices of the Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and Seven World Trade Center, New York, New York 10048. Copies of such material can also be obtained from the Commission's Public Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates. Certain of the Company's securities are listed on the New York Stock Exchange, and reports, proxy material and other information concerning the Company may be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by the Company are incorporated by reference in this Prospectus: (a) The Company's Annual Report on Form 10-K for the year ended December 31, 1992; (b) The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and September 30, 1993; (c) The Company's Current Reports on Form 8-K dated January 21, 1993, January 29, 1993, April 22, 1993, May 25, 1993, June 22, 1993, July 6, 1993, July 23, 1993, October 21, 1993, November 19, 1993 and January 21, 1994; and (d) The descriptions of the Common Stock, the preferred stock and the purchase rights for units of Junior Participating Preferred Stock set forth in the Company's Registration Statements filed pursuant to Section 12 of the Exchange Act and any amendment or report filed for the purpose of updating those descriptions. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Debt Securities offered hereby shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED TO: CHEMICAL BANKING CORPORATION, 270 PARK AVENUE, NEW YORK, NEW YORK 10017, ATTENTION: OFFICE OF THE SECRETARY, TELEPHONE (212) 270-4040. Unless otherwise indicated, currency amounts in this Prospectus are stated in United States dollars ("$", "dollars", "U.S. dollars" or "U.S.$"). 2 3 CHEMICAL BANKING CORPORATION GENERAL The Company is a bank holding company organized under the laws of Delaware in 1968 and registered under the Bank Holding Company Act of 1956, as amended (the "BHCA"). On December 31, 1991, Manufacturers Hanover Corporation was merged with and into the Company (the "Merger"). The Company conducts domestic and international financial services businesses through various bank and non-bank subsidiaries. The principal bank subsidiaries of the Company are Chemical Bank, a New York banking corporation ("Chemical Bank"), and Texas Commerce Bank National Association, a subsidiary of Texas Commerce Bancshares, Inc., a bank holding company subsidiary of the Company headquartered in Texas ("Texas Commerce"). At December 31, 1993, the Company had total assets of approximately $149.9 billion and stockholders' equity of approximately $11.2 billion. The Company is the fourth largest bank holding company in the United States in terms of total assets. Chemical Bank is the third largest bank in the United States in terms of deposits. At December 31, 1993, Chemical Bank had total assets of approximately $113.0 billion, total loans of approximately $59.3 billion and total deposits of approximately $76.5 billion. Texas Commerce is the second largest bank holding company in Texas in terms of total deposits and, as of December 31, 1993, had total assets of approximately $21.8 billion. The Company owns a 40% interest in The CIT Group Holdings, Inc., which engages in diversified financial services activities, including asset-based financing and leasing, sales financing and factoring. BUSINESS The activities of the Company and its subsidiaries are internally organized, for management information purposes, into three principal lines of business. A brief description of each principal line of business is presented below. GLOBAL BANK The Global Bank is organized into three principal management entities: (i) Banking and Corporate Finance (domestic wholesale banking, corporate finance and venture capital activities); (ii) Asia, Europe and Capital Markets (international wholesale banking and corporate finance and the Company's trading and treasury functions); and (iii) Developing Markets (trade finance, corporate finance and advisory services in emerging markets). REGIONAL BANK The Regional Bank includes Retail Banking (consumer banking, commercial and professional banking, retail card services and national consumer business); Regional Relationship Banking (middle market, private banking and Chemical New Jersey Holdings, Inc.); and Geoserve (cash management, funds transfer, trade, corporate trust and securities services worldwide). The Company's Technology and Operations Group is also managed within this organizational structure. TEXAS COMMERCE Texas Commerce is one of Texas' leading commercial banking institutions, with over 120 locations statewide. At December 31, 1993, Texas Commerce ranked, in terms of total deposits, first in the Houston and third in the Dallas/Fort Worth banking markets and had total assets of approximately $21.8 billion. 3 4 CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES The following are the consolidated ratios of earnings to fixed charges for each of the periods indicated:
YEAR ENDED DECEMBER 31, ---------------------------------------- 1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- Earnings to Fixed Charges: Excluding Interest on Deposits........................ 2.2 1.7 1.1 1.1 0.8 Including Interest on Deposits........................ 1.5 1.3 1.0 1.1 0.9
For the year ended December 31, 1989, earnings were insufficient to cover fixed charges, both excluding interest on deposits and including interest on deposits, by $832 million. For purposes of computing the ratios of earnings to fixed charges, earnings represent net income from continuing operations plus total taxes based on income and fixed charges. Fixed charges, excluding interest on deposits, include interest expense (other than on deposits), one-third (the proportion deemed representative of the interest factor) of rents, net of income from subleases, and capitalized interest. Fixed charges, including interest on deposits, include all interest expense, one-third (the proportion deemed representative of the interest factor) of rents, net of income from subleases, and capitalized interest. 4 5 DESCRIPTION OF CBC DEBT SECURITIES The statements under this caption are brief summaries of certain provisions contained in the CBC Indentures (as defined below), do not purport to be complete and are qualified in their entirety by reference to such CBC Indentures, copies of which are exhibits to the Registration Statement of which this Prospectus is a part. Numerical references in parentheses below are to sections of the applicable Indenture. Wherever capitalized terms are used but not defined herein, such terms shall have the meanings assigned to them in the applicable CBC Indenture, it being intended that such referenced sections of the CBC Indentures and such defined terms shall be incorporated herein by reference. GENERAL The CBC Senior Securities have been issued in series under an Indenture dated as of December 1, 1989 between the Company and The Chase Manhattan Bank (National Association), as Trustee (the "CBC Senior Trustee") (the "CBC Senior Indenture"). The CBC Subordinated Securities have been issued under an Indenture dated as of April 1, 1987, as amended and restated as of December 15, 1992, between the Company and Morgan Guaranty Trust Company of New York, as Trustee (the "CBC Subordinated Trustee") (the "CBC Subordinated Indenture"). The CBC Debt Securities may be offered together with warrants to purchase the CBC Debt Securities (the "Debt Warrants"), warrants to purchase shares of common stock, par value $1 per share, of the Company (the "Common Stock Warrants") and currency warrants entitling the holder to receive the cash value in U.S. dollars of the right to purchase or the right to sell foreign currencies or composite currencies, including European Currency Units ("ECU") (the "Currency Warrants"). The CBC Senior Indenture and the CBC Subordinated Indenture shall be collectively referred to as the "CBC Indentures." Neither CBC Indenture limits the amount of CBC Debt Securities which may be issued thereunder and CBC Debt Securities may be issued under either of the CBC Indentures up to the aggregate principal amount which may be authorized from time to time by the Company. Since the Company is a holding company, the right of the Company to participate in any distribution of assets of any subsidiary, including Chemical Bank and Texas Commerce, upon such subsidiary's liquidation or reorganization or otherwise (and thus the ability of holders of the CBC Debt Securities to benefit indirectly from such distribution), is subject to the prior claims of creditors of that subsidiary, except to the extent that the Company may itself be recognized as a creditor of that subsidiary. Claims on the Company's subsidiaries by creditors other than the Company include long-term debt and substantial obligations with respect to deposit liabilities, Federal funds purchased, securities sold under repurchase agreements, commercial paper and other short-term borrowings. Reference is made to the applicable description below for the following terms and other information with respect to an issue of CBC Debt Securities, including, where applicable: (i) the specific title of such CBC Debt Securities; (ii) any limit on the aggregate principal amount or aggregate initial offering price of such CBC Debt Securities; (iii) the purchase price of such CBC Debt Securities (expressed as a percentage of the principal amount thereof); (iv) the date or dates on which the principal of such CBC Debt Securities will be payable and the provisions, if any, for extension of such payment date or dates (v) the rate or rates per annum at which such CBC Debt Securities will bear interest, if any, including the rate of interest, if any, applicable to overdue payments of principal, or the method by which any such rate or rates will be determined and the dates on which such interest, if any, will be payable, the record dates for such interest payment dates and the date from which such interest, if any, will accrue; (vi) the place or places where the principal of (and premium, if any) and interest, if any, with respect to the CBC Debt Securities will be payable; (vii) the terms of any mandatory or optional redemption provisions applicable to the CBC Debt Securities; (viii) the terms of any sinking fund and analogous provisions with respect to the CBC Debt Securities; (ix) authorized denominations of the Debt Securities (if other than denominations of $1,000 and integral multiples thereof); (x) if other than the currency of the United States, the currency or currencies, including ECU and other composite currencies, in which payment of the principal of (and premium, if any) and interest, if any, on the CBC Debt Securities will be payable (which may be different for principal, premium and interest); (xi) if the principal of (and premium, if any) or interest, if any, on such CBC Debt Securities are to be payable at the election of the Company or a holder thereof in one or more currencies or composite currencies, the currencies or composite 5 6 currencies in which payment may be made and the manner of making such election; (xii) any provisions relating to the conversion or exchange of such CBC Debt Securities; (xiii) the index, if any, with reference to which the amount of payments of principal of (and premium, if any) or interest, if any, on such CBC Debt Securities will be determined; (xiv) whether such CBC Debt Securities are CBC Senior Securities or CBC Subordinated Securities, or include both; (xv) the portion of the principal amount of such CBC Debt Securities which will be payable upon declaration of acceleration of the maturity thereof, if other than the principal amount thereof; (xvi) any Events of Default applicable to such CBC Debt Securities (if not set forth in the applicable CBC Indenture); (xvii) if such CBC Debt Securities are CBC Senior Securities, whether the provisions of the CBC Senior Indenture relating to "Defeasance and Covenant Defeasance" will be applicable to such series of CBC Senior Securities; (xviii) whether any of such CBC Debt Securities are to be issuable in permanent global form; (xix) the terms of any Currency Warrants or Securities Warrants being offered with such CBC Debt Securities; and (xx) any other specific terms of such CBC Debt Securities (including any covenants applicable to the CBC Debt Securities if not set forth in the applicable CBC Indenture). The CBC Debt Securities have been issued only in fully registered form without coupons. The CBC Indentures also provide that CBC Debt Securities of a series may be issued as permanent global CBC Debt Securities. See "Permanent Global CBC Debt Securities" herein. No service charge will be made for any transfer or exchange of the CBC Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Unless a particular issue of CBC Debt Securities is represented by a permanent global note, principal of (and premium, if any) and interest, if any, on the CBC Debt Securities will be payable, and the CBC Debt Securities will be transferable or exchangeable, at the corporate trust office of Chemical Bank in New York City, provided that payment of interest on any CBC Debt Securities may be made at the option of the Company by check mailed to the registered holders of the CBC Debt Securities at their registered addresses. The Company will have the right to require a holder of any CBC Debt Security, in connection with the payment of the principal of (and premium, if any) and interest, if any, on such CBC Debt Security, to certify information to the Company or, in the absence of such certification, the Company will be entitled to rely on any legal presumption to enable the Company to determine its duties and liabilities, if any, to deduct or withhold taxes, assessments or governmental charges from such payment. If the principal of (and premium, if any) or interest, if any, on any CBC Debt Securities are to be payable in any currency other than U.S. dollars or, at the election of the Company or a holder thereof, in one or more currencies or composite currencies, or if any index is used to determine the amount of payments of principal of (and premium, if any) or interest, if any, on any series of CBC Debt Securities, any special Federal income tax, accounting and other considerations applicable thereto, if any, are described below. Some of the CBC Debt Securities may have been issued as original issue discount CBC Debt Securities (bearing no interest or interest at a rate which at the time of issuance is below market rates), to be sold at a discount below their stated principal amount. If any such CBC Debt Securities have been so issued, the Federal income tax, accounting and other special considerations applicable to any such original issue discount CBC Debt Securities, if any, are described below. Neither CBC Indenture contains any restriction on the Company's ability to enter into a highly leveraged transaction or any provision affording special protection to holders of CBC Debt Securities in the event the Company engages in a highly leveraged transaction. Further, neither CBC Indenture contains any provisions that would provide protection to holders of CBC Debt Securities upon a sudden and dramatic decline in the credit quality of the Company resulting from a takeover, recapitalization or similar restructuring of the Company. The CBC Debt Securities of certain series may be issued under the CBC Indentures upon the exercise of Securities Warrants issued with other CBC Debt Securities or upon exchange or conversion of exchangeable or convertible CBC Debt Securities. The specific terms of any such Securities Warrants, the specific terms of exchange or conversion of any such CBC Debt Securities and the specific terms of the CBC Debt Securities 6 7 issuable upon the exercise of any such Securities Warrants or upon any such exchange or conversion, if any, are described below. CBC SENIOR SECURITIES The CBC Senior Securities are direct, unsecured obligations of the Company and will constitute Senior Indebtedness issued on a parity with the other Senior Indebtedness of the Company. As of December 31, 1993, Senior Indebtedness and Additional Senior Obligations of the Company aggregated approximately $5.8 billion. See "Description of CBC Debt Securities--CBC Subordinated Securities--Subordination" below. Limitation on Disposition of Stock of Chemical Bank. The CBC Senior Indenture contains a covenant by the Company that, so long as any of the CBC Senior Securities are outstanding, but subject to the rights of the Company in connection with its consolidation with or merger into another person or a sale of the Company's assets, neither the Company nor any Intermediate Subsidiary will sell, assign, transfer, grant a security interest in or otherwise dispose of any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of Chemical Bank (except to the Company or an Intermediate Subsidiary), nor will the Company or any Intermediate Subsidiary permit Chemical Bank to issue any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of Chemical Bank, nor will the Company permit any Intermediate Subsidiary that owns any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of Chemical Bank to cease to be an Intermediate Subsidiary, unless (i) any such sale, assignment, transfer, grant of a security interest or other disposition is made for fair market value, as determined by the Board of Directors of the Company or such Intermediate Subsidiary, and (ii) the Company and any one or more Intermediate Subsidiaries will collectively own at least 80% of the issued and outstanding Voting Stock of Chemical Bank (or any successor to Chemical Bank) free and clear of any security interest after giving effect to such transaction. The foregoing, however, shall not preclude Chemical Bank from being consolidated with or merged into another domestic banking corporation, if after such merger or consolidation the Company, or any successor thereto in a permissible merger, and any one or more Intermediate Subsidiaries own or owns at least 80% of the Voting Stock of the resulting bank and, giving effect to the transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing. An Intermediate Subsidiary is defined in the CBC Senior Indenture as a Subsidiary (i) that is organized under the laws of any domestic jurisdiction and (ii) of which all the shares of each class of capital stock issued and outstanding, and all securities convertible into, and options, warrants and rights to subscribe for or purchase shares of, such capital stock, are owned directly by the Company, free and clear of any security interest. The limitation on the disposition of the Voting Stock of Chemical Bank does not prevent Chemical Bank from engaging in a sale of assets to the extent otherwise permitted by the CBC Senior Indenture. (Section 1006). Events of Default. The CBC Senior Indenture defines an Event of Default with respect to any series of CBC Senior Securities as any one of the following events: (i) default in the payment of interest on any CBC Senior Security of that series and continuance of such default for 30 days; (ii) default in the payment of principal of (or premium, if any, on) any CBC Senior Security of that series at Maturity; (iii) default in the deposit of any sinking fund payment, when and as due by the terms of a CBC Senior Security of that series, and continuance of such default for 5 days; (iv) failure by the Company for 60 days after due notice in performance of any other of the covenants or warranties in the CBC Senior Indenture (other than a covenant or warranty included in the CBC Senior Indenture solely for the benefit of a series of CBC Senior Securities other than that series); (v)(A) failure by the Company to pay indebtedness for money borrowed, including CBC Senior Securities of other series, in an aggregate principal amount exceeding $25,000,000, at the later of final maturity or upon the expiration of any applicable period of grace with respect to such principal amount or (B) acceleration of the maturity of any of the Company's indebtedness for money borrowed, including CBC Senior Securities of other series, in an aggregate principal amount exceeding $25,000,000, if such failure to pay or acceleration results from a default under the instrument giving rise to, or securing, such indebtedness for money borrowed and is not rescinded or annulled within 30 days after due notice, unless such default is 7 8 contested in good faith by appropriate proceedings; (vi) certain events of bankruptcy, insolvency or reorganization of the Company or Chemical Bank; and (vii) any other Event of Default provided with respect to CBC Senior Securities of that series. (Section 501). If any Event of Default with respect to CBC Senior Securities of any series at the time Outstanding occurs and is continuing, either the CBC Senior Trustee or the holders of not less than 25% in principal amount of the Outstanding CBC Senior Securities of that series may declare the principal amount (or, if the CBC Senior Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all CBC Senior Securities of that series to be due and payable immediately (provided that no such declaration is required upon certain events of bankruptcy); but upon certain conditions such declaration may be annulled and past defaults (except, unless theretofore cured, a default in payment of principal of (or premium, if any) or interest on the CBC Senior Securities of that series and certain other specified defaults) may be waived by the holders of a majority in principal amount of the Outstanding CBC Senior Securities of that series on behalf of the holders of all CBC Senior Securities of that series. (Sections 502 and 513). With respect to any series of CBC Senior Securities which are Original Issue Discount Securities, reference is made below to the terms of such series for the particular provisions relating to acceleration of the Maturity of a portion of the principal amount of such Original Issue Discount Securities upon the occurrence of an Event of Default and the continuation thereof. The CBC Senior Indenture provides that the CBC Senior Trustee will, within 90 days after the occurrence of a default known to it with respect to CBC Senior Securities of any series at the time Outstanding with respect to which it is trustee, give to the holders of the Outstanding CBC Senior Securities of that series notice of such default if uncured or not waived, provided that, except in the case of default in the payment of principal of (or premium, if any) or interest, if any, on any CBC Senior Security of that series, or in the payment of any sinking fund installment which is provided for such series, the CBC Senior Trustee will be protected in withholding such notice if the CBC Senior Trustee in good faith determines that the withholding of such notice is in the interest of the holders of the Outstanding CBC Senior Securities of such series and, provided further, that such notice shall not be given until 60 days after the occurrence of a default with respect to Outstanding CBC Senior Securities of any series in the performance of a covenant in the CBC Senior Indenture other than for the payment of the principal of (or premium, if any) or interest, if any, on any CBC Senior Security of such series or the deposit of any sinking fund payment with respect to the CBC Senior Securities of such series. The term "default" with respect to any series of Outstanding CBC Senior Securities for the purpose only of this provision means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to CBC Senior Securities of such series. (Section 602). The CBC Senior Indenture provides that, subject to the duty of the CBC Senior Trustee during default to act with the required standard of care, the CBC Senior Trustee will not be under any obligation to exercise any of its rights or powers under the CBC Senior Indenture at the request or direction of any of the holders, unless such holders shall have offered to the CBC Senior Trustee reasonable security or indemnity. (Section 603). The CBC Senior Indenture provides that the holders of a majority in principal amount of Outstanding CBC Senior Securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the CBC Senior Trustee for that series, or exercising any trust or other power conferred on such CBC Senior Trustee, provided that such CBC Senior Trustee may decline to act if such direction is contrary to law or the CBC Senior Indenture. (Section 512). The CBC Senior Indenture includes a covenant that the Company will file annually with the CBC Senior Trustee a certificate of no default, or specifying any default that exists. (Section 1007). Defeasance and Covenant Defeasance. The CBC Senior Indenture provides, if such provision is made applicable to the CBC Senior Securities of any series pursuant to Section 301 of the CBC Senior Indenture (which, if applicable, with respect to a particular series of CBC Senior Securities will be indicated below), that the Company may elect (i) to defease and be discharged from all of its obligations with respect to such CBC Senior Securities then outstanding (except for the obligations to register the transfer or exchange of such CBC Senior Securities, to replace temporary or mutilated, destroyed, lost or stolen CBC Senior Securities, to 8 9 maintain an office or agency in respect of the CBC Senior Securities and to hold moneys for payment in trust) ("defeasance") and/or (ii) to be released from its obligations with respect to such CBC Senior Securities then outstanding under Section 1005 and Section 1006 (and any other sections applicable to such CBC Senior Securities that are determined pursuant to Section 301 to be subject to covenant defeasance) and the consequences of the occurrence of an event of default specified in Section 501(4) (insofar as it is with respect to Section 1005, Section 1006 or any other section applicable to such CBC Senior Securities that is determined pursuant to Section 301 to be subject to covenant defeasance) or Section 501(5) of the CBC Senior Indenture (Section 1005 containing the covenant to pay taxes and other claims, Section 1006 containing the restrictions described above under "Limitation on Disposition of Stock of Chemical Bank" and Sections 501(4) and 501(5) containing the provisions described above under "Events of Default" relating to covenant defaults and cross-defaults, respectively) ("covenant defeasance"), in either case upon the deposit with the CBC Senior Trustee (or other qualifying trustee), in trust for such purpose, of money, and/or U.S. Government Obligations which through the payment of principal and interest in accordance with their terms will provide money in an amount sufficient, without reinvestment, to pay the principal of (and premium, if any) and interest, if any, on such CBC Senior Securities to maturity or redemption, as the case may be, and any mandatory sinking fund or analogous payments thereon. As a condition to defeasance or covenant defeasance, the Company must deliver to the CBC Senior Trustee an Opinion of Counsel (as specified in the CBC Senior Indenture) to the effect that the holders of such CBC Senior Securities will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance had not occurred. Such opinion, in the case of defeasance under clause (i) above, must refer to and be based upon a ruling of the Internal Revenue Service issued to the Company or published as a revenue ruling or upon a change in applicable Federal income tax law, in any such case after the date of the CBC Senior Indenture. Under current Federal income tax law, defeasance would likely be treated as a taxable exchange of such CBC Senior Securities for interests in the defeasance trust. As a consequence, a holder would recognize gain or loss equal to the difference between the holder's cost or other tax basis for such CBC Senior Securities and the value of the holder's proportionate interest in the defeasance trust, and thereafter would be required to include in income a proportionate share of the income, gain or loss, as the case may be, of the defeasance trust. Under current Federal income tax law, covenant defeasance would ordinarily not be treated as a taxable exchange of such CBC Senior Securities. Purchasers of such CBC Senior Securities should consult their own advisors with respect to the tax consequences to them of such defeasance and covenant defeasance, including the applicability and effect of tax laws other than the Federal income tax law. If the Company exercises its covenant defeasance option with respect to any series of CBC Senior Securities, payment of such CBC Senior Securities may not be accelerated by reference to the covenants relating to covenant defeasance described above. The Company may exercise its defeasance option with respect to such CBC Senior Securities notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its defeasance option, payment of such CBC Senior Securities may not be accelerated because of any Event of Default. If the Company exercises its defeasance option or covenant defeasance option and an acceleration were to occur, the realizable value at the acceleration date of the money and U.S. Government Obligations in the defeasance trust could be less than the principal and interest then due on such CBC Senior Securities, in that the required deposit in the defeasance trust is based upon scheduled cash flows rather than market value, which will vary depending upon interest rates and other factors. Modification of the Indenture. Modification and amendments of the CBC Senior Indenture may be made by the Company and the CBC Senior Trustee with the consent of the holders of not less than a majority in principal amount of each series of Outstanding CBC Senior Securities affected thereby, by executing supplemental indentures adding any provisions to or changing or eliminating any of the provisions of the CBC Senior Indenture or modifying the rights of the holders of Outstanding CBC Senior Securities of such series, except that no such supplemental indenture may (i) change the Stated Maturity of any CBC Senior Security of any series, or reduce the principal amount thereof (or premium, if any, thereon), or reduce the rate of payment of interest thereon, or change certain other provisions relating to the yield of the CBC Senior 9 10 Securities or change the currency or currencies in which the same is payable; (ii) reduce the aforesaid percentage of Outstanding CBC Senior Securities of any series, the consent of the holders of which is required for any supplemental indenture, or reduce the percentage of principal amount of Outstanding CBC Senior Securities necessary for waiver of compliance with certain provisions of the CBC Senior Indenture or for waiver of certain covenants and defaults; or (iii) modify the provisions of the CBC Senior Indenture relating to modification and amendment of the CBC Senior Indenture. The CBC Senior Indenture provides, however, that each of the amendments and modifications listed in clauses (i) through (iii) above may be made with the consent of the holder of each Outstanding CBC Senior Security affected thereby. (Section 902). Consolidation, Merger and Sale of Assets. The Company, without the consent of the holders of any of the CBC Senior Securities under the CBC Senior Indenture, may consolidate with or merge into any other person or transfer or lease its assets substantially as an entirety to any person or may permit any corporation to merge into the Company, provided that: (i) the successor is a person organized under the laws of any domestic jurisdiction; (ii) the successor person, if other than the Company, assumes the Company's obligations on the CBC Senior Securities and under the CBC Senior Indenture; (iii) after giving effect to the transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and (iv) certain other conditions are met. (Section 801). Outstanding CBC Senior Securities. The CBC Senior Indenture provides that, in determining whether the holders of the requisite principal amount of Outstanding CBC Senior Securities have given any request, demand, authorization, direction, notice, consent or waiver, (i) the portion of the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purpose shall be that portion of the principal amount thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof; (ii) the portion of the principal amount of a CBC Senior Security denominated in a foreign or composite currency or currencies that shall be deemed to be Outstanding for such purpose shall be the U.S. dollar equivalent, determined on the date of original issuance of such CBC Senior Security, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent on the date of original issuance of such CBC Senior Security of the amount determined as provided in (i) above) of such CBC Senior Security; (iii) the portion of the principal amount of a CBC Senior Security for which the amount of payments of principal of and any premium or interest on such CBC Senior Security may be determined with reference to an index that shall be deemed to be Outstanding for such purpose shall be determined as of the date of original issuance of such CBC Senior Security; and (iv) CBC Senior Securities owned by the Company, any of its Affiliates or any other obligor upon the CBC Senior Securities shall not be deemed to be Outstanding. (Section 101). Set forth below are the principal terms of the CBC Senior Securities issued and outstanding as of the date of this Prospectus, with respect to which offers and sales relating to secondary market transactions may be made by direct or indirect wholly-owned subsidiaries of the Company. Reference is made to the Glossary for the definition of some of the terms used herein. TERMS AND PROVISIONS OF 8.70% SENIOR NOTES DUE MAY 15, 1994 The 8.70% Senior Notes Due May 15, 1994 (the "8.70% 1994 Notes") are limited to $100,000,000 aggregate principal amount and will mature on May 15, 1994. The 8.70% 1994 Notes are not redeemable prior to maturity and no sinking fund is provided for the 8.70% 1994 Notes. The 8.70% 1994 Notes bear interest from May 15, 1991, payable semiannually in arrears on May 15 and November 15 to the persons in whose names the 8.70% 1994 Notes are registered at the close of business on the first day of May or November preceding such May 15 or November 15. TERMS AND PROVISIONS OF FLOATING RATE SENIOR NOTES DUE 1994 The Floating Rate Senior Notes Due 1994 (the "Floating Rate 1994 Notes") are limited to $100,000,000 aggregate principal amount and will mature on June 16, 1994. The Floating Rate 1994 Notes are not redeemable prior to maturity and no sinking fund is provided for the Floating Rate 1994 Notes. The Floating Rate 1994 Notes bear interest for each Interest Period at a rate per annum equal to LIBOR, plus a margin of 10 11 0.30%, from their original issue date, payable quarterly in arrears on the Interest Payment Date in each March, June, September and December, commencing with the Interest Payment Date in September 1992, and on the date of maturity. Such interest is payable to the person in whose name such Floating Rate 1994 Note is registered at the close of business on the fifteenth calendar day prior to such Interest Payment Date. TERMS AND PROVISIONS OF FLOATING RATE NOTES DUE AUGUST 3, 1994 The Floating Rate Notes Due August 3, 1994 (the "Floating Rate August 3, 1994 Notes") are limited to $100,000,000 aggregate principal amount and will mature on August 3, 1994. The Floating Rate August 3, 1994 Notes are not redeemable prior to maturity and no sinking fund is provided for the Floating Rate August 3, 1994 Notes. The Floating Rate August 3, 1994 Notes bear interest for each Interest Period at a rate per annum equal to LIBOR, plus a margin of 0.25%, from their original issue date, payable quarterly in arrears on the Interest Payment Date in each February, May, August and November, commencing with the Interest Payment Date in November 1992, and on the date of maturity. Such interest is payable to the person in whose name such Floating Rate August 3, 1994 Note is registered at the close of business on the fifteenth calendar day prior to such Interest Payment Date. TERMS AND PROVISIONS OF FLOATING RATE SENIOR NOTES DUE DECEMBER 1, 1994 The Floating Rate Senior Notes Due December 1, 1994 (the "Floating Rate December 1, 1994 Notes") are limited to $100,000,000 aggregate principal amount and will mature on December 1, 1994. The Floating Rate December 1, 1994 Notes are not redeemable prior to maturity and no sinking fund is provided for the Floating Rate December 1, 1994 Notes. The Floating Rate December 1, 1994 Notes bear interest for each Interest Period at a rate per annum equal to LIBOR, plus a margin of 0.40%, from their original issue date, payable quarterly in arrears on the Interest Payment Date in each March, June, September, and December, commencing with the Interest Payment Date in March 1993, and on the date of maturity. Such interest is payable to the person in whose name such Floating Rate December 1, 1994 Note is registered at the close of business on the fifteenth calendar day prior to such Interest Payment Date. TERMS AND PROVISIONS OF FLOATING RATE SENIOR NOTES DUE FEBRUARY 15, 1995 The Floating Rate Senior Notes Due February 15, 1995 (the "Floating Rate February 15, 1995 Notes") are limited to $300,000,000 aggregate principal amount and will mature on February 15, 1995. The Floating Rate February 15, 1995 Notes are not redeemable prior to maturity and no sinking fund is provided for the Floating Rate February 15, 1995 Notes. The Floating Rate February 15, 1995 Notes bear interest for each Interest Period at a rate per annum equal to LIBOR, plus a margin of 0.30%, from their original issue date, payable quarterly in arrears on the Interest Payment Date in each February, May, August and November, commencing with the Interest Payment Date in May 1993, and on the date of maturity. Such interest is payable to the person in whose name such Floating Rate February 15, 1995 Note is registered at the close of business on the fifteenth calendar day prior to such Interest Payment Date. TERMS AND PROVISIONS OF FLOATING RATE SENIOR NOTES DUE 1995 The Floating Rate Senior Notes Due 1995 (the "Floating Rate 1995 Notes") are limited to $100,000,000 aggregate principal amount and will mature on June 8, 1995. The Floating Rate 1995 Notes are not redeemable prior to maturity and no sinking fund is provided for the Floating Rate 1995 Notes. The Floating Rate 1995 Notes bear interest for each Interest Period at a rate per annum equal to LIBOR, plus a margin of 0.35%, from their original issue date, payable quarterly in arrears on the Interest Payment Date in each March, June, September, and December, commencing with the Interest Payment Date in September 1992, and on the date of maturity. Such interest is payable to the person in whose name such Floating Rate 1995 Note is registered at the close of business on the fifteenth calendar day prior to such Interest Payment Date. 11 12 TERMS AND PROVISIONS OF FLOATING RATE SENIOR NOTES DUE MARCH 11, 1996 The Floating Rate Senior Notes Due March 11, 1996 (the "Floating Rate March 11, 1996 Notes") are limited to $100,000,000 aggregate principal amount and will mature on March 11, 1996. The Floating Rate March 11, 1996 Notes are not redeemable prior to maturity and no sinking fund is provided for the Floating Rate March 11, 1996 Notes. The Floating Rate March 11, 1996 Notes bear interest for each Interest Period at a rate per annum equal to LIBOR, plus a margin of 0.50% (but in no event shall the interest rate for any Interest Period be more than 7.00% per annum), from their original issue date, payable quarterly in arrears on the Interest Payment Date in each March, June, September, and December, commencing with the Interest Payment Date in June 1993, and on the date of maturity. Such interest is payable to the person in whose name such Floating Rate March 11, 1996 Note is registered at the close of business on the fifteenth calendar day prior to such Interest Payment Date. TERMS AND PROVISIONS OF FLOATING RATE SENIOR NOTES DUE MAY 6, 1996 The Floating Rate Senior Notes Due May 6, 1996 (the "Floating Rate May 6, 1996 Notes") are limited to $150,000,000 aggregate principal amount and will mature on May 6, 1996. The Floating Rate May 6, 1996 Notes may not be redeemed prior to the Interest Payment Date occurring on May 18, 1994. The Floating Rate May 6, 1996 Notes may be redeemed on any Interest Payment Date occurring on or after May 18, 1994 at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at 100% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. No sinking fund is provided for the Floating Rate May 6, 1996 Notes. The Floating Rate May 6, 1996 Notes bear interest for each Interest Period at a rate per annum equal to LIBOR, plus a margin of 0.25%, from their original issue date, payable quarterly in arrears on the Interest Payment Date in each February, May, August and November, commencing August 18, 1993, and on the date of maturity. Such interest is payable to the person in whose name such Floating Rate May 6, 1996 Note is registered at the close of business on the fifteenth calendar day prior to such Interest Payment Date. TERMS AND PROVISIONS OF 7 3/8% SENIOR NOTES DUE 1997 The 7 3/8% Senior Notes Due 1997 (the "7 3/8% 1997 Notes") are limited to $100,000,000 aggregate principal amount and will mature on June 15, 1997. The 7 3/8% 1997 Notes are not redeemable prior to maturity and no sinking fund is provided for the 7 3/8% 1997 Notes. The 7 3/8% 1997 Notes bear interest from May 26, 1992, payable semiannually in arrears on June 15 and December 15 to the persons in whose names the 7 3/8% 1997 Notes are registered at the close of business on the first day of June or December preceding such June 15 or December 15. TERMS AND PROVISIONS OF 6 5/8% SENIOR NOTES DUE 1998 The 6 5/8% Senior Notes Due 1998 (the "6 5/8% 1998 Notes") are limited to $300,000,000 aggregate principal amount and will mature on January 15, 1998. The 6 5/8% 1998 Notes are not redeemable prior to maturity and no sinking fund is provided for the 6 5/8% 1998 Notes. The 6 5/8% 1998 Notes bear interest from January 19, 1993, payable semiannually in arrears on January 15 and July 15 to the persons in whose names the 6 5/8% 1998 Notes are registered at the close of business on the first day of January or July preceding such January 15 or July 15. 12 13 TERMS AND PROVISIONS OF SENIOR MEDIUM-TERM NOTES, SERIES C Set forth below is a table indicating the issuance date and the maturities of the $1,879,300,000 aggregate principal amount of Senior Medium-Term Notes, Series C (the "Senior Medium Term Notes") issued and outstanding as of the date of this Prospectus. The Senior Medium-Term Notes are not subject to any sinking fund and are not redeemable prior to their stated maturity. The Senior Medium-Term Notes have either (a) fixed interest rates or (b) floating interest rates which are either reset daily, monthly, quarterly, semiannually or annually based on the CD Rate, Commercial Paper Rate, the Federal Funds Effective Rate, the Treasury Rate or LIBOR, adjusted by a Spread or Spread Multiplier, as applicable.
ISSUANCE DATE PRINCIPAL AMOUNT MATURITY DATE RATE - ---------------------- ---------------- ---------------------- -------------------------------- February 14, 1992..... $ 25,000,000 February 14, 1994..... LIBOR Reset Quarterly + 0.35% February 12, 1990..... $ 5,000,000 February 14, 1994..... LIBOR Reset Quarterly + 0.40% February 15, 1990..... $ 14,000,000 February 15, 1994..... LIBOR Reset Quarterly + 0.375% February 16, 1990..... $ 2,000,000 February 16, 1994..... LIBOR Reset Quarterly + 0.35% February 23, 1990..... $ 12,000,000 February 23, 1994..... LIBOR Reset Quarterly + 0.375% February 28, 1990..... $ 5,000,000 February 28, 1994..... LIBOR Reset Quarterly + 0.375% February 26, 1990..... $ 10,000,000 February 28, 1994..... LIBOR Reset Quarterly + 0.375% March 1, 1990......... $ 5,000,000 March 1, 1994......... LIBOR Reset Quarterly + 0.375% March 1, 1990......... $ 5,000,000 March 1, 1994......... LIBOR Reset Quarterly + 0.375% March 6, 1990......... $ 10,000,000 March 7, 1994......... LIBOR Reset Quarterly + 0.40% March 21, 1990........ $ 10,000,000 March 23, 1994........ LIBOR Reset Quarterly + 0.40% April 30, 1992........ $ 5,000,000 April 28, 1994........ LIBOR Reset Quarterly + 0.25% April 30, 1992........ $ 5,000,000 April 28, 1994........ LIBOR Reset Quarterly + 0.25% May 15, 1991.......... $ 10,000,000 May 16, 1994.......... LIBOR Reset Quarterly + 1.05% May 16, 1991.......... $ 6,000,000 May 16, 1994.......... 8.82% June 17, 1992......... $ 50,000,000 June 15, 1994......... LIBOR Reset Quarterly + 0.30% June 7, 1991.......... $ 10,000,000 June 15, 1994......... 8.67% July 29, 1992......... $ 5,000,000 July 29, 1994......... LIBOR Reset Quarterly + 0.25% July 30, 1992......... $ 10,000,000 July 29, 1994......... 4.71% September 22, 1992.... $ 5,000,000 September 22, 1994.... LIBOR Reset Quarterly + 0.25% October 9, 1992....... $ 5,000,000 October 11, 1994...... LIBOR Reset Quarterly + 0.25% October 16, 1992...... $ 10,000,000 October 17, 1994...... LIBOR Reset Quarterly + 0.25% November 4, 1992...... $ 10,000,000 November 4, 1994...... LIBOR Reset Quarterly + 0.25% November 18, 1991..... $ 7,800,000 November 18, 1994..... 7.42% November 20, 1992..... $100,000,000 November 21, 1994..... LIBOR Reset Quarterly + 0.35% December 8, 1992...... $ 5,000,000 December 8, 1994...... LIBOR Reset Quarterly + 0.40% December 16, 1992..... $ 25,000,000 December 21, 1994..... LIBOR Reset Quarterly + 0.375% December 31, 1992..... $ 6,000,000 January 3, 1995....... LIBOR Reset Quarterly + 0.35% January 30, 1992...... $ 25,000,000 January 30, 1995...... 6.46% February 13, 1990..... $ 5,000,000 February 13, 1995..... LIBOR Reset Quarterly + 0.35% February 22, 1993..... $ 5,000,000 February 22, 1995..... 4.68% February 22, 1993..... $ 10,000,000 February 22, 1995..... LIBOR Reset Quarterly + 0.30% February 22, 1993..... $ 5,000,000 February 22, 1995..... LIBOR Reset Quarterly + 0.30% February 22, 1993..... $ 25,000,000 February 22, 1995..... LIBOR Reset Quarterly + 0.30% February 22, 1993..... $ 22,000,000 February 22, 1995..... LIBOR Reset Quarterly + 0.30% February 6, 1992...... $ 30,000,000 February 28, 1995..... 6.63% March 2, 1993......... $ 50,000,000 March 2, 1995......... LIBOR Reset Quarterly + 0.30% March 29, 1993........ $ 25,000,000 March 29, 1995........ See Note 1 below.
13 14
ISSUANCE DATE PRINCIPAL AMOUNT MATURITY DATE RATE - ---------------------- ---------------- ---------------------- -------------------------------- April 15, 1993........ $ 50,000,000 April 14, 1995........ LIBOR Reset Quarterly + 0.25% April 15, 1993........ $ 50,000,000 April 14, 1995........ LIBOR Reset Quarterly + 0.25% April 27, 1993........ $ 25,000,000 April 27, 1995........ LIBOR Reset Quarterly + 0.20% May 12, 1993.......... $100,000,000 May 15, 1995.......... 3.55% fixed until May 16, 1994; May 16, 1994 to maturity, LIBOR Reset Quarterly + 0.20% May 17, 1991.......... $ 6,000,000 May 17, 1995.......... 9.23% June 8, 1992.......... $ 5,000,000 June 8, 1995.......... LIBOR Reset Quarterly + 0.35% April 13, 1993........ $100,000,000 April 15, 1996........ LIBOR Reset Quarterly + 0.30% April 26, 1993........ $ 10,000,000 April 26, 1996........ LIBOR Reset Quarterly + 0.50% and see Note 2 below. June 4, 1993.......... $ 25,000,000 June 4, 1996.......... 5.00% June 21, 1991......... $ 4,500,000 June 21, 1996......... 9.80% July 12, 1993......... $ 25,000,000 July 15, 1996......... LIBOR Reset Quarterly + 0.1875% July 12, 1993......... $ 25,000,000 July 15, 1996......... LIBOR Reset Quarterly + 0.1875% July 28, 1993......... $ 75,000,000 July 29, 1996......... LIBOR Reset Quarterly + 0.15% July 28, 1993......... $ 10,000,000 July 29, 1996......... LIBOR Reset Quarterly + 0.15% June 16, 1993......... $ 15,000,000 December 18, 1996..... See Note 3 below. June 16, 1993......... $ 5,000,000 December 18, 1996..... See Note 3 below. June 16, 1993......... $ 5,000,000 December 18, 1996..... See Note 3 below. February 24, 1993..... $ 5,000,000 February 24, 1997..... LIBOR Reset Semiannually + 0.35%, converts to 8.20% fixed on February 24, 1995 May 20, 1993.......... $100,000,000 May 20, 1997.......... Prime Rate Reset Daily - 2.00% May 28, 1993.......... $ 5,000,000 May 28, 1997.......... LIBOR Reset Quarterly + 0.30% June 28, 1993......... $ 26,000,000 June 30, 1997......... LIBOR Reset Quarterly + 0.25% November 2, 1992...... $ 5,000,000 December 17, 1997..... LIBOR Reset Quarterly + 0.40% February 23, 1993..... $ 5,000,000 February 23, 1998..... LIBOR Reset Semiannually + 0.50%, converts to 8.00% fixed on February 23, 1996 May 11, 1993.......... $150,000,000 May 11, 1998.......... LIBOR Reset Quarterly + 0.35% August 9, 1993........ $ 5,000,000 August 10, 1998....... LIBOR Reset Quarterly + 0.25% August 18, 1993....... $100,000,000 August 19, 1996....... LIBOR Reset Quarterly + 0.20% December 28, 1993..... $ 5,000,000 December 28, 1998..... See Note 4 below. January 25, 1994...... $ 25,000,000 January 27, 1997...... LIBOR Reset Quarterly + 0.05% January 25, 1994...... $ 75,000,000 January 27, 1997...... LIBOR Reset Quarterly + 0.05% January 25, 1994...... $100,000,000 January 27, 1997...... LIBOR Reset Quarterly + 0.05% January 25, 1994...... $ 50,000,000 January 25, 1999...... LIBOR Reset Quarterly + 0.15% January 27, 1994...... $ 50,000,000 January 27, 1998...... LIBOR Reset Quarterly + 0.10% February 3, 1994...... $ 50,000,000 February 3, 1995...... See Note 5 below.
- --------------- (1) Until March 29, 1994, the rate shall be the lower of (i) three-month LIBOR plus 0.50% or (ii) 9.00% minus three-month LIBOR, but in no event shall the rate be less than zero. From March 29, 1994 up to but excluding September 29, 1994, the rate shall be the lower of (i) three-month LIBOR plus 0.50% or (ii) 10.00% minus three-month LIBOR, but in no event shall the rate be less than zero. From and after September 29, 1994, the rate shall be the lower of (i) three-month LIBOR plus 0.50% or (ii) 11.00% minus three-month LIBOR, but in no event shall the rate be less than zero. (2) Until April 26, 1994 the rate shall be LIBOR plus 0.50%, but in no event shall the rate exceed 4.75%. From April 26, 1994 up to but excluding April 26, 1995 the rate shall be LIBOR plus 0.50%, but in no event shall the rate exceed 6.00%. From and after April 26, 1994, the rate shall be LIBOR plus 0.50%, but in no event shall the rate exceed 7.50%. (3) From December 15, 1993 up to but excluding December 21, 1994, the rate shall be 9.00% minus LIBOR, but in no event shall the rate be less than zero. From December 21, 1994 up to but excluding December 20, 1995, the rate shall be 10.00% minus LIBOR, but in no event shall the rate be less than zero. From and after December 20, 1995, the rate shall be 11.00% minus LIBOR, but in no event shall the rate be less than zero. (footnotes continued on next page.) 14 15 (footnotes continued from previous page) (4) Until December 27, 1994 the rate shall be 4.25%. From December 28, 1994 through December 27, 1995 the rate shall be 5.75%. From December 28, 1995 through December 29, 1996 the rate shall be 7.25%. From December 30, 1996 through December 28, 1997 the rate shall be 10.00% minus six-month LIBOR, but in no event less than zero (which rate will be computed on the basis of a 360-day year of twelve 30-day months). From December 29, 1997 through December 27, 1998 the rate shall be 10.375% minus six-month LIBOR, but in no event less than zero (which rate shall be computed as aforesaid). (5) Rate resets daily. The daily rate shall either be (a) 4.5% if three-month LIBOR is (i) until July 29, 1994, greater than or equal to 3.00% but less than or equal to 4.00%, and (ii) thereafter until February 1, 1995, greater than or equal to 3.00% but less than or equal to 4.25% or (b) if not 4.5% pursuant to (a), then zero. The rate for each Interest Period shall be calculated by multiplying 4.5% by a fraction, the numerator of which is the number of business days in the Interest Period LIBOR was in the applicable range and the denominator of which is the number of business days in the Interest Period. CBC SUBORDINATED SECURITIES General. The CBC Subordinated Securities are direct, unsecured obligations of the Company. The obligations of the Company pursuant to the CBC Subordinated Securities are subordinate in right of payment to all Senior Indebtedness and, in certain circumstances relating to the dissolution, winding-up, liquidation or reorganization of the Company, to all Additional Senior obligations, whether outstanding as of the date hereof or hereafter created, assumed or incurred, as discussed below under "Subordination." The CBC Subordinated Indenture does not contain any restriction on the amount of Senior Indebtedness or Additional Senior Obligations which the Company may incur. Unless otherwise indicated below with respect to a particular series of CBC Subordinated Securities, the maturity of the CBC Subordinated Securities will be subject to acceleration only in the event of bankruptcy or reorganization of the Company. See "Defaults and Waivers Thereof" below. The holders of any series of CBC Subordinated Securities which are specified below and are convertible into Common Stock ("Subordinated Convertible Securities") will be entitled, as specified below, subject to prior redemption, repayment or repurchase, to convert any Subordinated Convertible Securities of such series into Common Stock, at the conversion price specified below, subject to adjustment and to such other terms as are set forth below. The holders of a particular series of CBC Subordinated Securities may be obligated at maturity, or at any earlier time as set forth below with respect to such series, to exchange them for Capital Securities of the Company. (Article Seventeen). The terms of any such exchange and the Capital Securities issuable upon such exchange are, to the extent applicable to a particular series of CBC Subordinated Securities, described below. "Capital Securities" may consist of Common Stock, perpetual preferred stock or other capital securities of the Company acceptable to its primary Federal banking regulator. Currently, the Company's primary Federal banking regulator is the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). Whenever CBC Subordinated Securities are exchangeable for Capital Securities, the Company will be obligated to deliver Capital Securities with a market value equal to the principal amount of such CBC Subordinated Securities. In addition, the Company will unconditionally undertake, at the expense of the Company, to sell the Capital Securities in a sale (the "Secondary Offering") on behalf of any holders who elect to receive cash for the Capital Securities. The Common Stock is described below under "Description of Capital Stock -- Common Stock". A general description of the preferred stock of the Company is set forth below under "Description of Capital Stock -- Preferred Stock". The staff of the Commission has advised the Company that Rule 13e-4 of the Commission's rules and regulations relating to tender offers by issuers, as currently in effect and interpreted, would be applicable to the exchange of CBC Subordinated Securities of any series for Capital Securities and to any Secondary Offering. If, at the time of the exchange of CBC Subordinated Securities of any series for Capital Securities and the Secondary Offering, Rule 13e-4 (or any successor rule or rules) applies to such transactions, the Company will comply with such rule (or any successor rule or rules) and will afford holders of such CBC Subordinated Securities all rights and will make all filings required by such rule (or successor rule or rules). If fewer than all of the CBC Subordinated Securities of a series may be exchanged for Capital Securities pursuant to the terms of such CBC Subordinated Securities, the particular CBC Subordinated Securities to be exchanged shall be selected by the CBC Subordinated Trustee utilizing a method such Trustee deems fair and equitable, provided that such method shall comply with the requirements of applicable law, including Federal securities law. 15 16 Subordination. On August 28, 1992, the Federal Reserve Board revised the risk-based capital guidelines to impose additional restrictions on subordinated debt securities in order for such securities to qualify as Tier II Capital. See "Certain Regulatory Matters -- Capital Ratios." In response to the new guidelines, the Company and the CBC Subordinated Trustee amended and restated the CBC Subordinated Indenture as of December 15, 1992 to permit the Company to issue CBC Subordinated Securities that would qualify as Tier II Capital. CBC Subordinated Securities issued prior to the amendment and restatement of the CBC Subordinated Indenture are collectively referred to herein as "Antecedent CBC Subordinated Indebtedness" and CBC Subordinated Securities issued on after the date of the amendment and restatement of the CBC Subordinated Indenture are collectively referred to herein as "Post-Amendment CBC Subordinated Indebtedness". Antecedent CBC Subordinated Indebtedness includes the following CBC Subordinated Securities: (i) the 10 1/8% Subordinated Capital Notes Due 2000; (ii) the 9 3/4% Subordinated Capital Notes Due 1999; (iii) the Floating Rate Subordinated Capital Note Due 1999; (iv) the 8 1/2% Subordinated Notes Due 2002; (v) the 8 5/8% Subordinated Debentures Due 2002; (vi) the 8 1/8% Subordinated Notes Due 2002; (vii) the 10 3/8% Subordinated Notes Due 1999; and (viii) the Floating Rate Subordinated Capital Note Due 1998. As of the date of this Prospectus, an aggregate principal amount of approximately $1.19 billion of Antecedent CBC Subordinated Indebtedness was outstanding. Post-Amendment CBC Subordinated Indebtedness includes the following CBC Subordinated Securities (i) the 7 5/8% Subordinated Notes Due 2003; (ii) the 7 1/8% Subordinated Debentures Due 2005; and (iii) the 6 1/2% Subordinated Debentures Due 2009. As of the date of this Prospectus, an aggregate principal amount of approximately $600,000,000 of Post-Amendment CBC Subordinated Indebtedness was outstanding. The CBC Subordinated Indenture provides that "Senior Indebtedness" shall mean the principal of (and premium, if any) and interest on (i) all indebtedness of the Company for money borrowed, whether outstanding on the date of execution of the CBC Subordinated Indenture or thereafter created, assumed or incurred, except (A) Post-Amendment CBC Subordinated Indebtedness, (B) Antecedent CBC Subordinated Indebtedness, (C) Assumed MHC Subordinated Indebtedness (as defined below) and (D) such other indebtedness of the Company which by its terms is expressly stated to be not superior in right of payment to the CBC Subordinated Securities or to rank pari passu in right of payment with the CBC Subordinated Securities (such other indebtedness hereinafter referred to as "Other Subordinated Indebtedness") and (ii) any deferrals, renewals or extensions of any such Senior Indebtedness. The term "indebtedness of the Company for money borrowed" shall mean any obligations of, or any obligation guaranteed by, the Company for the repayment of money borrowed, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation for payment of the purchase price of property or assets. Assumed MHC Subordinated Indebtedness includes the following outstanding subordinated indebtedness of the Company which are MHC Subordinated Securities and which were assumed by the Company as a result of the Merger: (i) the Floating Rate Subordinated Notes Due 1997; (ii) the 8 1/2% Subordinated Capital Notes Due February 15, 1999; and (iii) the Subordinated Note Due 1996. As of the date of this Prospectus, an aggregate principal amount of approximately $272 million of Assumed MHC Subordinated Indebtedness and an aggregate principal amount of approximately $100 million of Other Subordinated Indebtedness was outstanding. The CBC Subordinated Indenture provides that "Additional Senior Obligations" shall mean all indebtedness of the Company, whether outstanding on December 15, 1992 or thereafter created, assumed or incurred, for claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; provided, however, that Additional Senior Obligations do not include claims in respect of Senior Indebtedness or obligations which, by their terms, are expressly stated to be not superior in right of payment to the Post-Amendment CBC Subordinated Securities or to rank pari passu in right of payment with the Post-Amendment CBC Subordinated Securities. For purposes of this definition, "claim" shall have the meaning assigned thereto in Section 101(4) of the United States Bankruptcy Code of 1978, as amended and in effect on December 15, 1992. 16 17 The CBC Subordinated Securities (irrespective of whether such CBC Subordinated Securities are Antecedent or Post-Amendment CBC Subordinated Indebtedness) are subordinate in right of payment to all Senior Indebtedness. No payment pursuant to the CBC Subordinated Securities, or exchange for Capital Securities, may be made, and no holder of the CBC Subordinated Securities shall be entitled to demand or receive any such payment or exchange unless all amounts of principal (and premium, if any) and interest, if any, then due with respect to all Senior Indebtedness of the Company shall have been paid in full or duly provided for, and unless at the time of such payment or exchange and immediately after giving effect thereto, there shall not exist with respect to any such Senior Indebtedness any event of default permitting the holders thereof to accelerate the maturity thereof or any event which, with notice or lapse of time or both, would become such an event of default. Such subordination will not prevent the occurrence of any default in respect of the CBC Subordinated Securities. See "Defaults and Waiver Thereof" below for limitations on the rights of acceleration. The Post-Amendment CBC Subordinated Securities are subordinate in right of payment to Senior Indebtedness as described above and, in certain circumstances relating to the dissolution or winding-up of the Company, to Additional Senior Obligations. Accordingly, upon any distribution of the assets of the Company upon dissolution, winding-up, liquidation or reorganization, (i) the holders of Senior Indebtedness will be entitled to receive payment in full of principal (and premium, if any) and interest, if any, before any payment or distribution is made on the CBC Subordinated Securities, and (ii) if, after giving effect to the operation of clause (i) above, (A) amounts remain available for payment or distribution in respect of the CBC Subordinated Securities and (B) creditors in respect of Additional Senior Obligations have not received payment in full of amounts due or to become due thereon or payment of such amounts has not been duly provided for, then such amounts available for payment or distribution in respect of the Post-Amendment CBC Subordinated Indebtedness shall first be applied to pay or provide for the payment in full of all such Additional Senior Obligations before any payment may be made on the Post-Amendment CBC Subordinated Indebtedness. The Antecedent CBC Subordinated Indebtedness will not be subordinated to indebtedness of the Company which is not Senior Indebtedness, the Post-Amendment CBC Subordinated Indebtedness will not be subordinated to indebtedness of the Company which is not Senior Indebtedness or Additional Senior Obligations, and the creditors of the Company who do not hold Senior Indebtedness or Additional Senior Obligations will not benefit from the subordination provisions described herein. In the event of the bankruptcy or reorganization of the Company before or after maturity of the CBC Subordinated Securities (and prior to any exchange or conversion thereof), such other creditors would rank pari passu in right of payment with holders of the CBC Subordinated Securities, subject, however, to the broad equity powers of a Federal bankruptcy court pursuant to which such court may, among other things, reclassify the claims of holders of any series of CBC Subordinated Securities into a class of claims having a different relative priority with respect to the claims of such other creditors or any other claims against the Company. Summary of Subordination Provisions Relating to CBC Subordinated Securities. No series of subordinated debt securities of the Company, including, without limitation, the Post-Amendment CBC Subordinated Indebtedness, the Antecedent CBC Subordinated Indebtedness, the Assumed MHC Subordinated Indebtedness and the Other Subordinated Indebtedness, is subordinated to any other series of subordinated debt securities of the Company. However, Antecedent CBC Subordinated Indebtedness is subordinated, by its terms, only to Senior Indebtedness; Post-Amendment CBC Subordinated Indebtedness and Other Subordinated Indebtedness are subordinated, by their terms, to Senior Indebtedness and, in certain circumstances relating to the dissolution, winding-up, liquidation or reorganization of the Company, to Additional Senior Obligations; and MHC Subordinated Securities (otherwise referred to as Assumed MHC Subordinated Indebtedness) are subordinated, by their terms, to Senior Indebtedness, Additional Senior Obligations and all other obligations of the Company to its creditors other than any obligation of the Company as is by its terms expressly stated to be not superior in right of payment to or to rank pari passu in right of payment with such MHC Subordinated Securities. As a result of the differences between the subordination provisions applicable to the Post-Amendment CBC Subordinated Indebtedness, the Antecedent CBC Subordinated Indebtedness, the MHC Subordinated Securities (otherwise referred to herein as Assumed MHC Subordinated Indebted- 17 18 ness) and the Other Subordinated Indebtedness, in the event of a dissolution, winding-up, liquidation or reorganization of the Company, the holders of Post-Amendment CBC Subordinated Indebtedness and Other Subordinated Indebtedness may receive less, ratably, than the holders of Pre-Amendment CBC Subordinated Indebtedness, but more, ratably, than the holders of MHC Subordinated Securities. Limitation on Disposition of Voting Stock of Chemical Bank. With respect to Post-Amendment CBC Subordinated Indebtedness, the CBC Subordinated Indenture contains no covenant that the Company will not sell, transfer or otherwise dispose of any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, voting stock of Chemical Bank, nor does it prohibit Chemical Bank from issuing any shares of, securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, voting stock of Chemical Bank. However, the CBC Subordinated Indenture does contain a covenant by the Company, for the exclusive benefit of the Antecedent CBC Subordinated Indebtedness and subject to the provisions described below under "Consolidation, Merger and Sale of Assets," that the Company will not sell, transfer or otherwise dispose of any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, voting stock of Chemical Bank, nor will it permit Chemical Bank to issue any shares of, securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, voting stock of Chemical Bank, with the following exceptions: (i) issuances or sales of directors' qualifying shares; (ii) issuances or sales of shares to the Company; (iii) sales or other dispositions or issuances for fair market value, as determined by the Board of Directors of the Company, if after giving effect to such sales, dispositions or issuances and to the issuance of any shares issuable upon conversion of convertible securities or upon the exercise of options, warrants or rights, the Company would own directly or indirectly through subsidiaries not less than 80% of the issued and outstanding shares of voting stock of Chemical Bank; (iv) sales or other dispositions or issuances made in compliance with an order or direction of a court or regulatory authority of competent jurisdiction; and (v) sales of voting stock by Chemical Bank to its shareholders if such sales do not reduce the percentage of shares of voting stock owned by the Company. (Section 5.07). Defaults and Waiver Thereof. The CBC Subordinated Indenture defines an Event of Default (i) with respect to Antecedent CBC Subordinated Indebtedness, any one of certain events of bankruptcy, insolvency and reorganization affecting the Company; (ii) with respect to Post-Amendment CBC Subordinated Indebtedness, any one of certain events of bankruptcy or reorganization affecting the Company; and (iii) with respect to any CBC Subordinated Securities, any other Event of Default specifically provided for by the terms of such series of CBC Subordinated Securities, as may be described below with respect to such series. (Section 7.01). In case an Event of Default shall have occurred and be continuing with respect to any series of CBC Subordinated Securities then outstanding under the CBC Subordinated Indenture, the CBC Subordinated Trustee or the holders of at least 25% in aggregate principal amount of the CBC Subordinated Securities of that series which are then outstanding may declare the principal (or, in the case of original issue discount CBC Subordinated Securities, such lesser amount of principal as may be provided therein) of all CBC Subordinated Securities of that series to be due and payable immediately in cash, but such declaration may be annulled, and certain past defaults may be waived, by the holders of not less than a majority in aggregate principal amount of the CBC Subordinated Securities of that series, upon the conditions provided in the CBC Subordinated Indenture. (Section 7.01). The right of the holders of the CBC Subordinated Securities of a series to demand payment in cash would exist upon the occurrence and continuance of an Event of Default before or after the stated maturity of the CBC Subordinated Securities of such series, so long as the CBC Subordinated Securities of such series have not been exchanged or converted as provided in the CBC Subordinated Indenture. Any such right to payment in cash would, in the event of the bankruptcy or reorganization of the Company, be subject as to enforcement to the broad equity powers of a Federal bankruptcy court and to the determination by that court of the nature and status of the payment claims of the holders of the CBC Subordinated Securities. Prior to any declaration accelerating the maturity of the CBC Subordinated Securities of any series, the holders of a majority in aggregate principal amount of the CBC Subordinated Securities of that series at the time outstanding may on behalf of the holders of all CBC Subordinated Securities of that series waive any past default or Event of Default and its consequences, except a default in the payment of the principal of (or premium, if any) or interest, if any, on the CBC Subordinated Securities of that series. (Section 7.07). 18 19 Unless otherwise provided in the terms of a series of CBC Subordinated Securities, there will be no right of acceleration of the payment of principal of the CBC Subordinated Securities of such series upon a default in the payment of principal or interest or a default in the performance of any covenant or agreement in the CBC Subordinated Securities or the CBC Subordinated Indenture. In the event of a default in the payment of interest or principal (including the delivery of any Capital Securities in exchange for CBC Subordinated Securities) or the performance of any covenant or agreement in the CBC Subordinated Securities or the CBC Subordinated Indenture, the CBC Subordinated Trustee may, subject to certain limitations and conditions, seek to enforce payment of such interest or principal (including the delivery of any Capital Securities in exchange for CBC Subordinated Securities) or the performance of such covenant or agreement. The CBC Subordinated Indenture provides that the CBC Subordinated Trustee shall, within 90 days after the occurrence of a default with respect to the CBC Subordinated Securities of any series, give to the holders of the CBC Subordinated Securities of that series notice of all uncured defaults known to it (the term "default" being defined to include the events specified above without grace periods or notice), provided, that except in the case of an Event of Default that relates to the bankruptcy or reorganization of the Company or a default in payment of principal (or premium, if any) or interest, if any, in respect of the CBC Subordinated Securities of that series, or the obligation to deliver Capital Securities in exchange for such CBC Subordinated Securities, the CBC Subordinated Trustee shall be protected in withholding such notice if and so long as the board of directors or trustees, the executive committee or a trust committee of directors or responsible officers or both, of the CBC Subordinated Trustee, in good faith determines that the withholding of such notice is in the interest of such holders. (Section 7.08). The Company will be required to furnish to the CBC Subordinated Trustee annually an officers' certificate as to the absence of defaults under the CBC Subordinated Indenture. (Section 5.06). Subject to the provisions of the CBC Subordinated Indenture relating to the duties of the CBC Subordinated Trustee, the CBC Subordinated Trustee will be under no obligation to exercise any of its rights or powers under the CBC Subordinated Indenture at the request, order or direction of any of the holders of the CBC Subordinated Securities, unless such holders shall have offered to the CBC Subordinated Trustee reasonable security or indemnity. Subject to such provision for security or indemnification, the holders of a majority in principal amount of the CBC Subordinated Securities of any series then outstanding under the CBC Subordinated Indenture will have the right to direct the time, method and place of conducting any proceeding for any remedy available to, or exercising any trust or power conferred on, the CBC Subordinated Trustee with respect to the CBC Subordinated Securities of such series. (Sections 7.07 and 8.02). Modification of the CBC Subordinated Indenture. The CBC Subordinated Indenture contains provisions permitting the Company and the CBC Subordinated Trustee, with the consent of the holders of not less than a majority in principal amount of the CBC Subordinated Securities at the time outstanding of each series affected by such modification, to modify the CBC Subordinated Indenture or any supplemental indenture or the rights of the holders of the CBC Subordinated Securities, provided that no such modification shall, without the consent of the holder of each CBC Subordinated Security affected thereby: (i) change the stated maturity date of the principal of, or any installment of principal of or interest on, any such CBC Subordinated Security; (ii) reduce the principal amount of (or premium, if any) or interest, if any, on any such CBC Subordinated Security; (iii) reduce the portion of the principal amount of an original issue discount CBC Subordinated Security payable upon acceleration of the maturity thereof; (iv) reduce any amount payable upon redemption of any CBC Subordinated Security; (v) change the place or places where, or the coin or currency in which, any CBC Subordinated Security or any premium or the interest thereon is payable; (vi) change the definition of "Market Value"; (vii) impair the right of any holders of CBC Subordinated Securities of any series to receive on any Exchange Date for CBC Subordinated Securities of such series Capital Securities with a Market Value equal to that required by the terms of the CBC Subordinated Securities; (viii) impair the conversion rights of any holders of CBC Subordinated Securities of a series entitled to the conversion rights set forth in Article Nineteen of the CBC Subordinated Indenture; (ix) impair the right of a holder to institute suit for the enforcement of any payment on or with respect to any such CBC Subordinated Security (including any right of redemption at the option of the holder of such CBC Subordinated Security) or impair any rights to the delivery of Capital Securities in exchange for any CBC 19 20 Subordinated Security or to require the Company to sell Capital Securities in a Secondary Offering or to require the delivery of Common Stock, CBC Debt Securities or other property upon conversion of CBC Subordinated Securities; (x) reduce the above-stated percentage of CBC Subordinated Securities of any series the consent of the holders of which is necessary to modify or amend the CBC Subordinated Indenture or reduce the percentage of CBC Subordinated Securities of any series the holders of which are required to waive any past default or Event of Default; or (xi) modify the foregoing requirements. (Section 11.02). The CBC Subordinated Indenture permits the Company and the CBC Subordinated Trustee to amend the CBC Subordinated Indenture in certain circumstances without the consent of the holders of CBC Subordinated Securities to evidence the merger of the Company or the replacement of the CBC Subordinated Trustee, to effect modifications which do not affect any series of CBC Subordinated Securities already outstanding and for certain other purposes. (Section 11.01). Consolidation, Merger and Sale of Assets. The Company may not merge or consolidate with any other corporation or sell or convey all or substantially all of its assets as an entirety to any other corporation, unless (i) either the Company shall be the continuing corporation or the successor corporation shall expressly assume the payment of the principal of (including issuance and delivery of Capital Securities) (and premium, if any) and interest, if any, on the CBC Subordinated Securities and the performance and observance of all the covenants and conditions of the CBC Subordinated Indenture binding upon the Company, and (ii) the Company or such successor corporation shall not, immediately after such merger or consolidation or such sale or conveyance, be in default in the performance of any such covenant or condition. (Article Twelve). Set forth below are the principal terms of the CBC Subordinated Securities issued and outstanding as of the date of this Prospectus, with respect to which offers and sales relating to secondary market transactions may be made by direct or indirect wholly-owned subsidiaries of the Company. Reference is made to the Glossary for the definition of some of the terms used herein. TERMS AND PROVISIONS OF 10 3/8% SUBORDINATED NOTES DUE 1999 The 10 3/8% Subordinated Notes Due 1999 (the "10 3/8% 1999 Notes") are limited to $100,000,000 aggregate principal amount and will mature on March 15, 1999. The 10 3/8% 1999 Notes are not redeemable prior to maturity and no sinking fund is provided for the 10 3/8% 1999 Notes. The 10 3/8% 1999 Notes bear interest from March 15, 1989, payable semiannually in arrears on each March 15 and September 15, commencing September 15, 1989 to the persons in whose names the 10 3/8% 1999 Notes are registered at the close of business on the first day of March or September preceding such March 15 or September 15. The happening of one or more of the following events shall constitute an Event of Default with respect to the 10 3/8% 1999 Notes: (i) default for 30 days in the payment of any installment of interest on any 10 3/8% 1999 Note; (ii) default in the payment, when due, of the principal of any 10 3/8% 1999 Note; (iii) default, for 60 days after appropriate written notice, in the observance of performance of any other covenants or agreements of the Company contained in the 10 3/8% 1999 Notes or in the Indenture for the benefit of the 10 3/8% 1999 Notes; and (iv) certain events of bankruptcy, insolvency and reorganization affecting the Company or Chemical Bank. TERMS AND PROVISIONS OF 9 3/4% SUBORDINATED CAPITAL NOTES DUE 1999 The 9 3/4% Subordinated Capital Notes Due 1999 (the "9 3/4% 1999 Notes") are limited to $300,000,000 aggregate principal amount and will mature on June 15, 1999. The 9 3/4% 1999 Notes are not redeemable prior to maturity, except upon the occurrence of certain events relating to the Federal income tax treatment of the 9 3/4% 1999 Notes to the Company, and no sinking fund is provided for the 9 3/4% 1999 Notes. The 9 3/4% 1999 Notes bear interest from June 22, 1987, payable semiannually in arrears on each June 15 and December 15, commencing December 15, 1987 to the persons in whose names the 9 3/4% 1999 Notes are registered at the close of business on the first day of June or December preceding such June 15 or December 15. At maturity, the 9 3/4% 1999 Notes will be exchanged for Capital Securities having a Market Value equal to the principal amount of the 9 3/4% 1999 Notes, except to the extent that the Company, at its option, elects to pay in cash the principal amount of the 9 3/4% 1999 Notes, in whole or in part, from amounts representing proceeds of other 20 21 issuances of Capital Securities which the Company has theretofore designated for such use ("Designated Proceeds"). The Company has Designated Proceeds sufficient to pay the 9 3/4% 1999 Notes in cash at maturity. TERMS AND PROVISIONS OF 10 1/8% SUBORDINATED CAPITAL NOTES DUE 2000 The 10 1/8% Subordinated Capital Notes Due 2002 (the "10 1/8% 2000 Notes") are limited to $150,000,000 aggregate principal amount and will mature on November 1, 2000. The 10 1/8% 2000 Notes are not subject to redemption prior to maturity, except upon the occurrence of certain events relating to the Federal income tax treatment of the 10 1/8% 2000 Notes to the Company, and no sinking fund is provided for 10 1/8% 2000 Notes. The 10 1/8% 2000 Notes bear interest from November 1, 1988, payable semiannually in arrears on each May 1 and November 1, commencing May 1, 1989 to the persons in whose names the 10 1/8% 2000 Notes are registered at the close of business on the fifteenth day of April or October preceding such May 1 or November 1. At maturity, the 10 1/8% 2000 Notes will be exchanged for Capital Securities having a Market Value equal to the principal amount of the 10 1/8% 2000 Notes, except to the extent that the Company, at its option, elects to pay in cash the principal amount of the 10 1/8% 2000 Notes, in whole or in part, from Designated Proceeds. The Company has Designated Proceeds sufficient to pay the 10 1/8% 2000 Notes in cash at maturity. TERMS AND PROVISIONS OF 8 1/2% SUBORDINATED NOTES DUE 2002 The 8 1/2% Subordinated Notes Due 2002 (the "8 1/2% 2002 Notes") are limited to $200,000,000 aggregate principal amount and will mature on February 15, 2002. The 8 1/2% 2002 Notes are not redeemable prior to maturity and no sinking fund is provided for the 8 1/2% 2002 Notes. The 8 1/2% 2002 Notes bear interest from February 10, 1992, payable semiannually in arrears on each February 15 and August 15, commencing August 15, 1992 to the persons in whose names the 8 1/2% 2002 Notes are registered at the close of business on the first day of February or August preceding such February 15 or August 15. The happening of one or more of the following events shall constitute an Event of Default with respect to the 8 1/2% 2002 Notes: (i) default for 30 days in the payment of any installment of interest on any 8 1/2% 2002 Note; (ii) default in the payment, when due, of the principal of any 8 1/2% 2002 Note; (iii) default, for 60 days after appropriate written notice, in the observance or performance of any other covenants or agreements of the Company contained in the 8 1/2% 2002 Notes; and (iv) certain events of bankruptcy, insolvency and reorganization affecting the Company or Chemical Bank. TERMS AND PROVISIONS OF 8 5/8% SUBORDINATED DEBENTURES DUE 2002 The 8 5/8% Subordinated Notes Due 2002 (the "8 5/8% 2002 Notes") are limited to $150,000,000 aggregate principal amount and will mature on May 1, 2002. The 8 5/8% 2002 Notes are not redeemable prior to maturity and no sinking fund is provided for the 8 5/8% 2002 Notes. The 8 5/8% 2002 Notes bear interest from May 1, 1992, payable semiannually in arrears on each May 1 and November 1, commencing November 1, 1992 to the persons in whose names the 8 5/8% 2002 Notes are registered at the close of business on the fifteenth day of April or October preceding such May 1 or November 1. TERMS AND PROVISIONS OF 8 1/8% SUBORDINATED NOTES DUE JUNE 15, 2002 The 8 1/8% Subordinated Notes Due June 15, 2002 (the "8 1/8% June 15, 2002 Notes") are limited to $100,000,000 aggregate principal amount and will mature on June 15, 2002. The 8 1/8% June 15, 2002 Notes are not redeemable prior to maturity and no sinking fund is provided for the 8 1/8% June 15, 2002 Notes. The 8 1/8% June 15, 2002 Notes bear interest from June 15, 1992, payable semiannually in arrears on each June 15 and December 15, commencing December 15, 1992 to the persons in whose names the 8 1/8% June 15, 2002 Notes are registered at the close of business on the first day of June or December preceding such June 15 or December 15. 21 22 TERMS AND PROVISIONS OF 7 5/8% SUBORDINATED NOTES DUE 2003 The 7 5/8% Subordinated Notes Due 2003 (the "7 5/8% 2003 Notes") are limited to $200,000,000 aggregate principal amount and will mature on January 15, 2003. The 7 5/8% 2003 Notes are not redeemable prior to maturity and no sinking fund is provided for the 7 5/8% 2003 Notes. The 7 5/8% 2003 Notes bear interest from January 22, 1993, payable semiannually in arrears on each January 15 and July 15, commencing July 15, 1993 to the persons in whose names the 7 5/8% 2003 Notes are registered at the close of business on the first day of January or July preceding such January 15 or July 15. TERMS AND PROVISIONS OF 7 1/8% SUBORDINATED DEBENTURES DUE 2005 The 7 1/8% Subordinated Debentures Due 2005 (the "7 1/8% 2005 Debentures") are limited to $200,000,000 aggregate principal amount and will mature on March 1, 2005. The 7 1/8% 2005 Debentures are not redeemable prior to maturity and no sinking fund is provided for the 7 1/8% 2005 Debentures. The 7 1/8% 2005 Debentures bear interest from March 1, 1993, payable semiannually in arrears on each March 1 and September 1, commencing September 1, 1993 to the persons in whose names the 7 1/8% 2005 Debentures are registered at the close of business on the fifteenth day of February or August preceding such March 1 or September 1. TERMS AND PROVISIONS OF 6 1/2% SUBORDINATED DEBENTURES DUE 2009 The 6 1/2% Subordinated Debentures Due 2009 (the "6 1/2% 2009 Debentures") are limited to $200,000,000 aggregate principal amount and will mature on January 15, 2009. The 6 1/2% 2009 Debentures are not redeemable prior to maturity and no sinking fund is provided for the 6 1/2% 2009 Debentures. The 6 1/2% 2009 Debentures bear interest from January 25, 1994, payable semiannually in arrears on each January 15 and July 15, commencing July 15, 1994, to the persons in whose names the 6 1/2% 2009 Debentures are registered at the close of business on the first day of January or July preceding such January 15 or July 15. TERMS AND PROVISIONS OF SUBORDINATED MEDIUM-TERM NOTES, SERIES A The Subordinated Medium-Term Notes, Series A (the "Subordinated Medium-Term Notes") mature from 9 months to 30 years from their date of issue, as mutually agreed between the purchaser and the Company. The Subordinated Medium-Term Notes are not subject to any sinking fund and are not redeemable prior to their stated maturity. The Subordinated Medium-Term Notes have either (a) fixed interest rates or (b) floating interest rates which are either reset daily, monthly, quarterly, semiannually or annually based on the CD Rate, Commercial Paper Rate, the Federal Funds Effective Rate, the Treasury Rate or LIBOR, adjusted by a Spread or Spread Multiplier, as applicable. As of the date of this Prospectus, no Subordinated Medium Term Notes were outstanding. PERMANENT GLOBAL CBC DEBT SECURITIES Certain series of the CBC Debt Securities were issued in permanent global form. See "Permanent Global Debt Securities" for a discussion of the rights of beneficial owner of interest in permanent global debt securities. INFORMATION CONCERNING THE TRUSTEES The Company, Chemical Bank and certain other subsidiaries of the Company maintain deposits with, and conduct other banking transactions with, the trustees under each of the CBC Indentures in the ordinary course of business. Morgan Guaranty Trust Company of New York is trustee under the MHC Senior Indenture. 22 23 DESCRIPTION OF MHC DEBT SECURITIES The statements under this caption are brief summaries of certain provisions contained in the MHC Indentures (as defined below), do not purport to be complete and are qualified in their entirety by reference to such MHC Indentures, copies of which are exhibits to the Registration Statement of which this Prospectus is a part. Wherever capitalized terms are used but not defined herein, such terms shall have the meanings assigned to them in the applicable MHC Indenture, it being intended that such referenced sections of the MHC Indentures and such defined terms shall be incorporated herein by reference. GENERAL The MHC Senior Securities have been issued under an Indenture, dated as of June 1, 1982, between MHC and Morgan Guaranty Trust Company of New York, as Trustee (the "MHC Senior Trustee"), as amended by the First Supplemental Indenture dated as of January 15, 1986, the Second Supplemented Indenture dated as of March 13, 1991 and the Third Supplemented Indenture dated as of December 31, 1991 (the "MHC Senior Indenture"). The MHC Subordinated Securities have been issued under an Indenture, dated as of June 1, 1985, between MHC and IBJ Schroder Bank & Trust Company (the "MHC Subordinated Trustee"), as amended by the First Supplemented Indenture dated as of December 31, 1991 (the "MHC Subordinated Indenture"). The MHC Senior Indenture and the MHC Subordinated Indenture shall be collectively referred to as the "MHC Indentures." As a result of the Merger, the Company has assumed the obligations and liabilities of MHC under the MHC Indentures and the MHC Debt Securities. Since the Company is a holding company, the right of the Company to participate in any distribution of assets of any subsidiary, including Chemical Bank and Texas Commerce, upon such subsidiary's liquidation or reorganization or otherwise (and thus the ability of holders of the MHC Debt Securities to benefit indirectly from such distribution), is subject to the prior claims of creditors of that subsidiary, except to the extent that the Company may itself be recognized as a creditor of that subsidiary. Claims on the Company's subsidiaries by creditors other than the Company include long-term debt and substantial obligations with respect to deposit liabilities, Federal funds purchased, securities sold under repurchase agreements, commercial paper and other short-term borrowings. The MHC Debt Securities have been issued in fully registered form only and may be transferred, combined or split up into authorized denominations without payment of any charge other than stamp taxes or other governmental charges. Neither MHC Indenture contains any restriction on the Company's ability to enter into a highly leveraged transaction or any provision affording special protection to holders of MHC Debt Securities in the event the Company engages in a highly leveraged transaction. Further, neither MHC Indenture contains any provisions that would provide protection to holders of MHC Debt Securities upon a sudden and dramatic decline in the credit quality of the Company resulting from a takeover, recapitalization or similar restructuring of the Company. MHC SENIOR SECURITIES The MHC Senior Securities are direct, unsecured obligations of the Company and constitute Senior Indebtedness issued on a parity with the other Senior Indebtedness of the Company. See "Description of CBC Debt Securities--CBC Subordinated Securities" above. Limitation on Disposition of Voting Stock of Chemical Bank. The MHC Senior Indenture contains a covenant by the Company that, so long as any of the MHC Senior Securities are outstanding, it will not sell, assign, transfer or otherwise dispose of any shares of, securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, voting stock of Chemical Bank (the successor by merger to Manufacturers Hanover Trust Company), nor will it permit Chemical Bank to issue any shares of, securities convertible into or options, warrants or rights to subscribe for or purchase shares of, voting stock of Chemical Bank, unless (a) any such sale, assignment, transfer or other disposition is made for fair market value, as determined by the Board of Directors of the Company and (b) the Company will own at least 80% of the issued and outstanding voting stock of Chemical Bank after giving effect to such transaction. 23 24 Defaults and Waiver Thereof. The MHC Senior Indenture provides that the happening of one or more of the following events shall constitute an Event of Default with respect to any series of MHC Senior Securities then outstanding under the MHC Senior Indenture: (i) default for 30 days in the payment of any installment of interest on any MHC Senior Securities of that series; (ii) default in the payment, when due, of the principal of (or premium if any, on) any MHC Senior Securities of that series; (iii) default, for 60 days after written notice, in the observance or performance of any other of the covenants or agreements of the Company in the MHC Senior Securities of that series or in the MHC Senior Indenture relating to that series; and (iv) certain events of insolvency. In case an Event of Default shall have occurred and be continuing with respect to any series of MHC Senior Securities then outstanding under the MHC Senior Indenture, the MHC Senior Trustee or the holders of at least 25% in aggregate principal amount of the MHC Senior Securities of that series which are then outstanding may declare the principal, or, in the case of discounted MHC Senior Securities, such lesser amount of principal as may be provided therein, of all MHC Senior Securities of that series to be due and payable immediately, but such declaration may be annulled, and certain past defaults waived, by the holders of not less than a majority in aggregate principal amount of the MHC Senior Securities of that series, upon the conditions provided in the MHC Senior Indenture. The MHC Senior Indenture provides that the MHC Senior Trustee shall, within 90 days after the occurrence of a default with respect to the MHC Senior Securities of any series, give to the holders of the MHC Senior Securities of that series notice of all uncured defaults known to it (the term "default" being defined to include the events specified above without grace periods or notice); provided that, except in the case of default in payment of principal (or premium, if any) or interest, if any, in respect of the MHC Senior Securities of that series, the MHC Senior Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or responsible officers or both, of the trustee, in good faith determines that the withholding of such notice is in the interest of such holders. The Company is required to furnish to the MHC Senior Trustee annually an officers' certificate to the effect that the Company is not in default under any provision of the MHC Senior Indenture. Subject to the provisions of the MHC Senior Indenture relating to the duties of the MHC Senior Trustee, the MHC Senior Trustee is under no obligation to exercise any of its rights or powers under the MHC Senior Indenture at the request, order or direction of any of the holders of the MHC Senior Securities, unless such holders have offered to the MHC Senior Trustee reasonable indemnity. Subject to such provision for indemnification, the holders of a majority in principal amount of the MHC Senior Securities of any series then outstanding under the MHC Senior Indenture have the right to direct the time, method and place of conducting any proceeding for any remedy available to, or exercising any trust or power conferred on, the MHC Senior Trustee with respect to the MHC Senior Securities of such series. Modification of the Indenture. The MHC Senior Indenture provides that, with the consent of the holders of not less than 66 2/3% in aggregate principal amount of the MHC Senior Securities of the series to be affected then outstanding under the MHC Senior Indenture (voting as one class), modifications and alterations of the MHC Senior Indenture may be made which affect the rights of the holders of the MHC Senior Securities of each such series, but no such modification or alteration may be made which would (i) extend the fixed maturity of any MHC Senior Security or reduce the principal amount thereof or reduce the rate or extend the time of payment of any interest thereon or (ii) reduce the above-stated percentage of holders required to modify or alter the MHC Senior Indenture, without consent of all the holders of the MHC Senior Securities then outstanding under the MHC Senior Indenture to be affected thereby. Set forth below are the principal terms of the MHC Senior Securities issued and outstanding as of the date of this Prospectus, with respect to which offers and sales relating to secondary market transactions may be made by direct or indirect wholly-owned subsidiaries of the Company. Reference is made to the Glossary for the definition of some of the terms used herein. TERMS AND PROVISIONS OF 8 1/8% NOTES DUE JANUARY 15, 1997 The 8 1/8% Notes Due January 15, 1997 (the "8 1/8% January 15, 1997 Notes") are limited to $150,000,000 aggregate principal amount and will mature on January 15, 1997. The 8 1/8% January 15, 1997 Notes are not redeemable prior to maturity and no sinking fund is provided for the 8 1/8% January 15, 1997 Notes. The 8 1/8% 24 25 January 15, 1997 Notes bear interest from January 20, 1987, payable semi-annually in arrears on each January 15 and July 15, commencing July 15, 1987 to the persons in whose names the 8 1/8% January 15, 1997 Notes are registered at the close of business on the first day of January or July preceding such January 15 or July 15. TERMS AND PROVISIONS OF 9 1/2% NOTES DUE MARCH 15, 1994 The 9 1/2% Notes Due March 15, 1994 (the "9 1/2% March 15, 1994 Notes") are limited to $100,000,000 aggregate principal amount and will mature on March 15, 1994. The 9 1/2% March 15, 1994 Notes are not redeemable prior to maturity and no sinking fund is provided for the 9 1/2% March 15, 1994 Notes. The 9 1/2% March 15, 1994 Notes bear interest from March 20, 1991, payable semi-annually on each March 15 and September 15, commencing September 15, 1991 to the persons in whose names the 9 1/2% March 15, 1994 Notes are registered at the close of business on the first day of March or September preceding such March 15 or September 15. The 9 1/2% March 15, 1994 Notes are represented by one or more permanent global certificates registered in the name of the Depositary or its nominee. TERMS AND PROVISIONS OF MHC MEDIUM-TERM NOTES Set forth below is a table indicating the issuance date and the maturities of the $8,000,000 aggregate principal amount of MHC Medium-Term Notes (the "MHC Medium-Term Notes") issued and outstanding as of the date of this Prospectus. The MHC Medium-Term Notes will mature from 9 months to 15 years from their date of issue. The MHC Medium-Term Notes are not subject to any sinking fund and are not redeemable prior to maturity.
ISSUANCE DATE PRINCIPAL AMOUNT MATURITY DATE RATE ---------------------- ---------------- ---------------------- ----- February 17, 1987..... $5,000,000 February 17, 1994..... 7.88% March 6, 1987......... $3,000,000 March 6, 1994......... 7.82%
MHC SUBORDINATED SECURITIES MHC Subordinated Securities are unsecured debt obligations of the Company. Payment of the principal of the MHC Subordinated Securities is subject to acceleration only in the event of bankruptcy, insolvency or reorganization of the Company. The provisions of the MHC Subordinated Indenture do not restrict the ability of the Company to incur additional MHC Senior Indebtedness (as defined below) from time to time. Subordination. The MHC Subordinated Securities are subordinated, by their terms, to Senior Indebtedness, Additional Senior Obligations and all other obligations of the Company to its creditors other than any obligation of the Company as is by its terms expressly stated to be not superior in right of payment to or to rank pari passu in right of payment with such MHC Subordinated Securities (collectively, "MHC Senior Indebtedness"). The MHC Subordinated Securities are also referred to in this Prospectus as Assumed MHC Subordinated Indebtedness. No payment pursuant to the MHC Subordinated Securities may be made, and no holder of MHC Subordinated Securities shall be entitled to demand or receive any such payment unless all amounts of principal, premium, if any, and interest then due on all MHC Senior Indebtedness shall have been paid in full or if, at the time of such payment or immediately after giving effect thereto, there shall exist with respect to any such MHC Senior Indebtedness any event of default permitting the holders thereof to accelerate the maturity thereof or any event which, with notice or lapse of time or both, would become such an event of default. Such subordination will not prevent the occurrence of any default in respect of the MHC Subordinated Securities. See "Defaults and Waivers Thereof" below. Upon any distribution of the assets of the Company upon dissolution, winding-up, liquidation or reorganization, the holders of MHC Senior Indebtedness will be entitled to receive payment in full of principal, premium, if any, and interest before any payment is made on the MHC Subordinated Securities. By reason of such subordination, in the event of the insolvency of the Company, holders of MHC Senior 25 26 Indebtedness may receive more ratably, and holders of MHC Subordinated Securities may receive less ratably, than other creditors of the Company, including holders of CBC Subordinated Securities. See "Description of CBC Debt Securities -- CBC Subordinated Securities". The MHC Subordinated Securities will not be subordinated to indebtedness of the Company which is not MHC Senior Indebtedness, and the creditors of the Company who do not act hold MHC Senior Indebtedness, and the creditors of the Company who do act hold MHC Senior Indebtedness will not benefit from the subordination provisions described herein. In the event of the bankruptcy or reorganization of the Company, such other creditors would rank pari passu in right of payment with holders of the MHC Subordinated Securities, subject, however, to the broad equity powers of a Federal bankruptcy court pursuant to which such court may, among other things, reclassify the claims of holders of any series of MHC Subordinated Securities into a class of claims having a different relative priority with respect to the claims of such other creditors or any other claims against the Company. Defaults and Waiver Thereof. The MHC Subordinated Indenture provides that the happening of one or more of the following events shall constitute an Event of Default with respect to any series of MHC Subordinated Securities then outstanding under the MHC Subordinated Indenture: (i) default for 30 days in the payment of any instalment of interest on any MHC Subordinated Securities of that series; (ii) default in the payment, when due, of the principal of (or premium, if any, on) any MHC Subordinated Securities of that series; (iii) default, for 60 days after written notice, in the observance or performance of any other of the covenants or agreements of the Company in the MHC Subordinated Securities of that series or in the MHC Subordinated Indenture relating to that series; and (iv) certain events of insolvency. In case (a) an Event of Default shall have occurred and be continuing with respect to any series of MHC Subordinated Securities then outstanding under the MHC Subordinated Indenture (other than MHC Subordinated Securities designated as Primary Capital Securities), or (b) certain events of insolvency with respect to the Company shall have occurred and be continuing with respect to any series of MHC Subordinated Securities then outstanding under the MHC Subordinated Indenture that has been designated as Primary Capital Securities, then, the MHC Subordinated Trustee or the holders of at least 25% in aggregate principal amount of the MHC Subordinated Securities of that series which are then outstanding may declare the principal of all MHC Subordinated Securities of that series to be due and payable immediately, but such declaration may be annulled, and certain past defaults waived, by the holders of not less than a majority in aggregate principal amount of the MHC Subordinated Securities of that series, upon the conditions provided in the MHC Subordinated Indenture. The MHC Subordinated Indenture provides that the MHC Subordinated Trustee shall, within 90 days after the occurrence of a default with respect to the MHC Subordinated Securities of any series, give to the holders of the MHC Subordinated Securities of that series notice of all uncured defaults known to it (the term "default" being defined to include the events specified above without grace periods or notice); provided that, except in the case of default in payment of principal (or premium, if any) or interest, if any, in respect of the MHC Subordinated Securities of that series, the MHC Subordinated Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or responsible officers or both, of the MHC Subordinated Trustee, in good faith determines that the withholding of such notice is in the interest of such holders. The Company is required to furnish to the MHC Subordinated Trustee annually an officers' certificate to the effect that the Company is not in default under any provision of the Indenture. Subject to the provisions of the MHC Subordinated Indenture relating to the duties of the MHC Subordinated Trustee, the MHC Subordinated Trustee is under no obligation to exercise any of its rights or powers under the MHC Subordinated Indenture at the request, order or direction of any of the holders of the MHC Subordinated Securities, unless such holders have offered to the MHC Subordinated Trustee reasonable indemnity. Subject to such provision for indemnification, the holders of a majority in principal amount of the MHC Subordinated Securities of any series then outstanding under the MHC Subordinated Indenture have the right to direct the time, method and place of conducting any proceeding for any remedy available to, or exercising any trust or power conferred on, the MHC Subordinated Trustee with respect to the MHC Subordinated Securities of such series. 26 27 Modification of the MHC Subordinated Indenture. The MHC Subordinated Indenture provides that, with the consent of the holders of not less than 66 2/3% in aggregate principal amount then outstanding under the MHC Subordinated Indenture of the MHC Subordinated Securities of all series to be affected (voting as one class), modifications and alterations of the MHC Subordinated Indenture may be made which affect the rights of the holders of the MHC Subordinated Securities of each such series, but no such modification or alteration may be made which would (i) extend the fixed maturity of any MHC Subordinated Security or reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon or (ii) reduce the above-stated percentage of holders required to modify or alter the MHC Subordinated Indenture, without the consent of all the holders of the MHC Subordinated Securities and other securities then outstanding under the MHC Subordinated Indenture to be affected thereby. Set forth below are the principal terms of the MHC Subordinated Securities issued and outstanding as of the date of this Prospectus, with respect to which offers and sales relating to secondary market transactions may be made by direct or indirect wholly-owned subsidiaries of the Company. Reference is made to the Glossary for some of the definitions of the terms used herein. TERMS AND PROVISIONS OF 8 1/2% SUBORDINATED CAPITAL NOTES DUE FEBRUARY 15, 1999 The 8 1/2% Subordinated Capital Notes Due February 15, 1999 (the "8 1/2% February 15, 1999 Notes") are limited to $150,000,000 aggregate principal amount and will mature on February 15, 1999. The 8 1/2% February 15, 1999 Notes are not redeemable prior to maturity and no sinking fund is provided for the 8 1/2% February 15, 1999 Notes. The 8 1/2% February 15, 1999 Notes will bear interest from February 24, 1987, payable semi-annually on each February 15 and August 15, commencing August 15, 1987 to the persons in whose names the 8 1/2% February 15, 1999 Notes are registered at the close of business on the first day of February or August preceding such February 15 or August 15. At maturity, the 8 1/2% February 15, 1999 Notes will be exchanged for Capital Securities of the Company having a Market Value equal to the principal amount of the 8 1/2% February 15, 1999 Notes, except to the extent that the Company, at its option, elects to pay in cash the principal amount of the 8 1/2% February 15, 1999 Notes, in whole or in part, from Designated Proceeds. The Company has Designated Proceeds sufficient to pay the 8 1/2% February 15, 1999 Notes in cash at maturity. PERMANENT GLOBAL MHC DEBT SECURITIES Certain series of the MHC Senior Securities were issued in permanent global form. See "Permanent Global Debt Securities" for a discussion of the rights of beneficial owner of interest in permanent global debt securities. INFORMATION CONCERNING THE TRUSTEES The Company, Chemical Bank and certain other subsidiaries of the Company maintain deposits with, and conduct other business transactions with, the trustees under each of the MHC Indentures in the ordinary course of business. Morgan Guaranty Trust Company of New York is the trustee under the CBC Subordinated Indenture. PERMANENT GLOBAL DEBT SECURITIES Certain series of Debt Securities may have been issued as permanent global Debt Securities. Each such global Debt Security has been deposited with, or on behalf of, The Depository Trust Company, as depositary (the "Depositary"), or its nominee and registered in the name of a nominee of the Depositary. Except under the limited circumstances described below, permanent global Debt Securities will not be exchangeable for definitive certificated Debt Securities. Ownership of beneficial interests in a permanent global Debt Security will be limited to institutions that have accounts with the Depositary or its nominee ("participants") or persons that may hold interests through participants. In addition, ownership of beneficial interests by participants in a permanent global Debt Security will be evidenced only by, and the transfer of that ownership interest will be effected only through, records 27 28 maintained by the Depositary or its nominee for a permanent global Debt Security. Ownership of beneficial interests in such permanent global Debt Security by persons that hold through participants will be evidenced only by, and the transfer of that ownership interest within such participant will be effected only through, records maintained by such participant. The Depositary has no knowledge of the actual beneficial owners of the Debt Securities. Beneficial owners will not receive written confirmation from the Depositary of their purchase, but beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the participants through which the beneficial owners entered the transaction. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a permanent global Debt Security. The Company has been advised by the Depositary that upon the issuance of a permanent global Debt Security and the deposit of such permanent global Debt Security with the Depositary, the Depositary will immediately credit, on its book-entry registration and transfer system, the respective principal amounts represented by such permanent global Debt Security to the accounts of such participants. Payment of principal of, and interest on, Debt Securities represented by a permanent global Debt Security registered in the name of or held by the Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner and holder of the permanent global Debt Security representing such Debt Securities. The Company has been advised by the Depositary that upon receipt of any payment of principal of, or interest on, a permanent global Debt Security, the Depositary will immediately credit, on its book-entry registration and transfer system, accounts of participants with payments in amounts proportionate to their respective beneficial interests in the principal amount of such permanent global Debt Security as shown in the records of the Depositary. Payments by participants to owners of beneficial interests in a permanent global Debt 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", and will be the sole responsibility of such participants, subject to any statutory or regulatory requirements as may be in effect from time to time. None of the Company, the trustees or any other agent of the Company or the trustees will have any responsibility or liability for any aspect of the records of the Depositary, any nominee or any participant relating to, or payments made on account of, beneficial interests in a permanent global Debt Security or for maintaining, supervising or reviewing any of the records of the Depositary, any nominee or any participant relating to such beneficial interests. A permanent global Debt Security is exchangeable for definitive Debt Securities registered in the name of, and a transfer of a permanent global Debt Security may be registered to, any person other than the Depositary or its nominee, only if: (a) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such permanent global Debt Security or if at any time the Depositary ceases to be registered under the Exchange Act; (b) the Company in its sole discretion determines that such permanent global Debt Security shall be exchangeable for definitive Debt Securities in registered form; or (c) there shall have occurred and be continuing an Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default under the CBC Debt Securities. Any permanent global Debt Security that is exchangeable pursuant to the preceding sentence will be exchangeable in whole for definitive Debt Securities in registered form, of like tenor and of an equal aggregate principal amount as the permanent global Debt Security, in denominations of $1,000 and integral multiples thereof. Such definitive Debt Securities will be registered in the name or names of such persons as the Depositary shall instruct the registrar. It is expected that such instructions may be based upon directions received by the Depositary from its participants with respect to ownership of beneficial interests in such permanent global Debt Security. Any principal and interest will be payable, the transfer of the definitive Debt Securities will be registerable and the definitive Debt Securities will be exchangeable at the corporate trust 28 29 office of Chemical Bank in the Borough of Manhattan, The City of New York, provided that payment of interest may be made at the option of the Company by check mailed to the address of the person entitled thereto as of the record date and as shown on the register for the Debt Securities. Except as provided above, owners of the beneficial interests in a permanent global Debt Security will not be entitled to receive physical delivery of Debt Securities in definitive form and will not be considered the holders thereof for any purpose under the Indentures, and no permanent global Debt Security shall be exchangeable except for another permanent global Debt Security of like denomination and tenor to be registered in the name of the Depositary or its nominee. Accordingly, each person owning a beneficial interest in such permanent global Debt Security must rely on the procedures of the Depositary and, if such person is not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a holder under the permanent global Debt Security or the Indentures. The Company understands that, under existing industry practices, in the event that the Company requests any action of holders, or an owner of a beneficial interest in such permanent global Debt Security desires to give or take any action that a holder is entitled to give or take under the Debt Securities or the Indentures, the Depositary would authorize the participants holding the relevant beneficial interests to give or take such action, and such participants would authorize beneficial owners owning through such participants to give or take such action or would otherwise act upon the instructions of beneficial owners owning through them. The Depositary has advised the Company that the Depositary is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered under the Exchange Act. The Depositary was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depositary's participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. The Depositary is owned by a number of its participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to the Depositary and its participants are on file with the Commission. 29 30 GLOSSARY As used in the descriptions of CBC Debt Securities (whether CBC Senior Securities or CBC Subordinated Securities, but excluding Senior Medium-Term Notes) the following terms shall have the following meanings: "Calculation Agent" means Chemical Bank in such capacity. "Interest Payment Date" means with respect to (i) the Floating Rate Senior Notes Due 1994, the sixteenth day of each March, June, September and December; (ii) the Floating Rate Notes Due August 3, 1994, the third day of each February, May, August and November; (iii) the Floating Rate Senior Notes Due December 1, 1994, the first day of each March, June, September and December; (iv) the Floating Rate Senior Notes Due February 15, 1995, the fifteenth day of each February, May, August and November; (v) the Floating Rate Senior Notes Due 1995, the eighth day of each March, June, September and December; (vi) the Floating Rate Senior Notes Due March 11, 1996, the tenth day of each March, June, September and December; and (vii) the Floating Rate Senior Notes Due May 6, 1996, the third Wednesday of each February, May, August and November. "Interest Period" means with respect to each CBC Debt Security the period beginning on and including the issue date of such CBC Debt Security and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date. "LIBOR" will be determined by the Calculation Agent in accordance with the following provisions: (i) For each Interest Period, LIBOR will be determined on the applicable Interest Determination Date on the basis of the offered rates for deposits of not less than U.S. $1,000,000 having a maturity of three months commencing on the second London Business Day immediately following such Interest Determination Date, which appear on the Reuters Screen LIBO Page as of 11:00 A.M., London time, on such Interest Determination Date. If at least two such offered rates appear on the Reuters Screen LIBO Page, the rate in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of such offered rates as determined by the Calculation Agent. If fewer than two offered rates appear, LIBOR in respect of such Interest Determination Date will be determined as described in (ii) below. (ii) On any Interest Determination Date on which fewer than two offered rates for deposits of not less than U.S. $1,000,000 having a maturity of three months appear on the Reuters Screen LIBO Page as specified in (i) above, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars having a maturity of three months commencing on the second London Business Day immediately following such Interest Determination Date and in a principal amount of not less than U.S. $1,000,000 that is representative for a single transaction in such market at such time are offered by four major banks in the London interbank market selected by the Calculation Agent at approximately 11:00 A.M., London time, on such Interest Determination Date to prime banks in the London interbank market. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of such quotations. If fewer than two quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of the rates quoted by three major banks in New York City selected by the Calculation Agent at approximately 11:00 A.M., New York City time, on such Interest Determination Date for loans in U.S. dollars to leading European banks having a maturity of three months commencing on the second London Business Day immediately following such Interest Determination Date and in a principal amount of not less than U.S. $1,000,000 that is representative for a single transaction in such market at such time; provided, however, that if fewer than three banks selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, LIBOR will be LIBOR in effect on such Interest Determination Date. 30 31 For the purpose of calculating LIBOR, the following terms shall have the following meanings: "Interest Determination Date" for any Interest Period shall mean the second London Business Day preceding the Interest Payment Date commencing such Interest Period or, in the case of the first Interest Period, the second London Business Day preceding the original issue date of the Notes. "London Business Day" means a Business Day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. "Reuters Screen LIBO Page" shall mean the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). As used in the description and in the description of the Senior Medium-Term Notes above, the following terms shall have the following meanings: "Business Day" means any day that is not a Saturday or Sunday and that, in New York City, is not a day on which banking institutions are authorized or required by law or executive order to close. "Calculation Agent" means the agent appointed by the Company to calculate interest rates for Floating Rate Notes. "Calculation Date" means the date on which the Calculation Agent is to calculate an interest rate for a Floating Rate Note. Unless otherwise specified in such Note and the description with respect to the relevant Medium-Term Notes, the Calculation Date, where applicable, pertaining to an Interest Determination Date for a Floating Rate Note will be the first to occur of (i) the tenth calendar day after such Interest Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (B) the Business Day preceding the applicable Interest Payment Date or date of maturity (or the date of redemption or repayment, if any) of such Note, as the case may be. "CD Rate" means, with respect to any Interest Determination Date, the rate on such date for negotiable certificates of deposit having the Index Maturing designated in the description with respect to the relevant Medium-Term Notes as published in H.15(519) under the heading "CDs (Secondary Market)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the CD Rate will be the rate on such Interest Determination Date for negotiable certificates of deposit of the Index Maturity designated in the description with respect to the relevant Medium-Term Notes as published in Composite Quotations under the heading "Certificates of Deposit". If such rate is not yet published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, then the CD Rate on such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of the secondary market offered rates as of 10:00 A.M., New York City time, on such Interest Determination Date, quoted by three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in New York City selected by the Calculation Agent for negotiable certificates of deposit in a denomination of $5,000,000 of major United States money market banks of the highest credit standing (in the market for negotiable certificates of deposit) with a remaining maturity closet to the Index Maturity designated in the pricing Supplement; provided, however, that if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the CD Rate will be the CD Rate in effect on such Interest Determination Date. "Commercial Paper Rate" means, with respect to any Interest Determination Date, the Money Market Yield (as defined below) of the rate on such date for commercial paper having the Index Maturity designated in description with respect to the relevant Medium-Term Notes as published in H.15(519) under the heading "Commercial paper" or, if not so published by 9:00 A.M., New York city time, on the Calculation Date pertaining to such Interest Determination Date, the Commercial Paper Rate will be the Money Market Yield of the rate on such Interest Determination Date for commercial paper having the Index Maturity designated in the description with respect to the relevant Medium-Term Notes as published in Composite Quotations under the heading "Commercial Paper". If such rate is not yet published by 3:00 P.M., New York City time, 31 32 on the Calculation Date pertaining to such Interest Determination Date, then the Commercial Paper Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be the Money Market Yield of the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of the offered rates of three leading dealers of commercial paper in New York City selected by the Calculation Agent as of 11:00 A.M., New York City time, on such Interest Determination Date for commercial paper having the Index Maturity designated in the applicable Pricing Supplement placed for an industrial issuer whose bond rate is "Aa", or the equivalent, from a nationally recognized statistical rating organization; provided, however, that if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the Commercial Paper Rate will be the Commercial Paper Rate in effect on such Interest Determination Date. "Composite Quotations" means the daily statistical release entitled "Composite 3:30 P.M. Quotations for U.S. Government Securities", or any successor publication, published by the Federal Reserve Bank of New York. "Money Market Yield" means a yield (expressed as a percentage rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) calculated in accordance with the following formula: D X 360 Money Market Yield = --------------- X 100 360 - (D X M)
where "D" refers to the per annum rate for the commercial paper, quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the interest period for which interest is being calculated. "Designated LIBOR Page" means either, (a) if "LIBOR Reuters" is designated in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is designated in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes, the display on the Dow Jones Telerate service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. If neither LIBOR Reuters nor LIBOR Telerate is so specified, LIBOR for the applicable Index Currency will be determined as if LIBOR Telerate had been specified. "Federal Funds Effective Rate" means, with respect to any Interest Determination Date, the rate on such date for Federal Funds as published in H.15 (519) under the heading "Federal Funds (Effective)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Effective Rate will be the rate on such Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If such rate is not yet published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Effective Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of the rates for the last transaction in overnight Federal funds arranged by three leading brokers of Federal funds transactions in New York City selected by the Calculation Agent as of 9:00 A.M., New York City time, on such Interest Determination Date; provided, however, that if fewer than three brokers selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the Federal Funds Effective Rate will be the Federal Funds Effective Rate in effect on such Interest Determination Date. "Fixed Rate Note" means a Note that bears interest at a fixed rate or rates. "Floating Rate Note" means a Note on which interest rates are determined, and adjusted periodically, by reference to an interest rate basis or formula (which may include the CD Rate, the Commercial Paper Rate, the Federal Funds Effective Rate, LIBOR, the Treasury Rate or the Prime Rate), adjusted by a Spread or Spread Multiplier, if any. 32 33 "H.15(519)" means the publication entitled "Statistical Release H.15(519), Selected Interest Rates", or any successor publication, published by the Board of Governors of the Federal Reserve System. "Index Currency" means the currency (including composite currencies) specified in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes as the currency for which LIBOR shall be calculated. If no currency is so specified, the Index Currency shall be U.S. dollars. "Index Maturity" means the period of time designated as the representative maturity of the certificates of deposit, the commercial paper, the Index Currency or the Treasury bills, respectively, by reference to transactions in which the CD Rate, the Commercial Paper Rate, LIBOR and the Treasury Rate, respectively, are to be calculated, as set forth in a Note bearing interest at one of those rates and the description with respect to the relevant Medium-Term Notes. "Interest Determination Date" means the date as of which the interest rate for a Floating Rate Note is to be calculated, to be effective as of the following Reset Date and calculated on the related Calculation Date (except in the case of LIBOR, which is calculated on the Interest Determination Date). Unless otherwise specified in such Note and the description with respect to the relevant Medium-Term Notes, (i) the Interest Determination Date pertaining to a Reset Date for a CD Rate Note, Commercial Paper Rate Note, Federal Funds Effective Rate Note or Prime Rate Note will be the second Business Day preceding such Reset Date, (ii) the Interest Determination Date pertaining to a Reset Date for a LIBOR Note will be the second London Business Day preceding such Reset Date and (iii) the Interest Determination Date pertaining to a Reset Date for a Treasury Rate Note will be the day of the week during which such Reset Date falls on which Treasury bills of the Index Maturity designated in the description with respect to the relevant Medium-Term Notes are auctioned. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Interest Determination Date pertaining to the Reset Date occurring in the next succeeding week. "Interest Payment Date" means the date on which payments of interest on a Note (other than payments on maturity) are to be made. "LIBOR" will be determined by the Calculation Agent in accordance with the following provisions: (i) On each Interest Determination Date, LIBOR will be either, (a) if "LIBOR Reuters" is specified in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity designated in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes commencing on the second London Business Day immediately following the applicable Interest Determination Date that appears on the Designated LIBOR Page specified in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes as of 11:00 a.m., London time, on that Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes, the rate for deposits in the Index Currency having the Index Maturity designated in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes, commencing on the second London Business Day immediately following the applicable Interest Determination Date that appears on the Designated LIBOR Page specified in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes as of 11:00 a.m., London time, on that Interest Determination Date. If fewer than two offered rates appear (unless, as aforesaid, only a single rate is required), or no rate appears, as applicable, LIBOR in respect of the related Interest Determination Date will be determined as if the parties had specified the rate described in clause (ii) below. 33 34 (ii) On any Interest Determination Date on which fewer than two offered rates for the applicable Index Maturity appear on the applicable Designated LIBOR Page as specified in (i) above (unless the specified Designated LIBOR Page by its terms provides only for a single rate), or no rate appears, as applicable, LIBOR will be determined on the basis of the rates at which deposits in the Index Currency having the Index Maturity designated in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes commencing on the second London Business Day immediately following such Interest Determination Date and in a principal amount that is representative for a single transaction in such market at such time are offered by four major banks in the London interbank market selected by the Calculation Agent at approximately 11:00 A.M., London time, on such Interest Determination Date to prime banks in the London interbank market. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of such quotations. If fewer than two quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards), of the rates quoted by three major banks in New York City selected by the Calculation Agent at approximately 11:00 A.M., New York City time, on such Interest Determination Date for loans in the Index Currency to leading European banks having the Index Maturity designated in the related LIBOR Note and the description with respect to the relevant Medium-Term Notes commencing on the second London Business Day immediately following such Interest Determination Date and in a principal amount that is representative for a single transaction in such market at such time; provided, however, that if fewer than three banks selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, LIBOR will be LIBOR in effect on such Interest Determination Date. "London Business Day" means a Business Day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. "Prime Rate" means, with respect to any Interest Determination Date, the prime rate or lease lending rate on that date as such rate is published in H.15(519) under the heading "Bank Prime Loan". In the event that such rate is not published by 9:00 a.m., New York City time, on the Calculation Date pertaining to such Interest Determination Date, then the Prime Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of the rates of interest publicly announced by each bank that appears on the Reuters Screen NYMF Page as such bank's prime rate or base lending rate as in effect for such Interest Determination Date. If fewer than four such rates appear on the Reuters Screen NYMF Page on such Interest Determination Date, then the Prime Rate shall be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of the prime rates or base lending rates (quoted on the basis of the actual number of days in the year divided by a 360-day year) as of the close of business on such Interest Determination Date by three major banks in The City of New York selected by the calculation Agent; provided, however, that if fewer than three banks selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the Prime Rate shall be the Prime Rate in effect on such Interest Determination Date. "Record Date" means the date on which a Note must be held in order for the holder to receive an interest payment on the next Interest Payment Date. Unless otherwise specified in a Note, the Record Date for any Interest Payment Date will be the fifteenth day (whether or not a Business Day or a London Business Day) next preceding such Interest Payment Date. "Reset Date" means the date on which a Floating Rate Note will begin to bear interest at the interest rate determined as of any Interest Determination Date. Unless otherwise specified in such Note and the description with respect to the relevant Medium Term Notes, the Reset Dates will be: (i) in the case of Floating Rate Notes that reset daily, each Business Day; (ii) in the case of Floating Rate Notes (other than Treasury Rate Notes) that reset weekly, Wednesday of each week; (iii) in the case of Treasury Rate Notes that reset weekly, Tuesday of each week; (iv) in the case of Floating Rate Notes that reset monthly, the third 34 35 Wednesday of each month; (v) in the case of Floating Rate Notes that reset quarterly, the third Wednesday of March, June, September and December of each year; (vi) in the case of Floating Rates Notes that reset semi-annually, the third Wednesday of each of two months of each year specified in the description with respect to the relevant Medium-term Notes; and (vii) in the case of Floating Rate Notes that reset annually, the third Wednesday of one month of each year specified in the description with respect to the relevant Medium-Term Notes. If a Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day (or, in the case of a LIBOR Note, a day that is not a London Business Day), such Reset Date shall be postponed to the succeeding Business Day or London Business Day, as the case may be, (except that, in the case of a LIBOR Note, if such London Business Day is in the next succeeding calendar month, such Reset Date shall be the preceding London Business Day). If a Treasury bill auction (as described in the definition of "Interest Determination Date") will be held on any day that would otherwise be a Reset Date for a Treasury Rate Note, then such Reset Date will instead be the Business Day following such auction date. "Reuters Screen NYMF Page" means the display page designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace the NYMF page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). "Spread" means the constant amount, if any, to be added to the CD Rate, the Commercial Paper Rate, the Federal Funds Effective Rate, LIBOR, the Treasury Rate, the Prime Rate or any other interest rate index in effect from time to time with respect to a Note, which amount will be set forth in such Note and description with respect to the relevant Medium-Term Notes. "Spread Multiplier" means the percentage by which the CD Rate, the Commercial Paper Rate, the Federal Funds Effective Rate, LIBOR, the Treasury Rate, the Prime Rate or any other interest rate index in effect from time to time with respect to a Note is to be multiplied, which percentage will be set forth in such Note and description with respect to the relevant Medium-Term Notes. "Treasury Rate" means, with respect to any Interest Determination Date, the rate for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity designated in the description with respect to the relevant Medium-Term Notes as published in H.15(519) under the heading "U.S. Government Securities-auction average (investment)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Treasury Rate will be the auction average rate (expressed as a bond equivalent, rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If the results of the auction of Treasury bills having the Index Maturity designated in the description with respect to the relevant Medium-Term Notes are not published or announced as provided above by 3:00 P.M., New York City time, on such Calculation Date or if no such auction is held in a particular week, then the Treasury Rate will be calculated by the Calculation Agent and will be a yield to maturity (expressed as a bond equivalent, rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Interest Determination Date of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity designated in the applicable Pricing Supplement; provided, however, that if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the Treasury Rate with respect to such Interest Determination Date will be the Treasury Rate in effect on such Interest Determination Date. DESCRIPTION OF CAPITAL STOCK The following summary does not purport to be complete and is subject in all respects to the applicable provisions of the General Corporation Law of the State of Delaware, the Company's Certificate of 35 36 Incorporation, including Certificates of Designations pursuant to which the outstanding series of preferred stock were issued and the terms of the Rights Agreement dated as of April 13, 1989, as amended (the "Rights Agreement"), described below. COMMON STOCK The Company is authorized to issue up to 400,000,000 shares of Common Stock. At January 1, 1994, the Company had outstanding 253,397,864 shares of Common Stock (including 515,782 shares held in its treasury). As of January 1, 1994, approximately 18,500,000 shares of Common Stock were reserved for issuance under various employee incentive and stock purchase plans and under the Company's dividend reinvestment plan. In addition, as of such date, the Company had also reserved 7,700,000 shares of Common Stock for issuance upon the conversion of its 10% Convertible Preferred Stock (the "10% Preferred"). Holders of Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors of the Company out of funds legally available therefor, provided that, so long as any shares of preferred stock are outstanding, no dividends (other than dividends payable in Common Stock) or other distributions (including redemptions and purchases) may be made with respect to the Common Stock unless full dividends on the shares of preferred stock, including accumulations in the case of cumulative preferred stock, have been paid. Subject to the rights, if any, of the holders of any series of preferred stock, all voting rights are vested in the holders of shares of Common Stock, each share being entitled to one vote on all matters presented for a vote, including the election of directors. Holders of shares of Common Stock have noncumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of directors can elect 100% of the directors, and, in such event, the holders of the remaining shares voting for the election of directors will not be able to elect any directors. In the event of the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, after there have been paid or set aside for the holders of all series of preferred stock the full preferential amounts to which such holders are entitled, the holders of Common Stock will be entitled to share equally and ratably in any assets remaining after the payment of all debts and liabilities. The issued and outstanding shares of Common Stock are fully paid and nonassessable. Holders of shares of Common Stock are not entitled to preemptive rights. Shares of Common Stock are not convertible into shares of any other class of capital stock. Chemical Bank is the transfer agent, registrar and dividend disbursement agent for the Common Stock. SHAREHOLDERS' RIGHTS PLAN The Company has adopted a Shareholders' Rights Plan which is intended to protect stockholders in the event of unsolicited offers or attempts to acquire the Company, including offers that do not treat all stockholders equally, acquisitions in the open market of shares constituting control without offering fair value to all stockholders and other coercive or unfair takeover tactics that could impair the Board of Directors' ability to represent stockholders' interests fully. Pursuant to the Shareholders' Rights Plan, the Board of Directors declared a dividend distribution of one right (a "Right") for each outstanding share of Common Stock to stockholders of record at the close of business on April 24, 1989 (the "Record Date"), and authorized the issuance of one Right (as adjusted pursuant to the Rights Agreement, as described below) for each share of Common Stock issued between the Record Date and the Chemical Distribution Date (as described below). Each Right entitles the registered holder to purchase from the Company a unit consisting of one one-hundredth of a share (a "Unit") of Junior Participating Preferred Stock at a price of $150 per Unit, subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement between the Company and Chemical Bank, as Rights Agent. One Right will be distributed with each share of Common Stock issued by the Company, including shares of Common Stock issued (i) upon the conversion of any CBC Subordinated Securities into shares of Common Stock, (ii) in exchange for CBC Subordinated Securities that are exchangeable for Common Stock or (iii) upon exercise of Common Stock Warrants. 36 37 The Rights have certain anti-takeover effects. The Rights may cause substantial dilution to a person that attempts to acquire the Company without the approval of the Board of Directors unless the offer is conditioned on a substantial number of Rights being acquired. The Rights, however, should not affect offers for all outstanding shares of Common Stock at a fair price and otherwise in the best interests of the Company and its stockholders as determined by the Board of Directors, since the Board of Directors may, at its option, redeem all, but not fewer than all, the then outstanding Rights. Initially, the Rights are and will be attached to all certificates representing Common Stock at the time outstanding. The Rights will separate from the Common Stock on the Chemical Distribution Date, which is defined as (i) 10 days after a person acquires 20% or more of Common Stock or voting power of the Company, (ii) 10 business days following commencement of a tender offer for 25% or more of the Common Stock or voting power of the Company or (iii) 10 business days after an owner of 10% or more of the Common Stock or voting power of the Company is determined by the unaffiliated "Continuing Directors" (as defined in the Rights Agreement) to be an "Adverse Person". An Adverse Person is one who intends to have the Company repurchase such person's ownership interest, who intends to pressure the Company into action for the financial gain of such person or whose ownership is likely to cause a material adverse impact on the Company (including, but not limited to, impairment of the Company's (i) relationships with customers, (ii) ability to maintain its capital position, (iii) ability to meet the convenience and needs of the communities it serves, (iv) business reputation or (v) ability to deal with governmental agencies) to the detriment of the Company's stockholders. If a "Flip-in Event" occurs, the holder of a Right is entitled to receive Common Stock or other property of the Company valued at two times the exercise price of the Right. A Flip-in Event occurs if a person acquires 20% or more of the Common Stock or voting power of the Company (except certain offers to acquire all of the Common Stock deemed by the Continuing Directors to be fair and in the best interests of the Company) or if a person is determined to be an Adverse Person. If a "Triggering Event" occurs, the holder of a Right is entitled to receive common stock of a company that has acquired the Company valued at two times the exercise price of the Right. A Triggering Event occurs if the Company is acquired in a merger or other business combination in which the Company is not the survivor or if 50% or more of the Company's assets or earning power is sold or transferred. Following the occurrence of a Flip-in Event or a Triggering Event, all Rights that are beneficially owned by an acquiring person or an Adverse Person will be null and void. To avoid the consequences of a Flip-in Event, the Company may redeem the Rights in whole, but not in part, at a redemption price of $0.01 per Right. PREFERRED STOCK Under the Company's Certificate of Incorporation, the Board of Directors is authorized, without further stockholder action, to provide for the issuance of up to 200,000,000 shares of Preferred Stock, in one or more series, with such voting powers and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions, as shall be set forth in resolutions providing for the issue thereof adopted by the Board of Directors or a duly authorized committee thereof. At January 1, 1994, there were issued and outstanding: (i) 33,647,591 shares of Adjustable Rate Cumulative Preferred Stock, Series C (the "Series C Preferred"); (ii) 4,000,000 shares of 10.96% Preferred Stock (the "10.96% Preferred"); (iii) 4,000,000 shares of the 10% Preferred; (iv) 14,000,000 shares of 8 3/8% Preferred Stock (the "8 3/8% Preferred"); (v) 2,000,000 shares of 7.92% Cumulative Preferred Stock (the "7.92% Preferred"); (vi) 2,000,000 shares of 7.58% Cumulative Preferred Stock (the "7.58% Preferred"); and (vii) 2,000,000 shares of 7 1/2% Cumulative Preferred Stock (the "7 1/2% Preferred"). In addition, as of January 1, 1994, 4,000,000 shares of Preferred Stock, designated as Junior Participating Preferred Stock, were reserved for issuance pursuant to the Rights Agreement. 37 38 All series of outstanding Preferred Stock rank on a parity with each other series and all have preference over the Common Stock with respect to the payment of dividends and the distribution of assets in the event of the liquidation or dissolution of the Company. Dividends on all outstanding series of Preferred Stock are cumulative. The amounts of the cumulative dividends on the Series C Preferred vary with the interest rates on certain U.S. Government obligations. Dividends on the 10.96% Preferred, 10% Preferred, 8 3/8% Preferred, 7.92% Preferred, 7.58% Preferred and 7 1/2% Preferred are fixed at their respective rates. If at the time of any annual meeting of the Company's stockholders the equivalent of six quarterly dividends payable on such outstanding Preferred Stock are in default, the number of directors of the Company will be increased by two and the holders of the outstanding Preferred Stock, voting as a single class without regard to series, will be entitled to elect those additional two directors at each such annual meeting. Each director elected by holders of shares of the Preferred Stock shall continue to serve as such director for the full term for which he or she shall have been elected, notwithstanding that prior to the end of such term such default shall cease to exist. The affirmative vote or consent of the holders of at least two-thirds of the outstanding shares of any series of Preferred Stock, voting as a separate class, will be required for any amendment of the Company's Certificate of Incorporation (or any certificate amendatory thereof or supplemental thereto relating to any series of the Preferred Stock) which will adversely affect the powers, preferences, privileges or rights of such series of the Preferred Stock. The affirmative vote or consent of the holders of shares representing at least two-thirds of the voting power of the outstanding shares of any series of Preferred Stock and any other series of Preferred Stock ranking on a parity with such series of the Preferred Stock as to dividends or upon liquidation, voting as a single class without regard to series, will be required to authorize, effect or validate (i) the creation, authorization or issuance of, (ii) the reclassification of any authorized stock of the Company into, or (iii) the creation, authorization or issuance of any obligation or security convertible into or evidencing the right to purchase, any additional class or series of stock ranking prior to such series of the Preferred Stock as to dividends or upon liquidation. The Company may amend from time to time its Certificate of Incorporation to increase the number of authorized shares of Preferred Stock. Any such amendment would require the approval of the holders of a majority of the outstanding shares of Common Stock, and the approval of the holders of a majority of the outstanding shares of all series of Preferred Stock voting as a single class without regard to series. In the event of a liquidation or dissolution of the Company, the holders of (i) 10% Preferred are entitled to receive a distribution of $50 per share; (ii) Series C Preferred are entitled to receive a distribution of $12 per share; (iii) 7.92% Preferred, 7.58% Preferred and 7 1/2% Preferred are each entitled to receive a distribution of $100 per share; and (iv) 10.96% Preferred and 8% Preferred are each entitled to receive a distribution of $25 per share plus, in each case, accrued and unpaid dividends, if any. Shares of Series C Preferred are redeemable at the option of the Company at a redemption price per share of $12.36 prior to May 2, 1997 and $12 per share thereafter. Shares of 10.96% Preferred are redeemable at the option of the Company at any time on or after June 30, 2000 at a redemption price per share of $25. Shares of 10% Preferred are redeemable at the option of the Company at any time on or after May 1, 1995 at an initial redemption price per share of $53 and thereafter at prices declining to $50 per share on and after May 1, 2001. Shares of 8% Preferred are redeemable at the option of the Company at any time on or after June 1, 1997 at a redemption price per share of $25. Shares of 7.92% Preferred are redeemable at the option of the Company at any time on or after October 1, 1997 at a redemption price per share of $100. Shares of 7.58% Preferred are redeemable at the option of the Company at any time on or after April 1, 1998 at a redemption price per share of $100. Shares of 7 1/2% Preferred are redeemable at the option of the Company at any time on or after June 1, 1998 at a redemption price per share of $100. The redemption prices set forth above with respect to each outstanding series of Preferred Stock will be increased, in each case, by the amount of accrued and unpaid dividends thereon, if any, to the date fixed for redemption. The shares of the 10% Preferred are convertible into shares of the Common Stock at a conversion price of $26.20 per share of Common Stock, subject to adjustment in certain events. 38 39 DESCRIPTION OF SECURITIES WARRANTS The Company may issue Securities Warrants for the purchase of CBC Debt Securities, Preferred Stock or Common Stock. Securities Warrants may be issued independently or together with CBC Debt Securities, Preferred Stock or Common Stock and may be attached to or separate from such CBC Debt Securities, Preferred Stock or Common Stock. Each series of Securities Warrants will be issued under a separate warrant agreement (a "Securities Warrant Agreement") to be entered into between the Company and Chemical Bank or another bank or trust company, as warrant agent (the "Securities Warrant Agent"). The Securities Warrant Agent will act solely as an agent of the Company in connection with the Securities Warrants and will not assume any obligation or relationship of agency or trust for or with any holders of Securities Warrants or beneficial owners of Securities Warrants. Copies of the forms of Securities Warrant Agreements, including the forms of Securities Warrant Certificates representing the Securities Warrants, are filed as exhibits to the Registration Statement of which this Prospectus is a part. The following summary of certain provisions of the Securities Warrants does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Securities Warrant Agreements. At December 31, 1993, there were no Securities Warrants outstanding. If any Securities Warrants are issued, reference is made to the description of such Securities Warrants included herein for the terms of such Securities Warrants, including, where applicable: (i) the designation, aggregate principal amount, currencies, denominations and terms of the series of CBC Debt Securities purchasable upon exercise of such Securities Warrants and the price at which such CBC Debt Securities may be purchased upon such exercise; (ii) the designation, number of shares, stated value and terms (including, without limitation, liquidation, dividend, conversion and voting rights) of the series of Preferred Stock purchasable upon exercise of Securities Warrants to purchase Preferred Stock and the price at which such number of shares of Preferred Stock of such series may be purchased upon such exercise; (iii) the number of shares of Common Stock purchasable upon the exercise of Securities Warrants to purchase Common Stock and the price at which such number of shares of Common Stock may be purchased upon such exercise; (iv) the date on which the right to exercise such Securities Warrants shall commence and the date (the "Expiration Date") on which such right shall expire; (v) United States Federal income tax consequences applicable to such Securities Warrants; and (vi) any other terms of such Securities Warrants. Securities Warrants for the purchase of Common Stock will be offered and exercisable for U.S. dollars only. Securities Warrants will be issued in registered form only. The exercise price for Securities Warrants will be subject to adjustment as described herein. Each Securities Warrant will entitle the holder thereof to purchase such principal amount of CBC Debt Securities or such number of shares of Preferred Stock or Common Stock at such exercise price as shall in each case be set forth in, or calculable from, the description herein relating to the Securities Warrants, which exercise price may be subject to adjustment upon the occurrence of certain events. After the close of business on the Expiration Date (or such later date to which such Expiration Date may be extended by the Company), unexercised Securities Warrants will become void. The place or places where, and the manner in which, Securities Warrants may be exercised shall be described herein. Prior to the exercise of any Securities Warrants to purchase CBC Debt Securities, Preferred Stock or Common Stock, holders of such Securities Warrants will not have any of the rights of holders of the CBC Debt Securities, Preferred Stock or Common Stock, as the case may be, purchasable upon such exercise, including the right to receive payments of principal of (and premium, if any) or interest, if any, on the CBC Debt Securities purchasable upon such exercise or to enforce covenants in the applicable Indenture, or to receive payments of dividends, if any, on the Preferred Stock or Common Stock purchasable upon such exercise or to exercise any applicable right to vote. DESCRIPTION OF CURRENCY WARRANTS The Company may issue Currency Warrants. The following description of the terms of the Currency Warrants sets forth certain general terms and provisions of Currency Warrants as described herein. At December 31, 1993, no Currency Warrants were outstanding. If any Currency Warrants are issued, the 39 40 particular terms of such Currency Warrants and the extent, if any, to which such general provisions do not apply to such Currency Warrants so offered will be described herein. Each issue of Currency Warrants will be issued under a warrant agreement (each, a "Currency Warrant Agreement") to be entered into between the Company and Chemical Bank or another bank or trust company, as warrant agent (the "Currency Warrant Agent"), all as described herein. The Currency Warrant Agent will act solely as the agent of the Company under the applicable Currency Warrant Agreement and will not assume any obligation or relationship of agency or trust for or with any holders of such Currency Warrants. A copy of the form of Currency Warrant Agreement, including the form of warrant certificate, is filed as an exhibit to the Registration Statement of which this Prospectus is a part. The following summary of certain provisions of the Currency Warrants does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the particular Currency Warrants and Currency Warrant Agreement. The Company may issue Currency Warrants either in the form of currency put warrants entitling the holders thereof to receive from the Company the cash settlement value in U.S. dollars of the right to sell a specified amount of a specified foreign currency or composite currency (the "Designated Currency") for a specified amount of U.S. dollars (each, a "Currency Put Warrant"), or in the form of currency call warrants entitling the holders thereof to receive from the Company the cash settlement value in U.S. dollars of the right to purchase a specified amount of a Designated Currency for a specified amount of U.S. dollars (each, a "Currency Call Warrant"). If any Currency Warrants are issued, reference is hereby made to the description of such Currency Warrants included herein for the terms of such Current Warrants, including, where applicable: (i) whether such Currency Warrants shall be Currency Put Warrants, Currency Call Warrants or both; (ii) the aggregate amount of such Currency Warrants; (iii) the offering price of such Currency Warrants; (iv) the Designated Currency, which currency may be a foreign currency or a composite currency, including ECU, and information regarding such currency or composite currency; (v) the date on which the right to exercise such Currency Warrants commences and the date on which such right expires; (vi) the manner in which such Currency Warrants may be exercised; (vii) the circumstances which will cause the Currency Warrants to be deemed automatically exercised; (viii) the minimum number, if any, of such Currency Warrants exercisable at any one time and any other restrictions on exercise; (ix) the method of determining the amount payable in connection with the exercise of such Currency Warrants; (x) the national securities exchange on which such Currency Warrants will be listed, (xi) whether such Currency Warrants will be represented by certificates or issued in book-entry form; (xii) the place or places at which payment of the cash settlement value of such Currency Warrants is to be made by the Company, if applicable; (xiii) information with respect to book-entry procedures, if any; (xiv) the plan of distribution of such Currency Warrants; and (xv) any other terms of such Currency Warrants. Prospective holders of Currency Warrants should be aware of special United States Federal income tax considerations applicable to instruments such as the Currency Warrants. The description of a particular issue of Currency Warrants shall describe such tax considerations. Except as may otherwise be provided herein, the Currency Warrants will be issued in the form of global Currency Warrant Certificates, registered in the name of a depository or its nominee. Holders will not be entitled to receive definitive certificates representing Currency Warrants. A holder's ownership of a Currency Warrant will be recorded on or through the records of the brokerage firm or other entity that maintains such holder's account. In turn, the total number of Currency Warrants held by an individual brokerage firm for its clients will be maintained on the records of the depository in the name of such brokerage firm or its agent. Transfer of ownership of any Currency Warrant will be effected only through the selling holder's brokerage firm. Each issue of Currency Warrants will be listed on a national securities exchange, subject only to official notice of issuance, as a condition of sale of such issue of Currency Warrants. In the event that any issue of Currency Warrants are delisted from, or permanently suspended from trading on, such exchange, the expiration date for such Currency Warrants will be the date such delisting or trading suspension becomes 40 41 effective, and Currency Warrants not previously exercised will be deemed automatically exercised on such expiration date. The applicable Currency Warrant Agreement will contain a covenant of the Company not to seek delisting of the Currency Warrants, or suspension of their trading, on such exchange unless the Company has concurrently arranged for listing on another national securities exchange. RISK FACTORS RELATING TO CURRENCY WARRANTS ANY CURRENCY WARRANTS ISSUED BY THE COMPANY WILL INVOLVE A HIGH DEGREE OF RISK, INCLUDING RISKS ARISING FROM FLUCTUATIONS IN THE PRICE OF THE UNDERLYING CURRENCY, FOREIGN EXCHANGE RISKS AND THE RISK OF EXPIRING WORTHLESS. FURTHER, THE CASH SETTLEMENT VALUE OF THE CURRENCY WARRANTS AT ANY TIME PRIOR TO EXERCISE OR EXPIRATION COULD BE LESS THAN THE TRADING VALUE OF THE CURRENCY WARRANTS. THE TRADING VALUE OF CURRENCY WARRANTS WILL FLUCTUATE BECAUSE SUCH VALUE IS DEPENDENT, AT ANY TIME, ON A NUMBER OF FACTORS, INCLUDING THE TIME REMAINING TO EXERCISE SUCH CURRENCY WARRANTS, THE RELATIONSHIP BETWEEN THE EXERCISE PRICE OF CURRENCY WARRANTS AND THE PRICE AT SUCH TIME OF THE DESIGNATED CURRENCY AND THE EXCHANGE RATE ASSOCIATED WITH THE DESIGNATED CURRENCY. BECAUSE CURRENCY WARRANTS WILL BE UNSECURED OBLIGATIONS OF THE COMPANY, CHANGES IN THE PERCEIVED CREDITWORTHINESS OF THE COMPANY MAY ALSO BE EXPECTED TO AFFECT THE TRADING PRICES OF SUCH CURRENCY WARRANTS. FINALLY, THE AMOUNT OF ACTUAL CASH SETTLEMENT OF A CURRENCY WARRANT MAY VARY AS A RESULT OF FLUCTUATIONS IN THE PRICE OF THE DESIGNATED CURRENCY BETWEEN THE TIME INSTRUCTIONS ARE GIVEN TO EXERCISE THE CURRENCY WARRANT AND THE TIME SUCH EXERCISE IS ACTUALLY EFFECTED. HOLDERS OF CURRENCY WARRANTS SHOULD BE PREPARED TO SUSTAIN A LOSS OF SOME OR ALL OF THE PURCHASE PRICE OF THEIR CURRENCY WARRANTS. PROSPECTIVE HOLDERS OF CURRENCY WARRANTS SHOULD BE EXPERIENCED WITH RESPECT TO OPTIONS AND OPTION TRANSACTIONS AND SHOULD REACH AN INVESTMENT DECISION ONLY AFTER CAREFUL CONSIDERATION WITH THEIR ADVISERS OF THE SUITABILITY OF SUCH CURRENCY WARRANTS IN LIGHT OF THEIR PARTICULAR FINANCIAL CIRCUMSTANCES, THE INFORMATION SET FORTH UNDER "DESCRIPTION OF CURRENCY WARRANTS" HEREIN, AND TO THE OTHER INFORMATION REGARDING THE CURRENCY WARRANTS AND THE DESIGNATED CURRENCY SET FORTH HEREIN. CERTAIN REGULATORY MATTERS CAPITAL RATIOS The Federal Reserve Board has issued risk-based capital guidelines, which require banking organizations to maintain certain ratios of "qualifying capital" to "risk-weighted assets". "Qualifying capital" is classified in two tiers, referred to as Tier 1 capital and Tier 2 capital. Tier 1 capital consists of common equity, qualifying perpetual preferred equity and minority interests in the equity accounts of unconsolidated subsidiaries, less goodwill and certain intangible assets. Tier 2 capital consists of perpetual preferred equity not qualifying as Tier 1 capital, a portion of the allowance for losses, mandatory convertible debt and subordinated and other qualifying securities. The amount of Tier 2 capital may not exceed the amount of Tier 1 capital. In calculating "risk-weighted assets", certain risk percentages specified by the Federal Reserve Board are applied to particular categories of on-balance sheet assets and off-balance sheet items. The guidelines require that banking organizations maintain a minimum ratio of Tier 1 capital to risk-weighted assets of 4% and a minimum ratio of total capital (Tier 1 capital plus Tier 2 capital) to risk-weighted assets of 8%. Another capital measure, the Tier 1 leverage ratio, is defined as Tier 1 capital (as defined under the risk-based capital guidelines) divided by average total assets (net of allowance for losses, goodwill and certain intangible assets). The minimum leverage ratio is 3% for banking organizations that do not anticipate significant growth and that have well-diversified risk (including no undue interest rate risk), excellent asset quality, high liquidity and good earnings. Other banking organizations are expected to have ratios of at least 4%-5%, depending upon their particular condition and growth plans. Higher capital ratios could be required if warranted by the particular circumstances or risk profile of a given banking organization. The Federal Reserve Board has not advised the Company of any specific minimum Tier 1 leverage ratio applicable to it. 41 42 The following table sets forth at December 31, 1993 a summary of certain capital ratio information for the Company.
AT DECEMBER 31, 1993 ------------- Total Equity to Assets..................................... 7.45% Common Equity to Assets.................................... 6.34% Tier 1 Leverage Ratio...................................... 6.77%(est.) Tier 1 Risk-Based Capital Ratio............................ 8.05%(est.) Total Risk-Based Capital Ratio............................. 12.12%(est.)
DIVIDENDS Federal law imposes limitations on the payment of dividends by the subsidiaries of the Company that are state member banks of the Federal Reserve System (a "state member bank") or are national banks. Two different calculations are performed to measure the amount of dividends that may be paid: a "recent earnings" test and an "undivided profits" test. Non-bank subsidiaries of the Company are not subject to such limitations. Under the recent earnings test, a dividend may not be paid if the total of all dividends declared by a bank in any calendar year is in excess of the current year's net profits combined with the retained net profits of the two preceding years unless the bank obtains the approval of its appropriate Federal banking regulator (which, in the case of a state member bank, is the Federal Reserve Board and, in the case of a national bank, is the Office of the Comptroller of the Currency (the "Comptroller of the Currency")). Pursuant to regulations (the "Regulations") adopted in December 1990 by the Federal Reserve Board and the Comptroller of the Currency, "net profits" is defined as the net income figure reported by a bank in its Reports of Condition and Income and "retained net profits" is "net profits" less any common or preferred dividends declared for that reporting period. The New York Banking Department also adopted regulations in December 1990 that require net profits of New York State-chartered banks, like Chemical Bank, to be calculated in a manner similar to the method set forth in the Regulations. Under the undivided profits test, a dividend may not be paid in excess of a bank's "undivided profits then on hand", after deducting therefrom losses and bad debts in excess of the allowance for loan and lease losses. Under the Regulations, "allowance for loan and lease losses" and "undivided profits" are defined as the amounts reported as such by a bank in its Reports of Condition and Income, and "bad debts" is defined to include matured obligations due a bank on which the interest is past due and unpaid for six months, unless the debts are well-secured and in the process of collection. Generally, a debt is considered "matured" when all or a part of the principal is due and payable as a result of demand, arrival of the stated maturity date or acceleration by contract or by operation of law. The Regulations provide that a bank may seek the approval of its appropriate Federal banking regulator to pay a dividend which would otherwise violate the undivided profits test. In addition, the Regulations specify that only that portion of a bank's surplus account that is "earned surplus" (that is, surplus derived from earnings of prior periods that is in excess of the minimum amount of surplus required under Federal or state law to be maintained by the bank) may be transferred to undivided profits for the purpose of paying dividends, provided that the transfer is approved by the bank's board of directors and the appropriate Federal banking regulator. In accordance with the foregoing restrictions, Chemical Bank could, during 1994, without the approval of its banking regulators, pay dividends estimated at $1,473 million plus an additional amount equal to its net profits from January 1, 1994 through the date in 1994 of any such dividend payment. In addition to the dividend restrictions described above, the Federal Reserve Board, the Comptroller of the Currency and the FDIC have authority under the Financial Institutions Supervisory Act to prohibit or to limit the payment of dividends by the banking organizations they supervise, including the Company and its subsidiaries that are banks or bank holding companies, if, in the banking regulator's opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the banking organization. 42 43 FDICIA On December 19, 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") was enacted. Among other things, FDICIA requires the FDIC to establish a risk-based assessment system for FDIC deposit insurance. FDICIA also contains provisions limiting certain activities and business methods of depository institutions, including limiting the acceptance of brokered deposits by certain depository institutions; placing restrictions on the terms of "bank investment contracts" that may be offered by depository institutions; and requiring the FDIC to study the current rules applicable to the aggregation of accounts of depositors at an institution that are entitled to FDIC insurance. Finally, FDICIA provides for expanded regulation of depository institutions and their affiliates, including parent holding companies, by such institutions' appropriate Federal banking regulator, and requires the appropriate Federal banking regulator to take "prompt corrective action" with respect to a depository institution if such institution does not meet certain capital adequacy standards. Pursuant to FDICIA, the Federal Reserve Board, the FDIC and the Comptroller of the Currency (collectively, the "Regulators") have adopted regulations, effective December 19, 1992, setting forth a five-tier scheme for measuring the capital adequacy of the financial institutions they supervise. Under the regulations (commonly referred to as the "prompt corrective action" rules), an institution would be placed in one of the following capital categories: (i) well capitalized (an institution that has a total risk-based capital ratio of at least 10%, a Tier 1 risk-based capital ratio of at least 6% and a Tier 1 leverage ratio of at least 5%); (ii) adequately capitalized (an institution that has a total risk-based capital ratio of at least 8%, a Tier 1 risk-based capital ratio of at least 4% and a Tier 1 leverage ratio of at least 4%); (iii) undercapitalized (an institution that has a total risk-based capital ratio of under 8% or a Tier 1 risk-based capital ratio under 4% or a Tier 1 leverage ratio under 4%); (iv) significantly undercapitalized (an institution that has a total risk-based capital ratio of under 6% or a Tier 1 risk-based capital ratio under 3% or a Tier 1 leverage ratio under 3%); and (v) critically undercapitalized (an institution that has a ratio of tangible equity to total assets of 2% or less). The regulations would permit the appropriate Federal banking regulator to downgrade an institution to the next lower category if the regulator determines (i) after notice and opportunity for hearing or response, that the institution is in an unsafe or unsound condition or (ii) that the institution has received (and not corrected) a less-than-satisfactory rating for any of the categories of asset quality, management, earnings or liquidity in its most recent exam. Supervisory actions by the appropriate Federal banking regulator will depend upon an institution's classification within the five categories. All institutions are generally prohibited from declaring any dividends, making any other capital distribution, or paying a management fee to any controlling person, if such payment would cause the institution to become undercapitalized. Additional supervisory actions are mandated for an institution falling into one of the three "undercapitalized" categories, with the severity of supervisory action increasing at greater levels of capital deficiency. For example, critically undercapitalized institutions are, among other things, restricted from making any principal or interest payments on subordinated debt without prior approval of their appropriate Federal banking regulator. The regulations apply only to banks and not to bank holding companies, such as the Company; however, the Federal Reserve Board is authorized to take appropriate action at the holding company level based on the undercapitalized status of such holding company's subsidiary banking institution. In certain instances relating to an undercapitalized banking institution, the bank holding company is required to guarantee the performance of the undercapitalized subsidiary and may be liable for civil money damages for failure to fulfill its commitments on such guarantee. At December 31, 1993, Chemical Bank was "well-capitalized", based on the "prompt corrective action" ratios and guidelines described above. The FDIC has issued a rule, effective June 16, 1992, regarding the ability of depository institutions to accept brokered deposits. Under the rule, the term "brokered deposits" is defined to include deposits that are solicited by a bank's affiliates on its behalf. A significant portion of Chemical Bank's wholesale deposits are solicited on its behalf by a broker-dealer affiliate of Chemical Bank and, therefore, such deposits could be considered brokered deposits. The rule provides that (i) an "undercapitalized" institution is prohibited from accepting, renewing or rolling over brokered deposits, (ii) an "adequately capitalized" institution must obtain a waiver from the FDIC before accepting, renewing or rolling over brokered deposits and is not permitted to pay interest on brokered deposits accepted in such institution's normal market area at rates that "significantly 43 44 exceed" rates paid on deposits of similar maturity in such area, and (iii) a "well capitalized" institution may accept, renew or roll over brokered deposits without restriction. The definitions of "well capitalized", "adequately capitalized", and "undercapitalized" are similar to, although not exactly the same as, the definitions utilized in the "prompt corrective action" rules described above. At December 31, 1993, Chemical Bank was "well capitalized" under these regulations and the Company does not presently anticipate that the brokered deposit regulation will have an adverse effect on its operations. The FDIC has also issued a regulation implementing risk-based FDIC insurance premiums. Under the assessment system, each depository institution will be assigned to one of nine risk classifications based upon certain capital and supervisory measures and, depending upon its classification, will be assessed premiums ranging from 23 basis points to 31 basis points. Risk-based FDIC insurance premiums did not have a material effect on the Company's expenses during 1993. Other rules that have been adopted pursuant to FDICIA include: (i) real estate lending standards for banks to provide guidelines concerning loan-to-value ratios for various types of real estate loans; (ii) rules relating to consumer lending, including regulations governing advertising and disclosures required for consumer deposit accounts; (iii) rules requiring depository institutions to develop and implement internal procedures to evaluate and control credit and settlement exposure to their correspondent banks; (iv) rules implementing the FDICIA provision prohibiting, with certain exceptions, FDIC-insured banks from making equity investments of the types and amount not permissible for national banks; and (v) rules mandating enhanced financial reporting and audit requirements. OTHER The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") imposes liability on an institution the deposits of which are insured by the FDIC for costs incurred by the FDIC in connection with the insolvency of other FDIC-insured institutions under common control with such institution. Such an FDIC claim against a depository institution is superior in right of payment to claims of the holding company of such institution. Under Federal Reserve Board policy, the Company is expected to act as a source of financial strength to each bank subsidiary and to commit resources to support such bank subsidiary in circumstances where it might not do so absent such policy. Any loans by a bank holding company to any of its subsidiary banks that qualify as capital are subordinate in right of payment to deposits and to certain other indebtedness of the subsidiary banks. In the event of a bank holding company's bankruptcy, any commitment by the bank holding company to a Federal banking regulator to maintain the capital of a subsidiary bank at a certain level will be assumed by the bankruptcy trustee and entitled to a priority of payment. The bank subsidiaries of the Company are subject to certain restrictions imposed by Federal law on extensions of credit to, and certain other transactions with, the Company and certain other affiliates and on investments in stock or securities thereof. Such restrictions prevent the Company and such other affiliates from borrowing from a bank subsidiary unless the loans are secured in specified amounts. Without the prior approval of the Federal Reserve Board, such secured loans, other transactions and investments by any bank subsidiary are generally limited in amount as to the Company and as to each of such other affiliates to 10% of such bank's capital and surplus and as to the Company and all such other affiliates to an aggregate of 20% of such bank's capital and surplus. Federal law also requires that transactions between a bank subsidiary and the Company or certain non-bank affiliates, including extensions of credit, sales of securities or assets and the provision of services, be conducted on terms at least as favorable to the bank subsidiary as those that apply or that would apply to comparable transactions with unaffiliated parties. 44 45 ERISA MATTERS The Company and CSI may be considered a "party in interest" within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and a "disqualified person" under corresponding provisions of the Internal Revenue Code, as amended, with respect to certain employee benefit plans. Certain transactions between an employee benefit plan and a party in interest or disqualified person may result in "prohibited transactions" within the meaning of ERISA and the Code. ANY EMPLOYEE BENEFIT PLAN PROPOSING TO INVEST IN THE DEBT SECURITIES SHOULD CONSULT WITH ITS LEGAL COUNSEL. OTHER MATTERS The distribution of the Debt Securities by CSI will comply with the requirements of Schedule E of the By-laws of the NASD regarding an NASD member firm distributing securities of an affiliate. EXPERTS The financial statements of the Company incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 1992 have been so incorporated in reliance on the report of Price Waterhouse, independent accountants, given on the authority of said firm as experts in auditing and accounting. 45 46 - --------------------------------------------------------- - --------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT OR UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE. ------------------ TABLE OF CONTENTS
PAGE ------ Available Information.................... 2 Incorporation of Certain Documents by Reference.............................. 2 Chemical Banking Corporation............. 3 Consolidated Ratios of Earnings to Fixed Charges................................ 4 Description of CBC Debt Securities....... 5 Description of MHC Debt Securities....... 23 Permanent Global Debt Securities......... 27 Glossary................................. 30 Description of Capital Stock............. 35 Description of Securities Warrants....... 39 Description of Currency Warrants......... 39 Risk Factors Relating to Currency Warrants............................... 41 Certain Regulatory Matters............... 41 ERISA Matters............................ 45 Other Matters............................ 45 Experts.................................. 45
------------------ - --------------------------------------------------------- - --------------------------------------------------------- - --------------------------------------------------------- - --------------------------------------------------------- (LOGO) CHEMICAL BANKING CORPORATION DEBT SECURITIES WARRANTS -------------------- PROSPECTUS -------------------- JANUARY , 1994 - --------------------------------------------------------- - --------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----