-----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, ffsfeW3rUSVztEMimqCJPeEqjhrnzHMNvpjbk8VWAvAXF2OCkPKxTG0OJkeHNFNi MamLvcDNQzka5OCKtKfDww== 0000950152-95-000653.txt : 19950417 0000950152-95-000653.hdr.sgml : 19950417 ACCESSION NUMBER: 0000950152-95-000653 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19950414 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEYCORP /NEW/ CENTRAL INDEX KEY: 0000091576 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 346542451 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-58405 FILM NUMBER: 95528818 BUSINESS ADDRESS: STREET 1: 127 PUBLIC SQ CITY: CLEVELAND STATE: OH ZIP: 44114-1306 BUSINESS PHONE: 2166893000 MAIL ADDRESS: STREET 1: 127 PUBLIC SQ CITY: CLEVELAND STATE: OH ZIP: 44114-1306 FORMER COMPANY: FORMER CONFORMED NAME: SOCIETY CORP DATE OF NAME CHANGE: 19920703 S-3/A 1 KEYCORP S-3/A 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1995 REGISTRATION NO. 33-58405 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ KEYCORP (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) OHIO 34-6542451 (STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NUMBER) OR ORGANIZATION)
127 PUBLIC SQUARE CLEVELAND, OHIO 44114 (216) 689-3000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------ CARTER B. CHASE, ESQ., EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL, AND SECRETARY KEYCORP 127 PUBLIC SQUARE CLEVELAND, OHIO 44114 (216) 689-3000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------ COPIES TO: THOMAS C. STEVENS, ESQ. STUART K. FLEISCHMANN, ESQ. THOMPSON, HINE AND FLORY SHEARMAN & STERLING 1100 NATIONAL CITY BANK BUILDING 599 LEXINGTON AVENUE CLEVELAND, OHIO 44114 NEW YORK, NEW YORK 10022 (216) 566-5500 (212) 848-4000
------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC: From time to time after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ 2 In accordance with Rule 429 under the Securities Act, the Prospectus included herein is a combined prospectus which also relates to KeyCorp's Registration Statement on Form S-3, File No. 33-53643, effective date June 10, 1994, with respect to Debt Securities, Debt Warrants, Preferred Stock, Depositary Shares, Preferred Stock Warrants, Depositary Share Warrants, Common Shares, Common Share Warrants and Capital Securities. This Registration Statement, which is a new Registration Statement on Form S-3, also constitutes a post-effective amendment to KeyCorp's Registration Statement on Form S-3, File No. 33-53643. Such post-effective amendment shall hereafter become effective concurrently with the effectiveness of this Registration Statement and in accordance with Section 8(c) of the Securities Act. The aggregate amount of securities covered by this Registration Statement and the other Registration Statement referred to above to which the Prospectus contained herein relates shall not exceed $850,000,000. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. 3 PROSPECTUS SUPPLEMENT [LOGO HERE] (To Prospectus Dated April , 1995) $750,000,000 SENIOR MEDIUM-TERM NOTES, SERIES C SUBORDINATED MEDIUM-TERM NOTES, SERIES B DUE NINE MONTHS OR MORE FROM DATE OF ISSUE KeyCorp (also referred to herein as the "Corporation") may offer from time to time its senior Medium-Term Notes, Series C (the "Senior Notes") and its subordinated Medium-Term Notes, Series B (the "Subordinated Notes" and together with the Senior Notes, the "Notes") with an aggregate principal amount of up to U.S. $750,000,000, (or, if any Notes are to be Original Issue Discount Notes, Foreign Currency Notes or Indexed Notes (as each term is defined under "Description of Notes"), such principal amount as shall result in an initial aggregate offering price equivalent to no more than $750,000,000), subject to reduction as a result of the sale of other Securities of the Corporation. See "Plan of Distribution." Each Note will mature on any day nine months or more from its date of issue, as agreed upon by the Corporation and the purchaser, and may be subject prior to maturity to redemption at the option of the Corporation or repayment at the option of the registered holder. Each Note will bear interest either at a fixed rate (a "Fixed Rate Note") established by the Corporation at the date of issue of such Note, which may be zero in the case of certain Original Issue Discount Notes, or at a floating rate (a "Floating Rate Note"), as set forth therein and specified in the applicable Pricing Supplement (as defined below). A Fixed Rate Note may pay a level amount in respect of both interest and principal amortized over the life of the Note (an "Amortizing Note"). The Notes may be issued as Senior Notes or Subordinated Notes, as set forth in the applicable Pricing Supplement. Subordinated Notes will be subordinated to all existing and future Senior Indebtedness and, in certain events involving the insolvency of the Corporation, to Other Senior Obligations. See "Description of Debt Securities -- Subordination of Subordinated Debt Securities" in the accompanying Prospectus. Unless otherwise specified in the applicable Pricing Supplement, interest on each Fixed Rate Note will be payable each June 1 and December 1 and at maturity. Interest on each Floating Rate Note is payable on the dates set forth herein and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, Amortizing Notes will pay principal and interest semiannually each June 1 and December 1, or quarterly each March 1, June 1, September 1 and December 1, and at maturity. See "Description of Notes." Unless otherwise specified in the applicable Pricing Supplement, the Notes may not be redeemed by the Corporation or repaid at the option of the holder prior to maturity. Notes denominated in U.S. dollars will be issued in denominations of $100,000 or any amount in excess thereof which is an integral multiple of $1,000. The authorized denominations of Foreign Currency Notes will be set forth in the applicable Pricing Supplement. Any terms relating to Notes being denominated in one or more foreign currencies, currency units, or composite currencies ("Specified Currency") ("Foreign Currency Notes") will be set forth in the applicable Pricing Supplement. Each Note will be issued only in fully registered form and will be represented either by a Global Security registered in the name of The Depository Trust Company, as Depository or a nominee thereof (a "Book-Entry Note"), or by a certificate issued in definitive form (a "Certificated Note"), as set forth in the applicable Pricing Supplement. Beneficial interests in Global Securities representing Book-Entry Notes will be shown on, and transfer thereof will be effected through, the records maintained by the Depository (with respect to participants' interests) and its participants. Book-Entry Notes will not be issuable as Certificated Notes except as described under "Description of Debt Securities -- Book-Entry Procedures" in the accompanying Prospectus. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY SUPPLEMENT HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE NOTES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS BUT ARE UNSECURED DEBT OBLIGATIONS OF KEYCORP AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY. - --------------------------------------------------------------------------------
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO PUBLIC(1) AND COMMISSIONS(2) CORPORATION(2)(3) Per Note............................. 100% .125%-.750% 99.875%-99.250% Total(4)............................. $750,000,000 $937,500-5,625,000 $749,062,500-$744,375,000
- -------------------------------------------------------------------------------- (1) Unless otherwise specified in the applicable Pricing Supplement, Notes will be sold at 100% of their principal amount. If the Corporation issues any Note at a discount from or at a premium over its principal amount, the Price to Public of such Note will be set forth in the applicable Pricing Supplement. Notes may be resold by the Agents, acting as principals, at market prices prevailing at the time of sale, at prices related to such prevailing prices, or at negotiated prices. (2) Unless otherwise specified in the applicable Pricing Supplement, with respect to Notes with Maturity Dates from 9 months to 30 years from the date of issue, the Corporation will pay a commission to the Agents (as defined below in "Plan of Distribution") ranging from .125% to .750% of the principal amount of each Note. With respect to Notes with a Maturity Date that is longer than 30 years from the date of issue sold through any Agent, the rate of commission will be negotiated at the time of sale and will be specified in the applicable Pricing Supplement. The Corporation may also sell Notes to an Agent, as principal, at negotiated discounts, for resale to investors and other purchasers. The Corporation has agreed to indemnify each Agent against certain liabilities, including liabilities under the Securities Act of 1933, as amended. (3) Before deducting expenses payable by the Corporation estimated to be $674,378. (4) Or the equivalent thereof, if any of the Notes are denominated other than in U.S. dollars. The Notes are being offered by the Corporation on a continuous basis through the Agents, each of which has agreed to use its reasonable efforts to solicit offers to purchase Notes. The Corporation may also sell Notes to an Agent acting as principal for its own account or for resale to one or more investors and other purchasers at varying prices related to prevailing market prices at the time of resale or, if so agreed, at a fixed public offering price. No termination date for the offering of the Notes has been established. The Corporation or an Agent may reject any offer in whole or in part. The Corporation reserves the right to withdraw, cancel or modify the offer made hereby without notice. The Corporation reserves the right to sell Notes directly on its own behalf and accept (but not solicit) offers to purchase Notes through additional agents on substantially the same terms and conditions (including commission rates) as would apply to purchases of Notes by or through the Agents. The Notes will not be listed on any securities exchange, and there can be no assurance that the Notes offered hereby will be sold or that there will be a secondary market for the Notes. See "Plan of Distribution." SALOMON BROTHERS INC CS FIRST BOSTON GOLDMAN, SACHS & CO. J.P. MORGAN SECURITIES INC. The date of this Prospectus Supplement is April , 1995 4 IN CONNECTION WITH THIS OFFERING MADE PURSUANT TO THIS PROSPECTUS SUPPLEMENT AND THE APPLICABLE PRICING SUPPLEMENT, THE AGENTS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-1 5 SELECTED CONSOLIDATED FINANCIAL DATA The following table presents summary consolidated financial data derived from the consolidated financial statements of the Corporation and notes thereto. On March 1, 1994, KeyCorp ("old KeyCorp"), a New York corporation and financial services holding company headquartered in Albany, New York, merged into and with Society Corporation ("Society"), an Ohio corporation and a financial services holding company headquartered in Cleveland, Ohio, pursuant to an Agreement and Plan of Merger and a related Supplemental Agreement to Agreement and Plan of Merger, each dated as of October 1, 1993, and each as amended. In the merger, Society was the surviving corporation, but changed its name to KeyCorp. The Merger was accounted for as a pooling of interests and, accordingly, the financial data below is presented as if old KeyCorp and Society had been combined for all periods presented. This summary is qualified in its entirety by the detailed information and financial statements included in the documents incorporated by reference under "Incorporation of Certain Documents by Reference."
YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 1994 1993 1992 1991 1990 --------- --------- --------- --------- --------- (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) FOR THE PERIOD Interest income............................... $ 4,490.1 $ 4,213.9 $ 4,198.8 $ 4,652.4 $ 4,528.8 Interest expense.............................. 1,796.8 1,534.9 1,750.1 2,519.4 2,667.7 Net interest income........................... 2,693.3 2,679.0 2,448.7 2,133.0 1,861.1 Provision for loan losses..................... 125.2 211.7 338.4 466.2 517.2 Noninterest income............................ 882.6 1,001.7 925.2 849.3 744.2 Noninterest expense........................... 2,167.2 2,385.1 2,170.4 2,065.7 1,819.5 Income before income taxes.................... 1,283.5 1,083.9 865.1 450.4 268.6 Net income.................................... 853.5 709.9 592.1 313.7 256.1 Net income applicable to Common Shares........ 837.5 691.8 568.1 297.5 249.0 PER COMMON SHARE Net income.................................... $ 3.45 $ 2.89 $ 2.42 $ 1.31 $ 1.13 Cash dividends................................ 1.28 1.12 .98 .92 .88 Weighted average Common Shares (000).......... 243,067.5 239,775.2 235,004.8 227,116.2 220,078.6 AT PERIOD-END Loans......................................... $46,224.7 $40,071.3 $36,021.8 $35,534.3 $34,193.7 Earning assets................................ 60,046.5 54,352.7 49,380.8 48,207.9 44,668.2 Total assets.................................. 66,798.1 59,631.2 55,068.4 53,600.9 49,953.4 Deposits...................................... 48,564.2 46,499.1 43,433.1 42,835.0 40,935.3 Long-term debt................................ 3,569.8 1,763.9 1,790.1 1,224.5 1,145.2 Common shareholders' equity................... 4,538.5 4,233.6 3,683.3 3,272.4 2,941.7 Total shareholders' equity.................... 4,698.5 4,393.6 3,927.3 3,516.4 3,025.7 PERFORMANCE RATIOS Return on average total assets................ 1.36% 1.24% 1.13% .60% .54% Return on average common equity............... 18.87 17.27 16.33 9.29 8.39 Efficiency(1)................................. 59.39 60.50 60.96 65.27 66.92 Overhead(2)................................... 46.14 46.85 47.21 52.63 54.58 Net interest margin........................... 4.83 5.31 5.31 4.71 4.53 CAPITAL RATIOS AT PERIOD-END Tangible equity to tangible assets............ 6.19% 6.51% 6.11% 5.45% 4.79% Tier I risk-adjusted capital.................. 8.48 8.73 8.56 7.67 6.75 Total risk-adjusted capital................... 11.62 12.22 11.73 9.80 9.17 Leverage...................................... 6.63 6.72 6.56 5.97 5.23
S-2 6
YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 1994 1993 1992 1991 1990 --------- --------- --------- --------- --------- (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) ASSET QUALITY DATA Nonperforming loans........................... $ 256.0 $ 336.3 $ 552.9 $ 729.5 $ 798.9 Nonperforming assets.......................... 339.8 500.1 900.2 1,071.9 1,013.2 Allowance for loan losses..................... 830.3 802.7 782.6 793.5 677.3 Nonperforming loans to period-end loans....... .55% .84% 1.53% 2.05% 2.34% Nonperforming assets to period-end loans plus OREO and other nonperforming assets......... .73 1.24 2.47 2.99 2.94 Allowance for loan losses to nonperforming loans....................................... 324.27 238.69 141.54 108.79 84.78 Allowance for loan losses to period-end loans....................................... 1.80 2.00 2.17 2.23 1.98 Net loan charge-offs to average loans......... .26 .56 1.02 1.11 1.02 RATIO OF EARNINGS TO FIXED CHARGES(3) Excluding deposit interest.................... 3.50x 4.15x 3.67x 2.07x 1.57x Including deposit interest.................... 1.70x 1.69x 1.48x 1.18x 1.10x
- --------------- The comparability of the information presented above is affected by certain acquisitions and divestitures completed by KeyCorp in the time periods presented. (1) Calculated as noninterest expense (excluding merger and integration charges and other significant nonrecurring charges) divided by taxable-equivalent net interest income plus noninterest income (excluding net securities transactions and certain gains on asset sales). (2) Calculated as noninterest expense (excluding merger and integration charges and other significant nonrecurring charges) less noninterest income (excluding net securities transactions and certain gains on assets sales) divided by taxable-equivalent net interest income. (3) Earnings represent consolidated income before income taxes plus fixed charges. Fixed charges include consolidated interest expense (excluding or including interest on deposits as the case may be) and the proportion deemed representative of the interest factor of rental expense, net of income from subleases. S-3 7 DESCRIPTION OF NOTES The following description of the particular terms of the Notes offered hereby supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Debt Securities set forth under the heading "Description of Debt Securities" in the accompanying Prospectus, to which reference is hereby made. The particular terms of the Notes sold pursuant to any pricing supplement (a "Pricing Supplement") will be described therein. The terms and conditions set forth in "Description of Notes" will apply to each Note unless otherwise specified in the applicable Pricing Supplement and in such Note. Capitalized terms not defined herein shall have the same meanings assigned to such terms in the Prospectus or the Applicable Indenture. Reference herein to "U.S. dollars" or "U.S. $" or "$" are to the currency of the United States of America. GENERAL The Notes offered hereby, if Senior Debt Securities, will be issued under the Senior Indenture, as amended or supplemented. Notes issued under the Senior Indenture will rank equally with all other unsecured and unsubordinated indebtedness of the Corporation which is not accorded a priority under applicable law. Notes issued under the Subordinated Indenture will be subordinated in right of payment to the prior payment in full of the Senior Indebtedness of the Corporation and, in certain events involving the insolvency of the Corporation, Other Senior Obligations of the Corporation. See "Description of Debt Securities -- Subordination of Subordinated Debt Securities" in the accompanying Prospectus. As of December 31, 1994, the Corporation had outstanding approximately $902.2 million aggregate principal amount of Senior Indebtedness and $538.4 million of Other Senior Obligations. The Notes will be offered on a continuous basis. The Notes offered by this Prospectus Supplement issued under the Applicable Indenture will constitute all or part of a single series for purposes of such Indenture. The Notes of such series offered hereby are limited to an aggregate initial offering price of U.S. $750,000,000 subject to reduction as a result of the sale by the Corporation of other Securities referred to in the accompanying Prospectus. See "Plan of Distribution." For purposes of this Prospectus Supplement, (i) the principal amount of any Original Issue Discount Note means the Issue Price (as defined below) of such Note and (ii) the principal amount of any Note issued in the Specified Currency means the U.S. dollar equivalent on the date of issue of the Issue Price of such Note. Each Note will mature on any day nine months or more from its date of issue, as selected by the initial purchaser and agreed to by the Corporation (the "Stated Maturity") which date may be subject to extension at the option of the Corporation (subject to applicable regulatory approval in the case of subordinated Notes) or the holder, and may be subject to redemption at the option of the Corporation or repayment at the option of the holder prior to its Stated Maturity as specified in the applicable Pricing Supplement. See "Optional Redemption" and "Repayment at the Noteholder's Option" below. Each Note will be issued initially as either a Book-Entry Note or a Certificated Note. Except as set forth under "Description of Debt Securities -- Book-Entry Procedures" in the accompanying Prospectus, Book-Entry Notes will not be issuable as Certificated Notes. See "Book-Entry System" below. Unless otherwise specified in the applicable Pricing Supplement, the Notes will be denominated in U.S. dollars and payments of principal and any premium, and interest on the Notes will be made in U.S. dollars. Except as specified for Notes not denominated in U.S. dollars or as otherwise provided in the applicable Pricing Supplement, the Notes will be issued only in fully registered form in denominations of U.S.$100,000 or any amount in excess thereof which is an integral multiple of U.S.$1,000. If any of the Notes are to be denominated in a Specified Currency other than U.S. dollars, additional information pertaining to the terms of such Notes and other matters relevant to the holders thereof will be described in the applicable Pricing Supplement. The Notes may be issued as Original Issue Discount Notes (including Zero Coupon Notes, as defined below) as indicated in the applicable Pricing Supplement. An "Original Issue Discount Note" means any Note that provides for an amount less than the entire principal amount thereof to be payable upon declaration S-4 8 of acceleration of the maturity thereof pursuant to the Applicable Indenture. See "United States Tax Considerations -- Original Issue Discount and Acquisition Discount and Foreign Currency Notes" below. The Notes may be issued as Indexed Notes, Amortizing Notes, Renewable Notes and Extendible Notes, as indicated in the applicable Pricing Supplement. See "Indexed Notes", "Amortizing Notes", "Renewable Notes" and "Extendible Notes" below. The Pricing Supplement relating to each Note will specify the price (expressed as a percentage of the aggregate principal amount thereof) at which such Note will be issued if other than 100% (the "Issue Price"), the principal amount, the interest rate or interest rate formula, ranking, maturity, currency, (including one or more foreign currencies, currency units or composite currencies), any redemption or repayment provisions and any other terms on which each such Note will be issued that are not inconsistent with the provisions of the Applicable Indenture. Unless otherwise specified in the applicable Pricing Supplement, the Notes, except for Amortizing Notes, will not be subject to any sinking fund. The Notes may be presented for payment of principal and interest, transfer of the Notes will be registrable, and the Notes will be exchangeable, at Society National Bank, as paying agent (the "Paying Agent") in The City of Cleveland; provided that Book-Entry Notes will be exchangeable only in the manner and to the extent set forth below under "Description of Debt Securities -- Book-Entry Procedures" in the accompanying Prospectus. As used herein, "Business Day" shall mean any day other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are generally authorized or required by law or regulation to close in The City of New York and (i) in respect of LIBOR Notes (as defined below), in the city of London, (ii) with respect to Notes denominated or payable in a Specified Currency other than ECUs in the financial center of the country issuing the Specified Currency, (iii) with respect to Notes denominated or payable in ECUs, in the financial center of each country that issues a component currency of the ECU, and that is not a non-ECU settlement day. "London Banking Day" shall mean any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. As used herein, an "Interest Payment Date" with respect to any Note shall be a date on which, under the terms of such Note, regularly scheduled interest shall be payable. Unless otherwise specified in the applicable Pricing Supplement, "Record Date" with respect to any Interest Payment Date shall be the date fifteen calendar days (whether or not such date is a Business Day) prior to such Interest Payment Date. Unless otherwise specified in the applicable Pricing Supplement, Society National Bank will act as Authenticating Agent for the Notes pursuant to an appointment by the Trustee. Unless otherwise specified in the applicable Pricing Supplement, Society National Bank will also act as Registrar for the Notes pursuant to an appointment by the Trustee. PAYMENT CURRENCY AND CURRENCY EXCHANGE INFORMATION Purchasers are required to pay for Notes denominated in a Specified Currency in such Specified Currency, and payments of principal, premium, if any, and interest on such Notes will be made in such Specified Currency, unless otherwise provided in the applicable Pricing Supplement. Currently, there are limited facilities in the United States for the conversion of U.S. dollars into foreign currencies and vice versa. In addition, most banks do not currently offer non-U.S. dollar denominated checking or savings account facilities in the United States. Accordingly, unless otherwise specified in the applicable Pricing Supplement, or unless alternative arrangements are made, payment of principal, premium, if any, and interest on Notes in a Specified Currency other than U.S. dollars will be made to an account at a bank outside the United States. If the applicable Pricing Supplement provides for payments of principal of, premium, if any, and interest on a non-U.S. dollar denominated Note to be made in U.S. dollars or for payments of principal of, premium, if any, and interest on a U.S. dollar denominated Note to be made in a Specified Currency other than U.S. dollars, the conversion of the Specified Currency into U.S. dollars or U.S. dollars into the Specified Currency, as the case may be, will be handled by the Exchange Rate Agent identified in the applicable Pricing S-5 9 Supplement. The costs of such conversion will be borne by the holder of such Note through deductions from such payments. If the applicable Pricing Supplement provides for payments of principal of, premium, if any, and interest on a non-U.S. dollar denominated Note to be made, at the option of the holder of such Note, in U.S. dollars, conversion of the Specified Currency into U.S. dollars will be based on the highest bid quotation in The City of New York received by the Exchange Rate Agent at approximately 11:00 A.M., New York City time, on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers selected by the Exchange Rate Agent (one of which may be the Exchange Rate Agent unless the Exchange Rate Agent is the applicable Agent) for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to the holders of Notes and at which the applicable dealer commits to execute a contract. If none of such bid quotations are available, payments will be made in the Specified Currency. All currency exchange costs will be borne by the holders of Notes by deductions from such payments. Except as set forth below, if the principal of, premium, if any, or interest on, any Note is payable in a Specified Currency other than U.S. dollars and such Specified Currency is not available to the Corporation for making payments thereof due to the imposition of exchange controls or other circumstances beyond the control of the Corporation or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions within the international banking community, then the Corporation will be entitled to satisfy its obligations to holders of the Notes by making such payments in U.S. dollars on the basis of the Market Exchange Rate on the date of such payment or, if the Market Exchange Rate is not available on such date, as of the most recent practicable date. Any payment made under such circumstances in U.S. dollars where the required payment is in a Specified Currency other than U.S. dollars will not constitute an Event of Default or Default under the Applicable Indenture. If payment in respect of a Note is required to be made in ECUs and ECUs are unavailable due to the imposition of exchange controls or other circumstances beyond the Corporation's control or are no longer used in the European Monetary System, then all payments in respect of such Note shall be made in U.S. dollars until ECUs are again available or so used. The amount of each payment in U.S. dollars shall be computed on the basis of the equivalent of the ECU in U.S. dollars, determined as described below, as of the second Business Day prior to the date on which such payment is due. The equivalent of the ECU in U.S. dollars as of any date shall be determined by the Corporation or its agent on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU as of the last date on which the ECU was used in the European Monetary System. The equivalent of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Components. The U.S. dollar equivalent of each of the Components shall be determined by the Corporation or such agent on the basis of the most recently available Market Exchange Rates for such Components. If the official unit of any Component is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more Components are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the appropriate amounts of the consolidated component currencies expressed in such single currency. If any Component is divided into two or more currencies, the amount of the original component currency shall be replaced by the appropriate amounts of such two or more currencies, the sum of which shall be equal to the amount of the original component currency. All determinations referred to above made by the Corporation or its agent shall be at its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on holders of Notes. INTEREST AND PRINCIPAL PAYMENTS Interest will be payable to the person in whose name the Note is registered at the close of business on the applicable Record Date; provided that the interest payable upon maturity, redemption or repayment (whether S-6 10 or not the date of maturity, redemption or repayment is an Interest Payment Date) will be payable to the person to whom principal is payable. Unless otherwise specified in the applicable Pricing Supplement, the initial interest payment on a Note will be made on the first Interest Payment Date falling after the date the Note is issued; provided, however, that payments of interest (or, in the case of an Amortizing Note, principal and interest) on a Note issued less than 15 calendar days before an Interest Payment Date will be paid on the next succeeding Interest Payment Date to the holder of record on the Record Date with respect to such succeeding Interest Payment Date, unless otherwise specified in the applicable Pricing Supplement. U.S. dollar payments of interest, other than interest payable at maturity (or on the date of redemption or repayment, if a Note is redeemed or repaid prior to maturity), will be made by check mailed to the address of the person entitled thereto as shown on the Note register. U.S. dollar payments of principal, premium, if any, and interest upon maturity, redemption or repayment will be made in immediately available funds against presentation and surrender of the Note. Notwithstanding the foregoing, (a) the Depositary, as holder of Book-Entry Notes, shall be entitled to receive payments of interest by wire transfer of immediately available funds and (b) a holder of U.S.$1,000,000 (or the equivalent) or more in aggregate principal amount of Certificated Notes (whether having identical or different terms and provisions) shall be entitled to receive payments of interest by wire transfer of immediately available funds upon written request to the Paying Agent not later than 15 calendar days prior to the applicable Interest Payment Date. Notwithstanding the foregoing, unless otherwise specified in the applicable Pricing Supplement, a holder of a Foreign Currency Note may elect to receive payment of the principal of and any premium and interest on such Note in the Specified Currency by transmitting a written request for such payment to the Trustee at its Corporate Trust Office in the Borough of Manhattan, The City of New York, or the Paying Agent on or prior to the Record Date in the case of an interest payment or at least 15 calendar days prior to the Stated Maturity in the case of a principal or premium payment. Such request may be in writing with a signature guarantee, (mailed or hand delivered), or by cable, telex or other form of facsimile transmission. A holder of a Foreign Currency Note may elect to receive payment in the Specified Currency for all principal and any premium and interest payments and need not file a separate election for each payment. Such election will remain in effect until revoked by written notice to the Trustee, but written notice of any such revocation must be received by the Trustee on or prior to the relevant Record Date or at least 15 calendar days prior to the Stated Maturity, as the case may be. Holders of Foreign Currency Notes whose Notes are to be held in the name of a broker or nominee should contact such broker or nominee to determine whether and how an election to receive payments in the Specified Currency may be made. Unless otherwise specified in the applicable Pricing Supplement, a beneficial owner of Book-Entry Notes denominated in a Specified Currency electing to receive payments of principal or any premium or interest in the Specified Currency must notify the Participant through which its interest is held on or prior to the applicable Record Date, in the case of a payment of interest, and on or prior to the fifteenth calendar day prior to the Stated Maturity, in the case of payment of principal or premium, of such beneficial owner's election to receive all or a portion of such payment in a Specified Currency. Such Participant must notify the Depository of such election on or prior to the third Business Day after such Regular Record Date. The Depository will notify the Paying Agent of such election on or prior to the fifth Business Day after such Regular Record Date. If complete instructions are received by the Participant and forwarded by the Participant to the Depository, and by the Depository to the Paying Agent, on or prior to such dates, the beneficial owner will receive payments in the Specified Currency. Unless otherwise specified in the applicable Pricing Supplement or unless alternative arrangements are made, payments of principal, premium, if any, and interest on Notes in a Specified Currency other than U.S. dollars will be made by wire transfer of immediately available funds to an account maintained by the payee with a bank located outside the United States if the holder of such Notes provides the Paying Agent with the appropriate wire transfer instructions not later than 15 calendar days prior to the applicable payment date. If such wire transfer instructions are not so provided, payments of principal, premium, if any, and interest on such Notes will be made by check payable in such Specified Currency mailed to the address of the Person entitled thereto as such address shall appear in the Note register. S-7 11 Certain Notes, including Original Issue Discount Notes, may be considered to be issued with original issue discount, which must be included in income for United States federal income tax purposes at a constant rate. See "United States Tax Considerations -- Original Issue Discount and Acquisition Discount and Foreign Currency Notes" below. Unless otherwise specified in the applicable Pricing Supplement, if the principal of any Original Issue Discount Note is declared to be due and payable immediately as described under "Description of Debt Securities -- Events of Default" in the accompanying Prospectus, the amount of principal due and payable with respect to such Note shall be limited to the aggregate principal amount of such Note multiplied by the sum of its Issue Price (expressed as a percentage of the aggregate principal amount) plus the original issue discount amortized from the date of issue to the date of declaration, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of declaration). Special considerations applicable to any such Notes will be set forth in the applicable Pricing Supplement. FIXED RATE NOTES Each Fixed Rate Note will bear interest from the date of issuance at the annual rate stated on the face thereof, except as described below under "Extension of Maturity," or "Renewal" until the principal thereof is paid or made available for payment. Unless otherwise specified in the applicable Pricing Supplement, such interest will be computed on the basis of a 360-day year of twelve 30-day months. Unless otherwise specified in the applicable Pricing Supplement, payments of interest on Fixed Rate Notes other than Amortizing Notes will be made semiannually on each June 1 and December 1 and at maturity or upon any earlier redemption or repayment. If any Interest Payment Date for any Fixed Rate Note would fall on a day that is not a Business Day, the interest payment shall be postponed to the next day that is a Business Day, and no interest on such payment shall accrue for the period from and after the Interest Payment Date. If the maturity date (or date of redemption or repayment) of any Fixed Rate Note would fall on a day that is not a Business Day, the payment of principal, premium, if any, and interest may be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after the maturity date (or date of redemption or repayment). Interest payments for Fixed Rate Notes will include accrued interest from the date of issue or from the last date in respect of which interest has been paid or duly provided for, as the case may be, to, but excluding, the Interest Payment Date or the date of maturity or earlier redemption or repayment, as the case may be. Amortizing Notes Unless otherwise specified in the applicable Pricing Supplement, payments of principal and interest on Amortizing Notes, which are securities on which payments of principal and interest are made in equal installments over the life of the security, will be made either quarterly on each March 1, June 1, September 1 and December 1 or semiannually on each June 1 and December 1, as set forth in the applicable Pricing Supplement, and at maturity or upon any earlier redemption or repayment. Payments with respect to Amortizing Notes will be applied first to interest due and payable thereon and then to the reduction of the unpaid principal amount thereof. A table setting forth repayment information in respect of each Amortizing Note will be provided to the original purchaser and will be available, upon request, to subsequent holders. FLOATING RATE NOTES Each Floating Rate Note will bear interest from the date of issuance until the principal thereof is paid or made available for payment at a rate determined by reference to an interest rate basis (the "Base Rate"), which may be adjusted by a Spread and/or Spread Multiplier (each as defined below). The applicable Pricing Supplement will designate one or more of the following Base Rates as applicable to each Floating Rate Note: (a) the CD Rate (a "CD Rate Note"), (b) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (c) the Federal Funds Rate (a "Federal Funds Rate Note"), (d) LIBOR (a "LIBOR Note"), (e) the Prime Rate (a "Prime Rate Note"), (f) the Treasury Rate (a "Treasury Rate Note"), (g) the CMT Rate (a "CMT Rate Note"), (h) the 11th District Cost of Funds Rate (an "11th District Cost of Funds Rate S-8 12 Note") or (i) such other Base Rate as is set forth in such Pricing Supplement and in such Floating Rate Note. The "Index Maturity" for any Floating Rate Note is the period of maturity of the instrument or obligation from which the Base Rate is calculated and will be specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the interest rate on each Floating Rate Note will be calculated by reference to the specified Base Rate (i) plus or minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one one-hundredth of a percentage point) specified in the applicable Pricing Supplement to be added to or subtracted from the Base Rate for such Floating Rate Note, and the "Spread Multiplier" is the percentage specified in the applicable Pricing Supplement to be applied to the Base Rate for such Floating Rate Note. As specified in the applicable Pricing Supplement, a Floating Rate Note may also have either or both of the following: (i) a maximum limitation, or ceiling, on the rate of interest which may accrue during any interest period ("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the rate of interest which may accrue during any interest period ("Minimum Interest Rate"). In addition to any Maximum Interest Rate that may be applicable to any Floating Rate Note pursuant to the above provisions, the interest rate on a Floating Rate Note will in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application. Unless otherwise specified in the applicable Pricing Supplement, the rate of interest on each Floating Rate Note will be reset daily, weekly, monthly, quarterly, semiannually or annually (such period being the "Interest Reset Period" for such Note, and the first day of each Interest Reset Period being an "Interest Reset Date"), as specified in the applicable Pricing Supplement. Unless otherwise specified in the Pricing Supplement, the Interest Reset Date will be, in the case of Floating Rate Notes which reset daily, each Business Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes which reset weekly, the Tuesday of each week, except as provided below; in the case of Floating Rate Notes which reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes which reset quarterly, the third Wednesday of March, June, September and December; in the case of Floating Rate Notes which reset semiannually, the third Wednesday of two months of each year, as specified in the applicable Pricing Supplement; and in the case of Floating Rate Notes which reset annually, the third Wednesday of one month of each year, as specified in the applicable Pricing Supplement; provided, however, that the interest rate in effect from the date of issue to the first Interest Reset Date with respect to a Floating Rate Note will be the initial interest rate set forth in the applicable Pricing Supplement (the "Initial Interest Rate"). If any Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the next preceding Business Day. Except as provided below and unless otherwise specified in the applicable Pricing Supplement, interest on Floating Rate Notes will be payable: (i) in the case of Floating Rate Notes with a daily, weekly or monthly Interest Reset Date (other than the 11th District Cost of Funds Rate Notes), on the third Wednesday of each month or on the third Wednesday of March, June, September and December, or in the case of the 11th District Cost of Funds Rate Notes, all of which reset monthly, the first calendar day of each month, as specified in the applicable Pricing Supplement; (ii) in the case of Floating Rate Notes with a quarterly Interest Reset Date, on the third Wednesday of March, June, September and December; (iii) in the case of Floating Rate Notes with a semiannual Interest Reset Date, on the third Wednesday of the two months specified in the applicable Pricing Supplement; and (iv) in the case of Floating Rate Notes with an annual Interest Reset Date, on the third Wednesday of the month specified in the applicable Pricing Supplement and, in each case, at maturity. If any Interest Payment Date for any Floating Rate Note would fall on a day that is not a Business Day with respect to such Floating Rate Note, such Interest Payment Date will be the following day that is a Business Day with respect to such Floating Rate Note, except that, in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding day that is a Business Day with respect to such LIBOR Note. If the maturity date or any earlier redemption or repayment date of a Floating Rate Note would fall on a day that is not a Business Day, the payment of principal, premium, if any, and interest will be made on the next succeeding Business S-9 13 Day, and no interest on such payment shall accrue for the period from and after such maturity, redemption or repayment date, as the case may be. Unless otherwise specified in the applicable Pricing Supplement, interest payments for Floating Rate Notes shall be the amount of interest accrued from, and including, the date of issue or from, and including, the last date to which interest has been paid to or duly provided for, to, but excluding, the Interest Payment Date. With respect to a Floating Rate Note, accrued interest shall be calculated by multiplying the principal amount of such Floating Rate Note by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which interest is being paid. Unless otherwise specified in the applicable Pricing Supplement, the interest factor for each such day is computed by dividing the interest rate applicable to such day by 360, in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes, the 11th District Cost of Funds Rate Notes and Prime Rate Notes or by the actual number of days in the year, in the case of CMT Rate Notes and Treasury Rate Notes. The interest rate in effect on any Interest Reset Date will be the applicable rate as reset on such date. The interest rate applicable to any other day is the interest rate from the immediately preceding Interest Reset Date (or, if none, the Initial Interest Rate). All percentages used in or resulting from any calculation of the rate of interest on a Floating Rate Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward, and all dollar amounts used in or resulting from such calculation on Floating Rate Notes will be rounded to the nearest cent, with one-half cent rounded upward. Unless otherwise specified in the applicable Pricing Supplement, Society National Bank will be the calculation agent (the "Calculation Agent") with respect to any issue of Floating Rate Notes. Upon the request of the holder of any Floating Rate Note, the Calculation Agent will provide the interest rate then in effect and, if determined, the interest rate that will become effective on the next Interest Reset Date with respect to such Floating Rate Note. Unless otherwise specified in the applicable Pricing Supplement, the "Interest Determination Date" pertaining to an Interest Reset Date for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate Notes and Prime Rate Notes will be the second Business Day next preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for an 11th District Cost of Funds Rate Note (the "11th District Cost of Funds Rate Interest Determination Date") will be the last working day of the month immediately preceding such Interest Reset Date on which the Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the Index (as defined below under "-- Eleventh District Cost of Funds Rate Notes"). The Interest Determination Date pertaining to an Interest Reset Date for a LIBOR Note will be the second London Banking Day preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note will be the day of the week in which such Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, but 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 Interest Reset Date occurring in the next succeeding week. If an auction falls on a day that is an Interest Reset Date, such Interest Reset Date will be the next following Business Day. Unless otherwise specified in the applicable Pricing Supplement, the "Calculation Date", where applicable, pertaining to an Interest Determination Date will be the earlier of (i) the tenth calendar day after such Interest Determination Date or, if any such day is not a Business Day, the next succeeding Business Day or, (ii) the Business Day preceding the applicable Interest Payment Date or Stated Maturity, as the case may be. S-10 14 Interest rates will be determined (which determination, in the absence of manifest error, will be conclusive and binding) by the Calculation Agent as follows: CD Rate Notes CD Rate Notes will bear interest at the interest rate (calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the CD Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "CD Rate" means, with respect to any Interest Determination Date, the rate on such date for negotiable certificates of deposit having the Index Maturity designated in the applicable Pricing Supplement as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or any successor publication of the Board of Governors of the Federal Reserve System ("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 applicable Pricing Supplement as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" (the "Composite Quotations") under the heading "Certificates of Deposit." If such rate is not yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the CD Rate on such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on such Interest Determination Date for certificates of deposit in the denomination of $5,000,000 with a remaining maturity closest to the Index Maturity designated in the Pricing Supplement of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of New York (which may include one or more of the Agents) selected by the Calculation Agent for negotiable certificates of deposit of major United States money center banks of the highest credit standing in the market for negotiable certificates of deposit; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the CD Rate in effect for the applicable period will be the same as the CD Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Rate Period, the rate of interest payable on the CD Rate Notes for which such CD Rate is being determined shall be the Initial Interest Rate). Commercial Paper Rate Notes Commercial Paper Rate Notes will bear interest at the interest rate (calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Commercial Paper Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "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 specified in the applicable Pricing Supplement, as such rate shall be published in H.15(519), under the heading "Commercial Paper." 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 Commercial Paper Rate shall be the Money Market Yield of the rate on such Interest Determination Date for commercial paper of the specified Index Maturity as published in Composite Quotations under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet available in either H.15(519) or Composite Quotations, then the Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York City time, on such Interest Determination Date of three leading dealers of commercial paper in The City of New York (which may include one or more of the Agents) selected by the Calculation Agent for commercial paper of the specified Index Maturity, placed for an industrial issuer whose bond rating is "AA," or the equivalent, from a nationally recognized rating agency; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the S-11 15 Commercial Paper Rate in effect for the applicable period will be the same as the Commercial Paper Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Commercial Paper Rate Notes for which such Commercial Paper Rate is being determined shall be the Initial Interest Rate). "Money Market Yield" shall be a yield calculated in accordance with the following formula: D X 360 Money Market Yield = ------------- X 100 360 -(D X M)
where "D" refers to the applicable per annum rate for 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. Federal Funds Rate Notes Federal Funds Rate Notes will bear interest at the interest rate (calculated with reference to the Federal Funds Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Federal Funds Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Federal Funds 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 Rate will be the rate on such Interest Determination Date published in the Composite Quotations under the heading "Federal Funds/Effective Rate." If such rate is not yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the rates for the last transaction in overnight Federal funds, as of 11:00 A.M., New York City time, on such Interest Determination Date, arranged by three leading brokers of Federal funds transactions in The City of New York (which may include one or more of the Agents) selected by the Calculation Agent; provided, however, that if the brokers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the Federal Funds Rate in effect for the applicable period will be the same as the Federal Funds Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Federal Funds Rate Notes for which such Federal Funds Rate is being determined shall be the Initial Interest Rate). LIBOR Notes LIBOR Notes will bear interest at the interest rate (calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the LIBOR Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for each Interest Determination Date will be determined by the Calculation Agent as follows: (i) The rate for deposits in U.S. dollars of the Index Maturity specified in the applicable Pricing Supplement, commencing on the second Business Day immediately following such Interest Determination Date, that appears on the Telerate Page 3750 as of 11:00 A.M., London time, on such Interest Determination Date ("LIBOR Telerate"). "Telerate Page 3750" means the display designated as page "3750" on the Telerate Service (or such other page as may replace the page 3750 on that service or such other service or services as may be designated by the British Bankers' Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits). (ii) As of the Interest Determination Date, the Calculation Agent will determine the arithmetic mean of the offered rates for deposits in U.S. dollars for the period of the Index Maturity designated in the applicable Pricing Supplement, commencing on the second Business Day immediately following such Interest Determination Date which appear on the Reuters Screen LIBO Page at approximately S-12 16 11:00 A.M., London time, on such Interest Determination Date ("LIBOR Reuters"). "Reuters Screen LIBO Page" means 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). If neither LIBOR Telerate nor LIBOR Reuters is specified in the applicable LIBOR Note, LIBOR will be determined as if LIBOR Telerate had been specified. (iii) If (a) in the case where paragraph (i) above applies, no rate appears on the Telerate Page 3750 or (b) in the case where paragraph (ii) above applies, fewer than two offered rates appear on the Reuters Screen LIBO Page, the Calculation Agent will request the principal London offices of each of four major banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in United States dollars for the period of the specified Index Maturity to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1 million that is representative of a single transaction in such market at such time. If at least two such quotations are provided, LIBOR will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean of rates quoted by three major banks in The City of New York selected by the Calculation Agent (after consultation with the Corporation) 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, for the period of the specified Index Maturity and in a principal amount of not less than U.S. $1 million that is representative of 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 rates as mentioned in this sentence, "LIBOR" for such Interest Reset Period will be the same as LIBOR for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the LIBOR Notes for which LIBOR is being determined shall be the Initial Interest Rate). Prime Rate Notes Prime Rate Notes will bear interest at the interest rate (calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Prime Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate" means, with respect to any Interest Determination Date, the rate set forth H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is not yet published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Prime Rate for such Interest Determination Date will be the arithmetic mean of the rates of interest publicly announced by each bank named on the Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base lending rate as in effect for such Interest Determination Date as quoted on the Reuters Screen NYMF Page on such Interest Determination Date, or, if fewer than four such rates appear on the Reuters Screen NYMF Page for such Interest Determination Date, the rate shall be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Interest Determination Date by at least two of the three major money center banks in The City of New York selected by the Calculation Agent from which quotations are requested. If fewer than two quotations are provided, the Prime Rate shall be calculated by the Calculation Agent and shall be determined as the arithmetic mean on the basis of the prime rates in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, in each case having total equity capital of at least U.S. $500 million and being subject to supervision or examination by federal or state authority, selected by the Calculation Agent to quote such rate or rates. "Reuters Screen NYMF Page" means the display designated as Page "NYMF" on the Reuters Monitor Money Rates Services (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). S-13 17 If in any month or two consecutive months the Prime Rate is not published in H.15(519) and the banks or trust companies selected as aforesaid are not quoting as mentioned in the preceding paragraph, the "Prime Rate" for such Interest Reset Period will be the same as the Prime Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Prime Rate Notes for which the Prime Rate is being determined shall be the Initial Interest Rate). If this failure continues over three or more consecutive months, the Prime Rate for each succeeding Interest Determination Date until the maturity or redemption or repayment of such Prime Rate Notes or, if earlier, until this failure ceases, shall be LIBOR determined as if such Prime Rate Notes were LIBOR Notes with an Index Maturity specified in the applicable Pricing Supplement, and the Spread, if any, shall be the number of basis points specified in the applicable Pricing Supplement as the "Alternative Rate Event Spread." Treasury Rate Notes Treasury Rate Notes will bear interest at the interest rate (calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Treasury Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Treasury Rate" means, with respect to any Interest Determination Date, the rate for the auction held on such date of direct obligations of the United States ("Treasury Bills") having the Index Maturity designated in the applicable Pricing Supplement, as published in H.15(519) under the heading "Treasury Bills -- 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 auction average rate on such Interest Determination Date (expressed as a bond equivalent, 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. In the event that the results of the auction of Treasury Bills having the Index Maturity designated in the applicable Pricing Supplement are not published or reported are provided above by 3:00 P.M., New York City time, on such Calculation Date or if no such auction is held on such Interest Determination Date, then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) calculated using 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 in the City of New York (which may include one or more of the Agents) 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 the dealers selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, the Treasury Rate for the applicable period will be the same as the Treasury Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Treasury Rate Notes for which the Treasury Rate is being determined shall be the Initial Interest Rate). CMT Rate Notes CMT Rate Notes will bear interest at the interest rate (calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and Maximum Interest Rate, if any), specified on the face of the CMT Rate Note and in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate" means, with respect to any Interest Determinate Date, the rate displayed on the Designated CMT Telerate Page under the caption " . . . Treasury Constant Maturities. . . . Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index for (i) if the Designated CMT Telerate Page is 7055, the rate on such Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the rate for the week, or the month, as applicable, ended immediately preceding the week in which the related Interest Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the related Interest Calculation Date, then the CMT Rate for such Interest Determination Date will be such Treasury Constant Maturity rate for S-14 18 the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published, or if not published by 3:00 P.M., New York City time, on the related Interest Calculation Date, then the CMT Rate for such Interest Determination Date will be such Treasury Constant Maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the Interest Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the related Interest Calculation Date, then the CMT Rate for the Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York (which may include one or more of the Agents) selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Note") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the CMT Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of the secondary market offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least $100 million. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of the offer prices obtained and neither the highest nor lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference Dealers in the City of New York (which may include one or more of the Agents) selected by the Calculation Agent are quoting as described herein, the CMT Rate will be the CMT Rate in effect on such Interest Determination Date. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated in the applicable Pricing Supplement (or any other page as may replace such page on the service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified in the applicable Pricing Supplement, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in the applicable Pricing Supplement as the Index Maturity with respect to which the CMT Rate will be calculated. If no such maturity is specified in the applicable Pricing Supplement, the Designated CMT Maturity Index shall be 2 years. 11th District Cost of Funds Rate Notes Each 11th District Cost of Funds Rate Note will bear interest at the interest rate (calculated with reference to the 11th District Cost of Funds Rate and the Spread and/or Spread Multiplier, if any and subject to the Minimum Interest Rate and Maximum Interest Rate, if any) specified in the applicable 11th District Cost of Funds Rate Notes. S-15 19 Unless otherwise indicated in the applicable 11th District Cost of Funds Rate Note, "11th District Cost of Funds Rate" means, with respect to any Interest Determination Date, the rate equal to the monthly weighted average cost of funds for the calendar month immediately preceding the month in which such Interest Determination Date falls, as set forth under the caption "11th District" on the Telerate Page 7058 as of 11 A.M., San Francisco Time, on such Interest Determination Date. If such rate does not appear on the Telerate 7058 on any related Interest Determination Date, the 11th District Cost of Funds Rate means the rate equal to the monthly 11th District Cost of Funds Index (the "11th District Cost of Funds Index") normally published by the Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco") during the month immediately preceding the Interest Reset Date to which such Interest Determination Date applies. The 11th District Cost of Funds Index is normally published by the FHLB of San Francisco on the last day on which the FHLB of San Francisco is open for business in each month and represents the monthly weighted average cost of funds for savings institutions in the 11th District (Arizona, California and Nevada) of the Federal Home Loan Bank System for the month preceding the month in which the 11th District Cost of Funds Index is published. Currently, the 11th District Cost of Funds Index is computed by the FHLB of San Francisco for each month by dividing the cost of funds (interest paid during the month by 11th District savings institutions on savings, advances and other borrowings) by the average of the total amount of those funds outstanding at the end of that month and the prior month and annualizing and adjusting the result to reflect the actual number of days in the particular month. If necessary, before these calculations are made, the component figures are adjusted by the FHLB of San Francisco to neutralize the effect of events such as member institutions leaving the 11th District or acquiring institutions outside the 11th District. Receipt by mail of Information Bulletins announcing 11th District Cost of Funds Index changes may be arranged by contacting the FHLB of San Francisco. If the FHLB of San Francisco shall fail in any month to publish the 11th District Cost of Funds Index (each such failure being referred to herein as an "Alternative Rate Event"), then the 11th District Cost of Funds Rate for the Interest Determination Date after the Alternate Rate Event shall be calculated on the basis of the 11th District Cost of Funds Index most recently published prior to such Interest Determination Date. If an Alternate Rate Event occurs in the month immediately following a month in which a prior Alternate Rate Event occurred, then the 11th District Cost of Funds Rate for the Interest Determination Date immediately following the second Alternate Rate Event shall be calculated on the basis of the 11th District Cost of Funds Index most recently published prior to such Interest Determination Date and, thereafter, the 11th District Cost of Funds Rate for each succeeding Interest Determination Date shall be LIBOR, determined as though the Interest Rate Basis were LIBOR and the Spread shall be plus or minus the number of basis points specified in the applicable 11th District Cost of Funds Rate Note at the "Alternate Rate Event Spread," if any. In determining that the FHLB of San Francisco has failed in any month to publish the 11th District Cost of Funds Index, the Calculation Agent may rely conclusively on any written advice from the FHLB of San Francisco to such effect. INDEXED NOTES The Notes may be issued, from time to time, as Notes of which the principal amount payable on the Stated Maturity and/or on which the amount of interest payable on an Interest Payment Date and/or any premium payable will be determined by reference to prices, changes in prices, or differences between prices, of securities, currencies, currency units, composite currencies, intangibles, goods, articles, or commodities or other objective price, economic or other measures (the "Indexed Notes"), as indicated in the applicable Pricing Supplement. Holders of Indexed Notes may receive a principal amount at maturity that is greater than or less than the face amount of such Notes depending upon the fluctuation of the relative value, rate or price of the specified index. Specific information pertaining to the method for determining the principal amount payable at maturity, a historical comparison of the relative value, rate or price of the specified index and the face amount of the Indexed Note and certain additional United States federal tax and other relevant considerations will be described in the applicable Pricing Supplement. S-16 20 EXTENSION OF MATURITY The Pricing Supplement relating to each Fixed Rate Note (other than an Amortizing Note) will indicate whether the Corporation has the option to extend the maturity of such Fixed Rate Note for one or more periods specified in the applicable Pricing Supplement (each an "Extension Period") up to but not beyond the date (the "Final Maturity Date") set forth in such Pricing Supplement. If the Corporation has such option with respect to any such Fixed Rate Note (an "Extendible Note"), the following procedures will apply, unless modified as set forth in the applicable Pricing Supplement. The Corporation may exercise such option with respect to an Extendible Note by notifying the Paying Agent of such exercise at least 50 but not more than 60 calendar days prior to the maturity date originally in effect with respect to such Note (the "Original Maturity Date") or, if the maturity date of such Note has already been extended, prior to the maturity date then in effect (an "Extended Maturity Date"). No later than 40 calendar days prior to the Original Maturity Date or an Extended Maturity Date, as the case may be (each, a "Maturity Date"), the Paying Agent will mail to the holder of such Note a notice (the "Extension Notice") relating to such Extension Period, by first class mail, postage prepaid, setting forth (a) the election of the Corporation to extend the maturity of such Note; (b) the new Extended Maturity Date; (c) the interest rate applicable to the Extension Period; and (d) the provisions, if any, for redemption during the Extension Period, including the date or dates on which, the period or periods during which and the price or prices at which such redemption may occur during the Extension Period. Upon the mailing by the Paying Agent of an Extension Notice to the holder of an Extendible Note, the maturity of such Note shall be extended automatically, and, except as modified by the Extension Notice and as described in the next paragraph, such Note will have the same terms it had prior to the mailing of such Extension Notice. Notwithstanding the foregoing, not later than 10:00 A.M., New York City time, on the twentieth calendar day prior to the Maturity Date then in effect for an Extendible Note (or, if such day is not a Business Day, not later than 10:00 A.M., New York City time, on the immediately succeeding Business Day), the Corporation may, at its option, revoke the interest rate provided for in the Extension Notice and establish a higher interest rate for the Extension Period by causing the Paying Agent to send notice of such higher interest rate to the holder of such Note by first class mail, postage prepaid, or by such other means as shall be agreed between the Corporation and the Paying Agent. Such notice shall be irrevocable. All Extendible Notes with respect to which the Maturity Date is extended in accordance with an Extension Notice will bear such higher interest rate for the Extension Period, whether or not tendered for repayment. If the Corporation elects to extend the maturity of an Extendible Note, the holder of such Note will have the option to require the Corporation to repay such Note on the Maturity Date then in effect at a price equal to the principal amount thereof plus any accrued and unpaid interest to such date. In order for an Extendible Note to be repaid on such Maturity Date, the holder thereof must follow the procedures set forth below under "Repayment at the Noteholders' Option" for optional repayment, except that the period for delivery of such Note or notification to the Paying Agent shall be at least 25 but not more than 35 calendar days prior to the Maturity Date then in effect and except that a holder who has tendered an Extendible Note for repayment pursuant to an Extension Notice may, by written notice to the Paying Agent, revoke any such tender for repayment until 3:00 P.M., New York City time, on the tenth calendar day prior to the Maturity Date then in effect (or, if such day is not a Business Day, until 3:00 P.M., New York City time, on the next succeeding Business Day). RENEWABLE NOTES The Corporation may also issue from time to time variable rate renewable notes (the "Renewable Notes") that will bear interest at the interest rate (calculated with reference to a Base Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Renewable Notes and in the applicable Pricing Supplement. The Renewable Notes will mature on an Interest Payment Date as specified in the applicable Pricing Supplement (the "Initial Maturity Date"), unless the maturity of all or any portion of the principal amount thereof is extended in accordance with the procedures described below. On the Interest Payment Dates in June and December in each year (unless different Interest Payment Dates are specified in the applicable S-17 21 Pricing Supplement) (each such Interest Payment Date, an "Election Date"), the maturity of the Renewable Notes will be extended to the Interest Payment Date occurring twelve months after such Election Date, unless the holder thereof elects to terminate the automatic extension of the maturity of the Renewable Notes or of any portion thereof having a principal amount of $100,000 or any multiple of $100,000 in excess thereof by delivering a notice to such effect to the Paying Agent not less than nor more than a number of days to be specified in the applicable Pricing Supplement prior to such Election Date. Such option may be exercised with respect to less than the entire principal amount of the Renewable Notes; provided that the principal amount for which such option is not exercised is at least $100,000 or any larger amount that is an integral multiple of $100,000. Notwithstanding the foregoing, the maturity of the Renewable Notes may not be extended beyond the Final Maturity Date, as specified in the applicable Pricing Supplement (the "Final Maturity Date"). If the holder elects to terminate the automatic extension of the maturity of any portion of the principal amount of the Renewable Notes and such election is not revoked as described below, such portion will become due and payable on the Interest Payment Date falling six months (unless another period is specified in the applicable Pricing Supplement) after the Election Date prior to which the holder made such election. An election to terminate the automatic extension of maturity may be revoked as to any portion of the Renewable Notes having a principal amount of $100,000 or any multiple of $100,000 in excess thereof by delivering a notice to such effect to the Paying Agent or any day following the effective date of the election to terminate the automatic extension of maturity and prior to the date 15 calendar days before the date on which such portion would otherwise mature. Such a revocation may be made for less than the entire principal amount of the Renewable Notes for which the automatic extension of maturity has been terminated; provided that the principal amount of the Renewable Notes for which the automatic extension of maturity has been terminated and for which such a revocation has not been made is at least $100,000 or any larger amount that is an integral multiple of $100,000. Notwithstanding the foregoing, a revocation may not be made during the period from and including a Record Date to but excluding the immediately succeeding Interest Payment Date. An election to terminate the automatic extension of the maturity of the Renewable Notes, if not revoked as described above by the holder making the election or any subsequent Holder, will be binding upon such subsequent holder. The Renewable Notes may be redeemed in whole or in part at the option of the Corporation on the Interest Payment Date for the year specified in the applicable Pricing Supplement, commencing with the Interest Payment Date specified in the applicable Pricing Supplement, at a redemption price as stated in the applicable Pricing Supplement, together with accrued and unpaid interest to the date of redemption. Notwithstanding anything to the contrary in this Prospectus Supplement, notice of redemption will be provided by mailing a notice of such redemption to each holder by first class mail, postage prepaid, at least 180 calendar days prior to the date fixed for redemption. BOOK-ENTRY SYSTEM Unless otherwise indicated in the applicable Pricing Supplement, upon issuance, all Fixed Rate Book-Entry Notes having the same Issue Date, interest rate, if any, amortization schedule, if any, maturity date and other terms, if any, will be represented by one or more Global Securities, and all Floating Rate Book-Entry Notes having the same Issue Date, Initial Interest Rate, Base Rate, Interest Reset Period, Interest Payment Dates, Index Maturity, Spread and/or Spread Multiplier, if any, Minimum Interest Rate, if any, Maximum Interest Rate, if any, maturity date and other terms, if any, will be represented by one or more Global Securities. Each Global Security representing Book-Entry Notes will be deposited with, or on behalf of, the Depository, and registered in the name of a nominee of the Depository. Certificated Notes will not be exchangeable for Book-Entry Notes. Book-Entry Notes will not be exchangeable for Certificated Notes and will not otherwise be issuable as Certificated Notes, except under the circumstances described in the Prospectus under "Description of Debt Securities -- Book-Entry Procedures." Settlement for the Book-Entry Notes will be made in immediately available funds. The Book-Entry Notes will trade in the Depositary's Same-Day Funds Settlement System until maturity, and therefore the Depositary will require secondary trading activity in the Book-Entry Notes to be settled in immediately available funds. Secondary trading in long-term notes and debentures of corporate issuers is generally settled S-18 22 in clearing-house or next-day funds. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity in the Book-Entry Notes. A further description of the Depository's procedures with respect to Global Securities representing Book-Entry Notes is set forth in the accompanying Prospectus under "Description of Debt Securities -- Book-Entry Procedures." The Depository has confirmed to the Corporation, each Agent and the Trustee that it intends to follow such procedures. OPTIONAL REDEMPTION Unless otherwise indicated in the applicable Pricing Supplement, Notes may not be redeemed by the Corporation prior to maturity. If so specified in the applicable Pricing Supplement, the Notes will be redeemable prior to maturity at the option of the Corporation on the terms specified therein. Unless otherwise indicated in the applicable Pricing Supplement, notice of redemption will be provided by mailing a notice of such redemption to each holder by first class mail, postage prepaid, at least 30 days and not more than 60 calendar days prior to the date fixed for redemption to the respective address of each holder as that address appears upon the books maintained by the Paying Agent. REPAYMENT AT THE NOTEHOLDERS' OPTION Unless otherwise indicated in the applicable Pricing Supplement, Notes may not be repaid at the option of the holders thereof prior to maturity. If so specified in the applicable Pricing Supplement, a Note will be repayable at the option of the holder on a date or dates specified prior to its maturity date and, unless otherwise specified in such Pricing Supplement, at the Repayment Price together with accrued interest to the Repayment Date, each as specified in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement, in order for such a Note to be repaid, the Paying Agent must receive at least 30 days but not more than 45 calendar days prior to the Repayment Date the Note with the form entitled "Option to Elect Repayment" on the reverse of the Note duly completed. Except in the case of Extendible Notes, and unless otherwise specified in the applicable Pricing Supplement, exercise of the repayment option by the holder of a Note will be irrevocable. On any Repayment Date with respect to any Note, such Note will be repayable in whole or in part in increments of $1,000 (provided that any remaining principal amount of such Note will not be less than the minimum authorized denomination of such Note) at the option of the holder thereof at a Repayment Price specified in the applicable Pricing Supplement together with interest accrued thereon to the Repayment Date. If a Note is represented by a Global Security, the Depository's nominee will be the holder of such Note and therefore will be the only entity that can exercise a right to repayment. In order to ensure that the Depository's nominee will timely exercise a right to repayment with respect to a particular Note, the beneficial owner of such Note must instruct the broker or other direct or indirect participant through which it holds an interest in such Note to notify the Depository of its desire to exercise a right to repayment. Different firms have different cut-off times for accepting instructions from their customers and, accordingly, each beneficial owner should consult the broker or other direct or indirect participant through which it holds an interest in a Note in order to ascertain the cut-off time by which such an instruction must be given in order for timely notice to be delivered to the Depository. REPURCHASE The Corporation may purchase Notes at any price in the open market or otherwise. Notes so purchased by the Corporation may, at the discretion of the Corporation, be held or resold or surrendered to the relevant Trustee for cancellation. S-19 23 FOREIGN CURRENCY RISKS EXCHANGE RATE AND EXCHANGE CONTROLS Any investment in Notes that are denominated in, or the payment of which is related to the value of, a Specified Currency other than U.S. dollars entails significant risks that are not associated with a similar investment in a security denominated in U.S. dollars. Such risks include, without limitation, the possibility of significant changes in rates of exchange between the U.S. dollar and the various foreign currencies (or composite currencies or currency units) and the possibility of the imposition or modification of exchange controls by either the U.S. or foreign governments. Such risks generally depend on economic and political events over which the Corporation has no control. In recent years, rates of exchange between U.S. dollars and certain foreign currencies have been highly volatile and such volatility may be expected to continue in the future. Fluctuations in any particular exchange rate that have occurred in the past are not necessarily indicative, however, of fluctuations in such rate that may occur during the term of any Note. Depreciation against the U.S. dollar of the currency in which a Note is payable would result in a decrease in the effective yield of such Note below its coupon rate and, in certain circumstances, could result in a loss to the investor on a U.S. dollar basis. In addition, depending on the specific terms of a currency linked Note, changes in exchange rates relating to any of the currencies involved may result in a decrease in its effective yield and, in certain circumstances, could result in a loss of all or a substantial portion of the principal of a Note to the investor. THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, A FOREIGN CURRENCY OR A COMPOSITE CURRENCY. THE MATERIAL RISKS RELATED TO THE PURCHASE OF ANY SUCH NOTES WILL BE DISCLOSED TO PROSPECTIVE INVESTORS IN THE APPLICABLE PRICING SUPPLEMENT RELATING TO ANY SUCH NOTES. IN ADDITION, PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH IS RELATED TO THE VALUE OF, SPECIFIED CURRENCIES OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS. Except as set forth below under "United States Tax Considerations -- Non-U.S. Holders," the information set forth in this Prospectus Supplement is directed to prospective purchasers who are United States residents, and the Corporation disclaims any responsibility to advise prospective purchasers who are residents of countries other than the United States with respect to any matters that may affect the purchase, holding or receipt of payments of principal, premium, if any, and interest on the Notes. Such persons should consult their own counsel with regard to such matters. Governments have imposed from time to time, and may in the future impose, exchange controls which could affect exchange rates as well as the availability of a specified foreign currency at the time of payment of principal of, premium, if any, or interest on a Note. Even if there are no actual exchange controls, it is possible that the Specified Currency for any particular Note not denominated in U.S. dollars would not be available when payments on such Note are due. In that event, the Corporation would make required payments in U.S. dollars on the basis of the Market Exchange Rate on the date of such payment, or if such rate of exchange is not then available, on the basis of the Market Exchange Rate as of the most recent practicable date. See "Description of Notes -- Payment Currency." With respect to any Note denominated in, or the payment of which is related to the value of, a foreign currency or currency unit, the applicable Pricing Supplement will include information with respect to applicable current exchange controls, if any, and historic exchange rate information on such currency or currency unit. The information contained therein shall constitute a part of this Prospectus Supplement and is furnished as a matter of information only and should not be regarded as indicative of the range of or trends in fluctuations in currency exchange rates that may occur in the future. S-20 24 GOVERNING LAW AND JUDGMENTS The Notes will be governed by and construed in accordance with the laws of the State of New York. In the event an action based on Notes denominated in a Specified Currency other than U.S. dollars were commenced in a Federal or State court in the United States, it is likely that such court would grant judgment relating to the Notes only in U.S. dollars. The date used to determine the rate of conversion of a Specified Currency into United States dollars will depend upon various factors, including which court renders the judgment. In the event of an action based on Notes denominated in a Specified Currency other than U.S. dollars in a state court in the State of New York, such court would be required to render such judgment in the Specified Currency in which the Note is denominated, and such judgment would be converted into U.S. dollars at the exchange rate prevailing on the date of entry of the judgment. UNITED STATES TAX CONSIDERATIONS In the opinion of Thompson, Hine and Flory, special tax counsel to the Corporation, the following summary accurately describes certain material United States federal income tax statutory and regulatory provisions which may pertain to the purchase, ownership and disposition of Notes as of the date hereof. This summary is based on laws, regulations, rulings and decisions now in effect (or, in the case of certain regulations, in proposed form) all of which are subject to change (including changes in effective dates) or possible differing interpretations, which could result in federal income tax consequences different from those discussed below. It deals only with Notes held as capital assets and does not purport to deal with persons in special tax situations, such as financial institutions, insurance companies, regulated investment companies, dealers in securities or currencies, persons holding Notes as a hedge against currency risks or as a position in a "straddle" for tax purposes, or persons whose functional currency is not the United States dollar. It does not deal with Notes other than Notes in the registered form. The federal income tax consequences of purchasing, holding or disposing of Amortizing Notes, Extendible Notes, Renewable Notes, Indexed Notes, Foreign Currency Notes (other than the Single Foreign Currency Notes) and Floating Rate Notes that provide for one Base Rate followed by a different Base Rate, a Base Rate followed by a fixed rate, or a fixed rate followed by a Base Rate will be set out in the applicable pricing supplement. It also does not deal with holders other than original purchasers. Additional tax considerations or consequences may result from the particular terms established in any Pricing Supplement or in any Note. This opinion is limited to the present laws of the United States, and Thompson Hine and Flory assumes no obligation to revise or supplement this opinion with respect to Notes issued pursuant to this Registration Statement in the event the present laws referred to above change by legislative action, judicial decision, or otherwise, or the facts as they presently exist change to the extent any such changes occur after the date of issue. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, OR DISPOSITION OF THE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. As used herein, a "U.S. Holder" of a Note means a beneficial owner of a Note that is for United States federal income tax purposes (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States, any state, or of any political subdivision thereof, or (iii) an estate or trust the income of which is subject to United States federal income taxation regardless of its source. As used herein, the term "Non-U.S. Holder" means a holder of a Note that is not a U.S. Holder. "Single Foreign Currency Note" means a Note on which all payments a holder is entitled to receive are denominated in or determined by reference to the value of a single Foreign Currency. "Foreign Currency" means a currency or currency unit, other than a hyperinflationary currency or the U.S. dollar. PAYMENTS OF INTEREST Payments of interest on a Note generally will be taxable to a U.S. Holder as ordinary interest income at the time such payments are accrued or received in accordance with the U.S. Holder's method of accounting for tax purposes. S-21 25 ORIGINAL ISSUE DISCOUNT AND ACQUISITION DISCOUNT Notes with a term greater than one year may be issued with original issue discount for United States federal income tax purposes (a "Discount Note"). Generally, original issue discount will arise if the stated redemption price at maturity (generally, the principal amount) of a Note exceeds its issue price by more than a de minimis amount or if a Note has certain interest payment characteristics (e.g., interest holidays, interest payable in additional notes, stepped interest rates or interest rates based upon multiple indices). The issue price of Discount Notes that are issued for cash will be the first price at which a substantial amount of the Discount Notes in such issue are sold. If a Note is issued with original issue discount, a holder of the Note will be required to include amounts in gross income for United States federal income tax purposes on an accrual basis using the constant yield to maturity method and, as a result, a holder may be required to include such amount in income in advance of receipt of the cash payments to which such amounts are attributable. Any amounts included in income as original issue discount with respect to a Discount Note will increase a U.S. Holder's adjusted tax basis in the Discount Note. In addition, Floating Rate Notes may be subject to rules that differ from these general rules. Prospective investors should consult their own tax advisors with respect to the tax consequences of any prospective purchase of Floating Rate Notes. The following summary is based upon Treasury Regulations which were published in the Federal Register on February 2, 1994 and which became effective as Final Treasury Regulations on April 4, 1994 (the "OID Regulations"), and Proposed Treasury Regulations published in the Federal Register on December 16, 1994 (the "Proposed Regulations"). In general, a Note will be treated as a "variable rate debt instrument" for purposes of the OID Regulations if the Note is issued for an amount that does not exceed the total noncontingent principal payments by more than an amount equal to the lesser of (i) 0.015 multiplied by the product of the total noncontingent principal and the number of complete years to maturity from the issue date; or (ii) 15% of the total noncontingent principal payments. In addition, to be a variable rate debt instrument, the Note must bear stated interest (compounded or paid at least annually) at (i) one or more qualified floating rates, (ii) a single fixed rate and one or more qualified floating rates, (iii) a single objective rate or (iv) a single fixed rate and a single objective rate that is a "qualified inverse floating rate". A qualified floating rate or objective rate must be set at a "current value" of that rate; a "current value" is the value of the variable rate on any day that is no earlier than three months prior to the first day on which that value is in effect and no later than one year following that day. A "qualified floating rate" generally is a rate the variations in the value of which can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Note is denominated. A qualified floating rate may be multiplied by a fixed, positive multiple not exceeding 1.35, which may be increased or decreased by a fixed rate. Certain combinations of rates constitute a single qualified floating rate, including (i) interest stated at a fixed rate for an initial period of less than one year followed by a qualified floating rate if the value of the floating rate at the issue date is intended to approximate the fixed rate, and (ii) two or more qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the debt instrument. A combination of such rates is conclusively presumed to be a single qualified floating rate if the values of all rates on the issue date are within 0.25 percentage points of each other. A variable rate that is subject to an interest rate cap, floor, governor or similar restriction on rate adjustment may be a qualified floating rate only if such restriction is fixed throughout the term of the debt instrument, or is not reasonably expected as of the issue date to cause the yield on the debt instrument to differ significantly from its expected yield absent the restriction. An "objective rate" is a rate (other than a qualified floating rate) that is determined using a single fixed formula and that is based on: (i) one or more qualified floating rates, (ii) one or more rates each of which would be a qualified floating rate for a debt obligation denominated in a currency other than currency in which the debt instrument is denominated, (iii) the yield or change in the price of one or more items of actively traded personal property, other than the stock or debt of the issuer or a related party, or (iv) a combination of the rates described in (i)-(iii) herein. The Proposed Regulations would alter the definition of "objective rate" to a rate (other than a qualified floating rate) that is determined by using a single fixed formula and that is based on objective financial or economic information (other than a rate based on information that is within the control of the issuer (or related party) or that is unique to the circumstances of the issuer (or related party), such as dividends, profits or the value of the issuer's stock); such change is proposed to be effective for debt S-22 26 instruments issued on or after the date that is 60 days after final regulations are published in the Federal Register. The Internal Revenue Service (the "IRS") may designate other variable rates that will be treated as objective rates. However, a variable rate is not an objective rate if it is reasonably expected that the average value of the rate during the first half of the debt instrument's term will differ significantly from the average value of such rate during the final half of its term. A "qualified inverse floating rate" is a rate that is equal to a fixed rate minus a qualified floating rate and the variations in which can reasonably be expected to inversely reflect contemporaneous variations in the cost of newly borrowed funds, disregarding certain restrictions on such rate such as caps, floors or governors. Finally, the Proposed Regulations specify that a variable rate debt instrument may not provide for any principal payments that are contingent. A payment is not considered contingent if, as of the issue date, the contingency is either remote or incidental. In general, the rules for determining the amount and accrual of original issue discount and qualified stated interest on a variable rate debt instrument convert the debt instrument into a fixed rate debt instrument and then apply the general original issue discount rules to the debt instrument. If a Note bears interest that is unconditionally payable at least annually at a single qualified floating rate or an objective rate, all stated interest is qualified stated interest. In the case of a single qualified floating rate or a qualified inverse floating rate, the accrual of original issue discount is determined by assuming that the rate is fixed upon issuance at the initial value of the interest rate. In the case of an objective interest rate (other than a qualified inverse floating rate), the accrual of original issue discount is calculated by assuming that the Note bears interest at a fixed rate that reflects the yield that is reasonably expected for the Note. If a Note bears interest at a variable rate other than a single qualified floating rate or objective rate, the amount and accrual of original issue discount are generally determined by converting the variable rate debt instrument into a fixed rate debt instrument as generally described above, applying the general original issue discount rules, and then making appropriate adjustments for actual interest rates under the Note. The Proposed Regulations clarify that the qualified stated interest allocable to an accrual period is increased (or decreased) if the interest actually paid during an accrual period exceeds (or is less than) the interest assumed to be paid during the accrual period; such clarification is proposed to be effective for debt instruments issued on or after April 4, 1994. Notes that provide for a variable rate of interest but that do not qualify as variable rate debt instruments are contingent payment debt instruments. The tax treatment for contingent payment debt instruments is not entirely clear under current law. The Proposed Regulations (proposed to be effective for debt instruments issued on or after the date that is 60 days after final regulations are published in the Federal Register) adopt the "noncontingent bond method" for contingent payment debt instruments that are issued for cash or publicly traded property. Under the noncontingent bond method, a projected payment schedule is determined for a debt instrument as of the issue date, and interest accrues on the debt instrument based on this schedule. The projected payment schedule includes all noncontingent payments as well as a projected amount for each contingent payment. Appropriate adjustments are made to account for any difference between the projected amount of a contingent payment and the actual amount of the payment. The projected amounts are, in effect, treated as fixed, and interest accrual is required based on these projected amounts as imputed interest. Thus, the noncontingent bond method may result in recognition of income prior to the receipt of cash. Prospective investors should consult their own tax advisors with respect to the application of the contingent payment debt instrument provisions to Floating Rate Notes. The OID Regulations provide special rules for Notes subject to contingencies, including optional redemption. Notes which may be redeemed in whole or in part prior to their Stated Maturity will be treated as having a maturity date for federal income tax purposes on such redemption date if such redemption would result in a lower yield to maturity in the case of a redemption at the issuer's option or a higher yield to maturity in the case of a redemption at the holder's option. Notice will be given in the applicable Pricing Supplement when the Corporation determines that a particular Note will be deemed to have a maturity date for federal income tax purposes prior to its Stated Maturity. Investors intending to purchase Notes with such features should consult their own tax advisors, since the original issue discount consequences will depend, in part, on the particular terms and features of such Notes. S-23 27 SHORT-TERM NOTES Notes that have a fixed maturity of one year or less ("Short-Term Notes") generally will be deemed to have been issued with original issue discount (generally, the excess of the Short-Term Note's principal amount, plus all interest payable on the Note, over the Note's purchase price). In general, an individual or other cash method U.S. Holder is not required to accrue original issue discount on a Short-Term Note unless the holder elects to do so. If such an election is not made, any gain recognized by the U.S. Holder on a taxable disposition (including the maturity) of a Short-Term Note will be ordinary income to the extent of the original issue discount accrued on a straight-line basis, or upon election on a constant yield method (based on daily compounding) through the date of sale or maturity, and a portion of the deductions otherwise allowable to the U.S. Holder for interest on borrowings allocable to a Short-Term Note will be deferred until a corresponding amount of income is realized. U.S. Holders who report income for federal income tax purposes under the accrual method, and certain other holders, including banks and dealers in securities, are required to accrue original issue discount on a Short-Term Note on a straight line basis unless an election is made to accrue the original issue discount under a constant yield method (based on daily compounding). MARKET DISCOUNT If a U.S. Holder purchases a Note, other than a Discount Note, for an amount that is less than its issue price or, in the case of a Discount Note, for an amount that is less than its adjusted issue price as of the purchase date, the amount of such difference will be treated as "market discount" for United Stated federal income tax purposes, unless such difference is less than a specified de minimis amount. Under the market discount rules, a U.S. Holder will be required to treat any gain in the sale, exchange, retirement or other taxable disposition of a Note as ordinary income to the extent that any market discount has accrued with respect to such Note and was not previously included in income by the U.S. Holder (pursuant to an election by the U.S. Holder to include such market discount in income as it accrues) at the time of such disposition. Market discount is accrued on a straight line basis unless the U.S. Holder elects to accrue market discount under a constant yield method. If the Note is disposed of in a nontaxable transaction (other than a nonrecognition transaction described in Section 1276(c) of the Internal Revenue Code of 1986, as amended (the "Code")), a U.S. Holder will include any accrued market discount in ordinary income (generally, as interest) as if such holder had sold the Note at its then fair market value. In addition, the holder may be required to defer, until the maturity of the Note or its earlier disposition in a taxable transaction, deductions for all or a portion of the interest expense on any indebtedness incurred or maintained to purchase or carry such Note. ACQUISITION PREMIUM; AMORTIZABLE BOND PREMIUM A U.S. Holder who purchases a Note for an amount that is greater than its adjusted issue price but equal to or less than its stated redemption price at maturity (generally, the sum of all amounts payable on the Note after the purchase date other than payments of qualified stated interest) will be considered to have purchased such Note at an "acquisition premium." Under the acquisition premium rules, the amount of original issue discount which such holder must include in its gross income with respect to such Note for any taxable year will be reduced by the portion of such acquisition premium properly allocable to such taxable year. A U.S. Holder who purchases a Note for an amount in excess of the Note's stated redemption price at maturity will be considered to have purchased the Note at a "premium" and will not be required to include any original issue discount in income. However, if the Note may be optionally redeemed after the U.S. Holder acquires it at a price in excess of its stated redemption price at maturity, special rules may apply which could result in a deferral of the amorization of some bond premium until later in the term of the Note. A U.S. Holder generally may elect to amortize this premium over the remaining term of the Note on a constant yield method. The amount amortized in any taxable year will be treated as a reduction of the U.S. Holder's interest income from the Note. If a U.S. Holder does not make such an election, the amount of such premium will decrease the gain or increase the loss otherwise recognized on a taxable disposition of the Note. If a U.S. Holder elects to amortize premium on a constant yield method, such election will apply to all debt obligations held or subsequently acquired by the electing U.S. Holder on or after the first day of the first taxable year to which the election applies and may not be revoked without the consent of the IRS. S-24 28 ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT Under the OID Regulations, a U.S. Holder may elect to treat all interest on any Note as original issue discount and calculate the amount includable in gross income under the constant yield method described above. For the purposes of this election, interest includes stated interest, acquisition discount, original issue discount, de minimis original issue discount, market discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. If a U.S. Holder makes this election for a Note with market discount or amortizable bond premium, the election is treated as an election under the market discount or amortizable bond premium provisions, described above, and the electing U.S. Holder will be required to amortize bond premium or include market discount in income currently for all of the holder's other debt instruments with market discount or amortizable bond premium. The election is to be made for the taxable year in which the U.S. Holder acquired the Note, and may not be revoked without the consent of the IRS. U.S. Holders should consult with their own tax advisors about this election. DISPOSITION OF A NOTE Except as discussed above, upon the sale, exchange or retirement of a Note, a U.S. Holder generally will recognize taxable gain or loss equal to the difference between the amount realized on the sale, exchange or retirement of the Note and such holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax basis in a Note generally will equal such U.S. Holder's initial investment in the Note increased by any original issue discount included in income (and accrued market discount, if any, if the U.S. Holder has elected to include such market discount in income) and decreased by the amount of any payments made with respect to the Notes, other than payments of qualified stated interest, and the amount of any amortizable bond premium taken with respect to such Note. Such gain or loss generally will be long term capital gain or loss if the Note is held for more than one year. NON-U.S. HOLDERS A Non-U.S. Holder will not be subject to United States federal income taxes on payments of principal or interest (including original issue discount, if any) on a Note, unless such Non-U.S. Holder is (i) a direct or indirect 10% or greater shareholder of the Corporation that issued such Note, (ii) a controlled foreign corporation related to the Corporation that issued such Note, or (iii) a bank described in section 881(c)(3)(A) of the Code. To qualify for the "portfolio interest" exemption described above, the last United States payor in the chain of payment prior to payment to a Non-U.S. Holder (the "Withholding Agent") must be received in the year in which a payment of interest or principal occurs, or in either of the two preceding calendar years, a statement that (i) is signed by the beneficial owner of the Note under penalties of perjury, (ii) certifies that such owner is not a U.S. Holder and (iii) provides the name and address of the beneficial owner. The statement may be made on an IRS Form W-8 or a substantially similar form, and the beneficial owner must inform the Withholding Agent of any change in the information on the statement within 30 days of such change. If a Note is held through a securities clearing organization or certain other financial institutions, the organization or institution may provide a signed statement to the Withholding Agent. However, in such case, the signed statement must be accompanied by a copy of the IRS Form W-8 or the substitute form provided by the beneficial owner to the organization or institution. The Treasury Department is considering implementation of further certification requirements aimed at determining whether the issuer of a debt obligation is related to holders thereof. Generally, a Non-U.S. Holder will not be subject to United States federal income or withholding taxes on any amount of capital gain recognized by the Non-U.S. Holder upon a sale, retirement or disposition of a Note, provided (i) such capital gain is not effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder, and (ii) in the case of an individual, the Non-U.S. Holder is not present in the United States for 183 days or more in the taxable year in which the sale, retirement or disposition takes place or certain other conditions are not met. Certain other exemptions may be applicable, and a Non-U.S. Holder should consult its own tax advisor in this regard. S-25 29 UNITED STATES ESTATE TAX CONSIDERATIONS The Notes will not be includible in the estate of a Non-U.S. Holder unless the individual is a direct or indirect 10% or greater shareholder of the Corporation or, at the time of such individual's death, payments in respect of the Notes would have been effectively connected with the conduct by such individual of a trade or business in the United States. FOREIGN CURRENCY NOTES A holder who uses the cash method of accounting and who receives a payment of interest (including qualified stated interest) in Foreign Currency with respect to a Note (other than with respect to a Discount Note, except to the extent any qualified stated interest is received) will be required to include in income the U.S. dollar value of the Foreign Currency payment (determined based on the "spot" exchange rate in effect on the date such payment is received) regardless of whether the payment is in fact converted to U.S. dollars at that time, and such U.S. dollar value will be the holder's tax basis in the Foreign Currency. A holder (to the extent the preceding paragraph is not applicable) will be required to include in income the U.S. dollar value of the amount of interest income (including original issue discount) that has accrued and is otherwise required to be taken into account with respect to a Single Foreign Currency Note during an accrual period. The U.S. dollar value of such accrued interest income will be determined by translating such income at the average rate of exchange for the accrual period or, with respect to an interest accrual period that spans two taxable years, at the average rate for the partial period within the taxable year. The average rate of exchange for the interest accrual period (or partial period) is the simple average of the "spot" exchange rates for each business day of such period or other average exchange rate for the period if such rate is reasonably derived and consistently applied by the taxpayer. Such holder may elect to determine the U.S. dollar value of any interest income accrued in a Foreign Currency under an alternative method, as described below under "Spot Rate Convention Election." Such holder will recognize ordinary income or loss with respect to Foreign Currency relating to accrued interest income on the date such income is actually received. The amount of ordinary income or loss recognized on the date such interest is actually received will equal the difference between the U.S. dollar value of the Foreign Currency payments received (determined by using the "spot" exchange rate in effect on the date such payment is received) in respect of such accrual period and the U.S. dollar value of the interest income that has accrued during such accrual period as determined by using one of the two conventions described above. A holder will have a tax basis in any Foreign Currency received on the sale, exchange or retirement of a Single Foreign Currency Note equal to the U.S. dollar value of such Foreign Currency, determined by using the "spot" exchange rate in effect at the time of such sale, exchange or retirement. Any gain or loss realized by a holder on a sale or other disposition of Foreign Currency (including its exchange for U.S. dollars or its use to purchase Single Foreign Currency Notes) will be ordinary income or loss. A holder's tax basis in a Single Foreign Currency Note, and the amount of any subsequent adjustment to such holder's tax basis, will be the U.S. dollar value of the Foreign Currency amount paid for such Single Foreign Currency Note, or of the Foreign Currency amount of the adjustment, determined on the date of such purchase or adjustment. A holder who converts U.S. dollars to a Foreign Currency and immediately uses that currency to purchase a Single Foreign Currency Note denominated in the same currency ordinarily will not recognize gain or loss in connection with such conversion and purchase. However, a holder who purchases a single Foreign Currency Note with previously owned Foreign Currency will recognize ordinary income or loss in an amount equal to the difference, if any, between such holder's tax basis in the Foreign Currency and the U.S. dollar fair market value of the Single Foreign Currency Note on the date of purchase. Gain or loss realized with respect to principal upon the sale, exchange or retirement of a Single Foreign Currency Note will be ordinary income or loss to the extent it is attributable to fluctuations in currency exchange rates. Gain or loss attributable to fluctuations in exchange rates will equal the difference between the U.S. dollar value of the Foreign Currency principal amount of such Note, determined by using the "spot" exchange rate in effect on the date such payment is received or such Note is disposed of and the U.S. dollar value of the Foreign Currency principal amount of such Note, determined by using the "spot" exchange rate in effect on the date such Holder acquired such Note. The foreign currency principal amount of a Single S-26 30 Foreign Currency Note generally equals the issue price in foreign currency of such Note. Such foreign currency gain or loss will be recognized only to the extent of the total gain or loss recognized by a holder on the sale, exchange or retirement of the single Foreign Currency Note. The source of exchange gain or loss will be determined by reference to the residence of the holder or the "qualified business unit" of the holder on whose books the Note is properly reflected. Any gain or loss recognized by such a holder in excess of such foreign currency gain or loss will be capital gain or loss (except in the case of an original issue Discount Note, to the extent of any accrued original issue discount), and generally will be long-term capital gain or loss if the holding period of the single Foreign Currency Notes exceeds one year. Any gain or loss which is treated as ordinary income or loss, as described above, generally will not be treated as interest income or expense except to the extent provided by administrative pronouncements of the Internal Revenue Service. The amount of original issue discount on a Foreign Currency Note is determined in the relevant foreign currency. The amount of such original issue discount that is taken into account currently under general rules applicable to Notes other than single Foreign Currency Notes is to be determined for any accrual period in the relevant foreign currency and then translated into U.S. dollars on the basis of the average exchange rate in effect during such accrual period (or, with respect to an accrual period that spans two taxable years, the partial period within the taxable year) unless the holder elects to use the alternative method, as described below under "Spot Rate Convention Election." SPOT RATE CONVENTION ELECTION For taxable years beginning after March 17, 1992, a United States Holder may elect to translate foreign currency original issue discount (and, in the case of an accrual basis United States Holder, accrued interest) into U.S. dollars at the exchange rate in effect on the last day of an accrual period for such original issue discount or interest, or in the case of the accrual period that spans two taxable years, at the exchange rate in effect on the last day of the partial period within the taxable year. Additionally, if a payment of original issue discount or interest is actually received within five business days of the last day of the accrual period or partial accrual period within the taxable year, an electing United States Holder may instead translate such original issue discount or accrued interest into U.S. dollars at the exchange rate in effect on the date of such receipt. Any such election will apply to all debt instruments held by the United States Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the United States Holder, and will be irrevocable without the consent of the Internal Revenue Service. BACKUP WITHHOLDING AND INFORMATION REPORTING Backup withholding of United States federal income tax may apply at a rate of 31% to payments including original issue discount made in respect of the Notes to holders who are not "exempt recipients" and who fail to provide and certify certain identifying information (such as the holder's taxpayer identification number) in the required manner. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. Payments made in respect of the Notes to a U.S. Holder must be reported to the IRS, unless the U.S. Holder establishes that it is an exempt recipient or otherwise establishes an exemption. Compliance with the identification procedures described in the preceding section generally would establish an exemption from backup withholding for Non-U.S. Holders who are not exempt recipients. In addition, upon the sale of a Note to (or through) a broker, the broker must withhold 31% of the entire purchase price, unless either (i) the broker determines that the seller is a corporation or other exempt recipient or (ii) the seller provides, in the required manner, certain identifying information and, in the case of a Non-U.S. Holder, certifies that such seller is a Non-U.S. Holder (and certain other conditions are met). Such a sale must also be reported by the broker to the IRS, unless the broker determines that the seller is an exempt recipient or the seller certifies its Non-U.S. status (and certain other conditions are met). Certification of the registered owner's Non-U.S. status generally would be made on an IRS Form W-8 under penalties of perjury, although in certain cases it may be possible to submit other documentary evidence. S-27 31 Any amounts withheld under the backup withholding rules from a payment to a beneficial owner would be allowed as a refund or a credit against such beneficial owner's United States federal income tax provided the required information is furnished to the IRS. THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS. PLAN OF DISTRIBUTION The Notes are being offered on a continuous basis by the Corporation through Salomon Brothers Inc, CS First Boston Corporation, Goldman, Sachs & Co. and J.P. Morgan Securities Inc. (the "Agents"), each of which will agree to use its reasonable efforts to solicit offers to purchase Notes. The Corporation will have the sole right to accept offers to purchase Notes and may reject any offer to purchase Notes in whole or in part. An Agent will have the right to reject any offer to purchase Notes solicited by it in whole or in part. Payment of the purchase price of the Notes will be required to be made in immediately available funds. Unless otherwise specified in the applicable Pricing Supplement, with respect to Notes with a Stated Maturity of from nine months to 30 years from the date of issue, the Company will pay each Agent a commission, in the form of a discount ranging from .125% to .750% of the principal amount of each Note, depending upon the Stated Maturity, sold through such Agent. With respect to Notes with a Stated Maturity that is longer than 30 years from the date of issue sold through any Agent, the rate of commission will be negotiated at the time of sale and will be specified in the applicable Pricing Supplement. The Corporation may appoint additional agents to solicit sales of the Notes or accept (but not solicit) offers from additional agents for the sale of Notes; provided that any such solicitation and sale of the Notes shall be on the same terms and conditions as the Agents have agreed to. The Corporation may also sell Notes directly to investors on its own behalf. In the case of sales made directly by the Corporation, no commission will be payable. The Corporation may also sell Notes to an Agent as principal for its own account or to a group of underwriters for whom an Agent acts as representative at discounts or premiums to be agreed upon at the time of sale. Such Notes may be resold to investors and other purchasers at prevailing market prices, or prices related thereto at the time of such resale, at negotiated prices or otherwise, as determined by the Agent. In addition, the Agents may offer the Notes they have purchased as principal to other dealers. The Agents may sell Notes to any dealer at a discount and, unless otherwise specified in the applicable Pricing Supplement, such discount allowed to any dealer will not be in excess of the discount received by such Agent from the Corporation unless otherwise specified in the applicable Pricing Supplement. After the initial public offering of Notes to be resold to investors and other purchasers on a fixed public offering price basis, the public offering price, concession and discount may be changed. An Agent may be deemed to be an "underwriter" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). The Corporation and the Agents have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act, or to contribute to payments made in respect thereof. The Corporation has also agreed to reimburse the Agents for certain expenses, including the fees and expenses of counsel. The Corporation does not intend to apply for the listing of the Notes on any national or regional securities exchange. The Corporation has been advised by the Agents that the Agents intend to make a market in the Notes, as permitted by applicable laws and regulations. The Agents are not obligated to do so, however, and the Agents may discontinue making a market at any time without notice. No assurance can be given as to the liquidity of any trading market for the Notes. Concurrently with the offering of Notes through the Agents as described herein, the Corporation may issue other Securities as described in the accompanying Prospectus. S-28 32 In the ordinary course of their respective businesses, certain of the Agents and their affiliates have engaged, and may in the future engage, in investment banking and commercial banking transactions with the Corporation and certain of its affiliates. VALIDITY OF THE NOTES The validity of the Notes will be passed upon for the Corporation by any Senior Managing Counsel to the Corporation authorized to render an opinion in the State of Ohio, and for the Agents by Shearman & Sterling, New York, New York. The Senior Managing Counsel to the Corporation will rely as to all matters of New York law upon the opinion of Shearman & Sterling. Shearman & Sterling will rely as to all matters of Ohio law upon the opinion of the Senior Managing Counsel to the Corporation. Thompson, Hine and Flory will pass on certain tax matters related to the Notes. See "United States Tax Considerations." The opinion of the Senior Managing Counsel to the Corporation and Shearman & Sterling will be conditioned upon, and subject to certain assumptions regarding, future action required to be taken by the Corporation and the Trustee in connection with the issuance and sale of Notes, the specific terms of Notes and other matters which may affect the validity of Notes but which cannot be ascertained on the date of such opinions. As of March 24, 1995, attorneys at Thompson, Hine and Flory owned an aggregate of approximately 26,888 common shares of the Corporation. In addition, as of March 24, 1995, the Senior Managing Counsel to the Corporation currently authorized to render the opinion on behalf of the Corporation owned approximately 2,700 common shares of the Corporation and options to purchase 6,500 common shares of the Corporation which were exercisable within 60 days of such date. S-29 33 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION DATED APRIL 14, 1995 PROSPECTUS DEBT SECURITIES DEBT WARRANTS PREFERRED STOCK PREFERRED STOCK WARRANTS DEPOSITARY SHARES DEPOSITARY SHARE WARRANTS COMMON SHARES COMMON SHARE WARRANTS CAPITAL SECURITIES
KeyCorp, an Ohio corporation (the "Corporation"), intends to issue from time to time, either separately or together, (i) one or more series of its unsecured debt securities, which may be either senior debentures, notes, bonds, and/or other evidences of indebtedness (the "Senior Debt Securities") or subordinated debentures, notes, bonds, and/or other evidences of indebtedness which may be convertible at the option of a holder or the Corporation into Capital Securities (as described herein) of the Corporation (the "Subordinated Debt Securities" and, together with the Senior Debt Securities, the "Debt Securities"), (ii) warrants to purchase Debt Securities (the "Debt Warrants"), (iii) shares of Preferred Stock, with a par value of $1 each (the "Preferred Stock") which may be convertible, at the option of the holder, into Common Shares or any other class or series of Capital Securities of the Corporation or convertible at the option of the Corporation into Capital Securities or other debt securities of the Corporation, (iv) shares of Preferred Stock represented by depositary shares ("Depositary Shares"), (v) warrants to purchase shares of Preferred Stock (the "Preferred Stock Warrants"), (vi) warrants to purchase Depositary Shares (the "Depositary Share Warrants"), (vii) Common Shares, with a par value of $1 each (the "Common Shares"), together with the related rights to purchase Common Shares (the "Rights"), and (viii) warrants to purchase Common Shares, together with the Rights, (the "Common Share Warrants," and together with the Debt Warrants, the Preferred Stock Warrants, and the Depositary Share Warrants, being collectively referred to herein as the "Securities Warrants") in amounts, at prices, and on terms to be determined at the time of the offering. The Debt Securities, Securities Warrants, Preferred Stock, Depositary Shares, and Common Shares offered hereby, together with the Capital Securities, are collectively referred to herein as the "Securities." The Securities offered pursuant to this Prospectus may be offered separately or together in one or more series up to an aggregate initial public offering price of $850,000,000 or the equivalent thereof in one or more foreign currencies or units of one or more foreign currencies or composite currencies (such as European Currency Units), at individual prices and on terms to be set forth in one or more supplements to this Prospectus (each, a "Prospectus Supplement"). The particular terms of the Securities offered by any Prospectus Supplement will be described in the Prospectus Supplement relating to such Securities (an "Applicable Prospectus Supplement"). The Senior Debt Securities, when issued, will rank equally with all other unsubordinated and unsecured indebtedness of the Corporation. The Subordinated Debt Securities will be subordinate to all existing and future Senior Indebtedness (as defined herein) of the Corporation and, in certain events involving the insolvency of the Corporation, to Other Senior Obligations (as defined herein) of the Corporation. See "Description of Debt Securities -- Subordination of Subordinated Debt Securities." The Debt Securities of any series may be issued with Securities Warrants, and, in the case of the Subordinated Debt Securities, may be convertible into Capital Securities of the Corporation. Unless otherwise indicated in a Prospectus Supplement, the maturity of the Subordinated Debt Securities will be subject to acceleration only in the event of certain events of bankruptcy, insolvency, or reorganization of the Corporation or upon receivership of a Major Bank (as defined herein). See "Description of Debt Securities -- Subordination of Subordinated Debt Securities". The specific terms of the Securities in respect of which this Prospectus is being delivered will be set forth in a Prospectus Supplement and, among other things, will include, where applicable, (i) in the case of Debt Securities, the specific designation, aggregate principal amount, currency, denomination, maturity, priority, premium, if any, rate of interest (which may be variable or fixed), time of payment of interest, terms for optional redemption or repayment by the Corporation or any holder and for sinking fund payments, terms for conversion, the initial public offering price, any special provisions related to Debt Securities denominated in a foreign currency or issued as medium-term notes, original issue discount securities, or with other special terms, and the designation of any applicable trustee, security registrar, or paying agent, (ii) in the case of shares of Preferred Stock, the specific title and stated value, number of shares or fractional interests therein, any dividend, liquidation, redemption, voting, and other rights, the terms for conversion, the initial public offering price, and whether such shares are to be issued as Depositary Shares, and, if so, the fraction of a share to be represented by each Depositary Share and the designation of the Depositary (as defined herein), (iii) in the case of Common Shares, the aggregate number of shares offered and the initial offering price, and (iv) in the case of Securities Warrants, where applicable, the applicable type and amount of securities covered thereby, and, where applicable, the aggregate amount, duration, offering price, exercise price, and detachability. A Prospectus Supplement will also contain information, where applicable, about certain U.S. Federal income tax, accounting, and other considerations relating to, and any listing on a securities exchange of, the Securities covered by the Prospectus Supplement. THE SECURITIES WILL BE OBLIGATIONS OF THE CORPORATION, ARE NOT AND WILL NOT BE SAVINGS ACCOUNTS, DEPOSITS, OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF THE CORPORATION, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND, OR ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE ------------------ The Securities may be sold to underwriters pursuant to the terms of the offering fixed at the time of sale, directly by the Corporation, or through dealers or agents designated from time to time by the Corporation, which agents may be affiliates of the Corporation. Each Prospectus Supplement will set forth the names of the underwriters, dealers, or agents, if any, and any applicable fees, commissions, or discounts and the net proceeds to the Corporation from such sale together with the terms of the offering. The Corporation may also issue contracts under which the counterparty may be required to purchase Debt Securities, Preferred Stock, or Depositary Shares. Such contracts would be issued with the Debt Securities, Preferred Stock, Depositary Shares, and/or Securities Warrants in amounts, at prices, and on terms to be set forth in a Prospectus Supplement. See "Plan of Distribution." THE DATE OF THIS PROSPECTUS IS APRIL , 1995. 34 AVAILABLE INFORMATION The Corporation is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements, and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements, and other information filed by the Corporation can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices at The Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Thirteenth Floor, New York, New York 10048. Copies of such material can be obtained by mail from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Certain securities of the Corporation are listed on the New York Stock Exchange, and such reports, proxy statements, and other information concerning the Corporation also may be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. This Prospectus constitutes part of a registration statement on Form S-3 (together with all amendments and exhibits thereto, the "Registration Statement") filed by the Corporation with the Commission under the Securities Act. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted from this Prospectus in accordance with the rules and regulations of the Commission. Reference is made to the Registration Statement and to the exhibits thereto for further information pertaining to the Corporation and the Securities offered hereby. The Registration Statement (and exhibits thereto) may be inspected without charge at the office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies thereof may be obtained from the Commission at prescribed rates. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE There are hereby incorporated by reference in this Prospectus the following documents and information heretofore filed by the Corporation with the Commission pursuant to Sections 12 or 13 of the Exchange Act: 1. The Corporation's Annual Report on Form 10-K for the year ended December 31, 1994; 2. The Corporation's Current Report on Form 8-K, filed on January 20, 1995; 3. The description of the Corporation's Common Shares and the Rights to purchase Common Shares contained in the Corporation's Registration Statement on Form 8-A dated July 31, 1992 as amended by Form 8-A/A filed on February 25, 1994 under Section 12 of the Exchange Act; and 4. The description of the Corporation's 10% Cumulative Preferred Stock, Class A (the "10% Cumulative Preferred Stock") and the Depositary Shares representing one-fifth of one share of 10% Cumulative Preferred Stock contained in the Corporation's Registration Statement on Form 8-A, filed on February 23, 1994 under Section 12 of the Exchange Act. All reports subsequently filed by the Corporation pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the termination of the offering of the Securities offered hereby shall be deemed to be incorporated by reference into 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 a Prospectus Supplement, 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 CORPORATION WILL PROVIDE UPON REQUEST AND WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED THEREIN BY REFERENCE). WRITTEN REQUESTS SHOULD BE DIRECTED TO CARTER B. CHASE, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL, AND SECRETARY, KEYCORP, 127 PUBLIC SQUARE, CLEVELAND, OHIO 44114-1306 (TELEPHONE (216) 689-3000). 2 35 NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH THEY RELATE AND DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO SUCH DATE. UNLESS OTHERWISE INDICATED, CURRENCY AMOUNTS IN THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT ARE STATED IN U.S. DOLLARS ("$," "DOLLARS," "U.S. DOLLARS," OR "U.S. $"). 3 36 THE CORPORATION OVERVIEW On March 1, 1994, KeyCorp, a financial services holding company headquartered in Albany, New York, with approximately $33 billion in assets at December 31, 1993 ("old KeyCorp"), merged into and with Society Corporation, a financial services holding company headquartered in Cleveland, Ohio, with approximately $27 billion in assets at December 31, 1993 ("Society"), pursuant to an Agreement and Plan of Merger, and a related Supplemental Agreement to Agreement and Plan of Merger, each dated as of October 1, 1993, and each as amended. In the merger, Society, an Ohio corporation, was the surviving corporation, but changed its name to KeyCorp (also referred to herein as the "Corporation"). The merger was accounted for as a pooling of interests. Accordingly, all financial data of KeyCorp set forth herein (or incorporated by reference) has been restated to give effect to the merger of old KeyCorp into and with Society. The merger of old KeyCorp into and with Society created a financial services holding company which traces its roots back to 1825, when the first predecessor of old KeyCorp was organized. At December 31, 1994, KeyCorp was one of the nation's largest bank holding companies, based upon consolidated total assets of approximately $66.8 billion. KeyCorp is a legal entity separate and distinct from its banking and other subsidiaries. Accordingly, the right of KeyCorp, its security holders and its creditors to participate in any distribution of the assets or earnings of its banking and other subsidiaries is necessarily subject to the prior claims of the respective creditors of such banking and other subsidiaries, except to the extent that claims of KeyCorp in its capacity as a creditor of such banking and other subsidiaries may be recognized. The executive offices of KeyCorp are located at 127 Public Square, Cleveland, Ohio 44114-1306, and its telephone number is (216) 689-6300. SUBSIDIARIES KeyCorp provides banking and other financial services across much of the country's northern tier and in Florida through a network of subsidiaries operating 1,272 full-service banking offices in 13 states, giving KeyCorp the nation's fifth largest domestic branch network as of December 31, 1994 (before giving effect to KeyCorp's recent acquisitions of BANKVERMONT Corporation, Casco Northern Bank, National Association and OMNIBANCORP as described in the "Recent Mergers, Acquisitions and Divestitures" section below. KeyCorp's largest bank subsidiaries include Society National Bank, headquartered in Cleveland, Ohio, which is the largest bank in Ohio and one of the nation's major regional banks with $24.6 billion in total assets and 289 full-service banking offices at December 31, 1994; Key Bank of New York, headquartered in Albany, New York, with $14.9 billion in total assets and 327 full-service banking offices at December 31, 1994 ("Key-NY"); Key Bank of Washington, headquartered in Tacoma, Washington, with $7.6 billion in total assets and 186 full-service banking offices at December 31, 1994 ("Key-Washington"); and Society National Bank, Indiana, headquartered in South Bend, Indiana, with $3.3 billion in total assets and 92 full-service banking offices at December 31, 1994 ("SNBI"). In addition, KeyCorp operates bank subsidiaries in Alaska, Colorado, Idaho, Maine, Michigan, Oregon, Utah, Vermont (its Vermont subsidiary was acquired on January 27, 1995) and Wyoming, a savings association subsidiary in Florida, and either a trust company subsidiary or an office of a trust company subsidiary in each of the aforementioned states except Vermont. See "-- Recent Mergers, Acquisitions and Divestitures," below. Through its bank and trust company subsidiaries KeyCorp provides a wide range of banking, fiduciary and other financial services to its corporate, individual and institutional customers located throughout the country. In addition to the customary banking services of accepting deposits and making loans, KeyCorp's bank and trust company subsidiaries provide specialized services tailored to specific markets, including personal and corporate trust services, personal financial services, customer access to mutual funds, cash management services, investment banking services and international banking services. Through its subsidiary banks, trust companies and registered investment adviser subsidiaries, KeyCorp provides investment management services to institutional and individual clients, including large corporate and public retirement plans, Taft-Hartley plans, foundations and endowments, and high net worth individuals. Several of KeyCorp's 4 37 investment management and trust company subsidiaries also serve as investment advisers to KeyCorp's proprietary mutual funds. KeyCorp also provides other financial services both in and outside of its primary banking markets through its nonbank subsidiaries. Services provided by nonbank financial services subsidiaries include reinsurance of credit life and accident and health insurance on loans made by subsidiary banks, venture capital and small business investment financing services, equipment lease financing, community development financing, stock transfer agent, and other financial services. KeyCorp is also a 20% equity participant in a joint venture with a number of other unaffiliated bank holding companies in Electronic Payment Services, Inc., which provides automated teller machine access to bank customers throughout most of the United States through its subsidiary, Money Access Service Inc. (more commonly known as the MAC(R) network). RECENT MERGERS, ACQUISITIONS AND DIVESTITURES PENDING AutoFinance Group, Inc. On March 20, 1995, KeyCorp entered into a definitive agreement to acquire AutoFinance Group, Inc. ("AFG"), a suburban Chicago based national consumer finance company, in a tax-free exchange of stock. Under the terms of the agreement, AFG Shareholders will receive KeyCorp common shares valued at $16.50 per share, subject to a maximum of .6 and a minimum of .5 KeyCorp common shares, for each AFG Share. Based upon the market price of KeyCorp common shares on the date of execution of the definitive agreement, this would result in the issuance of approximately 11 million KeyCorp common shares with a value of approximately $325 million. In addition, immediately prior to the closing, AFG will complete a spin-off to its Shareholders of 95.01% of its common stock interest in Patlex Corporation, a wholly owned subsidiary of AFG. Upon consummation of the acquisition, AFG will merge into KeyCorp Finance Inc., a wholly owned subsidiary of KeyCorp. The transaction, which is subject to approval by AFG's Shareholders and certain regulatory approvals, is expected to close on or about October 1, 1995 and will be accounted for as a purchase. AFG had total assets of $124.2 million at December 31, 1994. COMPLETED KeyCorp Mortgage Inc. On March 31, 1995, KeyCorp sold the residential mortgage loan servicing operations of KeyCorp Mortgage Inc. ("KMI"), an indirect wholly owned subsidiary of KeyCorp, to NationsBanc Mortgage Corp., a subsidiary of NationsBank Corp. KMI services approximately $28 billion of residential mortgage loans. KeyCorp plans to continue to service commercial mortgages and to originate residential mortgage loans through its banking franchise, and to package and sell the rights to service all residential mortgage loans originated after the KMI sale through a newly formed subsidiary. Spears, Benzak, Salomon & Farrell, Inc. On April 5, 1995, KeyCorp Asset Management Holdings, Inc., an indirect wholly owned subsidiary of KeyCorp, acquired Spears, Benzak, Salomon & Farrell, Inc., a New York-based investment management firm ("Spears, Benzak"). Spears, Benzak had aggregate assets under management of approximately $3 billion as of December 31, 1994. The transaction was counted for as a purchase. OMNIBANCORP. On February 28, 1995, KeyCorp acquired OMNIBANCORP, based in Denver, Colorado, in a tax-free exchange of stock. Under the terms of the merger agreement, 4,043,653 KeyCorp common shares were exchanged for all of the outstanding shares of OMNIBANCORP common stock (based on an exchange ratio of .2452 KeyCorp common shares for each share of OMNIBANCORP). OMNIBANCORP had five Colorado-chartered banks ("Omnibanks") and had 19 branches and total assets of $500.2 million at the date of acquisition. The Omnibanks will be merged with and into Key Bank of Colorado, a wholly owned subsidiary of KeyCorp. The transaction was accounted for as a purchase. Casco Northern Bank, National Association. On February 16, 1995, KeyCorp acquired Casco Northern Bank, National Association ("Casco Northern"), headquartered in Portland, Maine, for cash consideration of 5 38 $205.1 million. The transaction was accounted for as a purchase. At the date of acquisition, Casco Northern had total assets of $1.0 billion and 34 branches in Maine, but pursuant to the terms of a letter dated December 16, 1994, from the United States Department of Justice, KeyCorp will divest 11 of these branches. The remaining 23 branches of Casco Northern were acquired by Key Bank of Maine, an indirect wholly owned subsidiary of KeyCorp. BANKVERMONT Corporation. On January 27, 1995, KeyCorp acquired BANKVERMONT Corporation, headquartered in Burlington, Vermont, for cash consideration of $90.3 million. The transaction was accounted for as a purchase. Upon consummation of the acquisition, BANKVERMONT Corporation's only subsidiary, Bank of Vermont, with 12 branches and total assets of $660.5 million, became an indirect wholly owned subsidiary of KeyCorp and was renamed Key Bank of Vermont. The Bank of Greeley. On December 30, 1994, KeyCorp acquired The Bank of Greeley, a single location bank in Greeley, Colorado ("Greeley Bank"), through a merger of Greeley Bank with and into Key Bank of Colorado, a wholly owned subsidiary of KeyCorp, in a tax-free exchange of stock. Under the terms of the merger agreement, 259,697 KeyCorp Common Shares were exchanged for all of the outstanding shares of Greeley Bank common stock (based on an exchange ratio of 1.026 KeyCorp common shares for each share of Greeley Bank). The transaction was accounted for as a pooling of interests; however, financial statements for periods prior to the merger have not been restated to include the accounts and results of operations of Greeley Bank because the transaction was not material to KeyCorp. Greeley Bank had total assets of $60 million at the date of acquisition. First Citizens Bancorp of Indiana. On December 13, 1994, KeyCorp acquired First Citizens Bancorp of Indiana ("First Citizens"), based in Anderson, Indiana in a tax-free exchange of stock. Under terms of the merger agreement, 1,960,119 KeyCorp Common Shares were exchanged for all the outstanding shares of First Citizens common stock (based on an exchange ratio of 1.4286 KeyCorp common shares for each share of First Citizens). First Citizens' subsidiary, Citizens Banking Company, an Indiana-chartered commercial bank with nine branches in central Indiana, and total assets of $347 million at the date of acquisition, merged with and into Society National Bank, Indiana, a wholly owned subsidiary of KeyCorp, on March 10, 1995. The transaction was accounted for as a purchase. State Home Savings Bank, FSB. On September 16, 1994, Society National Bank, a wholly owned subsidiary of KeyCorp, acquired State Home Savings Bank, FSB ("State Home Savings"), a closely held Federal stock savings bank based in Bowling Green, Ohio, for cash consideration of $44.2 million. The transaction was accounted for as a purchase. State Home Savings had 14 branches in five Northwest Ohio counties and total assets of $321 million at the date of acquisition. Commercial Bancorporation of Colorado. On March 24, 1994, Commercial Bancorporation of Colorado ("CBC"), a bank holding company with subsidiaries operating in the Denver, Colorado Springs, Sterling and Fort Collins areas of Colorado was acquired by KeyCorp in a tax-free exchange of stock and its subsidiary banks merged into Key Bank of Colorado, a wholly owned subsidiary of KeyCorp. Under the terms of the merger agreement, 2,900,389 KeyCorp common shares were exchanged for all of the outstanding shares of CBC common stock (based on an exchange ratio of .899 KeyCorp common shares for each share of CBC). CBC had total assets of $409 million at the date of acquisition. The merger qualified for accounting as a pooling of interests; however, financial statements for periods prior to the merger have not been restated to include the accounts and results of operations of CBC because the transaction was not material to KeyCorp. 6 39 CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS The Corporation's ratio of earnings to fixed charges and ratio of earnings to combined fixed charges and preferred stock dividends are set forth below for the periods indicated:
YEAR ENDED DECEMBER 31, ---------------------------------------------- 1994 1993 1992 1991 1990 ------ ------ ------ ------ ------ Earnings to Fixed Charges: Excluding Interest on Deposits................... 3.50x 4.15x 3.67x 2.07x 1.57x Including Interest on Deposits................... 1.70x 1.69x 1.48x 1.18x 1.10x Earnings to Combined Fixed Charges and Preferred Stock Dividends: Excluding Interest on Deposits................... 3.34x 3.84x 3.31x 1.96x 1.54x Including Interest on Deposits................... 1.68x 1.66x 1.45x 1.17x 1.10x
For purposes of computing the above ratios, earnings represent consolidated income before income taxes plus fixed charges. Fixed charges include interest expense (excluding or including interest on deposits, as the case may be) and the proportion deemed representative of the interest factor of rental expense, net of income from subleases. Pre-tax earnings required for preferred stock dividends were computed using the effective tax rate for the applicable year. USE OF PROCEEDS Unless otherwise set forth in the Applicable Prospectus Supplement, the Corporation intends to use the net proceeds from the sale of the Securities for general corporate purposes, including investments in and advances to the Corporation's banking and nonbanking subsidiaries, reduction of short-term borrowings, investments, and financing possible future acquisitions including, without limitation, the acquisition of banking and nonbanking companies and financial assets and liabilities. All or a portion of the net proceeds from the sale of the Securities may also be used to finance, in whole or in part, the repurchase by the Corporation of shares of its outstanding common stock pursuant to the Corporation's stock repurchase program announced on January 19, 1995 and described in a Current Report on Form 8-K filed with the Commission on January 20, 1995, which is incorporated herein by reference (see "Incorporation of Certain Documents by Reference"), and additional share repurchases undertaken from time to time in connection with the Corporation's acquisition of banking and nonbanking companies. 7 40 DESCRIPTION OF DEBT SECURITIES The Senior Debt Securities are to be issued under an Indenture, dated as of June 10, 1994, (the "Senior Indenture"), between the Corporation and Bankers Trust Company, as Trustee. The Subordinated Debt Securities are to be issued under an Indenture, dated as of June 10, 1994 (the "Subordinated Indenture"), also between the Corporation and Bankers Trust Company, as Trustee. Copies of the Senior Indenture and the Subordinated Indenture have been filed with the Commission as exhibits to the Registration Statement of which this Prospectus is a part. The Senior Indenture and the Subordinated Indenture are sometimes referred to collectively herein as the "Indentures". Bankers Trust Company is hereinafter referred to as the "Senior Trustee" when referring to it in its capacity as trustee under the Senior Indenture, as the "Subordinated Trustee" when referring to it in its capacity as trustee under the Subordinated Indenture, and as the "Trustee" when referring to it in its capacity as trustee under both of the Indentures. The following summaries of certain provisions of the Senior Debt Securities, the Subordinated Debt Securities, and the Indentures do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Debt Securities and the Indenture applicable to a particular series of Debt Securities (the "Applicable Indenture"), including the definitions therein of certain terms. Wherever particular Sections, Articles, or defined terms of the Applicable Indenture are referred to, it is intended that such Sections, Articles, or defined terms shall be incorporated herein by reference. Article and Section references used herein are references to the Applicable Indenture. Capitalized terms not otherwise defined herein shall have the meaning given to them in the Applicable Indenture. The following sets forth certain general terms and provisions of the Debt Securities offered hereby. GENERAL TERMS The Indentures provide that the Debt Securities issued thereunder may be issued without limit as to aggregate principal amount and provide that Debt Securities may be issued thereunder from time to time in one or more series. The Senior Debt Securities will rank equally with all other unsecured and unsubordinated indebtedness of the Corporation which is not accorded a priority under applicable law. The Subordinated Debt Securities will rank equally with all other unsecured indebtedness of the Corporation, but, as described below, will be subordinated in right of payment to the prior payment in full of the Senior Indebtedness of the Corporation and, in certain events involving the insolvency of the Corporation, Other Senior Obligations of the Corporation. The Debt Securities will be unsecured obligations of the Corporation. Unless otherwise indicated in the Applicable Prospectus Supplement, principal of (and premium, if any), or interest, if any, on the Debt Securities will be payable, and the transfer of the Debt Securities will be registrable, at the office or agency of the Corporation in the Borough of Manhattan, the City of New York, maintained for such purpose and at any other office or agency maintained by the Corporation for such purpose, except that, at the option of the Corporation, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the register for the Debt Securities or by transfer to an account maintained with a bank located in the United States. (Sections 301, 305, and 1002) Debt Securities of a series may be issuable solely as Registered Securities, solely as Bearer Securities or as both Registered Securities and Bearer Securities (both as defined in the Indentures). Unless otherwise provided in the Applicable Prospectus Supplement, Debt Securities denominated in U.S. dollars are issuable in denominations of $1,000 and integral multiples of $1,000 (in the case of Registered Securities) and in denominations of $5,000 (in the case of Bearer Securities). The Indentures also provide that Debt Securities of a series may be issuable in global form, which may be of any denomination. See "Book-Entry Procedures". Unless otherwise indicated in the Applicable Prospectus Supplement, Bearer Securities will have interest coupons attached. (Sections 201 and 302) No service charge will be made for any registration of transfer or exchange of the Debt Securities, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith. (Section 305) The Applicable Prospectus Supplement will describe the following terms of the Debt Securities offered thereby: (1) The title of such Debt Securities and whether such Debt Securities will be Senior Debt Securities or Subordinated Debt Securities. 8 41 (2) The aggregate principal amount of such Debt Securities and any limit on the aggregate principal amount of Debt Securities of such series. (3) If other than the principal amount thereof, the portion of the principal amount thereof payable upon declaration of acceleration of the maturity thereof or the method by which such portion shall be determined. (4) The date or dates, or the method by which such date or dates will be determined or extended, on which the principal of such Debt Securities will be payable. (5) The rate or rates at which such Debt Securities will bear interest, if any, or the method by which such rate or rates will be determined, the calculation agent, if any, the date or dates from which any interest will accrue or the method by which such date or dates will be determined, the date or dates on which such interest, if any, will be payable and the regular record date or dates, if any, for the interest payable on any registered security on any interest payment date, or the method by which any such date will be determined, and the basis upon which interest will be calculated if other than that of a 360-day year of twelve 30-day months. (6) The period or periods within which, the price or prices at which, the currency or currencies, currency unit or units or composite currency or currencies in which, and the other terms and conditions upon which, such Debt Securities may be redeemed in whole or in part at the option of the Corporation, if the Corporation is to have that option. (7) The obligation, if any, of the Corporation to redeem, repay, or purchase such Debt Securities in whole or in part, pursuant to any sinking fund or analogous provision or at the option of a holder thereof and the period or periods within which or the date or dates on which, the price or prices at which, the currency or currencies, currency unit or units or composite currency or currencies in which and the other terms and conditions upon which, such Debt Securities will be so redeemed, repaid, or purchased. (8) Whether such Debt Securities are to be issuable as Registered Securities, Bearer Securities, or both, any restrictions applicable to the offer, sale, or delivery of Bearer Securities and the terms, if any, upon which Bearer Securities of the series may be exchanged for Registered Securities of the series and vice versa (if permitted by applicable laws and regulations), whether such Debt Securities will be issuable initially in temporary global form, whether any such Debt Securities will be issuable in permanent global form with or without coupons and, if so, whether beneficial owners of interests in any such permanent global security may exchange such interests for Debt Securities of such series and of like tenor of any authorized form and denomination and the circumstances under which any such exchanges may occur, if other than in the manner provided in the Applicable Indenture, and, if Registered Securities are to be issuable as a global security, the identity of the depository for such Debt Securities. (9) If other than U.S. dollars, the currency or currencies, currency unit or units or composite currency or currencies in which payments of the principal of (and premium, if any) or interest, if any, on such Debt Securities will be payable or in which such Debt Securities will be denominated. (10) Whether the amount of payments of principal of (and premium, if any) and/or interest, if any, on such Debt Securities may be determined with reference to an index, formula, or other method and the manner in which such amounts will be determined. (11) Whether the Corporation or a holder may elect payment of the principal of (and premium, if any), or interest, if any, on such Debt Securities in one or more currency or currencies, currency unit or units or composite currency or currencies, other than that in which such Debt Securities are denominated or stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made, and the time and manner of determining the exchange rate between the currency or currencies, currency unit or units or composite currency or currencies in which such Debt Securities are denominated or stated to be payable and the currency or currencies in which such Debt Securities are to be so payable. (12) The place or places, if any, other than or in addition to the City of New York, where the principal of (and premium, if any) or interest, if any, on such Debt Securities will be payable, where any 9 42 Registered Securities may be surrendered for registration of transfer, where Debt Securities may be surrendered for conversion and where notices or demands to or upon the Corporation in respect of such Debt Securities and the Applicable Indenture may be served. (13) The denomination or denominations in which such Debt Securities will be issuable, if other than $1,000 or any integral multiple thereof in the case of Registered Securities and $5,000 or any integral multiple thereof in the case of Bearer Securities. (14) If other than the applicable Trustee, the identity of each Security Registrar and/or Paying Agent. (15) The date as of which any Bearer Securities of the series and any temporary Debt Security issued in global form representing outstanding Securities of the series will be dated if other than the date of original issuance of the first Debt Security of the series to be issued. (16) The applicability, if at all, to such Debt Securities of the provisions of Article Thirteen of the respective Indenture described under "Defeasance and Covenant Defeasance" and any provisions in modification of, in addition to or in lieu of any of the provisions of such Article. (17) The person to whom any interest on any Registered Security of the series shall be payable, if other than the person in whose name such Registered Security (or one or more predecessor securities) is registered at the close of business on the Regular Record Date for such interest, the manner in which, or the person to whom, any interest on any Bearer Security of the series will be payable, if otherwise than upon presentation and surrender of the coupons appertaining thereto as they severally mature, and the extent to which, or the manner in which, any interest payable on a temporary Debt Security issued in global form will be paid in other than in the manner provided in the applicable Indenture. (18) If such Debt Securities are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Debt Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and/or terms of such certificates, documents or conditions. (19) If such Debt Securities will be issuable upon the conversion of other Securities or upon the exercise of Debt Warrants, the time, manner, and place for such Debt Securities to be authenticated and delivered. (20) The provisions, if any, granting special rights to the holders of such Debt Securities upon the occurrence of such events as may be specified. (21) Any deletions from, modifications of or additions to the Events of Default and in the case of the Subordinated Debt Securities, the Defaults, or covenants of the Corporation with respect to such Debt Securities, whether or not such Events of Default, Defaults, or covenants are consistent with the Events of Default, Defaults, or covenants set forth in the general provisions of the Applicable Indenture. (22) The designation of the initial Exchange Rate Agent, if any. (23) Whether such Subordinated Debt Securities will be convertible into Capital Securities of the Corporation and, if so, the terms and conditions upon which such Subordinated Debt Securities will be so convertible. (24) Any other terms of such Debt Securities not inconsistent with the provisions of the Applicable Indenture. The Corporation may be required to pay Additional Amounts, as contemplated by Section 1004 of each Indenture, to any holder of Debt Securities who is not a U.S. person (including any modification to the definition of such term as contained in the Applicable Indenture as originally executed) in respect of certain taxes, assessments, or governmental charges and, if so, the Corporation may have the option to redeem such Debt Securities rather than pay such Additional Amounts (and the terms of any such option). The Indentures provide that "Additional Amounts" means any additional amounts which are required by the Debt Securities or by or pursuant to a resolution of the Board of Directors to be paid by the Corporation in respect of certain 10 43 taxes imposed on such non-U.S. persons and which are owing to such holders. If the terms of any series of Debt Securities provide that the Corporation must pay Additional Amounts in respect thereof, for purposes of this Prospectus, any reference to the payment of (or premium, if any, on) or interest, if any, on such Debt Securities will be deemed to include mention of the payment of Additional Amounts provided for by the terms of such Debt Securities. Debt Securities may provide for an amount less than the entire principal amount thereof to be due and payable upon declaration of acceleration of the maturity thereof ("Original Issue Discount Securities"). (Section 101) Certain Federal income tax and other considerations pertaining to any such Original Issue Discount Securities will be described in the Applicable Prospectus Supplement. The Debt Securities may be issued under the Indentures as Original Issue Discount Securities to be offered and sold at a substantial discount from the principal amount thereof and may also be issued under the Indentures upon exercise of Debt Warrants issued by the Corporation. See "Description of Securities Warrants." Unless otherwise indicated in the Applicable Prospectus Supplement, the covenants contained in the Indentures and the Debt Securities will not afford holders protection in the event of a sudden decline in credit rating that might result from a recapitalization, restructuring, or other highly leveraged transaction. BOOK-ENTRY PROCEDURES Upon issuance, the Debt Securities may be issued in the form of one or more fully registered global securities (the "Global Securities"). Each such Global Security will be deposited with, or on behalf of, The Depository Trust Company, as depository (the "Depository"), and registered in the name of the Depository or a nominee thereof. Unless and until it is exchanged in whole or in part for Debt Securities in definitive form, no Global Security may be transferred except as a whole by the Depository to a nominee of such Depository or by a nominee of such Depository to such Depository. The Depository has advised the Corporation as follows: The Depository is a limited-purpose trust company organized under the Banking Law of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. The Depository was created to hold securities of its participating organizations ("Participants") and to facilitate the clearance and settlement of 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 Depository's Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of which (and/or their representatives) own the Depository. Access to the Depository'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 Depository and its Participants are on file with the Commission. Ownership of beneficial interests in the Debt Securities will be limited to Participants or persons that may hold interests through Participants ("Beneficial Owners"). The Depository has advised the Corporation that upon the issuance of Global Securities representing the Debt Securities, the Depository will credit, on its book-entry registration and transfer system, the Participants' accounts with the respective principal amounts of the Debt Securities beneficially owned by such Participants. Ownership of beneficial interests in the Debt Securities represented by such Global Securities will be shown on, and the transfer of such ownership interests will be effected only through, records maintained by the Depository (with respect to interests of Participants) and on the records of Participants (with respect to interests of Beneficial Owners). The laws of some states may require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to own, transfer, or pledge beneficial interests in Debt Securities represented by Global Securities. So long as the Depository, or its nominee, is the registered owner of a Global Security, the Depository or its nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented 11 44 by such Global Security for all purposes under the Applicable Indenture. Except as provided below, Beneficial Owners will not be entitled to have the Debt Securities represented by Global Securities registered in their names, will not receive or be entitled to receive physical delivery of the Debt Securities in definitive form, and will not be considered the owners or holders thereof under the Applicable Indenture. Accordingly, each Participant must rely on the procedures of the Depository and, if such person is a Beneficial Owner, on the procedures of the Participant through which such Beneficial Owner owns its interest, to exercise any rights of a holder under the Applicable Indenture. The Corporation understands that under existing industry practices, in the event that the Corporation requests any action of holders, or a Beneficial Owner desires to give or take any action which a holder is entitled to give or take under the Applicable Indenture, the Depository 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 holding through them. Payment of principal of (premium, if any) and interest, if any, owing on Debt Securities registered in the name of the Depository or its nominee will be made to the Depository or its nominee, as the case may be, as the holder of such Debt Securities represented by the Global Securities. None of the Corporation, the Trustee, or any other agent of the Corporation or agent of the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests or for supervising or reviewing any records relating to such beneficial ownership interests. The Corporation expects that the Depository, upon receipt of any payment of principal, premium, if any, or interest in respect of Debt Securities represented by Global Securities, will credit the accounts of the Participants with payment in amounts proportionate to their respective beneficial interests in the Debt Securities represented by such Global Securities as shown on the records of the Depository. The Corporation also expects that payments by Participants to Beneficial Owners will be governed by standing customer 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 responsibility of such Participants subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal (premium, if any) and interest to the Depository is the responsibility of the Corporation, disbursement of such payments to Participants is the responsibility of the Depository, and disbursement of such payments to the Beneficial Owners is the responsibility of the Participants. If (a) the Depository notifies the Corporation that it is at any time unwilling or unable to continue as depository for the Global Securities or the Depository ceases to be a clearing agency registered under the Exchange Act, (b) the Corporation executes and delivers to the Trustee an order of the Corporation to the effect that the Global Securities shall be transferable and exchangeable, or (c) an Event of Default has occurred and is continuing with respect to the Debt Securities, or any event which after notice or lapse of time, or both, would constitute an Event of Default has occurred and is continuing, the Global Securities will be transferable or exchangeable for Debt Securities in definitive form of like tenor and of an equal aggregate principal amount, in denominations of $1,000 and integral multiples thereof. Such definitive Debt Securities shall be registered in such name or names as the Depository shall instruct the Trustee. It is expected that such instructions may be based upon directions received by the Depository from Participants with respect to ownership of beneficial interests in Debt Securities represented by such Global Securities. In the event of an issuance of Global Securities, procedures for initial settlement and secondary trades will be set forth in the Applicable Prospectus Supplement. SUBORDINATION OF SUBORDINATED DEBT SECURITIES Unless otherwise indicated in the Applicable Prospectus Supplement, the following provisions shall apply to the Subordinated Debt Securities and the Subordinated Indenture. In 1992 the Federal Reserve Board issued an interpretation of its capital adequacy regulations, and a clarification of such interpretation (collectively, the "Interpretation"), that imposed additional restrictions on subordinated debt securities in order for such securities to qualify as Tier II capital and which provided that subordinated debt of bank holding companies issued on or after September 4, 1992 cannot qualify as Tier II capital unless the subordination of the debt meets certain criteria, the subordinated debt is not subject to 12 45 covenants and other provisions inconsistent with safe and sound banking practices and the subordinated debt may be accelerated only upon the bankruptcy of the bank holding company or the receivership of a major banking subsidiary. Since the Federal Reserve Board issued the Interpretation, the Corporation has not issued any subordinated debt securities, but in part in response to the Interpretation, the Corporation and the Subordinated Trustee have entered into a new Subordinated Indenture to permit the Corporation to issue Subordinated Debt Securities that would qualify as Tier II capital, subject to the limits thereon. As of December 31, 1994, all of the Old KeyCorp Subordinated Indebtedness (as defined below) and the Society Subordinated Indebtedness (as defined below), which was incurred by old KeyCorp and Society, respectively, prior to the issuance of the Interpretation, continued to constitute, and be treated by the Corporation as, Tier II capital. The Subordinated Debt Securities will be direct unsecured subordinated obligations of the Corporation and the indebtedness evidenced by the Subordinated Debt Securities and the payment of the principal of, premium, if any, and interest, if any, on the Subordinated Debt Securities will be subordinated in right of payment to the extent described below to the prior payment in full of all Senior Indebtedness. (Section 1601) In addition, no payments shall be made by the Corporation on account of the Subordinated Debt Securities if there shall have occurred and be continuing a default in any payment with respect to any Senior Indebtedness, or an event of default with respect to any Senior Indebtedness permitting the holders thereof to accelerate the maturity thereof, or if any judicial proceeding shall be pending with respect to any such default or event of default. (Section 1603) In certain circumstances relating to an insolvency, bankruptcy, reorganization or similar proceedings of or relating to the Corporation, or any liquidation, dissolution or winding-up, or any assignment for the benefit of creditors or marshalling of assets and liabilities, of the Corporation (an "insolvency event"), the payment of the principal of, premium, if any, and interest, if any, on the Subordinated Debt Securities also will be subordinated in right of payment to the extent described below to the prior payment in full of all Other Senior Obligations (as defined below). (Section 1614) The Subordinated Indenture provides that "Senior Indebtedness" shall mean the principal of (and premium, if any) and interest on (a) all indebtedness of the Corporation for money borrowed, whether outstanding on the date of execution of the Subordinated Indenture or thereafter created, assumed, incurred or guaranteed, except (i) indebtedness on account of all Subordinated Debt Securities issued under the Subordinated Indenture, indebtedness on account of all Existing Subordinated Indebtedness (as defined below) and all indebtedness which specifically by its terms ranks equally with and not prior to the Subordinated Debt Securities or the Existing Subordinated Indebtedness in right of payment upon an insolvency event and (ii) indebtedness which specifically by its terms ranks junior to and not equally with or prior to indebtedness referred to in clause (i) above in right of payment upon an insolvency event and (b) any renewals, extensions, modifications and refundings of any such Senior Indebtedness. The term "indebtedness of the Corporation for money borrowed" shall mean the principal of (and premium, if any) and interest, if any, on all (a) indebtedness of the Corporation (including indebtedness of others guaranteed by the Corporation), whether outstanding on the date of the Subordinated Indenture or thereafter created, incurred, assumed or guaranteed, which is for money borrowed and (b) any renewals, extensions, modifications and refundings of any such indebtedness. (Section 101) As of December 31, 1994, the Corporation had outstanding approximately $902.2 million aggregate principal amount of Senior Indebtedness. The Subordinated Indenture provides that "Other Senior Obligations" shall mean any obligation of the Corporation to its creditors, whether outstanding on the date of execution of the Subordinated Indenture or thereafter created, assumed, incurred or guaranteed, except (i) Senior Indebtedness, (ii) indebtedness on account of all Subordinated Debt Securities issued under the Subordinated Indenture, indebtedness on account of all Existing Subordinated Indebtedness and all indebtedness which specifically by its terms ranks equally with and not prior to the Subordinated Debt Securities or the Existing Subordinated Indebtedness in right of payment upon the happening of an insolvency event and (iii) indebtedness which specifically by its terms ranks junior to and not equally with or prior to indebtedness referred to in clause (ii) above in right of payment upon any insolvency event. (Section 101) As of December 31, 1994, the Corporation had $538.4 million of Other Senior Obligations outstanding. The Subordinated Indenture does not limit or prohibit the incurrence of additional Senior Indebtedness or Other Senior Obligations, and additional Senior Indebtedness may include indebtedness of the Corporation 13 46 for money borrowed that is senior to the Subordinated Debt Securities, but subordinate to other obligations of the Corporation. The Senior Debt Securities, if issued, will constitute Senior Indebtedness. The Subordinated Indenture provides that "Existing Subordinated Indebtedness" shall include all indebtedness for borrowed money of the Corporation under its 8.40% Subordinated Capital Notes due April 1, 1999 (originally issued by old KeyCorp and assumed by the Corporation), 8.125% Subordinated Notes due June 15, 2002 (originally issued by Society), 8.00% Subordinated Notes due July 1, 2004 (also originally issued by old KeyCorp and assumed by the Corporation), Medium-Term Notes Series IV due 1998, 2000, 2002, and 2003 (originally issued by old KeyCorp and assumed by the Corporation), and any renewals, extensions, modifications and refundings of any such indebtedness. All of the Existing Subordinated Indebtedness originally issued by old KeyCorp and assumed by the Corporation as a result of the merger on March 1, 1994 is referred to herein as "Old KeyCorp Subordinated Indebtedness" and all of the Existing Subordinated Indebtedness originally issued by Society is referred to herein as "Society Subordinated Indebtedness." As of December 31, 1994, the Corporation had outstanding $565.0 million aggregate principal amount of Existing Subordinated Indebtedness, which included $365.0 million aggregate principal amount of Old KeyCorp Subordinated Indebtedness and $200.0 million aggregate principal amount of Society Subordinated Indebtedness. The Society Subordinated Indebtedness is subordinated and subject in right of payment, by its terms, to the prior payment in full of all "senior indebtedness" (as defined in the indenture relating to the Society Subordinated Indebtedness, generally, as indebtedness of the Corporation whenever created, guaranteed, incurred, or assumed, for borrowed money, but excluding the Society Subordinated Indebtedness and any other indebtedness as to which it is provided in the instrument evidencing or creating such indebtedness that such indebtedness is not superior in right of payment to the Society Subordinated Indebtedness). The Old KeyCorp Subordinated Indebtedness is subordinate and junior in right of payment, by its terms, to all "senior indebtedness" (as defined in the indentures relating to the Old KeyCorp Subordinated Indebtedness, generally, as any obligations of the Corporation to its creditors, whenever incurred, other than Old KeyCorp Subordinated Indebtedness and any obligation as to which, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligation is not "senior indebtedness". Because the Old KeyCorp Subordinated Indebtedness and the Society Subordinated Indebtedness were issued by old KeyCorp and Society, respectively, prior to the merger of old KeyCorp and Society, the relationship between the Old KeyCorp Subordinated Indebtedness and the Society Subordinated Indebtedness is not expressly provided for in the respective indentures relating to such indebtedness. The Subordinated Indenture excludes Existing Subordinated Indebtedness from the definition of Senior Indebtedness and, accordingly, the Subordinated Debt Securities will not be subordinated in right of payment to Existing Subordinated Indebtedness. The Subordinated Indenture also provides that the Subordinated Debt Securities are not superior in right of payment to any of the Existing Subordinated Indebtedness and do not constitute "senior indebtedness" as defined in the indentures governing the Society Subordinated Indebtedness and the Old KeyCorp Subordinated Indebtedness and, accordingly, the Subordinated Debt Securities will not have the benefit of the subordination provisions contained in such indentures. Upon any payment or distribution of assets to creditors upon an insolvency event relating to the Corporation, the holders of all Senior Indebtedness will first be entitled to receive payment in full of all amounts due on or in respect of all Senior Indebtedness before the holders of the Subordinated Debt Securities will be entitled to receive any payment on account of the principal of, premium, if any, or interest, if any, on the Subordinated Debt Securities (Section 1602) or before the holders of Existing Subordinated Indebtedness will be entitled to receive any payment on account of the principal of and interest on such Existing Subordinated Indebtedness. In addition, upon any payment or distribution of assets to creditors upon an insolvency event, the holders of all Other Senior Obligations will first be entitled to receive payment in full of all amounts due on or in respect of such Other Senior Obligations before the holders of the Old KeyCorp Subordinated Indebtedness will be entitled to receive any payment on account of the principal of and interest on the Old KeyCorp Subordinated Indebtedness. If upon any such payment or distribution of assets to creditors, after giving effect to such subordination provisions applicable to the Subordinated Debt Securities and the Existing Subordinated Indebtedness in favor of the holders of Senior Indebtedness and also, in the case of the Old KeyCorp Subordinated Indebtedness, in favor of the holders of Other Senior Obligations, 14 47 there remain any amounts of cash, property, or securities available for payment or distribution in respect of Subordinated Debt Securities ("Excess Proceeds") and if, at such time, any Entitled Persons (as defined below) in respect of Other Senior Obligations have not received payment in full of all amounts due on or in respect of such Other Senior Obligations, then such Excess Proceeds shall first be applied to pay or provide for the payment in full of such Other Senior Obligations before any payment or distribution may be made in respect of the Subordinated Debt Securities. (Section 1614) "Entitled Persons" means persons who are entitled to payment pursuant to the terms of Other Senior Obligations. (Section 101) By reason of the subordination of the Subordinated Debt Securities in favor of the holders of Senior Indebtedness and Other Senior Obligations, in the event of a distribution of assets upon an insolvency event involving the Corporation, the holders of the Subordinated Debt Securities may recover less than the holders of Senior Indebtedness and the holders of Other Senior Obligations, and as a result of the differences among the subordination provisions applicable to the Society Subordinated Indebtedness, the Old KeyCorp Subordinated Indebtedness and the Subordinated Debt Securities, including differences in the definitions of senior indebtedness in the various indentures, in an insolvency event involving the Corporation, any distribution of assets among the holders of Society Subordinated Indebtedness, Old KeyCorp Subordinated Indebtedness and the Subordinated Debt Securities may not be ratable. OWNERSHIP OF VOTING STOCK OF SIGNIFICANT BANKS The Senior Indenture provides that the Corporation will not sell or otherwise dispose of, or grant a security interest in, or permit a Significant Bank (as defined below) to issue, any shares of voting stock of such Significant Bank (as defined below), unless the Corporation will own free of any security interest at least 80% of the issued and outstanding voting stock of such Significant Bank; provided, however, that the foregoing will not apply to (i) any sale or disposition where the proceeds are invested, within 90 days thereof, in any subsidiary (including any corporation which upon such investment becomes a subsidiary) engaged in a banking business or any business legally permissible for bank holding companies; provided, however, that if the proceeds are so invested in any subsidiary engaged in a business legally permissible for bank holding companies other than a banking business, the Corporation shall be prohibited from selling or otherwise disposing of, or granting a security interest in, or permitting such subsidiary to issue, any shares of voting stock of such subsidiary to the same extent as if such subsidiary were a Significant Bank if, upon making such investment, the assets of or held for the account of such subsidiary constitutes 10% or more of the consolidated assets of the Corporation, or (ii) any disposition in exchange for stock of any bank. (Section 1009) The term "Significant Bank" is defined in the Senior Indenture as any directly or indirectly owned banking subsidiary of the Corporation the assets of which constitute 10% or more of the consolidated assets of the Corporation (currently Society National Bank, Key Bank of New York and Key Bank of Washington.) (Section 101) The Subordinated Indenture does not contain a similar restriction on the Corporation's ability to sell or otherwise dispose of or grant a security interest in, or permit a Significant Bank to issue any shares of voting stock of any Significant Bank because inclusion of such a provision, under the Interpretation, would result in the Subordinated Debt Securities issued thereunder not qualifying as Tier II capital. The holders of Society Subordinated Indebtedness have the benefit of a covenant in the subordinated indenture relating thereto substantially similar to the covenant described above and the holders of Old KeyCorp Subordinated Indebtedness have the benefit of a covenant in the subordinated indentures relating thereto that restricts the sale, issuance or disposition of shares of stock of, or mergers or asset sales involving, certain banking subsidiaries. In order to conform to the Interpretation, the Subordinated Indenture does not contain either such covenant. EVENTS OF DEFAULT The Senior Indenture. The Senior Indenture defines an "Event of Default" (with respect to any series of Senior Debt Securities) as any one of the following events: (a) default in the payment of any interest upon any Senior Debt Security when such interest becomes due and payable, and continuance of such default for a period of 30 days; (b) default in the payment of the principal of (or premium, if any, on) any Senior Debt Security when due and payable at its maturity; (c) default in the deposit any sinking fund payment when and as due; (d) failure to perform, or default in the performance or breach of, any other covenant, warranty, or 15 48 agreement of the Corporation in the Senior Indenture (other than a default in the performance or breach of a covenant or warranty or agreement included in the Senior Indenture solely for the benefit of a series of Senior Debt Securities thereunder other than that series) and continuance of such default or breach for a period of 60 days after the holders of at least 25% in principal amount of the outstanding Senior Debt Securities of such series have given written notice as provided in the Senior Indenture; (e) acceleration of any indebtedness for borrowed money in an aggregate principal amount exceeding $20 million of the Corporation or a Significant Bank if such acceleration is not annulled within 10 days after written notice is given by the holders of at least 25% in principal amount of the outstanding Senior Debt Securities of such series requiring the Corporation to cause such acceleration to be annulled as provided in the Senior Indenture; (f) certain events involving the bankruptcy, insolvency, or reorganization of the Corporation or the receivership or conservatorship of any Significant Bank, and (g) any other Event of Default with respect to Senior Debt Securities of that series. (Section 501) Under certain circumstances not involving a default in the payment of principal of (premium, if any), or interest, if any, owing on the Senior Debt Securities of any series, or in the payment of any sinking fund installment, the Senior Trustee shall be protected in withholding notice to the holders of the Senior Debt Securities of such series of a default if the Senior Trustee in good faith determines that the withholding of such notice is in the interests of such holders and the Senior Trustee shall withhold such notice for certain defaults for a period of 60 calendar days. (Section 601) If an Event of Default described in clauses (a), (b), (c), (d), (e), or (g) above with respect to Senior Debt Securities of any series at the time outstanding occurs and is continuing, either the Senior Trustee or the holders of at least 25% in principal amount of the outstanding Senior Debt Securities of that series may declare the principal amount (or, if the Senior Debt Securities of that series are Original Issue Discount Debt Securities or Indexed Securities, such portion of the principal amount as may be specified in the terms thereof) of all the Senior Debt Securities of that series to be due and payable immediately. If an Event of Default described in clause (f) above occurs and is continuing, either the Senior Trustee or the holders of at least 25% in principal amount of all outstanding Senior Debt Securities then outstanding may declare the principal amount (or, if the Senior Debt Securities of any series are Original Issue Discount Debt Securities or Indexed Securities, such portion of the principal amount as may be specified in the terms thereof) of all the Senior Debt Securities to be due and payable immediately. At any time after a declaration of acceleration with respect to Senior Debt Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained, the holders of a majority in principal amount of outstanding Senior Debt Securities of that series may, under certain circumstances, rescind and annul such acceleration. (Section 502) The Subordinated Indenture. The Subordinated Indenture defines an "Event of Default" (with respect to any series of Subordinated Debt Securities) as certain (a) events involving the bankruptcy, insolvency, or reorganization of the Corporation or the receivership of a Major Bank (as defined below) and (b) any other Event of Default provided with respect to Subordinated Debt Securities of that series. (Section 501) The term "Major Bank" is defined in the Subordinated Indenture as any directly or indirectly owned banking subsidiary of the Corporation, the consolidated assets of which constitute 75% or more of the consolidated assets of the Corporation. As of the date of this Prospectus, no banking subsidiary of the Corporation constitutes a Major Bank. If an Event of Default described in clause (a) above occurs and is continuing, either the Subordinated Trustee or the holders of not less than 25% in principal amount of the outstanding Subordinated Debt Securities may declare the principal amount (or, if the Subordinated Debt Securities of any series are Original Issue Discount Debt Securities or Indexed Securities, such portion of the principal amount as may be specified in the terms of that series) of all Subordinated Debt Securities to be due and payable immediately. If an Event of Default described in clause (b) above with respect to Subordinated Debt Securities of any series at the time outstanding occurs and is continuing, either the Subordinated Trustee or the holders of not less than 25% in principal amount of the outstanding Subordinated Debt Securities of that series may declare the principal amount (or, if the Subordinated Debt Securities of that series are Original Issue Discount Debt Securities or Indexed Securities, such portion of the principal amount as may be specified in the terms of that series) of all Subordinated Debt Securities of that series to be due and payable immediately. At any time after a declaration of acceleration with respect to Subordinated Debt Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained, the holders of a majority in principal amount of the outstanding Subordinated Debt Securities of that series may, under certain circumstances, rescind and annul such acceleration. (Section 502) 16 49 Unless otherwise provided in the terms of a series of Subordinated Debt Securities, there will be no right of acceleration of the payment of principal of a series of Subordinated Debt Securities upon a default in the payment of principal of (premium, if any), or interest, if any, owing on, or in the performance of any covenant or agreement in, the Subordinated Debt Securities of the particular series, or in the Subordinated Indenture. In case a Default (as defined below) shall occur and be continuing, the Subordinated Trustee may in its discretion proceed to protect and enforce its rights and the rights of the holders of Subordinated Debt Securities by appropriate judicial proceeding as the Subordinated Trustee deems most effective. The Subordinated Indenture defines a "Default" (with respect to any series of Subordinated Debt Securities) as any one of the following events: (a) an Event of Default; (b) default in the payment of any installment of interest, if any, on any Subordinated Debt Security when such interest becomes due and payable, and the continuance of such default for a period of 30 calendar days (whether or not such payment is prohibited by the subordination provisions); (c) default in payment of principal of (or premium, if any, on) any Subordinated Debt Security at its maturity (whether or not such payment is prohibited by the subordination provisions); (d) failure to deposit any sinking fund payment when due; (e) failure to perform any other covenants or warranties of the Corporation in the Subordinated Indenture (other than a covenant or warranty included in the Subordinated Indenture solely for the benefit of a series of Subordinated Debt Securities other than that series) continued for a period of 60 calendar days after holders of at least 25% in principal amount of outstanding Subordinated Debt Securities have given written notice as provided in the Subordinated Indenture; and (f) any other Default specified in the Subordinated Indenture with respect to Subordinated Debt Securities of that series. (Section 503) Under certain circumstances not involving a default in the payment of principal of (premium, if any), or interest, if any, owing on the Subordinated Debt Securities of any series, or in the payment of any sinking fund installment, the Subordinated Trustee shall be protected in withholding notice to the holders of the Subordinated Debt Securities of such series of a default if the Subordinated Trustee in good faith determines that the withholding of such notice is in the interests of such holders and the Subordinated Trustee shall withhold such notice for certain defaults for a period of 60 calendar days. (Section 601) In comparison to the Events of Default provided for in the Subordinated Indenture and the subordinated indenture relating to the Old Key Subordinated Indebtedness, the holders of Society Subordinated Indebtedness have the benefit of broader events of default and related acceleration rights in the subordinated indenture relating thereto, including, without limitation, any one of the following "events of default" as defined in the subordinated indenture: (a) default in the payment of any interest upon the Society Subordinated Indebtedness when such interest becomes due and payable; (b) default in the payment of principal of (or premium, if any, on) any Society Subordinated Indebtedness when due and payable at its maturity; (c) default in the performance, or breach, of any covenant or warranty of the Corporation; and (d) acceleration of any indebtedness for borrowed money of the Corporation or a principal bank (as defined in such subordinated indenture). In order to conform to the Interpretation, the Subordinated Indenture does not contain any of such events of default or acceleration rights. Senior and Subordinated Indentures. Subject to the duty of the Trustee during default to act with the required standard of care, under both the Senior Indenture and the Subordinated Indenture, the applicable Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Applicable Indenture at the request or direction of any of the holders of Debt Securities of any series, unless such holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee. (Section 602) Subject to such provisions for the indemnification of the Trustee and to certain other conditions, the holders of a majority in aggregate principal amount of outstanding Senior Debt Securities or outstanding Subordinated Debt Securities of any series will have the right, subject to certain limitations, to direct the time, method, and place of conducting any proceeding for any remedy available to the Senior Trustee or Subordinated Trustee, respectively, or exercising any trust or power conferred on the Senior Trustee or Subordinated Trustee, respectively. (Section 512) No holder of any series of Debt Securities will have any right to institute any proceeding with respect to the Applicable Indenture, or for the appointment of a receiver or trustee, or for any remedy thereunder, unless such holder shall have previously given to the Trustee under the Applicable Indenture written notice of a continuing Event of Default (in the case of Senior Debt Securities) or a continuing Event of Default or 17 50 Default (in the case of Subordinated Debt Securities) and unless the holders of not less than 25% in principal amount of the outstanding Debt Securities of that series shall have made written request, and offered security or indemnity reasonably satisfactory to the Trustee, to such Trustee to institute such proceeding as trustee, and such Trustee shall not have received from the holders of a majority in aggregate principal amount of the outstanding Debt Securities of that series a direction inconsistent with such request and shall have failed to institute such proceeding within 60 calendar days. (Section 507) However, such limitations do not apply to a suit instituted by a holder of a Debt Security for enforcement of payment of the principal of (premium, if any) or subject to certain conditions, or interest, if any, on or after the respective due dates expressed in such Debt Security. (Section 508) The Corporation is required to furnish to the Trustee annually a statement as to the performance by the Corporation of certain of its obligations under the Indentures and as to any default in such performance. (Section 1005) MODIFICATION AND WAIVER Modifications and amendments of each of the Senior Indenture and the Subordinated Indenture may be made by the Corporation and the Trustee under the Applicable Indenture with the consent of the holders of not less than 66 2/3% in principal amount of the outstanding Debt Securities of each series issued under such Indenture and affected by the modification or amendment; provided, however, that no such modification or amendment may, without the consent of the holders of each outstanding Debt Security of the series affected thereby, (1) change the stated maturity of any principal of (or premium, if any), or any installment of principal of or interest, if any, on, any Debt Security of such series; (2) reduce the principal amount of, the rate of interest on, or any premium payable upon the redemption of any, Debt Security of such series; (3) change any obligation of the Corporation to pay Additional Amounts in respect of any Debt Security of such series; (4) reduce the portion of principal of an Original Issue Discount Security or Indexed Security that would be due and payable upon a declaration of acceleration of the maturity thereof or provable in bankruptcy; (5) adversely affect any right of repayment at the option of the holder of any Debt Security of such series; (6) change the place or currency or currencies of payment of principal of or any premium or interest on any Debt Security of such series; (7) impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption or repayment, on or after any Redemption Date or Repayment Date, as the case may be); (8) adversely affect the right to convert any Debt Security of such series as may be provided pursuant to the Applicable Indenture; (9) in the case of the Subordinated Indenture, modify the subordination provisions in a manner adverse to the holders of the Subordinated Debt Securities of such series; (10) reduce the percentage in principal amount of the outstanding Debt Securities, the consent of whose holders is required for modification or amendment of the Indenture or for waiver of compliance with certain provisions of the Indentures or for waiver of certain defaults; (11) reduce the requirements for voting or quorum relating to Bearer Securities; or (12) modify any of the provisions relating to supplemental indentures requiring the consent of holders, relating to the waiver of past defaults or relating to the waiver of certain covenants, except to increase the percentage of such Outstanding Securities required for such actions or to provide that certain other provisions of such Indenture cannot be modified or waived without the consent of the holder of each Outstanding Security affected thereby. (Section 902) In addition, under the Subordinated Indenture, no modification or amendment thereof may adversely affect the rights of any holder of Senior Indebtedness or Other Senior Obligations under Article Sixteen of such Indenture (described under the caption "Subordination of Subordinated Debt Securities") without the consent of such holder of Senior Indebtedness or Other Senior Obligations. (Subordinated Indenture Section 907) The holders of at least 66 2/3% in principal amount of the outstanding Senior Debt Securities of any series or outstanding Subordinated Debt Securities of any series may, on behalf of all holders of the outstanding Senior Debt Securities of that series or outstanding Subordinated Debt Securities of that series, respectively, waive compliance by the Corporation with certain restrictive provisions of the Applicable Indenture. (Senior Indenture Section 1010; Subordinated Indenture Section 1009) The holders of not less than 66 2/3% in aggregate principal amount of the outstanding Senior Debt Securities of any series or the outstanding Subordinated Debt Securities of any series may, on behalf of all holders of the outstanding Senior Debt 18 51 Securities of that series or the outstanding Subordinated Debt Securities of that series, respectively, waive any past default under the Applicable Indenture, except a default in the payment of principal (or premium, if any), or interest, if any, or in the performance of certain covenants. (Section 513) SATISFACTION AND DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE The Corporation may discharge certain obligations to holders of Debt Securities of a series that have not already been delivered to the applicable Trustee for cancellation and that either have become due and payable or are by their terms due and payable within one year (or scheduled for redemption within one year) by irrevocably depositing with the applicable Trustee, in trust, funds in an amount sufficient to pay the entire indebtedness on such Debt Securities for principal (and premium, if any) and interest, with respect thereto, to the date of such deposit (if such Debt Securities have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be. (Section 401) Each Indenture provides that, if the provisions of Article Thirteen are made applicable to the Debt Securities of or within a series pursuant to Section 301 thereunder, the Corporation may elect either (i) to defease and be discharged from any and all obligations with respect to such Debt Securities (except for the obligations to pay Additional Amounts, if any; to register the transfer or exchange of such Debt Securities; to replace temporary or mutilated, destroyed, lost or stolen Debt Securities; to maintain one or more offices or agencies in respect of such Debt Securities; and to hold moneys for payment in trust) ("defeasance") or (ii) to be released (a) in the case of any such Debt Securities that are Senior Debt Securities, from its obligations under Section 1009 of such Indenture or (b) in the case of any such Debt Securities (whether they are Senior Debt Securities or Subordinated Debt Securities), if so provided in the Applicable Prospectus Supplement, from its obligations with respect to any other covenant and, in the case of either (a) or (b) above, any omission to comply with such obligations will not constitute a Default or an Event of Default with respect to such Debt Securities ("covenant defeasance"), in either case upon the irrevocable deposit by the Corporation with the applicable Trustee (or other qualifying trustee), in trust, of (1) an amount, in the currency or currencies in which such Debt Securities are then specified as payable at Stated Maturity, (2) Government Obligations (as defined in the Indenture) applicable to such Debt Securities (with such applicability being determined on the basis of the currency in which such Debt Securities are then specified as payable at Stated Maturity) that, through the payment of principal and interest in accordance with their terms, will provide money in an amount, or (3) a combination thereof in an amount, sufficient to pay the principal of (and premium, if any, on) and interest, if any, on such Debt Securities, and any mandatory sinking fund or analogous payments thereon, on the scheduled due dates therefor. Such a trust may only be established if, among other things, the Corporation has delivered to the applicable Trustee an opinion of counsel to the effect that the holders of such Debt Securities to be defeased will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to U.S. 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, and such opinion of counsel, in the case of defeasance under clause (i) above, must refer to and be based upon a ruling of the Internal Revenue Service or a change in applicable U.S. federal income tax law occurring after the date of the Applicable Indenture. (Article Thirteen) Unless otherwise provided in the Applicable Prospectus Supplement, if, after the Corporation has deposited funds, Government Obligations, or both to effect defeasance or covenant defeasance with respect to Debt Securities of a series, (a) the holder of a Debt Security of such series is entitled to, and does, elect pursuant to the terms of such Debt Security to receive payment in a currency or currency unit other than that in which such deposit has been made in respect of such Debt Security or (b) a Currency Conversion Event (as defined in the applicable Indenture) occurs, then the indebtedness represented by such Debt Security will be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of (and premium, if any) and interest, if any, on such Debt Security as they become due out of the proceeds yielded by converting the amount so deposited in respect of such Debt Security into the currency in which such Debt Security becomes payable as a result of such election or such Currency Conversion Event based on the applicable Market Exchange Rate. (Section 1305) Unless otherwise provided in the Applicable Prospectus Supplement, all payments of principal of (and premium, if any) and interest, if any, on any Debt 19 52 Security that is payable in a foreign currency with respect to which a Currency Conversion Event occurs shall be made in U.S. dollars. (Section 312) In the event the Corporation effects covenant defeasance with respect to any Debt Securities and such Debt Securities are declared due and payable because of the occurrence of any Event of Default other than the Event of Default described in clause (d) under "Events of Default" with respect to the obligations described under "Ownership of Voting Stock of Significant Banks" above (which obligations would no longer be applicable to such Debt Securities) or described in clause (d) or (g) under "Events of Default" with respect to any other covenant with respect to which there has been defeasance, the amount in such currency in which such Debt Securities are payable, and Government Obligations on deposit with the applicable Trustee will be sufficient to pay amounts due on such Debt Securities at the time of their Stated Maturity but may not be sufficient to pay amounts due on such Debt Securities at the time of the acceleration resulting from such Event of Default. However, the Corporation would remain liable to make payment of such amounts due at the time of acceleration. If the applicable Trustee or any Paying Agent is unable to apply any money in accordance with the applicable Indenture by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Corporation's obligations under such Indenture and such Debt Securities shall be revived and reinstated as though no deposit had occurred pursuant to such Indenture, until such time as such Trustee or Paying Agent is permitted to apply all such money in accordance with such Indenture; provided, however, that, if the Corporation makes any payment of principal of (or premium, if any) or interest on any such Debt Security or coupon following the reinstatement of its obligations, the Corporation shall be subrogated to the rights of the holders of such Debt Securities to receive such payment from the money held by such Trustee or Paying Agent. The Applicable Prospectus Supplement may further describe the provisions, if any, permitting defeasance or covenant defeasance, including any modifications to the provisions described above, with respect to the Debt Securities of or within a particular series and any related coupons. CONSOLIDATION, MERGER, AND SALE OF ASSETS The Corporation, without the consent of the holders of any of the Debt Securities under the Indentures, may consolidate with or merge into any other person, may convey, transfer, or lease its assets substantially as an entirety to any person, or may permit any person to merge into or consolidate with the Corporation or convey, transfer or lease its property and assets substantially as an entirety to the Corporation, provided that: (1) any successor or purchaser is a corporation organized under the laws of any domestic jurisdiction; (2) any such successor or purchaser assumes the Corporation's obligations on such Debt Securities and under the Indentures; (3) after giving effect to the transaction, with respect to any Senior Debt Securities, no Event of Default and no event which, after notice of or lapse of time or both would become an Event of Default or, with respect to any Subordinated Debt Securities, no Default and no event that, after notice or lapse of time, would become an Event of Default or a Default, shall have occurred and be continuing; (4) with respect to the Senior Indenture, if, as a result of any such consolidation or merger or such conveyance, transfer or lease, shares of voting stock of any Significant Bank would become subject to a security interest not permitted under the Senior Indenture, the Corporation or successor, as the case may be, shall take such steps as shall be necessary effectively to secure the Senior Debt Securities equally and ratably with (or prior to) all indebtedness secured thereby; and (5) certain other conditions are met. (Section 801) CONVERSION The holders of Subordinated Debt Securities of a specified series that are convertible into Capital Securities ("Subordinated Convertible Debt Securities") may be entitled or, if so provided in the Applicable Prospectus Supplement, may be required at such time or times specified in the Applicable Prospectus Supplement relating to such Subordinated Convertible Debt Securities, subject to prior redemption, repayment, or repurchase, to convert any Subordinated Convertible Debt Securities of such series into Capital Securities, at the conversion price set forth in such Applicable Prospectus Supplement, subject to adjustment and to such other terms as are set forth in such Applicable Prospectus Supplement. No separate consideration 20 53 will be received for any Capital Securities issued upon conversion of Subordinated Convertible Debt Securities. RISK FACTORS OF DEBT SECURITIES DENOMINATED IN FOREIGN CURRENCIES Debt Securities denominated or payable in foreign currencies may entail significant risks. These risks include, without limitation, the possibility of significant fluctuations in the foreign currency market, the imposition of foreign exchange controls, and potential illiquidity in the secondary market. These risks will vary depending upon the currency involved. These risks may be more fully described in the Applicable Prospectus Supplement. CONCERNING THE TRUSTEE Bankers Trust Company is Trustee under both the Senior Indenture and the Subordinated Indenture. The Corporation and certain of its subsidiaries maintain deposit accounts and conduct other banking transactions with Bankers Trust Company in the ordinary course of business. Bankers Trust Company also serves as trustee under a senior indenture of old KeyCorp. 21 54 DESCRIPTION OF PREFERRED STOCK The following description of the terms of the shares of Preferred Stock, which sets forth certain general terms and provisions of the Preferred Stock to which any Prospectus Supplement may relate, does not purport to summarize any particular series of Preferred Stock. Certain terms of any offered series of Preferred Stock will be described in the Applicable Prospectus Supplement relating to such series of Preferred Stock. If so indicated in the Applicable Prospectus Supplement, the terms of any series may differ from the terms set forth below. The description of certain provisions of the Preferred Stock set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to the Amended and Restated Articles of Incorporation (the "Articles") and the Certificate of Amendment of the Amended and Restated Articles of Incorporation of the Corporation that relates to a particular series of Preferred Stock (the "Certificate") which will be filed with the Secretary of State of the State of Ohio at or prior to the time of the sale of the related series of Preferred Stock and which will be filed as an exhibit to or incorporated by reference in the Registration Statement. GENERAL The Corporation is authorized by its Articles to issue from time to time up to 25,000,000 shares of Preferred Stock, with a par value of $1 each. All shares of Preferred Stock must be of equal rank and the express terms thereof must be identical, except in respect of the terms that may be fixed by the Board of Directors as described below, and each share of each series shall be identical with all other shares of such series, except that in the case of a series as to which dividends are cumulative, the dates from which dividends are cumulative may vary to reflect differences in the dates of issue. The Preferred Stock will, when issued against payment therefor, be fully paid and nonassessable. The Corporation currently has issued and outstanding 1,280,000 shares of 10% Cumulative Preferred Stock. See "Preferred Stock Outstanding" below for a discussion of the 10% Cumulative Preferred Stock. The Board of Directors is authorized by the Articles to cause shares of Preferred Stock to be issued in one or more series and with respect to each such series to fix: (1) the designation of the series, which may be by distinguishing number, letter, or title; (2) the authorized number of shares of such series, which number the Board of Directors may, except to the extent otherwise provided in the creation of the series, from time to time, increase or decrease, but not below the number of shares thereof then outstanding; (3) the dividend rate or rates (which may be fixed or adjustable) of the shares of the series; (4) the dates on which dividends, if declared, shall be payable and, in the case of series on which dividends are cumulative, the dates from which dividends shall be cumulative; (5) the redemption rights and price or prices, if any, for shares of the series, (6) the amount, terms, conditions, and manner of operation of any retirement or sinking fund to be provided for the purchase or redemption of shares of the series; (7) the amounts payable on shares of the series in the event of any liquidation, dissolution, or winding up of the affairs of the Corporation; (8) whether the shares of the series shall be convertible into Common Shares or shares of any other series or class, and, if so, the specification of such other class or series, the conversion price or prices or rate or rates, any adjustment thereof, and all other terms and conditions upon which such conversion may be made; and (9) the restrictions, if any, upon the issue of any additional shares of the same series or of any other class or series. The Board of Directors is authorized to amend from time to time the Articles fixing, with respect to any unissued shares of Preferred Stock, the matters described in clauses (1) through (9). Each series of Preferred Stock will be offered on such of the above terms and at such offering price as specified in the Applicable Prospectus Supplement. As described under "Depositary Shares" below, the Corporation may, at its option, elect to offer Depositary Shares (evidenced by depositary receipts) which will represent a fraction to be specified in the Applicable Prospectus Supplement relating to the particular series of Preferred Stock of a share of the particular series of Preferred Stock issued and deposited with the Depositary (as defined below), in lieu of offering full shares of such series of the Preferred Stock. 22 55 CERTAIN DEFINITIONS For the purposes of this Description of Preferred Stock: Whenever reference is made to shares "ranking prior to the Preferred Stock," such reference shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof either as to the payment of dividends or as to distribution in the event of a liquidation, dissolution, or winding up of the Corporation are given preference over the rights of the holders of Preferred Stock. Whenever reference is made to shares "on a parity with the Preferred Stock," such reference shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof as to the payment of dividends or as to distributions in the event of a liquidation, dissolution, or winding up of the Corporation rank on an equality or parity with the rights of the holders of Preferred Stock. Whenever reference is made to shares "ranking junior to the Preferred Stock," such reference shall mean and include all shares of the Corporation in respect of which the rights of the holders thereof as to the payment of dividends and as to distributions in the event of a liquidation, dissolution, or winding up of the Corporation are junior or subordinate to the rights of the holders of Preferred Stock. DIVIDENDS The holders of Preferred Stock of each series, in preference to the holders of Common Shares and of any other class of shares of the Corporation ranking junior to the Preferred Stock shall be entitled to receive, out of any funds legally available for the payment of dividends and when and as declared by the Board of Directors, cash dividends at the rates set forth in the Applicable Prospectus Supplement, and no more, payable on the dividend payment dates fixed for such series set forth therein (each, a "Dividend Payment Date"). If any date specified as a Dividend Payment Date is not a business day, dividends, if declared, on the Preferred Stock will be paid on the immediately succeeding business day, without interest. Such rates may be fixed or variable. If variable, the formula used for determining the dividend rate for each dividend period will be set forth in the Applicable Prospectus Supplement. Dividends on the Preferred Stock may be cumulative or non-cumulative as provided in the Applicable Prospectus Supplement. No full dividends may be paid upon, declared, or set apart for the payment of dividends on shares ranking on a parity with or junior to the Preferred Stock unless dividends shall have been paid or set apart for payment on the Preferred Stock. REDEMPTION A series of Preferred Stock may be redeemable at any time, in whole or in part, at the option of the Corporation or the holder thereof upon terms and at the redemption prices set forth in the Applicable Prospectus Supplement relating to such series. RIGHTS UPON LIQUIDATION The holders of shares of Preferred Stock of any series shall, in case of liquidation, dissolution, or winding up of the Corporation, be entitled to receive in full out of the assets of the Corporation, including its capital, before any amount shall be paid or distributed among the holders of Common Shares or any other shares ranking junior to the Preferred Stock, the amounts set forth in the Applicable Prospectus Supplement with respect to shares of such series, plus all accrued and unpaid dividends for such series, in accordance with the terms set forth in the Applicable Prospectus Supplement. CONVERSION The holders of specified series of Preferred Stock may be entitled or, if so provided in the Applicable Prospectus Supplement, may be required, to convert such shares into Common Shares or any other class or series of Capital Securities or, in the case of Preferred Stock that is convertible at the option of the Corporation, other debt securities of the Corporation, at such conversion price or prices and on such other terms as may be set forth in the Applicable Prospectus Supplement relating to such series of Preferred Stock. 23 56 VOTING RIGHTS The holders of Preferred Stock shall not be entitled to vote upon matters presented to the shareholders, except as provided herein or as required by law. If the Corporation shall fail to pay full cumulative dividends on any series of Preferred Stock or the 10% Cumulative Preferred Stock (if then outstanding) for six quarterly dividend payment periods, whether or not consecutive, the number of directors will be increased by two, and the holders of all outstanding series of Preferred Stock and the 10% Cumulative Preferred Stock, voting as a single class without regard to series, will be entitled to elect such additional two directors until full cumulative dividends for all past dividend payment periods on all series of Preferred Stock and the 10% Cumulative Preferred Stock have been paid or declared and set apart for payment or until non-cumulative dividends have been paid regularly for at least one full year. Such right to vote separately as a class to elect directors shall, when vested, be subject, always, to the same provisions for the vesting of such right to elect directors separately as a class in the case of future dividend defaults. At any time when such right to elect directors separately as a class shall have so vested, the Corporation may, and upon the written request of the holders of record of not less than twenty percent of the total number of shares of the Preferred Stock and 10% Cumulative Preferred Stock of the Corporation then outstanding shall, call a special meeting of shareholders for the election of such directors. In the case of such a written request, such special meeting shall be held within ninety days after the delivery of such request and, in either case, at the place and upon the notice provided by law and in the Regulations of the Corporation, provided that the Corporation shall not be required to call such a special meeting if such request is received less than 120 days before the date fixed for the next ensuing annual meeting of shareholders of the Corporation. Directors elected as aforesaid shall serve until the next annual meeting of shareholders of the Corporation or until their respective successors shall be elected and qualify. If, prior to the end of the term of any director elected as aforesaid, a vacancy in the office of such director shall occur during the continuance of a default in dividends on any series of Preferred Stock by reason of death, resignation, or disability, such vacancy shall be filled for the unexpired term by the appointment by the remaining director or directors elected as aforesaid of a new director for the unexpired term of such former director. Under existing interpretations of the Federal Reserve Board and the OTS, if the holders of any series of Preferred Stock (including, in this case, the 10% Cumulative Preferred Stock) become entitled to vote for the election of directors because dividends on such series are in arrears, such series may then be deemed a "class of voting securities" and a holder of 25% or more of such series (or a holder of 5% or more if such holder otherwise exercises a "controlling influence" over the Corporation) may then be subject to regulation as a bank holding company in accordance with the BHCA, and as a savings and loan holding company in accordance with the HOLA. In addition, at such time, (i) any bank holding company or foreign bank with a U.S. presence may be required to obtain the approval of the Federal Reserve Board under the BHCA to acquire or retain 5% or more of such series and (ii) any person other than a bank holding company may be required to obtain the approval of the Federal Reserve Board and the OTS under the CBCA to acquire or retain 10% or more of such series. The affirmative vote or consent of the holders of at least two-thirds of the then outstanding shares of Preferred Stock, given in person or by proxy, either in writing or at a meeting called for the purpose at which the holders of Preferred Stock shall vote separately as a class, shall be necessary to effect any amendment, alteration, or repeal of any of the provisions of the Corporation's Articles or the Regulations of the Corporation which would be substantially prejudicial to the voting powers, rights, or preferences of the holders of Preferred Stock (but so far as the holders of Preferred Stock are concerned, such action may be effected with such vote or consent); provided, however, that neither the amendment of the Corporation's Articles to authorize or to increase the authorized or outstanding number of shares of any class ranking junior to or on a parity with the Preferred Stock, nor the amendment of the Regulations so as to change the number of directors of the Corporation shall be deemed to be substantially prejudicial to the voting powers, rights, or preferences of the holders of Preferred Stock (and any such amendment referred to in this proviso may be made without the vote or consent of the holders of the Preferred Stock); and provided further that if such amendment, alteration, or repeal would be substantially prejudicial to the rights or preferences of one or more but not all then outstanding series of Preferred Stock, the affirmative vote or consent of the holders of at least two-thirds of the then outstanding shares of the series so affected shall be required. 24 57 The affirmative vote or consent of the holders of at least two-thirds of the then outstanding shares of Preferred Stock and, if the holders of 10% Cumulative Preferred Stock are entitled to vote on such matter pursuant to Section 5 of Part A of Article IV of the Articles, the 10% Cumulative Preferred Stock, given in person or by proxy, either in writing or at a meeting called for the purpose at which the holders of Preferred Stock and, if applicable, 10% Cumulative Preferred Stock shall vote as a single class shall be necessary to effect any one or more of the following: (a) The authorization of, or the increase in the authorized number of, any shares of any class ranking prior to the Preferred Stock; or (b) The purchase or redemption for sinking fund purposes or otherwise of less than all of the then outstanding Preferred Stock except in accordance with a purchase offer made to all holders of record of Preferred Stock, unless all dividends on all Preferred Stock then outstanding for all previous dividend periods shall have been declared and paid or declared and funds therefor set apart and all accrued sinking fund obligations applicable thereto shall have been complied with. PREEMPTIVE RIGHTS No holder of Preferred Stock is entitled as a matter of right to subscribe for or purchase any part of any issue of shares of the Corporation, of any class whatsoever, or any part of any issue of securities convertible into shares of the Corporation, of any class whatsoever, and whether issued for cash, property, services, or otherwise. REPURCHASE OF SHARES Subject to the express terms of any series of Preferred Stock or the 10% Cumulative Preferred Stock, the Corporation, by action of its Board of Directors and without action by its shareholders, is authorized by its Articles to purchase any shares of any series of Preferred Stock from time to time in accordance with the provisions of the Ohio General Corporation Law. Such purchases may be made either in the open market, or at public or private sales, in such manner and amounts and at such price as the directors shall, from time to time determine. PREFERRED STOCK OUTSTANDING The Corporation has issued and outstanding 1,280,000 shares of the 10% Cumulative Preferred Stock, which is the only class or series of Preferred Stock of the Corporation currently outstanding. Dividends, which are cumulative, are payable on the 10% Cumulative Preferred Stock quarterly on March 31, June 30, September 30, and December 31 of each year at the rate per annum equal to 10% of the liquidation preference of $125, or $12.50, per share. The 10% Cumulative Preferred Stock ranks prior to the Common Shares as to payment of dividends and upon distribution in the event of a liquidation, dissolution, or winding up of the Corporation. Unless full cumulative dividends on the 10% Cumulative Preferred Stock have been paid for all past dividend payment periods, no dividends (other than in Common Shares or another stock ranking junior to the 10% Cumulative Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be made upon the Common Shares or on any other stock of the Corporation ranking junior to or on a parity with the 10% Cumulative Preferred Stock as to dividends or upon liquidation. Except as expressly required by applicable law, the holders of shares of 10% Cumulative Preferred Stock are not entitled to vote on matters presented to shareholders except under certain circumstances, including (a) if the Corporation fails to pay full cumulative dividends on the 10% Cumulative Preferred Stock or on any class of Preferred Stock for six quarterly dividend periods, whether or not consecutive, in which case the number of directors of the Corporation will be increased by two and the holders of all outstanding shares of 10% Cumulative Preferred Stock, together with the holders of all other outstanding classes of Preferred Stock, will be entitled to vote separately as a single class without regard to series to elect such additional two Directors until full cumulative dividends for all past dividend payment periods on all classes of Preferred Stock and the 10% Cumulative Preferred Stock have been paid or declared and set apart for payment, and (b) the adoption of any amendment to the Corporation's Articles that would adversely affect 25 58 the powers, preferences, privileges, or rights of the shares of the 10% Cumulative Preferred Stock, subject to certain exceptions. The holders of shares of 10% Cumulative Preferred Stock have no preemptive rights to acquire any additional shares of the Corporation. The 10% Cumulative Preferred Stock is not redeemable prior to June 30, 1996. On and after such date, the 10% Cumulative Preferred Stock will be redeemable in cash at the option of the Corporation, in whole or in part, from time to time upon not less than 30 nor more than 60 days' notice, with the prior approval of the Federal Reserve Board (if such approval is required), at $125 per share plus all accrued and unpaid dividends to the date fixed for redemption. Shares of the 10% Cumulative Preferred Stock that are redeemed will be deemed retired. The 10% Cumulative Preferred Stock is not convertible into shares of any other class or series of the capital stock of the Corporation. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation, the holders of shares of 10% Cumulative Preferred Stock will be entitled to receive out of the assets of the Corporation available for distribution to shareholders, before any distribution of assets is made to holders of Common Shares or any other class of stock of the Corporation ranking junior to the 10% Cumulative Preferred Stock upon liquidation, liquidating distributions in the amount of $125 per share plus accrued and unpaid dividends. If, upon any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation the amounts payable with respect to the 10% Cumulative Preferred Stock and any other shares of stock of the Corporation ranking as to any such distribution on a parity with the 10% Cumulative Preferred Stock are not paid in full, the holders of shares of the 10% Cumulative Preferred Stock and of such other shares will share ratably in any such distribution of assets of the Corporation in proportion to the full respective preferential amounts to which they are entitled. The 10% Cumulative Preferred Stock is evidenced by depositary shares, each of which represents a one-fifth interest in a share of 10% Cumulative Preferred Stock. The 10% Cumulative Preferred Stock is deposited under a Deposit Agreement, dated July 27, 1991 between the Corporation and Society National Bank, successor to The Chase Manhattan Bank, as depositary. DESCRIPTION OF DEPOSITARY SHARES The description set forth below and in any Prospectus Supplement of certain provisions of the Deposit Agreement (as defined below) and of the Depositary Shares and Depositary Receipts (as defined below) does not purport to be complete and is subject to, and qualified in its entirety by reference to, the forms of Deposit Agreement and Depositary Receipt relating to each series of the Preferred Stock, which are filed with the Commission as exhibits to the Registration Statement of which this Prospectus is a part, copies of which may be obtained from the Corporation upon request. GENERAL The Corporation may elect to offer fractional shares of Preferred Stock rather than full shares of Preferred Stock. In such event, the Corporation will cause depositary receipts ("Depositary Receipts") to be issued for Depositary Shares, each of which will represent a fraction (to be set forth in the Applicable Prospectus Supplement relating to a particular series of Preferred Stock) of a share of a particular series of Preferred Stock as described below. The shares of any series of Preferred Stock represented by Depositary Shares will be deposited under a Deposit Agreement (the "Deposit Agreement") between the Corporation and a bank or trust company selected by the Corporation having its principal office in the United States and having a combined capital and surplus of at least $50,000,000, and any successor as depositary (the "Depositary"). Subject to the terms of the Deposit Agreement, each owner of a Depositary Share will be entitled, in proportion to the applicable fraction of a share of Preferred Stock represented by such Depositary Share, to all the rights, preferences, and 26 59 privileges of the Preferred Stock represented thereby, including any and all dividend, voting, redemption, conversion, and liquidation rights provided for in the Certificate. The Depositary Shares will be evidenced by Depositary Receipts issued pursuant to the Deposit Agreement. Depositary Receipts will be distributed to those persons purchasing the fractional shares of Preferred Stock in accordance with the terms of the offering. Pending the preparation of definitive Depositary Receipts, the Depositary will, upon the written order of the Corporation or any holder of Preferred Stock, execute and deliver temporary Depositary Receipts which are substantially identical to, and entitle the holders thereof to all the benefits pertaining to, the definitive Depositary Receipts. Definitive Depositary Receipts will be prepared thereafter without unreasonable delay, and temporary Depositary Receipts will be exchangeable for definitive Depositary Receipts upon surrender of the temporary Depositary Receipts at the Depositary's principal office or such other office or offices, if any, as the Depositary may designate, at the Corporation's expense and without charge to the holder. DIVIDENDS AND OTHER DISTRIBUTIONS The Depositary will distribute cash dividends or other cash distributions received in respect of the deposited shares of Preferred Stock, including any cash received upon redemption of any shares of Preferred Stock, to the record holders of Depositary Receipts relating to such Preferred Stock in such amounts as are, as nearly as practicable, in proportion to the numbers of Depositary Shares evidenced by the Depositary Receipts held by such holders. In the event of a distribution other than in cash on the deposited shares of Preferred Stock, the Depositary will distribute property received by it to the record holders of Depositary Receipts in such amounts as are, as nearly as practicable, in proportion to the numbers of such Depositary Shares evidenced by the Depositary Receipts held by such holders, in any manner that the Depositary and the Corporation may deem equitable and practicable for accomplishing such distribution. If the Depositary, after consultation with the Corporation, determines that such distribution cannot be made proportionately or that it is otherwise not feasible to make such distribution, it may, with the approval of the Corporation, adopt such method as it deems equitable and practicable for the purpose of effecting such distribution, including the public or private sale of the property received. The Depositary will distribute or make available for distribution the net proceeds of any such sale to the holders entitled thereto. REDEMPTION OF PREFERRED STOCK A series of Preferred Stock may be redeemable at any time, in whole or in part, at the option of the Corporation or the holder thereof, as set forth in the Applicable Prospectus Supplement relating to such series of Preferred Stock. Whenever the Corporation elects to redeem shares of Preferred Stock held by the Depositary, the Depositary will redeem as of the same redemption date the number of Depositary Shares representing shares of Preferred Stock so redeemed, provided the Corporation shall have paid in full to the Depositary the redemption price of the Preferred Stock to be redeemed. In the event of such a redemption at the option of the Corporation, the Depositary Shares will be redeemed from the proceeds received by the Depositary resulting from the redemption of such Preferred Stock held by the Depositary. If fewer than all the outstanding Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will be selected by the Depositary by lot or pro rata or by any other equitable method, in each case as may be determined by the Corporation. In addition, although Depositary Shares, as such, are not redeemable at the option of the holder of Depositary Receipts evidencing Depositary Shares, such holder may, if so specified in the Applicable Prospectus Supplement relating to an offering of Depositary Shares, surrender Depositary Receipts with written instructions to the Depositary to instruct the Corporation to cause the redemption of any specified number of whole or fractional shares of Preferred Stock represented by the Depositary Shares evidenced by such Depositary Receipts. The Corporation will thereafter cause the redemption of the Preferred Stock at the redemption price utilizing the same procedures as those provided for delivery of Preferred Stock to effect such redemption. 27 60 In the event of redemption at the option of either the Corporation or the holders of Depositary Receipts, the redemption price per Depositary Share will be equal to the applicable fraction of the redemption price per share paid in respect of the shares of the deposited Preferred Stock so redeemed, plus any other money and other property, if any, represented by each such Depositary Share, including an amount equal to any accrued and unpaid dividends thereon to the date of such redemption. Unless the Corporation defaults in the payment of the redemption price of any Preferred Stock called for redemption by the Corporation or the holder thereof and unless otherwise specified in the Certificate, (i) from and after the redemption date, all dividends in respect of the shares of Preferred Stock called for redemption will cease to accrue, the Depositary Shares so called for redemption shall no longer be deemed outstanding, and, except as set forth in clause (ii) below, all rights of holders of such Depositary Shares shall terminate except for the right to receive the redemption price thereof, and (ii) in the case of any redemption at the option of the Corporation or at the option of the holder, any rights of conversion in respect of such shares of Preferred Stock shall terminate on the close of business on the redemption date. CONVERSION OF PREFERRED STOCK AT THE OPTION OF THE CORPORATION The holders of Depositary Shares may be obligated at any time or upon maturity of the Preferred Stock represented by the Depositary Shares to convert the Depositary Shares for the number of whole shares of Capital Securities or other debt securities of the Corporation (as the case may be, in accordance with the terms of such series of Preferred Stock) in proportion to the number of shares of Preferred Stock represented by the Depositary Shares. Whenever the Corporation exercises its option to convert shares of Preferred Stock held by the Depositary in whole or in part, the Depositary will convert as of the same conversion date the number of Depositary Shares representing shares of Preferred Stock so converted provided the Corporation shall have issued and deposited with the Depositary the Capital Securities or other debt securities for the Preferred Stock to be converted and paid in full to the Depositary any accrued and unpaid dividends thereon. In the event of such conversion at the option of the Corporation, the Depositary Shares will be converted at a conversion rate per Depositary Share equal to the applicable fraction of the conversion rate per share then in effect in respect of the shares of deposited Preferred Stock so converted as such conversion rate may be adjusted from time to time as provided in the Certificate of Amendment, plus any other money and other property, if any, represented by each such Depositary Share, including all amounts paid by the Corporation in respect of dividends which on the conversion date have accrued on the shares of Preferred Stock to be so converted and have not theretofore been paid. If fewer than all the outstanding Depositary Shares are to be converted, the Depositary Shares to be converted will be selected by the Depositary by lot or pro rata or by any other equitable method, in each case as may be determined by the Corporation. From and after the dated fixed for conversion, all dividends in respect of the shares of Preferred Stock called for conversion shall cease to accrue to the extent set forth in the Certificate, any rights of conversion or redemption at the option of the holders of the Depositary Shares represented by Depositary Receipts evidencing the shares of Preferred Stock called for conversion shall terminate at the close of business on such conversion date to the extent set forth in the Certificate, the Depositary Shares called for conversion will no longer be deemed to be outstanding, and all rights of the holders of the Depositary Receipts evidencing the Depositary Shares will cease, except the right to receive the securities payable upon such conversion and any money and other property, if any, to which the holders of such Depositary Shares were entitled upon such conversion upon surrender to the Depositary of the Depositary Receipts evidencing such Depositary Shares. CONVERSION OF PREFERRED STOCK AT THE OPTION OF THE HOLDER The Depositary Shares, as such, are not convertible at the option of the holder thereof into Common Shares or any other securities or property of the Corporation. Nevertheless, if so specified in the Applicable Prospectus Supplement relating to an offering of Depositary Shares, any holder of Depositary Shares representing any series of Preferred Stock which is convertible at the option of the holder, upon surrender of the Depositary Receipts therefor and delivery of instructions to the Depositary, may cause the Corporation to convert any specified number of shares of Preferred Stock represented by the Depositary Shares evidenced by such Depositary Receipts into the number of whole Common Shares or whole number of shares of any other class or series of Capital Securities of the Corporation (as the case may be, in accordance with the terms of 28 61 such series of the Preferred Stock) as are issuable, as provided in the Certificate upon conversion of such shares of Preferred Stock at the conversion rate (as such term is defined in the Certificate) then in effect, as such conversion rate may be adjusted by the Corporation from time to time as provided in the Certificate. In the event that a holder delivers Depositary Receipts to the Depositary for conversion which in the aggregate are convertible either into less than one whole Common Share or one whole share of any other class or series of Capital Securities or into any number of whole Common Shares or whole shares of any other class or series of Capital Securities plus an excess constituting less than one whole Common Share or one whole share of any other class or series of Capital Securities, the holder shall receive payment in lieu of such fractional Common Shares or fractional shares of such Capital Securities. WITHDRAWAL OF PREFERRED STOCK Any holder of Depositary Receipts may, upon surrender of such Depositary Receipts therefor to the Depositary (unless the related Preferred Stock has previously been called for redemption or conversion at the option of the Corporation), receive the number of whole shares of the related series of Preferred Stock and any money and other property represented by such Depositary Receipts. Holders of Depositary Receipts making such withdrawals will be entitled to receive whole shares of Preferred Stock on the basis set forth in the Applicable Prospectus Supplement for such series of Preferred Stock, but holders of such whole shares of Preferred Stock will not thereafter be entitled to deposit such Preferred Stock under the Deposit Agreement or to receive Depositary Shares therefor. If the Depositary Shares represented by the Depositary Receipts surrendered by the holder in connection with such withdrawal exceed the number of Depositary Shares that represent the number of whole shares of Preferred Stock to be withdrawn, the Depositary will deliver to such holder at the same time a new Depositary Receipt evidencing such excess number of Depositary Shares. VOTING THE PREFERRED STOCK Upon receipt of notice of any meeting at which the holders of shares of the Preferred Stock are entitled to vote, the Depositary will, as soon as practicable thereafter, mail the information contained in such notice of meeting to the record holders of the Depositary Receipts representing the Depositary Shares relating to such Preferred Stock. Each record holder of such Depositary Receipt on the record date (which will be the same date as the record date of the Preferred Stock) will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Preferred Stock represented by such holder's Depositary Shares. Upon the written request of a record holder of such Depositary Receipt, the Depositary will, insofar as practicable, vote or cause to be voted the amount of Preferred Stock represented by such Depositary Shares evidenced by such Depositary Receipt in accordance with such instructions, and the Corporation will agree to take all reasonable actions which may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will abstain from voting shares of the Preferred Stock to the extent it does not receive specific instructions from the holder of Depositary Receipts evidencing the Depositary Shares representing such Preferred Stock. The Depositary will not be required to exercise discretion in voting any Preferred Stock represented by the Depositary Shares evidenced by such Receipts. AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT The form of Depositary Receipt evidencing the Depositary Shares and any provision of the Deposit Agreement may at any time and from time to time be amended by agreement between the Corporation and the Depositary in any respect that they may deem necessary or desirable. However, any amendment which materially and adversely alters the rights of the holders of Depositary Receipts or which would be materially and adversely inconsistent with the rights granted to the holders of the Preferred Stock will not be effective unless such amendment has been approved by the holders of at least a majority of the Depositary Shares then outstanding. The Deposit Agreement automatically terminates if (i) all outstanding Depositary Shares have been redeemed, converted, or withdrawn; (ii) each share of Preferred Stock has been converted into Common Shares or shares of any other class or series of Capital Securities; or (iii) there has been a final distribution in respect of the Preferred Stock in connection with any liquidation, dissolution, or winding up of the Corporation and such distribution has been distributed to the holders of Depositary Receipts. The Deposit Agreement also 29 62 may be terminated by the Corporation at any time upon not less than 60 days prior written notice to the Depositary, in which case the Depositary will, upon a date not later than 30 days after the date of such notice, deliver to the record holders, upon surrender of the Depositary Receipts, such number of whole shares of Preferred Stock as are represented by such Depositary Receipts. In the event that such Depositary Receipts represent a fractional number of shares of Preferred Stock, the Depositary will aggregate all interests in such fractional shares, and, with the approval of the Corporation, adopt such method as it deems equitable and practicable for the purpose of effecting the distribution of such interests, including the public or private sale of the whole number of shares of Preferred Stock so aggregated, or any part thereof, after which the Depositary will distribute or make available for distribution to the holders of such Depositary Receipts, as the case may be, the net proceeds of any such sale. CHARGES OF DEPOSITARY AND OTHER TAXES AND CHARGES The Corporation will pay all fees and expenses of the Depositary, and all charges of the Depositary in connection with the initial deposit of the Preferred Stock and the initial issuance of the Depositary Shares evidenced by the Depositary Receipts, all withdrawals of shares of Preferred Stock by holders of Depositary Shares, any redemption or conversion of the Preferred Stock at the option of such holder and any redemption or conversion of the Preferred Stock at the option of the Corporation. The Corporation will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. Holders of Depositary Shares will pay such other transfer and other taxes and governmental charges as are expressly provided in the Deposit Agreement to be for their accounts. RESIGNATION AND REMOVAL OF DEPOSITARY The Depositary may resign at any time by delivering to the Corporation notice of its election to do so, and the Corporation may at any time remove the Depositary by notice of such removal delivered to the Depositary, any such resignation or removal to take effect upon the appointment of a successor Depositary and its acceptance of such appointment. Such successor Depositary must be appointed within 60 calendar days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000. MISCELLANEOUS The Depositary will forward to the holders of Depositary Receipts all notices and reports from the Corporation which are delivered to the Depositary in its capacity as holder of Preferred Stock and which the Corporation is required to furnish to the holders of the Preferred Stock. Neither the Depositary nor the Corporation will be liable to any holder of any Depositary Receipt if it is prevented or delayed by reason of any present or future law or regulation of the United States or of any other governmental authority, or by reason of any present or future provision of the Articles or the Certificate or by any other circumstance beyond its control in performing its obligations under the Deposit Agreement or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement. The obligations and liabilities of the Corporation to holders of Depositary Receipts and the Depositary under the Deposit Agreement or any Depositary Receipt will be limited to performance in good faith of such duties as are specifically set forth in the Deposit Agreement and the Corporation and the Depositary will not be obligated to appear in, prosecute, or defend any action, suit, or other proceeding in respect of deposited shares of Preferred Stock, Depositary Shares, or Depositary Receipts that in its opinion may subject it to expense or liability unless satisfactory indemnity is furnished. The Depositary and the Corporation may rely upon the written advice of counsel and the written advice of and information provided by any accountant, any holders of Depositary Receipts and any other persons believed by it in good faith to be competent to give such advice or information and upon documents believed by it to be genuine and to have been signed or presented by the proper party or parties. In the event the Depositary shall receive conflicting claims, requests, or instructions from any holders of Depositary Receipts, on the one hand, and the Corporation, on the other hand, the Depositary shall be entitled to act on such claims, requests, or instructions received from the Corporation. 30 63 DESCRIPTION OF COMMON SHARES The description of certain provisions of the Common Shares set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to the Articles and the Regulations (i.e. by-laws) of KeyCorp which are exhibits to the Registration Statement. GENERAL The Corporation's Common Shares as of December 31, 1994 consisted of 900,000,000 authorized shares, with a par value of $1 each, of which there were 240,362,117 shares outstanding (exclusive of treasury shares). The Common Shares are traded on the New York Stock Exchange. The transfer agent and registrar for the Common Shares is Society National Bank. Common Shares of the Corporation may be issued from time to time, in such amounts and proportion and for such consideration as may be fixed by the Board of Directors of the Corporation. No holder of Common Shares has any preemptive or preferential rights to purchase or to subscribe for any shares of capital stock or other securities which may be issued by the Corporation. The Common Shares have no redemption or sinking fund provisions applicable thereto. Common Shares do not have any conversion rights. The rights of holders of Common Shares will be subject to, and may be adversely affected by, the rights of holders of any Preferred Stock that may be issued in the future. The Corporation may issue authorized but unissued Common Shares in connection with several employee benefit and stock option and incentive plans maintained by the Corporation or its subsidiaries, and the Corporation's Automatic Dividend Reinvestment and Cash Payment Plan. The outstanding Common Shares are fully paid and non-assessable and future issuances of Common Shares, when fully paid for, will be non-assessable except that in both cases Section 1701.95 of the Ohio General Corporation Law provides that a shareholder who knowingly receives any dividend, distribution, or payment made contrary to law or the articles of a corporation shall be liable to the Corporation for the amount received by him that is in excess of the amount that could have been paid or distributed without violation of law or the articles. DIVIDENDS When, as, and if dividends, payable in cash, stock, or other property, are declared by the Board of Directors of the Corporation out of funds legally available therefor, the holders of Common Shares are entitled to share equally, share for share, in such dividends. The payment of dividends on the Common Shares is subject to the prior payment of dividends on the Preferred Stock and on the 10% Cumulative Preferred Stock. VOTING Except as described under "Outstanding Preferred Stock" above, holders of Common Shares have exclusive voting rights of the Corporation and are entitled to one vote for each share on all matters voted upon by the shareholders. Holders of Common Shares do not have the right to cumulate their voting power. LIQUIDATION In the event of any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, the holders of the Common Shares are entitled to receive, on a share for share basis, any assets or funds of the Corporation which are distributable to its holders of Common Shares upon such events, subject to the prior rights of creditors of the Corporation and holders of the Corporation's outstanding Preferred Stock and the 10% Cumulative Preferred Stock. SHAREHOLDER RIGHTS PLAN In August 1989, the Corporation's Board of Directors declared a dividend consisting of Rights to Purchase Common Shares ("Rights"). One of the Rights was distributed with respect to each Common Share outstanding on September 12, 1989. Rights have been and will continue to be issued in respect to all 31 64 Common Shares that are issued after September 12, 1989 but before the earlier of the expiration or redemption of the Rights or the occurrence of a Triggering Event (as defined below), or upon the exercise of any employee stock option granted prior to a Triggering Event. The description and terms of the Rights are set forth in the Rights Agreement, dated as of August 25, 1989, between the Corporation and First Chicago Trust Company of New York, as Rights Agent, as amended by the First Amendment to Rights Agreement, dated as of February 21, 1991, between the Corporation and the First Chicago Trust Company of New York, as Rights Agent, a Second Amendment to Rights Agreement, dated as of September 12, 1991, between the Corporation and First Chicago Trust Company of New York, as Rights Agent, a letter of resignation of First Chicago Trust Company of New York, dated June 26, 1992, a letter of the Corporation, dated June 26, 1992, to Ameritrust Texas National Association (now Society National Bank), and a Third Amendment to Rights Agreement, dated as of October 1, 1993, between the Corporation and Society National Bank, as Rights Agent (such documents being hereinafter collectively referred to as "Rights Agreement" which is filed as an exhibit to the Registration Statement). The Rights are designed to protect the interests of the Corporation and its shareholders against coercive takeover tactics. The purpose of the Rights Agreement is to encourage potential acquirors to negotiate with the Corporation's Board of Directors prior to attempting a takeover and to give the Board leverage in negotiating on behalf of all shareholders the terms of any proposed takeover. The Rights Agreement may, but is not intended to, deter takeover proposals. Each of the Rights initially represents the right to purchase one Common Share for $65 (the "Purchase Price"). The Rights will become exercisable 20 calendar days after the earlier of (1) the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person (as defined below), or (2) a public announcement that a person or group has become the beneficial owner of 15% or more of the outstanding Common Shares (such person or group being an "Acquiring Person"). Until the Rights become exercisable, they will trade with the Common Shares, and any transfer of Common Shares will also constitute a transfer of the associated Rights. When the Rights become exercisable, they will begin to trade separate and apart from the Common Shares. At that time, separate certificates representing the Rights will be mailed to holders. Twenty days after certain events occur ("Flip-in Events"), each of the Rights will become the right to purchase one Common Share for the then par value per share (now $1.00 per share), and the Rights beneficially owned by an Acquiring Person will become void. The Flip-in Events are (1) the beneficial ownership by a person or group of 15% or more of the outstanding Common Shares, unless the Common Shares are acquired in a tender or exchange offer for all of the Common Shares at a price and on other terms approved in advance by the Corporation's Board of Directors, (2) certain self-dealing transactions between the Corporation and an Acquiring Person, and (3) a reclassification or recapitalization of the Corporation that has the effect of increasing by more than 1% the percentage of the Common Shares owned by an Acquiring Person. If, after a person or group becomes an Acquiring Person, the Corporation is acquired in a merger or other business combination or 50% or more of its assets or earning power is sold, each of the Rights will "flip-over" and become the right to purchase common shares of the acquiror (a "Flip-over Event"). The holder (other than the Acquiring Person) of each Right would, upon the occurrence of a Flip-over Event, be entitled to purchase for the then par value of a Common Share (now $1.00) the number of common shares of the acquiror having a market price equal to the market price of a Common Share. The Purchase Price and/or the number of Common Shares (or common shares of an acquiror) to be purchased upon exercise of the Rights are subject to adjustment from time to time to prevent dilution in the event the Corporation: (1) declares a dividend on the Common Shares payable in Common Shares, (2) subdivides or combines the outstanding Common Shares, (3) issues any shares other than Common Shares in a reclassification of the Common Shares or (4) makes a distribution to all holders of Common Shares, of debt securities, subscription rights, warrants, or other assets (except regular cash dividends). With certain exceptions, no adjustment will be required until a cumulative adjustment of at least 1% is required. The Corporation is not required to issue fractional shares and, instead, may make a cash payment based on the market price of the Common Shares. 32 65 The Corporation's Board of Directors may redeem the Rights for 1/2 cent each (the "Redemption Price") at any time before a "Triggering Event" (which is defined as the occurrence of a Flip-over Event or the 20th day after a Flip-in Event). However, the Rights may not be redeemed while there exists an Acquiring Person unless (1) Continuing Directors, as defined below, constitute a majority of the Board of Directors and (2) a majority of the Continuing Directors approves the redemption. "Continuing Directors" are defined as directors who were in office prior to a person or group becoming an Acquiring Person or whose election to office was recommended by a majority of the Continuing Directors and who are not affiliated with the Acquiring Person. The Rights will expire on September 12, 1999, unless they are redeemed before that date. Until the Rights are exercised, the holders of the Rights, as such, will have no rights as shareholders of the Corporation, including the right to vote or receive dividends. Upon exercise of the Rights, the holder of the Common Share received upon the exercise thereof will be entitled to all the rights of any other holder of Common Shares. The provisions of the Rights Agreement may be amended by the Corporation's Board of Directors to cure any ambiguity or correct any defect or inconsistency or, prior to a Triggering Event, to make other changes that the Board of Directors deems to be desirable and not adverse to the interests of the Corporation and its shareholders. DESCRIPTION OF CAPITAL SECURITIES The following description of Capital Securities is included in this Prospectus because a Prospectus Supplement may provide that Capital Securities will be issuable upon conversion at the option of the Corporation of a series of Subordinated Debt Securities or Preferred Stock. Whenever Capital Securities are issued upon conversion of Subordinated Debt Securities, the Corporation will be obligated to deliver Capital Securities with a Market Value (as defined below) equal to the principal amount of such Subordinated Debt Securities. In addition, the Corporation will unconditionally undertake 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 in which event the Corporation will bear all expenses of the Secondary Offering, including underwriting discounts and commissions. There can be no assurance, however, that there will be a market for the Capital Securities when issued or at any time thereafter. If the Corporation fails to deliver any Capital Securities when required to be delivered, the Trustee may institute judicial proceedings for (i) specific performance, (ii) money damages equal to the principal amount of the Subordinated Debt Securities for which Capital Securities were to be converted or (iii) any other proper remedy. If the Corporation fails to effect the Secondary Offering, it will deliver to the holders Capital Securities and not cash, upon exchange of the Subordinated Debt Securities. In such event, the Corporation will have no specifically enforceable obligation to effect the Secondary Offering, but will not be relieved of any liability for money damages it would have for breach of its obligation to effect a Secondary Offering of sufficient amounts of Capital Securities. The "Market Value" of any Capital Securities means their sale price in the Secondary Offering. If the Corporation does not effect the Secondary Offering, the Market Value of such Capital Securities shall be their fair value when exchanged as determined by three independent nationally recognized investment banking firms selected by the Corporation. Whenever Preferred Stock is convertible at the option of the Corporation into Capital Securities, the Corporation will be obligated to deliver Capital Securities in an amount either based upon a conversion price or with a required conversion value. The conversion value will be determined by then market prices, by an auction or bidding procedure or by such other method as set forth in the Applicable Prospectus Supplement. The staff of the Commission has advised that Rules 13e-4 and 14e-1 of the Commission's rules and regulations relating to tender offers by issuers, as currently in effect and interpreted, would be applicable to the conversion of Capital Securities for Subordinated Debt Securities of any series and the Secondary Offering. If, at the time of the conversion of Capital Securities for Subordinated Debt Securities of any series and the Secondary Offering, Rule 13e-4 or Rule 14e-1 (or any successor rule or rules) applies to such transactions, the Corporation will comply with such rule (or any successor rule or rules) and will afford holders of such Subordinated Securities all rights and will make all filings required by such rule (or successor rule or rules). 33 66 Rule 13e-4 and Rule 14e-1 may also be deemed to apply to Preferred Stock that is convertible at the option of the Corporation. The Capital Securities may consist of Common Shares or Preferred Stock. All Capital Securities which will be issuable upon conversion of Subordinated Debt Securities or Preferred Stock will, upon issuance, be duly authorized, validly issued and, if applicable, fully paid and non-assessable. Any shares of Preferred Stock to be so issued will have such designations, preferences, dividend, and other rights, qualifications, limitations, and restrictions as may be determined by the Corporation and approved by the Board of Directors. DESCRIPTION OF SECURITIES WARRANTS The Corporation may issue, separately or together with any Debt Securities, Preferred Stock, Common Shares, or Depositary Shares, Securities Warrants for the purchase of other Debt Securities, Preferred Stock, Common Shares, or Depositary Shares (collectively, the "Underlying Securities"). The Securities Warrants will be issued under a warrant agreement (a "Securities Warrant Agreement") to be entered into between the Corporation and a bank or trust company, as warrant agent (the "Securities Warrant Agent"), all as set forth in the Applicable Prospectus Supplement relating to the particular issue of Securities Warrants. The form of Securities Warrant Agreement, including the form of certificates representing the Securities Warrants ("Securities Warrant Certificates"), reflecting the alternative provisions to be included in the Securities Warrant Agreements that will be entered into with respect to particular offerings of Securities Warrants, is filed as an exhibit to the Registration Statement. The following summaries of certain provisions of the Securities Warrant Agreement and the Securities Warrant Certificates, which are filed as exhibits to the Registration Statement, do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Securities Warrant Agreement and the Securities Warrant Certificates, respectively, including the definitions therein of certain terms. Wherever defined terms of the Securities Warrant Agreement are referred to, it is intended that such defined terms shall be incorporated herein by reference. GENERAL The Applicable Prospectus Supplement relating to the particular issue of Securities Warrants offered thereby will describe the terms of the offered Securities Warrants, the Securities Warrant Agreement relating to the offered Securities Warrants, and the Securities Warrant Certificates representing the offered Securities Warrants, including the following where applicable: (1) if the Securities Warrants are offered for separate consideration, the offering price and the currency for which Securities Warrants may be purchased; (2) the title, aggregate principal amount, currency, and terms of the series of Debt Securities purchasable upon exercise of the Debt Warrants and the price at which such Debt Securities may be purchased upon such exercise; (3) the title, number of shares, stated value, and terms (including, without limitation, liquidation, dividend, conversion, redemption, and voting rights) of the series of Preferred Stock purchasable upon exercise of Preferred Stock Warrants and the price at which such number of shares of Preferred Stock of such series may be purchased upon such exercise; (4) the number of Common Shares purchasable upon the exercise of Common Share Warrants and the price at which such number of Common Shares may be purchased upon such exercise; (5) the number of Depositary Shares purchasable upon the exercise of Depositary Share Warrants, the terms of the Preferred Stock which the Depositary Shares represent and the price at which such number of Depositary Shares may be purchased upon such exercise; (6) the date, if any, on and after which the offered Securities Warrants and the related Debt Securities, Preferred Stock, Common Shares and/or Depositary Shares will be separately transferable; (7) the time or times at which, or period or periods during which, the offered Securities Warrants may be exercised and the final date on which the offered Securities Warrants may be exercised (the "Expiration Date"); (8) a discussion of the specific United States Federal income tax, accounting, and other considerations applicable to the Securities Warrants; (9) the location where the offered Securities Warrants represented by the Securities Warrant Certificates may be transferred and registered; and (10) any other terms of the offered Securities Warrants. 34 67 Securities Warrant Certificates will be exchangeable on the terms specified in the Applicable Prospectus Supplement for new Securities Warrant Certificates of different denominations evidencing the same aggregate number of Warrants of the same title, and may be transferred in whole or in part on the terms specified in the Applicable Prospectus Supplement. Prospective purchasers of Securities Warrants should be aware that special U.S. federal income tax, accounting and other considerations may be applicable to instruments such as Securities Warrants. The Applicable Prospectus Supplement relating to any issue of Securities Warrants will describe such considerations. EXERCISE OF WARRANTS Each Securities Warrant will entitle the holder to purchase the principal amount of or number of Underlying Securities provided for therein, at such exercise price as shall in each case be set forth in, or be determinable from, the Applicable Prospectus Supplement relating to the Securities Warrants, by payment of such exercise price (the "Warrant Price") in full in the currency and in the manner specified in the Applicable Prospectus Supplement. Securities Warrants may be exercised at any time at or before 5:00 P.M., New York City time on the Expiration Date (or such later date to which such Expiration Date may be extended by the Corporation), and unexercised Securities Warrants will become void at such time. Securities Warrants may be exercised at the corporate trust office of the Securities Warrant Agent or any other office indicated in the Applicable Prospectus Supplement relating to the Securities Warrants. Upon receipt at the corporate trust office of the Securities Warrant Agent or any other office indicated in the Applicable Prospectus Supplement of (i) payment of the Warrant Price and (ii) the form of election to purchase set forth on the reverse side of the Securities Warrant Certificate properly completed and duly executed, the Corporation will, as soon as practicable, issue the Underlying Securities purchasable upon such exercise. If fewer than all of the Securities Warrants represented by such Securities Warrant Certificate are exercised, a new Securities Warrant Certificate will be issued for the remaining number of unexercised Securities Warrants. MODIFICATIONS The Warrant Agreement may be supplemented or amended by the Corporation and the Warrant Agent from time to time, without the approval of any Holder (as defined in the Warrant Agreement), in order to cure any ambiguity, to correct or supplement any defective or inconsistent provision contained therein, or to make any other provision in regard to matters or questions arising thereunder that the Corporation and the Warrant Agent may deem necessary or desirable and which will not adversely affect the interests of the Holders. The Corporation and the Warrant Agent may also modify or amend the Warrant Agreement and the Securities Warrant Certificates with the consent of the Holders of not fewer than a majority in number of the then outstanding unexercised Warrants affected by such modification or amendment, for any purpose, provided that no such modification or amendment that shortens the period of time during which the Warrants may be exercised, or otherwise materially and adversely affects the exercise rights of the Holders or reduces the percentage of Holders of outstanding Warrants the consent of which is required for modification or amendment of the Warrant Agreement or the Warrants may be made without the consent of each Holder affected thereby. COMMON SHARE WARRANT ADJUSTMENTS The terms and conditions on which the Warrant Price of and/or the number of Common Shares covered by a Warrant to purchase Common Shares (a "Common Share Warrant") are subject to adjustment will be set forth in the Warrant Agreement and the Applicable Prospectus Supplement. Such terms will include provisions for adjusting the Warrant Price and/or the number of Common Shares covered by such Common Share Warrant; the events requiring such adjustment; the events upon which the Corporation may, in lieu of making such adjustment, make proper provision so that the holder of such Common Share Warrant, upon exercise thereof, would be treated as if such holder had exercised such Common Share Warrant prior to the 35 68 occurrence of such events; and provisions affecting exercise in the event of certain events affecting the Common Shares. MERGER, CONSOLIDATION, SALE, OR OTHER DISPOSITIONS If at any time there shall be a merger, consolidation, sale, conveyance, transfer, lease, or other disposition of substantially all of the assets of the Corporation, then the successor or assuming corporation shall succeed to and be substituted for the Corporation in, and the Corporation will be relieved of any further obligation under, the Warrant Agreement or the Warrants. ENFORCEABILITY OF RIGHTS OF HOLDERS The Warrant Agent will act solely as an agent of the Corporation in acting under the Warrant Agreement and in connection with any Warrant Certificate. The Warrant Agent shall have no duty or responsibility in case of any default by the Corporation in the performance of its covenants or agreements contained in the Warrant Agreement or in any Warrant Certificate. Each Holder may, without the consent of the Warrant Agent, enforce by appropriate legal action, on its own behalf, the Holder's right to exercise its Warrants in the manner provided in the Warrant Agreement and its Warrant Certificate. NO RIGHTS AS HOLDERS OF UNDERLYING SECURITIES Prior to the exercise of any Securities Warrants to purchase Underlying Securities, holders of such Securities Warrants will not have any of the rights of holders of the Underlying Securities purchasable upon such exercise, including, without limitation, the right to receive the payment of principal of, or premium on, if any, or interest, if any, dividends or distributions of any kind, if any, on Underlying Securities, the right to enforce any of the covenants in the Indentures, if applicable, or the right to exercise any voting rights. PLAN OF DISTRIBUTION The Corporation may sell Securities to one or more underwriters for public or private offering and sale by them or may sell Securities to investors directly or through agents (which agents may be affiliates of the Corporation) that solicit or receive offers on behalf of the Corporation or through dealers or through a combination of any such methods of sale. The Applicable Prospectus Supplement will set forth the terms of the offering of the particular series of Securities to which such Applicable Prospectus Supplement relates, including (i) the name or names of any underwriters or agents with whom the Corporation has entered into arrangements with respect to the sale of such series of Securities, (ii) the initial public offering or purchase price of such series of Securities, (iii) any underwriting discounts, commissions, and other items constituting underwriters' compensation from the Corporation and any other discounts, concessions, or commissions allowed or reallowed or paid by any underwriters to other dealers, (iv) any commissions paid to any agents, (v) the net proceeds to the Corporation and (vi) the securities exchanges, if any, on which such series of Securities will be listed. Unless otherwise set forth in the Applicable Prospectus Supplement relating to a particular series of Securities, the obligations of the underwriters to purchase such series of Securities will be subject to certain conditions precedent and each of the underwriters with respect to such series of Securities will be obligated to purchase all of the Securities of such series allocated to it if any such Securities are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The Securities may be offered and sold by the Corporation directly or through agents designated by the Corporation from time to time. Unless otherwise indicated in the Applicable Prospectus Supplement, each such agent will be acting on a reasonable efforts basis for the period of its appointment. Any agent participating in the distribution of Securities may be deemed to be an "underwriter," as that term is defined in the Securities Act, of the Securities so offered and sold. The Securities also may be sold to dealers at the applicable price to the public set forth in the Applicable Prospectus Supplement relating to a particular series 36 69 of Securities who later resell to investors. Such dealers may be deemed to be "underwriters" within the meaning of the Securities Act. Underwriters, dealers, and agents may be entitled, under agreements entered into with the Corporation, to indemnification against and contribution toward certain civil liabilities, including liabilities under the Securities Act. The Corporation may also issue contracts under which the counterparty may be required to purchase Debt Securities, Preferred Stock, or Depositary Shares. Such contracts would be issued with Debt Securities, Preferred Stock, or Depositary Shares and/or Securities Warrants in amounts, at prices and on terms to be set forth in a Prospectus Supplement. If so indicated in the Applicable Prospectus Supplement, the Corporation will authorize underwriters, dealers, or agents to solicit offers by certain institutions to purchase Securities of a series from the Corporation at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts (each a "Contract") providing for payment and delivery at a future date. Each Contract will be subject only to those conditions set forth in the Applicable Prospectus Supplement and the Applicable Prospectus Supplement will set forth the commission payable for solicitation of such offers. Any of the underwriters, dealers, and agents of the Corporation and their associates may be customers of, engage in transactions with, and perform services for the Corporation in the ordinary course of business. The place and time of delivery of the Securities will be set forth in the Applicable Prospectus Supplement. LEGAL OPINIONS The validity of the Securities offered hereby will be passed upon for the Corporation, as shall be indicated in the Applicable Prospectus Supplement, by either the General Counsel or a Senior Managing Counsel to the Corporation or by Thompson, Hine and Flory, 1100 National City Bank Building, Cleveland, Ohio 44114, and for the Underwriters by Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022. Shearman & Sterling will rely as to all matters of Ohio law on the opinion rendered on behalf of the Corporation. The General Counsel or a Senior Managing Counsel to the Corporation or Thompson, Hine and Flory, as the case may be, will rely as to all matters of New York law on the opinion of Shearman & Sterling. The aggregate number of shares owned by attorneys at Thompson, Hine and Flory or the General Counsel or Senior Managing Counsel of the Corporation rendering the opinion referred to above on behalf of the Corporation will be set forth in the Applicable Prospectus Supplement. EXPERTS The consolidated financial statements of KeyCorp and subsidiaries incorporated by reference in KeyCorp's Annual Report (Form 10-K) for the year ended December 31, 1994, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon incorporated therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 37 70 NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS OR ANY PRICING SUPPLEMENT IN CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT, DEALER OR UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS OR ANY PRICING SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR IN THE ACCOMPANYING PROSPECTUS OR ANY PRICING SUPPLEMENT IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS NOR ANY PRICING SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. ------------------ TABLE OF CONTENTS
PAGE ----- PROSPECTUS SUPPLEMENT Selected Consolidated Financial Data............................... S-2 Description of Notes................. S-4 Foreign Currency Risks............... S-20 United States Tax Considerations..... S-21 Plan of Distribution................. S-28 Validity of the Notes................ S-29 PROSPECTUS Available Information................ 2 Incorporation of Certain Documents by Reference.......................... 2 The Corporation...................... 4 Consolidated Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.......... 7 Use of Proceeds...................... 7 Description of Debt Securities....... 8 Description of Preferred Stock....... 22 Description of Depositary Shares..... 26 Description of Common Shares......... 31 Description of Capital Securities.... 33 Description of Securities Warrants... 34 Plan of Distribution................. 36 Legal Opinions....................... 37 Experts.............................. 37
$750,000,000 [KEYCORP LOGO] SENIOR MEDIUM-TERM NOTES, SERIES C SUBORDINATED MEDIUM-TERM NOTES, SERIES B DUE NINE MONTHS OR MORE FROM DATE OF ISSUE SALOMON BROTHERS INC CS FIRST BOSTON GOLDMAN, SACHS & CO. J.P. MORGAN SECURITIES INC. DATED APRIL , 1995 71 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Estimated expenses in connection with the issuance and distribution of the securities being registered other than underwriting compensation are as follows: SEC Registration Fee.............................................. $291,378 Fees of Rating Agencies........................................... 180,000 Printing and Engraving Expenses................................... 25,000 Legal Fees and Expenses........................................... 75,000 Accounting Fees and Expenses...................................... 20,000 Fees of Indenture Trustees........................................ 8,000 Blue Sky Fees and Expenses........................................ 25,000 Miscellaneous..................................................... 50,000 -------- Total................................................... $674,378 ========
- --------------- All the above amounts except the SEC registration fee are estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under Ohio law, Ohio corporations are authorized to indemnify directors, officers, employees, and agents within prescribed limits and must indemnify them under certain circumstances. Ohio law does not provide statutory authorization for a corporation to indemnify directors, officers, employees, and agents for settlements, fines, or judgments in the context of derivative suits. However, it provides that directors (but not officers, employees, and agents) are entitled to mandatory advancement of expenses, including attorneys' fees, incurred in defending any action, including derivative actions, brought against the director, provided the director agrees to cooperate with the corporation concerning the matter and to repay the amount advanced if it is proved by clear and convincing evidence that his act or failure to act was done with deliberate intent to cause injury to the corporation or with reckless disregard for the corporation's best interests. Ohio law does not authorize payment of judgments to a director, officer, employee, or agent after a finding of negligence or misconduct in a derivative suit absent a court order. Indemnification is required, however, to the extent such person succeeds on the merits. In all other cases, if a director, officer, employee, or agent acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, indemnification is discretionary except as otherwise provided by a corporation's articles, code of regulations, or by contract except with respect to the advancement of expenses of directors. Under Ohio law, a director is not liable for monetary damages unless it is proved by clear and convincing evidence that his action or failure to act was undertaken with deliberate intent to cause injury to the corporation or with reckless disregard for the best interests of the corporation. There is, however, no comparable provision limiting the liability of officers, employees, or agents of a corporation. The statutory right to indemnification is not exclusive in Ohio, and Ohio corporations may, among other things, procure insurance for such persons. The KeyCorp Regulations provide that KeyCorp shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to any action, suit, or proceeding by reason of the fact that he is or was a director, officer, or employee of KeyCorp or of any other bank, corporation, partnership, trust, or other enterprise for which he was serving as a director, officer, or employee at the request of KeyCorp. Reference is made to the Form of Underwriting Agreement and the Distribution Agreement for additional provisions for the indemnification of directors, controlling persons, and certain officers of the Registrant by the underwriters. The Forms of Underwriting Agreement and Distribution Agreement are exhibits to the Registration Statement. II-1 72 Except as stated above, neither the Amended and Restated Articles of Incorporation of KeyCorp nor any other contract or arrangement to which KeyCorp is a party provides for such indemnification. Under the terms of KeyCorp's directors' and officers' liability and company reimbursement insurance policy, directors and officers of KeyCorp are insured against certain liabilities, including liabilities arising under the Securities Act. KeyCorp is a party to Employment Agreements with, respectively, Victor J. Riley, Jr., Robert W. Gillespie, and Roger Noall, and KeyCorp is party to Change of Control Agreements with certain other executive officers (the provisions of which became effective as a result of the merger of old KeyCorp with and into Society), pursuant to which KeyCorp has agreed to indemnify the officer, to the full extent permitted or authorized by Ohio law, if the officer is made or threatened to be made a party to any action, suit, or proceeding by reason of the officer's serving as an employee, officer, or director of KeyCorp and/or any of its subsidiaries or any other company at the request of KeyCorp or any of its subsidiaries, and KeyCorp has agreed to advance expenses incurred by the officer in defending any such action, suit, or proceeding. ITEM 16. EXHIBITS. See Index to Exhibits. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the registration statement is on Form S-3 or Form S- 8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) to remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby further undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned Registrant hereby further undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of section 310 of the Trust Indenture Act ("Act") in accordance with the rules and regulations prescribed by the Commission under section 305(b)(2) of the Act. II-2 73 Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the provisions described in Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 74 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS FORM S-3 REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CLEVELAND, STATE OF OHIO, ON THIS 14TH DAY OF APRIL, 1995. KEYCORP By /s/CARTER B. CHASE Carter B. Chase Executive Vice President, General Counsel and Secretary PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS FORM S-3 REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED. Victor J. Riley, Jr., Chairman of the Board, Chief Executive Officer, and Director (Principal Executive Officer); Robert W. Gillespie, President, Chief Operating Officer and Director (Principal Operating Officer); James W. Wert, Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer); Lee G. Irving, Executive Vice President, Treasurer, and Chief Accounting Officer (Principal Accounting Officer); H. Douglas Barclay, Director; William G. Bares, Director; Albert C. Bersticker, Director; Thomas A. Commes, Director; Kenneth M. Curtis, Director; John C. Dimmer, Director; Henry S. Hemingway, Director; Charles R. Hogan, Director; Lawrence A. Leser, Director; Steven A. Minter, Director; M. Thomas Moore, Director; John C. Morley, Director; Richard W. Pogue, Director; Robert A. Schumacher, Director; Dennis W. Sullivan, Director; Peter G. Ten Eyck, II, Director; and Nancy B. Veeder, Director. KEYCORP By /s/CARTER B. CHASE Carter B. Chase Attorney-in-Fact April 14, 1995 II-4 75 KEYCORP INDEX TO EXHIBITS
FORM S-3 EXHIBIT NO. DESCRIPTION - ----------- (1)(a) Form of Underwriting Agreement. (1)(b) Form of Distribution Agreement.* (4)(a) Amended and Restated Articles of Incorporation of KeyCorp. Incorporated herein by reference to Exhibit 7 to Form 8-A/A filed on February 25, 1994. (4)(b) Regulations of KeyCorp. Incorporated herein by reference to Exhibit 6 to Form 8-A/A filed on February 25, 1994. (4)(c) Senior Indenture between KeyCorp and Bankers Trust Company, as Trustee.* (4)(d) Subordinated Indenture between KeyCorp and Bankers Trust Company, as Trustee.* (4)(e) Form of Senior Debt Securities.* (4)(f) Form of Subordinated Debt Securities.* (4)(g) Form of Warrant Agreement.* (4)(h) Form of Warrant Certificate.* (4)(i) Form of Deposit Agreement.* (4)(j) Form of Depositary Receipt.* (4)(k) Rights Agreement, dated as of August 25, 1989, between Society Corporation (renamed KeyCorp on March 1, 1994) and First Chicago Trust Company of New York, as Rights Agent, including as Exhibit A thereto the form of Rights Certificate. Incorporated herein by reference to Exhibit 1 to Form 8-A filed on August 29, 1989. (4)(l) First Amendment to Rights Agreement, dated February 21, 1991, between Society Corporation (renamed KeyCorp on March 1, 1994) and First Chicago Trust Company of New York, as Rights Agent. Incorporated herein by reference to Exhibit 1 to Form 8-A filed on February 28, 1991. (4)(m) Second Amendment to Rights Agreement, dated September 12, 1991, between Society Corporation (renamed KeyCorp on March 1, 1994) and First Chicago Trust Company of New York, as Rights Agent. Incorporated herein by reference to Exhibit 4 to Schedule 13D filed on September 23, 1991. (4)(n) Third Amendment to Rights Agreement, dated October 1, 1993, between Society Corporation (renamed KeyCorp on March 1, 1994) and Society National Bank, as Rights Agent. Incorporated herein by reference to Exhibit 4 to Schedule 13D filed on October 12, 1993. (5) Opinion of Steven N. Bulloch, Senior Managing Counsel to the Corporation as to the legality of the securities to be registered.* (12) Computation of KeyCorp's Consolidated Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Stock Dividends. Incorporated herein by reference to Exhibit 12 to KeyCorp's Annual Report on Form 10-K for the year ended December 31, 1994 filed on March 28, 1995. (23)(a) Consent of Ernst & Young LLP. (23)(b) Consent of Steven N. Bulloch, Senior Managing Counsel to the Corporation (included as part of Exhibit (5)).* (23)(c) Consent of Thompson, Hine and Flory.* (24)(a) Powers of Attorney.* (24)(b) Certified Resolutions of Board of Directors of KeyCorp.* (25) Form T-1 Statement of Eligibility and Qualifications under the Trust Indenture Act of 1939 of Bankers Trust Company, as Trustee.*
- --------------- *Previously filed with the SEC as Exhibits with the same respective numbers to KeyCorp's Registration Statement (No. 33-58405) on Form S-=3, filed with the SEC on April 3, 1995. EX-1.A 2 EXHIBIT 1(A) 1 Exhibit 1(a) KeyCorp (an Ohio corporation) Senior Debt Securities, Subordinated Debt Securities, Preferred Stock, Depositary Shares representing Preferred Stock, Warrants to Purchase Debt Securities, Preferred Stock, Depositary Shares, Common Stock or Capital Securities UNDERWRITING AGREEMENT STANDARD PROVISIONS ------------------------------------------ From time to time, KeyCorp, an Ohio corporation (the "Company"), may enter into one or more Terms Agreements in the form of Exhibit A hereto (each a "Terms Agreement") that provide for the sale of designated securities to the several underwriters named therein. The standard provisions set forth herein may be incorporated by reference in any such Terms Agreement. The Terms Agreement including the provisions incorporated therein by reference, is herein referred to as "this Agreement". Unless otherwise defined herein, terms defined in the Terms Agreement are used herein as therein defined. 1. Description of Securities. The Company proposes to issue and sell ------------------------- from time to time, either together or separately, certain of its (i) senior debt securities (the "Senior Debt Securities") and/or (ii) subordinated debt securities (the "Subordinated Debt Securities", and together with the Senior Debt Securities, the "Debt Securities"), and/or (iii) preferred stock (the "Preferred Stock"), and/or (iv) depositary shares which represent fractional interests in the Preferred Stock (the "Depositary Shares") and/or (v) warrants (the "Warrants") to purchase Debt Securities, Preferred Stock, Depositary Shares, or the Company's Common Shares, with a par value of $1 each (the "Common Stock"), in one or more offerings on terms determined at the time of sale and set forth in a Terms Agreement. The Subordinated Debt Securities may be convertible into Capital Securities (as defined below) of the Company and the Preferred Stock may be convertible into shares of Common Stock, Debt Securities or any class or series of Capital Securities in each case as set forth in the applicable Terms Agreement relating thereto. As used herein, "Capital Securities" means any securities issued by the Company which consist of (i) Common Stock or (ii) Preferred Stock. All Capital Securities which will be issuable upon conversion of Subordinated Debt Securities or Preferred Stock will, upon issuance, be duly authorized, validly issued, and, if 2 2 applicable, fully paid and non-accessable. Any Shares of Preferred Stock so issued will have such designations, preferences, dividend and other rights, qualifications, limitations and restrictions as may be determined by the Company. The Senior Debt Securities are to be issued under an Indenture dated as of June 10, 1994, as amended or supplemented (the "Senior Indenture"), between the Company and Bankers Trust Company, as trustee (the "Senior Trustee"). The Subordinated Debt Securities are to be issued under an Indenture dated as of June 10, 1994, as amended or supplemented (the "Subordinated Indenture"), between the Company and Bankers Trust Company, as trustee (the "Subordinated Trustee", and together with the Senior Trustee, the "Trustees"). The Senior Indenture and the Subordinated Indenture are collectively referred to herein as the "Indentures". The Senior Debt Securities and the Subordinated Debt Securities may have varying titles, maturities, rates and times of payment of interest, if any, selling prices, redemption terms, if any, conversion terms, if any, and other specific terms as set forth in the applicable Terms Agreement relating thereto. The Warrants are to be issued under warrant agreements (each a "Warrant Agreement"), between the Company and a bank or trust company, as warrant agent (the "Warrant Agent"). The Warrants may have varying titles, expiration dates, selling prices, redemption terms, if any, adjustment terms, if any, and other specific terms as set forth in the applicable Terms Agreement relating thereto. Each issue of Preferred Stock may vary as to the specific number of shares, title, stated value and liquidation preference, issuance price, dividend rate or rates (or method of calculation), dividend payment dates, redemption or sinking fund requirements, conversion provisions and any other variable terms as set forth in the applicable Terms Agreement relating to such Preferred Stock. If the shares of Preferred Stock are to be offered in the form of Depositary Shares, the Preferred Stock will, when issued, be deposited by the Company against delivery of depositary receipts (the "Depositary Receipts") to be issued under a deposit agreement (the "Deposit Agreement"), to be entered into among the Company, a depositary institution (the "Depositary") and the holders from time to time of the Depositary Receipts issued thereunder. The Depositary Receipts will evidence the Depositary Shares and each Depositary Share will represent a fraction of a share of Preferred Stock. The Preferred Stock, together, if applicable, with the Depositary Shares is hereinafter referred to as the "Shares". The Debt Securities, Warrants and Shares to be issued and sold as specified in the applicable Terms Agreement, shall collectively be referred to herein as the "Offered Securities". The Company may also grant to the Underwriters an option to purchase additional Offered Securities to cover over- allotments, if any, as specified in the applicable Terms Agreement (the "Option Securities"). The Offered Securities and Option Securities, if any, shall collectively be referred to as the "Securities". As used herein, unless the context otherwise requires, the term "Underwriters" shall mean the firm or firms specified as Underwriter or Underwriters in the applicable Terms Agreement relating to the Securities and the term "you" shall mean the Underwriter or Underwriters, if no underwriting syndicate 3 3 is purchasing the Securities, or the representative or representatives of the Underwriters specified in the applicable Terms Agreement (the "Representatives"), if an underwriting syndicate is purchasing the Securities, as specified in the applicable Terms Agreement. The Debt Securities, Preferred Stock, Depositary Shares and Warrants may be sold either separately or as units (the "Units"). Whenever the Company determines to make an offering of Securities, the Company will enter into a Terms Agreement providing for the sale of the applicable Securities to, and the purchase and offering thereof by, the Underwriters. The Terms Agreement relating to the Securities shall specify the type of Securities to be issued, the names of the Underwriters participating in such offering (subject to substitution as provided in Section 9 hereof), the number of Offered Securities which each such Underwriter severally agrees to purchase, the price at which the Securities are to be purchased by the Underwriters from the Company, the initial public offering price of the Securities, the time and place of delivery and payment and other specific terms. The Terms Agreement may take the form of an exchange of any standard form of written telecommunication between you and the Company. Each offering of Securities will be governed by this Agreement and shall inure to the benefit of and be binding upon the Company and each Underwriter participating in the offering of such Securities. The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (File No.____), including a prospectus, relating to the Securities and the offering thereof from time to time in accordance with Rule 415 under the Securities Act of 1933, as amended (the "Securities Act" and the rules and regulations thereto being referred to as the "Securities Act Regulations"), which registration statement also constitutes post-effective amendment no. 1 to registration statement no. 33-53643 relating to the Company's debt securities, debt warrants, preferred stock, depositary shares, preferred stock warrants, depositary share warrants, common shares, common share warrants and capital securities. Such registration statement and such post-effective amendments, as amended, have been declared effective by the Commission. As provided in Section 4(a), a prospectus supplement reflecting the terms of the Securities, the terms of the offering thereof and the other matters set forth therein has been prepared and will be filed pursuant to Rule 424 under the Securities Act. Such prospectus supplement, in the form first filed after the date of the applicable Terms Agreement pursuant to Rule 424, is herein referred to as the "Prospectus Supplement". Such registration statement and such post-effective amendments, as amended at the date of the applicable Terms Agreement, including the exhibits thereto and the documents incorporated by reference therein, are herein called the "Registration Statement", and the basic prospectus included therein relating to all offerings of securities under the Registration Statement, as supplemented by the Prospectus Supplement, is herein called the "Prospectus", except that, if such basic prospectus is amended or supplemented on or prior to the date on which the Prospectus Supplement is first filed pursuant to Rule 424, the term "Prospectus" shall refer to the basic prospectus as so amended or supplemented and as supplemented by the Prospectus Supplement, in either case 4 4 including the documents filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are incorporated by reference therein. Any preliminary prospectus supplement included in such Registration Statement or filed with the Commission pursuant to Rule 424(a) of the Securities Act Regulations is herein called a "Preliminary Prospectus". 2. Representations and Warranties of the Company. The Company --------------------------------------------- represents and warrants to, and agrees with, each Representative and each Underwriter that: (a) The Registration Statement has been declared effective by the Commission under the Securities Act; no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been instituted or, to the knowledge of the Company, threatened by the Commission. (b) The Company meets the requirements for use of Form S-3 under the Securities Act and the Registration Statement and the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) comply, or will comply, as the case may be, in all material respects with the Securities Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder; each part of the Registration Statement and any amendment or supplement thereto, as of the date such part became or becomes effective, did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; each Prospectus, and any amendment or supplement thereto, as of the date thereof, did not or will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading provided, however, that the Company makes no representations or warranties as to (i) that part of the Registration Statement which shall constitute the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the Trustee or (ii) the information contained in or omitted from the Registration Statement or the Prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through the Representatives specifically for use in connection with the preparation of the Registration Statement and such Prospectus. (c) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, comply, or will comply, as the case may be, in all material respects to the requirements of the Exchange Act and, if applicable, the Securities Act and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the 5 5 Prospectus, or any amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Exchange Act and, as applicable, the Securities Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (d) (i) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Ohio, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, other than where the failure to be so qualified or in good standing, considering all such cases in the aggregate, does not involve a material risk to the business, properties, financial position or results of operations of the Company and its subsidiaries; (ii) each of its national bank subsidiaries is a duly organized and validly existing national banking association under the laws of the United States, continues to hold a valid certificate to do business as such and has full power and authority to conduct its business as such; each of its state-chartered bank subsidiaries is a duly organized and validly existing state-chartered bank under the laws of the jurisdiction of its organization, continues to hold a valid certificate to do business as such and has full power and authority to conduct its business as such; each of its federal savings association subsidiaries is a duly organized and validly existing federal savings association under the laws of the United States, continues to hold a valid certificate to do business as such and has full power and authority to conduct its business as such; each of its other significant subsidiaries, as defined in Regulation S-X (the "Significant Subsidiaries") is duly organized and validly existing under the laws of the jurisdiction of its organization with corporate power and authority under such laws to conduct its business; and (iii) all of the outstanding shares of capital stock of each such subsidiary have been duly authorized and validly issued, are fully paid and non-assessable (except, with respect to any subsidiary that is a national bank, as provided by Section 55 of Title 12 of the United States Code; and, with respect to any subsidiary that is a bank incorporated under state law, except as provided by the laws of any such states and (except as otherwise stated in the Registration Statement) are owned beneficially by the Company subject to no security interest, pledge, lien, charge or other encumbrance or adverse claim. (e) The execution and delivery of this Agreement, the Indentures, the Warrant Agreement, and the Deposit Agreement, if any, and the consummation of the transactions contemplated herein and therein, have been duly authorized by all necessary corporate action and when executed by the Company and the other parties thereto will not result in any breach of any of the terms, conditions or provisions of, 6 6 or constitute a default under, or result in the creation or imposition of any security interest, lien, charge or encumbrance upon any property or assets of the Company or its subsidiaries, pursuant to any indenture, loan agreement, contract or other material agreement or instrument to which the Company or its subsidiaries is a party or by which the Company may be bound or to which any of the property or assets of the Company or its subsidiaries is subject, nor will such action result in any violation of the provisions of the Amended and Restated Articles of Incorporation or the Regulations of the Company or its subsidiaries or any applicable statute, rule or regulation or, to the best of its knowledge, any order of any court or governmental agency or body having jurisdiction over the Company, its subsidiaries or any of their respective properties. (f) If the Securities include Debt Securities, such Debt Securities shall, on the date of the Terms Agreement relating to such Securities, be duly authorized and, when such Debt Securities are duly executed, authenticated and delivered in the manner provided for in the applicable Indenture and issued and paid for in accordance with this Agreement and the applicable Terms Agreement, such Debt Securities will constitute legal, valid and binding obligations of the Company entitled to the benefits of the applicable Indenture and enforceable against the Company in accordance with their terms subject, as to enforcement, to bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws relating to or affecting creditors' rights generally and to general equity principles; and, if the Securities include Subordinated Debt Securities that are convertible into Capital Securities, then such Subordinated Debt Securities shall be convertible into Capital Securities in accordance with their terms and the terms of the Subordinated Indenture. (g) If the Securities include Preferred Stock, such shares of Preferred Stock shall, on the date of the Terms Agreement relating to such Securities, be duly authorized and, when such shares of Preferred Stock are duly executed and delivered and issued and paid for in accordance with this Agreement and the applicable Terms Agreement, such shares of Preferred Stock will have been validly issued, fully paid and non-assessable; no holder thereof will be subject to personal liability by reason of being such a holder; such shares of Preferred Stock will not be subject to the preemptive rights of any stockholder of the Company; and all corporate action required to be taken for the authorization, issue and sale of such shares of Preferred Stock has been, or at the Closing Date will be, validly and sufficiently taken; and, if the Securities include shares of Preferred Stock that are to be represented by Depositary Shares, then, upon deposit by the Company of such shares of Preferred Stock with the Depositary pursuant to the Deposit Agreement and the execution by the Depositary of the Depositary Receipts evidencing the Depositary Shares, such Depositary Shares shall represent legal and valid interests in such shares of Preferred Stock; and, if the Securities include shares of Preferred Stock that are convertible into Capital Securities, Debt Securities or other preferred stock, then such shares of 7 7 Preferred Stock shall be convertible into Capital Securities, Debt Securities or other preferred stock in accordance with their terms and the terms of the Certificate of Amendment establishing a series of a class of stock relating to such shares of Preferred Stock (the "Certificate of Amendment"). (h) If the Securities include Warrants, such Warrants shall, on the date of the Terms Agreement relating to such Securities, be duly authorized and, when such Warrants are duly executed, countersigned and delivered in the manner provided for in the Warrant Agreement and issued and paid for in accordance with this Agreement and the applicable Terms Agreement, such Warrants will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Warrant Agreement and enforceable against the Company in accordance with their terms subject, as to enforcement, to bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws relating to or affecting creditors' rights generally and to general equity principles; and the Warrants shall be exercisable for Debt Securities or Preferred Stock in accordance with their terms and the terms of the Warrant Agreement. (i) If the Securities include Preferred Stock convertible into Debt Securities or Debt Securities, the Indentures have been duly authorized by the Company and qualified under the Trust Indenture Act, will be substantially in the forms filed as exhibits to the Registration Statement and, when duly executed and delivered by the Company and the Trustees, will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms subject, as to enforcement, to bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws relating to or affecting creditors' rights generally and to general equity principles; and the summary descriptions of the Indentures set forth in the Prospectus conform in all material respects to the provisions contained in the Indentures. (j) If the Securities include Preferred Stock convertible into Capital Securities or other preferred stock and/or Subordinated Debt Securities convertible into Capital Securities, the Capital Securities or preferred stock issuable upon conversion of the shares of Preferred Stock pursuant to their terms and the terms of the Certificate of Amendment and/or the Capital Securities issuable upon conversion of the Subordinated Debt Securities pursuant to their terms and the terms of the Subordinated Indenture, on the date of the Terms Agreement relating to such Securities, shall be duly authorized and validly reserved for issuance upon such conversion by all necessary corporate action and such Capital Securities or other preferred stock, when issued upon such conversion will be validly issued, fully paid and non-assessable; no holder thereof will be subject to personal liability by reason of being such a holder; and the issuance of such Capital Securities or other preferred stock upon such conversion will not be subject to preemptive rights. 8 8 (k) If the Securities include Depositary Shares, the Deposit Agreement has been duly authorized by the Company, will be substantially in the form filed as an exhibit to the Registration Statement and, when duly executed and delivered by the Company and the Depositary, will constitute a legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally and to general equity principles; and the summary description of the Deposit Agreement set forth in the Prospectus conforms in all material respects to the provisions contained in the Deposit Agreement. (l) If the Securities include Warrants, the Warrant Agreement has been duly authorized by the Company, will be substantially in the form filed as an exhibit to the Registration Statement and, when duly executed and delivered by the Company and the Warrant Agent, will constitute a legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency (including, without limitation, laws relating to fraudulent transfer), reorganization, moratorium or similar laws relating to or affecting creditors' rights generally and to general equity principles; and the summary description of the Warrant Agreement conforms in all material respects to the provisions contained in the Warrant Agreement. (m) If applicable, the shares of a Company's Common Stock, issuable upon conversion or exercise of any issue of Offered Securities have been duly authorized and reserved for issuance upon such conversion by all necessary corporate action and, when issued and delivered in accordance with the provisions of this Agreement relating thereto, will be validly issued, fully paid and non-assessable, no holder thereof will be subject to personal liability by reason of being such a holder; and the issuance of such shares upon such conversion will not be subject to preemptive rights. (n) The Securities conform in all material respects to the summary descriptions thereof contained or incorporated by reference in the Prospectus and such summary descriptions conform to the rights set forth in the instruments defining the same. (o) To the knowledge of the Company and except as set forth in the Prospectus, there is no threatened action, suit or proceeding that could reasonably be expected to result in any material adverse change in the condition (financial or other), business or results of operations of the Company and its subsidiaries, or could reasonably be expected to materially and adversely affect the properties or assets thereof. 9 9 (p) The Company has not taken and will not take, directly or indirectly, any action designed to, or that might be reasonably expected to, cause or result in stabilization or manipulation of the price of the Securities or the Capital Securities. (q) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material adverse change in the condition (financial or other), business or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus. (r) The Company has complied and will comply with all applicable provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes, and all regulations promulgated thereunder relating to issuers doing business in Cuba. (s) The aggregate amount of Securities to be purchased pursuant to this Agreement does not exceed the amount remaining registered under the Registration Statement. Any certificate signed by any officer of the Company and delivered to the Representatives or counsel for the Underwriters in connection with an offering of Securities shall be deemed a representation and warranty by the Company, as to the matters covered thereby, to each Underwriter participating in such offering. 3. Purchase, Sale and Delivery of Securities. On the basis of the ----------------------------------------- representations, warranties and agreements herein contained and contained in the applicable Terms Agreement, but subject to the terms and conditions herein and therein set forth, the Company agrees to issue and sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company pursuant to the terms of a Terms Agreement. If so authorized in the Terms Agreement, the Underwriters may solicit offers from investors of the types set forth in the Prospectus to purchase Securities from the Company pursuant to delayed delivery contracts ("Delayed Delivery Contracts"). Such contracts shall be substantially in the form of Exhibit I hereto but with such changes therein as the Company may approve. As compensation for arranging Delayed Delivery Contracts, the Company will pay to the Representatives on the Closing Date, for the accounts of the Underwriters, a fee as follows: (i) in the case of Debt Securities, Debt Warrants and Units consisting of Debt Securities and Debt Warrants, an amount equal to the percentage set forth in the applicable Terms Agreement of the principal amount of the Debt Securities or number of Debt Warrants for which such Delayed Delivery Contracts are made, (ii) in the case of Preferred Stock, Depositary Shares and Units consisting of Preferred Stock and any other Securities, an amount equal to the percentage set forth in the applicable Terms Agreement of the aggregate liquidation preference of the Preferred Stock, including shares represented by such Depositary Shares, for which Delayed Delivery Contracts are made, (iii) in the case of 10 10 all other Securities, an amount as set forth in the applicable Terms Agreement of Securities for which such Delayed Delivery Contracts are made. Securities to be purchased pursuant to Delayed Delivery Contracts are herein called "Contract Securities". When Delayed Delivery Contracts are authorized in the applicable Terms Agreement, the Company will enter into a Delayed Delivery Contract in each case where a sale of Contract Securities arranged through you has been approved by the Company but, except as the Company may otherwise agree, such Delayed Delivery Contracts must be for at least the minimum amount of Contract Securities set forth in the applicable Terms Agreement hereto, and the aggregate amount of Contract Securities may not exceed the amount set forth in such Schedule. The Company will advise you not later than 10:00 A.M., New York City time, on the third full business day preceding the Closing Date (or at such later time as you may otherwise agree) of the sales of Contract Securities that have been so approved. You and the other Underwriters will not have any responsibility in respect of the validity or performance of Delayed Delivery Contracts. The Representatives shall submit to the Company, at least three business days prior to Closing Date, the names of any institutional investors with which it is proposed that the Company will enter into Delayed Delivery Contracts and the amount or number of Securities to be purchased by each of them, and the Company will advise the Representatives, at least two business days prior to Closing Date, of the names of the institutions with which the making of Delayed Delivery Contracts is approved by the Company and the amount or number of Securities to be covered by each such Delayed Delivery Contract. The amount of Securities to be purchased by each Underwriter as set forth in the applicable Terms Agreement shall be reduced by an amount which shall bear the same proportion to the total amount of Contract Securities as the amount of Securities set forth opposite the name of such Underwriter bears to the total amount of Securities set forth in the applicable Terms Agreement, except to the extent that you determine that such reduction shall be otherwise than in such proportion and so advise the Company; provided, however, that the total amount of Securities to be purchased by all Underwriters shall be the total amount of Securities set forth in the applicable Terms Agreement less the aggregate amount of Contract Securities. The Offered Securities to be purchased by the Underwriters will be delivered by the Company to you for the accounts of the several Underwriters at the office specified in the applicable Terms Agreement against payment of the purchase price therefor by certified or official bank check or checks in New York Clearing House (next day) funds payable to the order of the Company at the office, on the date and at the times specified in such Terms Agreement, or at such other time not later than eight full business days thereafter as you and the Company determine, such time being herein referred to as the "Offered Securities Closing Date". The Option Securities to be purchased by the Underwriters will be delivered by the Company to you for the accounts of the several Underwriters at the office specified in the applicable Terms Agreement against payment of the purchase price therefor by certified 11 11 or official bank check or checks in New York Clearing House (next day) funds payable to the order of the Company at the office, on the date and at the times specified in such Terms Agreement, or at such other time not later than eight full business days thereafter as you and the Company determine, such time being herein referred to as the "Option Closing Date". The Offered Securities Closing Date and the Option Securities Closing Date are hereinafter collectively referred to as the "Closing Date". Such Securities will be prepared in definitive form and in such authorized denominations and registered in such names as you may require upon at least two business days' prior notice to the Company and will be made available for checking and packaging at the office at which they are to be delivered on the applicable Closing Date (or such other office as may be specified for that purpose in the Terms Agreement) at least one business day prior to the applicable Closing Date. It is understood that you, acting individually and not in a representative capacity, may (but shall not be obligated to) make payment to the Company on behalf of any other Underwriter for Securities to be purchased by such Underwriter. Any such payment by you shall not relieve any such Underwriter of any of its obligations hereunder. The Company will pay to you on the applicable Closing Date for the account of each Underwriter any commission or other compensation that is specified in the Terms Agreement. Such payment will be made by certified or official bank check in New York Clearing House (next day) funds. 4. Covenants. The Company covenants and agrees with each --------- Representative and each Underwriter that: (a) (i) If reasonably requested by you in connection with the offering of the Offered Securities, the Company will prepare a Preliminary Prospectus containing such information concerning the Securities as you and the Company deem appropriate and (ii) immediately following the execution of each Terms Agreement, the Company will prepare a Prospectus Supplement that complies with the Securities Act and the Securities Act Regulations and that sets forth the number or principal amount of Securities covered thereby, the names of the Underwriters participating in the offering and the number or principal amount of Securities which each severally has agreed to purchase, the name of each Underwriter, if any, acting as representative in connection with the offering, the price at which the Securities are to be purchased by the Underwriters from the Company, the initial public offering price, the selling concession and reallowance, if any, and such other information concerning the Securities as you and the Company deem appropriate in connection with the offering of the Securities. The Company will promptly transmit copies of the Prospectus Supplement to the Commission for filing pursuant to Rule 424 under the Securities Act and will furnish to the Underwriters named therein as many copies of any Preliminary Prospectus, the Prospectus and the Prospectus Supplement as you shall reasonably request. 12 12 (b) If at any time when the Prospectus is required by the Securities Act to be delivered in connection with sales of the Offered Securities any event shall occur or condition exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or counsel for the Company, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances under which they were made, or if it shall be necessary, in the opinion of either such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the Securities Act or the Securities Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 4(d), such amendment or supplement as may be necessary to correct such untrue statement or omission or to make the Registration Statement or the Prospectus comply with such requirements. Neither the Representatives' consent to, nor the Underwriters' delivery of, any such amendment or supplement shall constitute a waiver of the conditions set forth in Section 5. (c) During the period when the Prospectus is required by the Securities Act to be delivered in connection with sales of the Offered Securities, the Company will, subject to Section 4(d), file promptly all documents required to be filed with the Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (d) During the period between the date of the applicable Terms Agreement and the Closing Date, the Company will inform you of its intention to file any amendment to the Registration Statement, any supplement to the Prospectus or any document that would as a result thereof be incorporated by reference in the Prospectus, will furnish you with copies of any such amendment, supplement or other document and will not file any such amendment, supplement or other document in a form to which you or your counsel shall reasonably object. (e) During the period when the Prospectus is required by the Securities Act to be delivered in connection with sales of the Offered Securities, the Company will notify you immediately, and confirm the notice in writing, (i) of the effectiveness of any amendment to the Registration Statement, (ii) of the mailing or the delivery to the Commission for filing of any supplement to the Prospectus or any document that would as a result thereof be incorporated by reference in the Prospectus, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement, the Prospectus or the Prospectus Supplement, (iv) of any request by the Commission for any amendment to the Registration Statement or any supplement to the Prospectus or for additional information relating thereto or to any document incorporated by reference in the Prospectus and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Offered Securities for offering or sale in any jurisdiction, or of the institution or threatening of any proceeding for 13 13 any of such purposes. The Company will use every reasonable effort to prevent the issuance of any such stop order or of any order suspending such qualification and, if any such order is issued, the Company will use every reasonable effort to obtain the lifting thereof at the earliest possible moment. (f) The Company has furnished or will furnish to you as many copies of the Registration Statement as originally filed and of all amendments thereto, whether filed before or after the Registration Statement becomes effective, copies of all exhibits and documents filed therewith (including documents incorporated by reference into the Prospectus pursuant to Item 12 of Form S-3 under the Securities Act) and copies of all consents and certificates of experts as you may reasonably request, and has furnished or will furnish to you, for each other Underwriter, one copy of the Registration Statement as originally filed and of each amendment thereto (including documents incorporated by reference into the Prospectus but without exhibits). (g) The Company will use its reasonable best efforts to qualify the Offered Securities and, if applicable, any Debt Securities, Preferred Stock or Common Stock which may be issuable pursuant to the exercise of the applicable Warrants and Capital Securities into or for which the Subordinated Debt Securities are convertible and the Capital Securities, other preferred stock or Debt Securities into which the shares of Preferred Stock are convertible for offering and sale under the applicable securities laws of such states and other jurisdictions as you may reasonably designate and to maintain such qualifications in effect for a period of not less than one year from the effective date of the Terms Agreement applicable to such Offered Securities; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the Offered Securities have been qualified as above provided. (h) With respect to each sale of Offered Securities, the Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement of the Company (in form complying with the provisions of Rule 158 of the Securities Act Regulations) covering a period of 12 months beginning, in each case, not later than the first day of the Company's fiscal quarter next following the effective date (as defined in Rule 158) of the Registration Statement relating to the Offered Securities. (i) If and to the extent specified in the applicable Terms Agreement, the Company will use its best efforts to effect the listing of the Offered Securities and, if applicable, any Debt Securities, Preferred Stock or Common Stock which may be 14 14 issuable pursuant to the exercise of the applicable Warrants and the Capital Securities, other preferred stock or Debt Securities issuable upon conversion of Preferred Stock and/or Capital Securities issuable upon conversion of Subordinated Debt Securities, on the New York Stock Exchange or such other national securities exchange as may be designated in the applicable Terms Agreement by the Closing Date with respect to the applicable Terms Agreement. (j) For a period of five years after the Closing Date, the Company will furnish to you copies of all annual reports, quarterly reports and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by the Commission, and such other documents, reports and information as shall be furnished by the Company to its stockholders generally. (k) Between the date of the applicable Terms Agreement and the Closing Date or such other date as is set forth in such Terms Agreement, the Company will not, without your prior written consent, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of, the securities set forth in such Terms Agreement, other than as set forth in such Terms Agreement. (l) The Company, whether or not the transactions contemplated hereunder are consummated or the Agreement is terminated, will pay all expenses incident to the performance of its obligations hereunder, will pay the expenses of printing or otherwise producing all documents relating to the offering, and will pay, or reimburse the Underwriters, for any reasonable expenses (including fees and disbursements of counsel) incurred by them in connection with the matters referred to in Section 4(g) hereof and the preparation of memoranda relating thereto, for any filing fee of the National Association of Securities Dealers, Inc. relating to the Securities, for any fees charged by investment rating agencies for rating the Securities, for any fees and expenses of any Trustee and any agent of any Trustee in connection with any Indenture and the Securities, for any listing fees and for the cost of mailing any Preliminary Prospectus. Notwithstanding the foregoing, if there is a mistake in the written information furnished by the Representative or Representatives to the Company for use in the Prospectus and if such Prospectus is required to be reprinted pursuant to Sections 4(b) and 4(d), then the expense of reprinting such Prospectus shall be borne, severally, by the Underwriter or Underwriters who shall have furnished such incorrect information to such Representative or Representatives. (m) The Company will apply the net proceeds from the sale of the Securities as set forth in the Prospectus. 5. Conditions of Underwriters' Obligations. The obligations of the --------------------------------------- several Underwriters to purchase and pay for the Offered Securities as provided herein shall be subject to the accuracy, as of the date hereof and the date of any such Terms Agreement and the Closing Date (as if made at the Closing Date), of the representations and warranties of 15 15 the Company herein, to the accuracy of the statements of the Company's officers made in any certificate furnished pursuant to the provisions hereof, to the performance by the Company of all of its covenants and other obligations hereunder and to the following additional conditions: (a) The Prospectus shall have been filed with the Commission in accordance with the Securities Act Regulations and Section 4(a) of this Agreement. No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been instituted or, to the knowledge of the Company or any Underwriter, threatened by the Commission. (b) Subsequent to the execution of the Terms Agreement, there shall not have occurred (i) any change or any development in or affecting particularly the business or properties of the Company or its subsidiaries which, in the judgment of a majority in interest of the Underwriters, materially impairs the investment quality of the Securities (ii) trading in any securities of the Company has been suspended by the Commission or a national securities exchange or if trading on the New York Stock Exchange or the American Stock Exchange shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, on the New York Stock Exchange or the American Stock Exchange, by such Exchange or by order of the Commission or any other governmental authority having jurisdiction, (iii) any banking moratorium declared by Federal or New York authorities, (iv) any downgrading in the rating accorded the Company's debt securities or Preferred Stock by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act or any public announcement that any such organization has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities or Preferred Stock, or (v) any outbreak or escalation of hostilities in which the United States is involved, a declaration of war by Congress, any other substantial national or international calamity or any other event or occurrence of a similar character if, in the judgment of a majority in interest of the Underwriters, including any Representatives, the effect of any such outbreak, escalation, declaration, calamity or other event or occurrence makes it impractical or inadvisable to proceed with the completion of the sale of and payment for the Securities. Promptly after the determination by such majority in interest of the Underwriters that it is impractical or inadvisable to proceed with the completion of the sale and payment for the Securities, the Representatives shall notify the Company of such determination in writing; but the omission so to notify the Company shall not act to modify the rights of the Underwriters under this Section 5(b). (c) On the applicable Closing Date, you shall have received the opinion of the General Counsel or any Senior Managing Counsel to the Company and/or Thompson, Hine and Flory, counsel to the Company, as indicated in the applicable 16 16 Prospectus Supplement (it being understood that any opinion with respect to Key Bank of New York, Key Bank of Washington, Key Bank of Oregon, Key Bank of Maine, Key Bank of Idaho, Key Bank of Utah, Society Bank, Michigan, Key Bank of Alaska or Key Bank of Colorado may be delivered by the General Counsel or any Senior Managing Counsel to the Company), dated the Closing Date, together with signed or reproduced copies of such opinion for each of the other Underwriters, in form and substance satisfactory to you or your counsel, to the effect that: (i) The Company has been duly incorporated and is an existing corporation in good standing under the laws of Ohio and is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended; each of Society National Bank and Society National Bank, Indiana (the "National Banks") is a duly organized and validly existing national banking association under the laws of the United States and continues to hold a valid certificate to do business as such; each of Key Bank of New York, Key Bank of Washington, Key Bank of Oregon, Key Bank of Maine, Key Bank of Idaho, Key Bank of Utah, Society Bank, Michigan, Key Bank of Alaska or Key Bank of Colorado (the "State Banks") is a duly organized and validly existing state chartered banking association under the laws of the States of New York, Washington, Oregon, Maine, Idaho, Utah, Michigan, Alaska and Colorado, respectively, and each continues to hold a valid certificate to do business as such; each of the Company, the National Banks and the State Banks has full corporate power and authority to conduct its business as described in the Registration Statement and Prospectus and is duly qualified to do business in each jurisdiction in which it owns or leases real property, except where the failure to be so qualified, considering all such cases in the aggregate, does not involve a material risk to the business, properties, financial position or results of operations of the Company and its subsidiaries taken as a whole; and all of the outstanding shares of capital stock of each of the National Banks and the State Banks have been duly authorized and validly issued, are fully paid and non-assessable (exceptions to be specified) and (except as otherwise stated in the Registration Statement) are owned beneficially by the Company subject to no security interest, other encumbrance or adverse claim. (ii) This Agreement, the applicable Terms Agreement and any Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company. (iii) The Offered Securities conform in all material respects to the description thereof contained or incorporated by reference in the Prospectus and such description conforms in all material respects to the rights set forth in the instruments defining the same. (iv) If the Offered Securities include Debt Securities, such Debt Securities have been duly authorized and, when such Debt Securities are duly executed, authenticated and delivered in the manner provided for in the applicable Indenture and issued and paid for in accordance with this Agreement and the applicable Terms Agreement, such Debt Securities will 17 17 constitute valid and binding obligations of the Company entitled to the benefits of the applicable Indenture and enforceable against the Company in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and, if the Offered Securities include Subordinated Debt Securities that are convertible into Capital Securities, then such Subordinated Debt Securities are convertible into Capital Securities in accordance with their terms and the terms of the Subordinated Indenture. (v) If the Offered Securities include Preferred Stock, such shares of Preferred Stock have been duly authorized and, when such shares of Preferred Stock are duly executed and delivered and issued and paid for in accordance with this Agreement and the applicable Terms Agreement, such shares of Preferred Stock will have been validly issued, fully paid and non-assessable and no holder thereof will be subject to personal liability by reason of being such a holder; such shares of Preferred Stock will not be subject to the preemptive rights of any stockholder of the Company; and all corporate action required to be taken for the authorization, issue and sale of such shares of Preferred Stock has been validly and sufficiently taken; and, if the Offered Securities include shares of Preferred Stock that are to be represented by Depositary Shares, then, upon deposit by the Company of such shares of Preferred Stock with the Depositary pursuant to the Deposit Agreement and the execution by the Depositary of the Depositary Receipts evidencing the Depositary Shares, such Depositary Shares shall represent legal and valid interests in such shares of Preferred Stock; and, if the Offered Securities, Debt Securities and Debt Securities include shares of Preferred Stock that are convertible into Capital Securities, Debt Securities or other preferred stock, then such shares of Preferred Stock are convertible into Capital Securities, Debt Securities or other preferred stock in accordance with their terms and the terms of the Certificate of Amendment. (vi) If the Offered Securities include Warrants, such Warrants have been duly authorized and, when such Warrants are duly executed, authenticated and delivered in the manner provided for in the Warrant Agreement and issued and paid for in accordance with this Agreement and the applicable Terms Agreement, such Warrants will constitute valid and binding obligations of the Company entitled to the benefits of the Warrant Agreement and enforceable against the Company in accordance with their terms subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Warrants are exercisable for Debt Securities, shares of Preferred Stock or Common Stock in accordance with their terms and the terms of the Warrant Agreement. 18 18 (vii) If the Offered Securities include Debt Securities or Preferred Stock convertible into Debt Securities, the applicable Indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding instrument of the Company enforceable in accordance with its terms subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and each applicable Indenture has been duly qualified under the Trust Indenture Act. (viii) If the Offered Securities include Preferred Stock convertible into Capital Securities or other preferred stock and/or Subordinated Debt Securities convertible into Capital Securities, the Capital Securities or other preferred stock issuable upon conversion of the shares of Preferred Stock pursuant to their terms and the terms of the Certificate of Amendment and/or the Capital Securities issuable upon conversion of the Subordinated Debt Securities pursuant to their terms and the terms of the Subordinated Indenture, have been duly authorized and validly reserved for issuance upon such conversion by all necessary corporate action and such Capital Securities or other preferred stock, when issued upon such conversion, will be validly issued, fully paid and nonassessable and no holder thereof will be subject to personal liability by reason of being such a holder; and the issuance of such Capital Securities or other preferred stock upon such conversion will not be subject to preemptive rights. (ix) If the Offered Securities include Depositary Shares, the Deposit Agreement has been duly authorized, executed and delivered by the Company, and assuming due authorization, execution and delivery thereof by the Depositary, constitutes a valid and binding obligation of the Company enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (x) If the Offered Securities include Warrants, the Warrant Agreement has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery thereof by the Warrant Agent, constitutes a valid and binding obligation of the Company enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (xi) The issue and sale of the Offered Securities and the performance by the Company of its obligations under the Offered Securities, the Indenture 19 19 and this Agreement or other agreement pursuant to which the Underwriters purchase Offered Securities and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule or regulation, any agreement or instrument known to such counsel to which the Company is a party or by which it is bound, the Company's Articles of Incorporation or Regulations, or any order known to such counsel of any court or governmental agency or body having jurisdiction over the Company. (xii) No consent, approval, authorization, order, registration or qualification of or filing with any court or governmental agency or body is required for the issue and sale of Securities or the consummation of the other transactions contemplated by this Agreement, any applicable Terms Agreement or other agreement pursuant to which an Underwriter purchases Securities, except such consents, approvals, authorizations, registrations or qualifications as have been obtained under the Securities Act and the Trust Indenture Act and as may be required under state securities or Blue Sky laws in connection with purchases of Securities. (xiii) The Registration Statement has become effective under the Securities Act; any required amendment or supplement to the Prospectus has been filed as required by Section 4(a) hereof; and to the best knowledge of such counsel no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been instituted or threatened by the Commission. (xiv) Such counsel is of the opinion ascribed to it in the Prospectus under the caption "United States Federal Taxation", if any. (xv) The Registration Statement and the Prospectus, each as amended or supplemented on the Closing Date (except for the financial statements and other financial and statistical data contained therein or omitted therefrom and the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the Trustee as to which such counsel need express no opinion) complied as to form in all material respects with the requirements of the Act and the Exchange Act and the respective rules thereunder, and such counsel has no reason to believe that the Registration Statement, as amended (except for the financial statements and other financial or statistical data contained or incorporated therein or omitted therefrom and the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the Trustee as to which such counsel need express no opinion) at the time it became effective and at the date of this Agreement, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, as amended 20 20 or supplemented (except for the financial statements and other financial or statistical data contained or incorporated therein or omitted therefrom and the Statement of Eligibility (Form T-1 under the Trust Indenture Act of the Trustee as to which such counsel need express no opinion) as of the Closing Date, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed which is not filed as required. Such opinion or opinions shall be to such further effect with respect to other legal matters relating to this Agreement, any Delayed Delivery Contracts and the sale of the Offered Securities, pursuant to this Agreement as counsel for the Underwriters may reasonably request. Such opinion or opinions shall be limited to New York, Ohio, Washington and federal law and, if applicable, the law of the state of incorporation of any other Significant Subsidiary. In giving such opinion, such counsel may rely, as to all matters governed by the laws of jurisdictions in which such counsel is not qualified and the federal law of the United States, upon opinions of other counsel, who shall be counsel satisfactory to counsel for the Underwriters, in which case the opinion shall state that they believe you and they are entitled to so rely. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company, the National Banks and the State Banks and the Significant Subsidiaries and certificates of public officials. In rendering their opinion, such counsel may rely upon the opinion of Shearman & Sterling referred to below as to any matters governed by New York law covered therein. (d) At the applicable Closing Date, you shall have received the favorable opinion of Shearman & Sterling, counsel for the Underwriters, such opinion or opinions, dated the Closing Date, together with signed or reproduced copies of such opinion for each of the other Underwriters, to the effect that the opinion delivered pursuant to Section 5(c) appears on its face to be appropriately responsive to the requirements of this Agreement and the applicable Terms Agreement and with respect to the incorporation of the Company, the validity of the Securities, the Registration Statement, the Prospectus and other related matters as you reasonably may request and such counsel shall have received such papers and information as they request to enable them to pass upon such matters. In rendering their opinion, such counsel may rely upon the opinion rendered on behalf of the Company referred to above as to all matters governed by Ohio law. 21 21 (e) At or prior to the time of execution of the applicable Terms Agreement and on the Closing Date, you shall have received a letter from Ernst & Young, dated the date of delivery thereof, to the effect set forth in Exhibit II hereto. (f) You shall have received from the Company a certificate, signed by the Chairman of the Board, the President or an Executive Vice President, and by the principal financial or accounting officer, of the Company, dated the Closing Date, to the effect that, to the best of their knowledge based upon reasonable investigation: (i) The representations and warranties of the Company in this Agreement are true and correct, as if made at and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; and (ii) No stop order suspending the effectiveness of the Registration Statement has been issued, and no proceeding for that purpose has been instituted or is threatened by the Commission. (g) The Securities shall have been duly authorized for listing on such exchange, if any, and at such time as specified in the applicable Terms Agreement. (h) In the event the Underwriters exercise their option provided in a Terms Agreement to purchase all or a portion of the Option Securities, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company hereunder shall be true and correct as of each Option Securities Closing Date, and you shall have received: (1) A certificate, dated such Option Securities Closing Date, signed by the Chairman of the Board, the President or an Executive Vice President, and by the principal financial or accounting officer of the Company, confirming that the certificate delivered at the Closing Date pursuant to Section 5(f) hereof remains true and correct as of such Option Securities Closing Date. (2) The favorable opinion of the General Counsel or any Senior Managing Counsel to the Company and/or Thompson, Hine and Flory, special tax Counsel to the Company, in the form and substance satisfactory to Counsel for the Underwriters, dated the Option Securities Closing Date, relating to the Option Securities and otherwise in substantially to the same effect as the opinion required by Section 5(c) hereof. (3) The favorable opinion of Shearman & Sterling, Counsel for the Underwriters, dated the Option Securities Closing Date, relating to the Option 22 22 Securities and otherwise in substantially to the same effect as the opinion required by Section 5(d) hereof. (4) A letter from Ernst & Young in the form and substance satisfactory to you and dated the Option Securities Closing Date, substantially the same in scope and substance as the letter furnished to you pursuant to Section 5(e) hereof, except that the "specified date" in the letter shall be a date not more than five days prior to such Option Securities Closing Date. (i) The Company shall have furnished to you such further certificates and documents as you shall have reasonably requested. All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are satisfactory in form and substance to you. The Company will furnish you with such conformed copies of such opinions, certificates, letters and other documents as you shall reasonably request. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, the applicable Terms Agreement may be terminated by you by notice to the Company at any time at or prior to the applicable Closing Date, and such termination shall be without liability of any party to any other party except as provided in Section 4 hereof. Notwithstanding any such termination, the provisions of Sections 6, 7, 8 and 9 shall remain in effect. 6. Underwriters' Expenses. If the sale of the Securities provided ---------------------- for herein is not consummated by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled, other than by reason of a default by any of the Underwriters or the occurrence of any event specified in clause (ii), (iii) or (v) of Section 5(b), the Company will reimburse the Underwriters severally upon demand for all reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities. Except as otherwise provided for herein or in the applicable Terms Agreement, the Underwriters shall pay their own expenses (including fees and disbursements of counsel) in connection with the offering and sale of the Securities. 7. Indemnification and Contribution. (a) The Company will -------------------------------- indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any part of the Registration Statement when such part became effective, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or any other prospectus with respect to the Securities, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary 23 23 to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by it in connection with investigating or defending against such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that (i) the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by you, or by any Underwriter through you, specifically for use therein and (ii) such indemnity with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) to the extent that any such loss, claim, damage or liability of such Underwriter results from the fact that such Underwriter sold Securities to a person as to whom it shall be established that there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Prospectus (excluding documents incorporated by reference) or of the Prospectus as then amended or supplemented (excluding documents incorporated by reference) in any case where such delivery is required by the Securities Act if the Company has previously furnished copies thereof in sufficient quantity to such Underwriter and the loss, claim, damage or liability of such Underwriter results from an untrue statement or omission of a material fact contained in the Preliminary Prospectus which was corrected in the Prospectus (excluding documents incorporated by reference) or in the Prospectus as then amended or supplemented (excluding documents incorporated by reference). (b) Each Underwriter will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any part of the Registration Statement when such part became effective, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or any other prospectus relating to the Securities, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made therein in reliance upon and in conformity with written information furnished to the Company by you, or by such Underwriter through you, specifically for use therein, and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending against any such loss, claim, damage, liability or action as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be 24 24 brought against any indemnified party, and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that, if the defendants in any such action (including any impleaded parties) include both the indemnified party and the indemnifying party and representations of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, the indemnified party or parties shall have the right to select separate counsel to participate in the defense of such action on behalf of such indemnified party or parties (and the reasonable fees and expenses of one such separate counsel shall be paid by the indemnifying party). No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party. (d) If the indemnification provided for in this Section 7 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering of the Securities (before deducting expenses) received by the Company bear to the total compensation or profit (before deducting expenses) received or realized by the Underwriters from the purchase and resale, or underwriting, of the Securities. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the first sentence of this subsection (d). The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such 25 25 indemnified party in connection with investigating or defending against any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute shall be several in proportion to their respective underwriting obligations and not joint. (e) The obligations of the Company under this Section 7 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Securities Act; and the obligations of the Underwriters under this Section 7 shall be in addition to any liability that the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company (including any person who, with his consent, is named in the Registration Statement as about to become a director of the Company), to each officer of the Company who has signed the Registration Statement and to each person, if any, who controls the Company within the meaning of the Securities Act. 8. Representations and Agreements to Survive Delivery. All -------------------------------------------------- representations, warranties, indemnities and agreements of the Company herein or in certificates of officers of the Company delivered pursuant hereto, and the agreements of the several Underwriters contained in Section 7 hereof, shall remain operative and in full force and effect regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person, or the Company or any of its officers, directors or any controlling person, and shall survive delivery of and payment for the Securities. 9. Substitution of Underwriters. If one or more of the Underwriters ---------------------------- participating in an offering of Offered Securities shall fail at the applicable Closing Date to purchase the Offered Securities which it or they are obligated to purchase hereunder and under the applicable Terms Agreement (the "Defaulted Securities"), you shall have the right, within 36 hours thereafter, to make arrangements satisfactory to you and the Company for one or more of the nondefaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, you have not completed such arrangements within such 36-hour period, then: (a) if the number of Defaulted Securities does not exceed 10% of the number of Offered Securities to be purchased pursuant to such Terms Agreement, the 26 26 nondefaulting Underwriters named in such Terms Agreement shall be obligated to purchase the full amount thereof in the proportions that their respective underwriting obligations bear to the underwriting obligations of all nondefaulting Underwriters, or (b) if the number of Defaulted Securities exceeds 10% of the Offered Securities to be purchased pursuant to such Terms Agreement, the applicable Terms Agreement shall terminate without liability on the part of any nondefaulting Underwriter. No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default under this Agreement and the applicable Terms Agreement. In the event of any such default that does not result in the termination of the applicable Terms Agreement, either you or the Company shall have the right to postpone the applicable Closing Date for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. As used herein, the term "Underwriter" includes any person substituted for an Underwriter under this Section 9. 10. Notices. All notices or communications hereunder shall be in ------- writing and if sent to you shall be mailed, delivered, telexed or telecopied and confirmed to you at the address set forth for that purpose in the Terms Agreement, or if sent to the Company, shall be mailed, delivered, telexed, telecopied or telegraphed and confirmed to the Company at 127 Public Square, Cleveland, Ohio 44114, Attention: Secretary and General Counsel, telecopy --------- number: (216) 689-5681, with a copy to Senior Managing Counsel -- Securities. ---- -- Notice to any Underwriter pursuant to Section 7 hereof shall be mailed, delivered, telexed, telecopied or telegraphed and confirmed to such Underwriter's address as it appears in such Underwriter's questionnaire or other notice furnished to the Company in writing for the purpose of communications hereunder. Any party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose. 11. Parties. This Agreement shall inure solely to the benefit of and ------- be binding upon the Company and the Underwriters and their respective successors and the controlling persons, officers and directors referred to in Section 7 hereof, and no other person will have any right or obligation hereunder. In all dealings with the Company under this Agreement, you shall act on behalf of each of the several Underwriters, and any action under this Agreement taken by you or by any one of you designated in the applicable Terms Agreement will be binding upon all the Underwriters. 12. Applicable Law. This Agreement shall be governed by, and -------------- construed in accordance with, the laws of the State of New York. 27 EXHIBIT A KEYCORP (an Ohio corporation) [Title of Securities] TERMS AGREEMENT --------------- Dated: ______________, 199_ To: KeyCorp 127 Public Square Cleveland, Ohio 44114 Attention: Dear Sirs: We (the "Representative") understand that KeyCorp, an Ohio corporation (the "Company"), proposes to issue and sell [[$ aggregate principal amount] of its [senior debt securities] [and] [subordinated [convertible] debt securities] (the "Debt Securities")] [and] [_________ shares of its [convertible]] preferred stock (the "Preferred Stock")] [________ depositary shares (the "Depositary Shares") each representing ______ of a share of ____ preferred stock]. Subject to the terms and conditions set forth herein or incorporated by reference herein, the Underwriters named below (the "Underwriters") offer to purchase, severally and not jointly, the respective amounts of [Debt Securities] [and] [Preferred Stock] [Depositary Shares] set forth below. Principal Principal Principal Amount of Amount of Amount of Name of Debt Preferred Depositary Underwriter Securities Stock Shares - ------------- ---------- --------- ---------- _________ ________ _________ Total $_________ $________ $_________ 28 A-2 Debt Securities --------------- Title of Debt Securities: Principal amount to be issued: $ Senior or Subordinated: Currency: Current ratings: Interest rate or formula: % Interest payment dates: Date of maturity: Redemption provisions: Sinking fund requirements: Initial public offering price: % of the principal amount, plus accrued interest, if any, [or amortized original issue discount, if any,] from ____, 19__. Purchase price: % of the principal amount, plus accrued interest, if any, [or amortized original issue discount, if any,] from ____, 19__ (payable in next day funds). Listing requirement: [None] [NYSE] [OTHER] Convertible: Conversion provisions: Closing date and location: Additional representations, if any: Redemption provisions: 29 A-3 Lock-up provisions: Sinking fund requirements: Number of Option Securities, if any: Other terms and conditions: 30 A-4 Preferred Stock --------------- Title of Preferred Stock: Principal amount to be issued: $ Currency: Annual cash dividend rate: % Payable: Liquidation preference per Share: Initial public offering price: %, plus accrued interest or amortized original issue discount, if any, from ______, 19___. Purchase price: %, plus accrued interest or amortized original issue discount, if any, from ______, 19____ (payable in next day funds). Listing requirement: [None] [NYSE] [OTHER] Convertible: Initial Conversion price: $___ per share of [Common Stock] [Preferred Stock] [Capital Securities]. Other conversion provisions: Closing date and location: Additional representations, if any: Redemption provisions: Lock-up provisions: Sinking fund requirements: Number of Option Securities, if any: Other terms and conditions: 31 A-5 Depositary Shares ----------------- Title of Depositary Shares: Principal amount to be issued: $ Currency: Fractional amount of Preferred Stock represented by each Depositary Share: Initial public offering price per Depositary Share: % of the principal amount, plus accrued interest [or amortized original issue discount], if any, from _______, 19__. Purchase price per Depositary Share: (amount equal to the initial public offering price set forth above, less $_____ per Depositary Share): Annual cash dividend amount: $ Payable: Closing date and location: Additional representations, if any: Redemption provisions: Lock-up provisions: Sinking fund requirements: Number of Option Securities, if any: Other terms and conditions: 32 A-6 Warrants -------- Title of Warrants: Number to be issued: Currency: Initial public offering price per Warrant: $ Purchase price per Warrant: $ Listing requirement: [None] [NYSE] [OTHER] Exercisable for: Exercise price: Exercise provisions: Closing date and location: Additional representations, if any: Redemption provisions: Lock-up provisions: Other terms and conditions: Each Underwriter severally agrees, subject to the terms and provisions of the above referenced Underwriting Agreement Standard Provisions which is incorporated herein in its entirety and made a part hereof, to purchase the principal amount of Offered Securities set forth opposite its name and a proportionate share of Option Securities to the extent any are purchased. This Agreement shall be governed by and construed in accordance with, the laws of the State of New York. 33 A-7 If the foregoing is in accordance with your understanding of the agreement between you and the Company, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts and together with the Underwriting Agreement Standard Provisions, shall be a binding agreement between the Underwriters named herein and the Company in accordance with its terms and the terms of the Underwriting Agreement Standard Provisions. [Representative[s]] By ______________________________________ Acting on behalf of themselves and the other named Underwriters Confirmed and accepted as of the date first above written: KeyCorp By _________________________ Name and Title: 34 EXHIBIT I KEYCORP [Title of Securities] DELAYED DELIVERY CONTRACT ------------------------- _________________________________________________________________ [Insert date] KeyCorp [Names of Representatives] Gentlemen: The undersigned hereby agrees to purchase from KeyCorp (the "Company"), and the Company agrees to sell to the undersigned, as of the date hereof, for delivery on _______, 19__ ("Delivery Date") $_________ principal amount of the Company's [insert title of Security] (the "Securities"), offered by the Company's Prospectus relating thereto, receipt of a copy of which is hereby acknowledged, at a purchase price of [__% of the principal amount thereof plus accrued interest, if any, from ______, 19__,] [and $____ per share of Preferred Stock] [and $_____ per Warrant, respectively] to the Delivery Date and on the further terms and conditions set forth in this contract. Payment for the Securities that the undersigned has agreed to purchase for delivery on a Delivery Date shall be made to the Company or its order by certified or official bank check in New York Clearing House (next day) funds at the office of _______________________ at _____ A.M. on that Delivery Date upon delivery to the undersigned of the Securities to be purchased by the undersigned for delivery on that Delivery Date in definitive form and in such denominations and registered in such names as the undersigned may designate by written or telegraphic communication addressed to the Company not less than five full business days prior to that Delivery Date. The obligation of the Company to make delivery of and accept payment for, and the obligation of the undersigned to take delivery of and make payment for, Securities on the Delivery Date shall be subject only to the conditions that (1) investment in the Securities shall not on the Delivery Date be prohibited under the laws of any jurisdiction to which the undersigned is subject, which investment the undersigned represents is not prohibited on the date hereof, and (2) the Company, on or before _______, 19__, shall have sold to the 35 I-2 Underwriters the amount of the Securities to be sold to them pursuant to the Underwriting Agreement referred to in the Prospectus mentioned above. Promptly after completion of the sale to the Underwriters, the Company will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the opinion of counsel for the Company delivered to the Underwriters in connection therewith. This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. It is understood that the Company will not accept Delayed Delivery Contracts for an aggregate principal amount of Securities in excess of $__________ and that the acceptance of this contract and any other similar contracts is in the Company's sole discretion and, without limiting the foregoing, need not be on a first-come, first-served basis. If this contract is acceptable to the Company, it is requested that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding contract between the Company and the undersigned when such counterpart is so mailed or delivered. 36 I-3 This contract shall be governed by, and construed in accordance with, the laws of the State of New York. Very truly yours, ________________________________________ (Name of Purchaser) By: ________________________________________ (Title of Signatory) ________________________________________ ________________________________________ (Address of Purchaser) Accepted, as of the above date. KeyCorp By: ___________________________ [Insert title] 37 EXHIBIT II Pursuant to Section 5(e) of the Underwriting Agreement, the independent auditors shall furnish letters to the Underwriters to the effect that: (1) They are independent public accountants with respect to the Company and its subsidiaries within the meaning of the Securities Act and the applicable published Securities Act Regulations. (2) In their opinion, the consolidated financial statements and any supplemental financial information or schedules audited by them and included or incorporated by reference in the Registration Statement or Prospectus comply as to form in all material respects with the applicable accounting requirements of the Securities Act or the Exchange Act, as applicable, and the published rules and regulations thereunder. (3) On the basis of procedures referred to in such letter, including a reading of the minute books of the Company since the end of the most recent fiscal year with respect to which an audit report has been issued, performing the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS No. 71, Interim Financial Information, on the unaudited consolidated interim financial statements of the Company included or incorporated by reference in the Registration Statement and Prospectus and reading the internal unaudited consolidated interim financial data, if any, for the period from the date of the latest balance sheet included or incorporated by reference in the Registration Statement and Prospectus to the date of the latest available internal interim financial data (which internal unaudited interim financial data, if any, will be attached to each such letter to the Underwriters); and making inquiries of officials of the Company responsible for financial and accounting matters (including inquiries with respect to whether the unaudited consolidated financial statements comply as to form in all material respects with the applicable accounting requirements of the Exchange Act and inquiries of certain officials of the Company who have responsibility for financial and accounting matters whether the internal unaudited consolidated interim financial statements are stated on a basis substantially consistent with that of the audited consolidated financial statements incorporated by reference in the Registration Statement), nothing caused them to believe that: (A) (i) any material modifications should be made to the unaudited consolidated financial statements included in any Quarterly Reports on Form 10-Q which are incorporated by reference in the Registration Statement or Prospectus (the "10-Q Financials") for them to be in conformity with generally accepted accounting principles applicable to such financial statements and (ii) the 10-Q Financials do not comply as to form in all material respects with the applicable requirements of the Exchange Act as it applies to Form 10-Q and the related published rules and regulations; or (B) the internal unaudited consolidated interim financial statements of the Company are not in conformity with generally accepted accounting principles applied 38 II-2 on a basis substantially consistent with that of the audited consolidated financial statements incorporated by reference in the Registration Statement; or (C) at the date of the latest available internal unaudited consolidated interim financial statements of the Company, there was any decrease in consolidated shareholders' equity as compared with amounts shown in the latest balance sheet included or incorporated by reference in the Prospectus except in all instances for decreases that the Prospectus discloses have occurred or may occur or as may be set forth in such letter; or (D) for the period from the date of the latest balance sheet included or incorporated by reference in the Prospectus to the date of the latest available internal financial statements of the Company, there was any decrease, as compared with the corresponding period of the previous year, in consolidated net interest income, consolidated net interest income after provision for possible loan losses, consolidated income before taxes or in the total or per common share amounts of consolidated net income, except in all cases for changes or decreases that the Prospectus discloses have occurred or may occur or as may be set forth in such letter; (E) as of a specified date not more than five days prior to the date of delivery of such letter to the Representative(s), there was any decrease in consolidated shareholders' equity as compared with the [amount shown in the latest balance sheet included or incorporated by reference in the Prospectus/amount shown in the latest internal unaudited consolidated interim financial statements], except for any decrease that the Registration Statement discloses has occurred or may occur. (4) In addition to their examination referred to in their reports incorporated by reference in the Registration Statement and Prospectus and the procedures referred to in (3) above, (a) they have carried out certain other procedures, not constituting an audit, with respect to certain of the dollar amounts, percentages and other financial information (in each case to the extent that such dollar amounts, percentages and other financial information, either directly or by analysis or computation, are derived from the general accounting records of the Company and its subsidiaries) which are included or incorporated by reference in the Prospectus (other than those appearing in the audited financial statements included therein) and appear in the Prospectus or incorporated documents, as agreed to by officers of the Company and the Representative(s), and have found such dollar amounts, percentages and financial information to be in agreement with the general accounting records of the Company and its subsidiaries and (b) if any pro forma financial information is included or incorporated by reference in the Registration Statement and Prospectus, they have carried out other procedures, not constituting an audit, with respect to such pro forma financial information and indicated the results thereof, if requested by the Representative(s) and agreed to by officers of the Company. EX-23.A 3 EXHIBIT 23(A) 1 Exhibit 23(a) CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in Amendment No. 1 to the Registration Statement on Form S-3 (No. 33-58405) and related Prospectus of KeyCorp which Registration Statement also constitutes a post-effective amendment to KeyCorp's Registration Statement on Form S-3 (No. 33-53643) for the registration of a combined $850,000,000 of securities and to the incorporation by reference therein of our report dated January 18, 1995, except for Note 2, as to which the date is February 28, 1995, with respect to the consolidated financial statements of KeyCorp incorporated by reference in its Annual Report (Form 10-K) for the year ended December 31, 1994, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Cleveland, Ohio April 13, 1995 -----END PRIVACY-ENHANCED MESSAGE-----